Aerospace: A Wing and Two Players

Above: A350-1000 wing cover goes into production at Broughton © Airbus

Brexit has been the preoccupation for the UK aerospace industry for much of the past two years, with questions over the fate of Airbus’ investments and complex supply chain should the nation have to make a no-deal departure from the European Union in 2019. However, late in the year it was supplanted in the headlines by another B-word – or two to be precise: Bombardier and Boeing. The US aircraft manufacturer’s demand that sales of its Canadian counterpart’s CSeries jet be subject to punitive 300% tariffs on imports into the USA threatened the future of not only the programme, but Bombardier’s very existence, and with it the Belfast factory where the narrowbody airliner’s composite wings are engineered and built.

On the surface, it seemed an incredibly heavy-handed tactic by Boeing to stop the purchase by Delta Air Lines of 75 CSeries jets; the result of a contest in which Boeing had not even participated.
Boeing insisted that the purchase broke trade rules because the CSeries is heavily subsidised and Delta was sold aircraft at lower than cost – the US airline’s order represents almost a fifth of the CSeries backlog.
However, in Belfast – with 4,000 jobs at stake and many more in the supply chain – as well as in Westminster, Boeing was seen as a corporate bully.
The fact that Theresa May’s majority depends on 10 Northern Ireland MPs, along with the fragility of the province’s political situation, led to the matter being further up the agenda than may have been the case had Bombardier’s factory been in Bristol or Bradford.

Bombadier clean room in Belfast factory


Concurrently, Boeing was on a full-on charm offensive to emphasise its impact on the UK economy. It claims it supports 16,500 jobs in the UK supply chain and spent £2.1 billion with UK suppliers in 2016 – a far greater contribution than Bombardier’s. The country is Boeing’s third largest source of supply after the USA and Japan. In September, Boeing opened its first British factory here; its Sheffield plant will employ just 50 people making actuator components, but it is a highly symbolic move as it’s the first time the company has had a manufacturing footprint in the UK. Boeing is also supporting an Advanced Manufacturing Research Centre at She eld University and plans to open a maintenance hangar at London Gatwick airport in 2019, supporting Boeing operators based there. However, Boeing’s attack on its competitor back red – in quite a spectacular way. Behind the scenes, Airbus and Bombardier had, on and off for two years, been discussing a way of salvaging the ailing CSeries, on which Bombardier’s fortunes depend. The aircraft, available in 110- and 130-seat variants, has sold slowly compared with its larger Airbus A320neo and Boeing 737 Max rivals. The Montreal-based farm already had to sell a major stake in the programme to the Quebec government.

Hot Topics

  • Bombardier comes out on top in battle with Boeing
  • Future of Airbus A380 looking fragile
  • Maintenance and warranty activities boost Rolls- Royce profit upswing
  • Healthy SMEs are crucial to sector’s prosperity

Family Values

One of the ways SMEs have been proving the maxim that the whole is often greater than the sum of its parts has been by setting up regional clusters. Many of these evolved post 1997 as part of the Blair government’s emphasis on regional development agencies. However, the most recent initiative is Causeway Aero, a group of five family firms in Northern Ireland that set up last year to pool their expertise – from engineering services to injection-moulded plastics – to bid for work packages directly from aerostructures manufacturers. The project, which has the support of Invest Northern Ireland, is ambitious in that sets up a new legal entity that will own and manage the contract with the customer, and in turn pay the member companies for their contribution.

The deal is done

A week after the US government’s announcement about the CSeries tariffs, Airbus announced it was buying a 50.01% stake in the CSeries and will help market the aircraft and assemble US-bound examples at its Mobile, Alabama plant to get round US trade barriers. Boeing’s actions almost certainly provided the impetus for Airbus to sign the deal. The move should safeguard the programme and the Northern Ireland factory, where Bombardier also makes components and sections for its business jets and smaller regional aircraft. Belfast had already been struggling to stay competitive – it effectively has to compete for in-house contracts against other Bombardier aerostructures plants in Mexico, Morocco and the USA. But the CSeries wing factory is one of its true jewels. The composite technology used for the wings is the result of expertise built through years of research and development in partnership with Queens University and local farms, and cannot easily be replicated elsewhere in the Bombardier empire.

Airbus Challenges

Boeing announced its first UK factory in September 2017 (Credit: Boeing)


Wing technology is also crucial to Airbus’s presence in the UK and – despite the threat of a hard Brexit, of which more later – the European company’s problems have been “nice to have”, compared with those of Bombardier. Airbus factories in Bristol and Broughton, North Wales, engineer and assemble every Airbus wing, and with the company looking to ramp up to 60 single-aisle A320neo family aircraft a month from the end of the decade, there is the challenge of making sure the largely UK supply chain is robust enough to cope.
Fortunately, the A320neo is essentially a re-engined version of the venerable A320, in production for 30 years, so there are none of the complex engineering and design issues that can delay a clean-sheet aircraft programme, such as the Boeing 787.
While Airbus has been edging ahead in the competitive battle against its arch-rival in the narrowbody segment, the same cannot be said for its widebody aircraft. Its A350-900 and longer A350-1000 have been selling strongly enough but the A330neo was late to y this October – due to glitches with the Rolls-Royce Trent 7000 engines – and has been a slower-burner in terms of orders.
Meanwhile, the future of Airbus’s flagship, the A380 superjumbo, looks more fragile by the day, with no new orders for two years and a rapidly-diminishing order book bolstered only by the one true-believer in the double-deck airliner: Emirates. The A380’s giant 40m wing is Broughton’s most prestigious product, but its days may be numbered.

Rolls on a roll

A350-1000 wing cover into production at Broughton


Rolls-Royce still argues it was right to exit the narrowbody market at the start of this decade – it had a share in the International Aero Engines consortium that powers about half of all previous-generation A320s – and promises a return to the sector in the 2020s.
In the meantime, it maintains a dominant position against rival General Electric on Airbus widebodies, including exclusivity on the A350 and A330neo. After a few rocky years for the Derby-based rm, a restructuring and efficiency drive by chief executive Warren East now appears to be reaping rewards. Profits for the rst-half of 2017 are up substantially after strong sales of Trent engines and a growth in maintenance and warranty activities, more lucrative for Rolls-Royce than the selling of actual engines.
The UK’s other big aerospace and defence player, BAE Systems, has promised an “evolution not a revolution” under new chief executive Charles Woodburn. The company, which exited the commercial market over a decade ago with the cancellation of its last regional jet programme and exit from the Airbus consortium, depends almost entirely on the defence market. While about half its revenues come from its US operations, its Hawk jet trainer and Typhoon – it is a member of the four-nation European partnership behind the multi-role fighter – remain crucial to the UK’s defence export prospects. However, falling orders for both types led BAE this year to reduce production rates and shed 1,400 jobs at five factories and air bases.
Definitions of what counts as aerospace di er but trade body ADS estimates the industry’s revenues to be £32 billion, with 120,000 people employed directly in the UK, and almost the same amount again indirectly. Despite declining defence spending this decade, aerospace continues to grow in importance, mainly thanks to rising production of civil aircraft. The FlightGlobal Top 100 ranking of aerospace businesses by revenue includes nine UK-owned companies, most of them defence specialists such as BAE, Chemring, Marshall and ejection seat manufacturer Martin-Baker. Others, such as GKN, a major Airbus partner, have done well out of the booming commercial side. These do not count, of course, the foreign-run firms that are major UK employers, such as Leonardo, which builds and upgrades helicopters in Yeovil and makes defence electronics, Airbus, Bombardier and Thales. In addition, there are hundreds of SMEs.

Fast Facts

0
UK aerospace direct UK employment
0
UK aerospace additional supported jobs in the UK
0bn £
UK aerospace turnover in 2016
0%
Growth in the last five years

Brexit concerns

Brexit remains the elephant in the room, with ADS warning that failure to reach a deal with the EU would have “significant commercial consequences for UK industry”. It has called for continuing access to the Single Market and Customs Union, Europe’s skilled labour pool and the European Aviation Safety Agency’s regulatory regime for authorising aircraft parts across the EU.
The prospect of companies such as Airbus shipping out overnight in the event of a hard Brexit is inconceivable, given the many years of investment it takes to establish competencies such as wing design and manufacture. Optimists also point to Airbus’s decision to continue investing in R&D in this country. The Airbus-supported Aerospace Integration Research Centre opened this October at Cranfield University.
Weighed against this, Airbus’s other partner nations, especially Germany and Spain, would love to snatch the UK’s crown as wing centre of excellence. While Toulouse-head- quartered Airbus, under German chief executive Tom Enders, is today run much more as a conventional company than the alliance of often-warring national interests it used to be as EADS, politics still plays a role in investment decisions. It was behind Angela Merkel’s opposition to a merger between the then-EADS and BAE to create a powerful European competitor to the US defence giants. So when it comes to decisions about where to design and build a wing for the next all-new Airbus, perhaps in the mid-2020s, the UK – without influence on the Airbus board and outside the EU – may not be able to take for granted its status as the go-to industry.

Lever-pulling pays off

While Whitehall – since the Thatcher revolution in the 1980s – has stayed largely clear of French-style lever-pulling when it comes to the aerospace industry and its champions, there have been initiatives by successive governments to improve productivity and competitiveness.
Sharing in Growth, introduced by the coalition government in 2012 and funded partly by the country’s biggest aerospace companies, has signed up more than 60 supply chain companies to a programme of improving leadership and skills in areas such as “lean manufacturing, financial de-risking and employee engagement”. Beneficiaries have included Nasmyth in Bulwell, Rockford Components in Ipswich and Worcester-based Aeromet. It continues to thrive.
Other schemes include Supply Chain 21 – designed to “accelerate the competitiveness [of the industry] by raising the performance of its supply chains” and also supported by the big manufacturers and tier ones. Launched in 2006, some 100 companies have joined every year. The Aerospace Growth Partnership, run by ADS on the government’s behalf, is a broader strategic vision for the industry that promises to coordinate government spending decisions with the needs of industry and academia. A feature of the strategy is the Supply Chain Competitiveness Charter, aimed at strengthening relationships between the larger companies and the supply chain, and is an acknowledgement that the prosperity of the UK aerospace industry depends as much on healthy SMEs as its household names.

Murdo Morrison is head of strategic content for Flightglobal and editor of Flight Daily News. He was editor of Flight International between 2001 and 2015.