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THE CONTRIBUTION of THALES to the UK ECONOMY MARCH 2019 Thales’S Digital Signalling Has Helped Increase Capacity Across London Underground

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THE CONTRIBUTION of THALES to the UK ECONOMY MARCH 2019 Thales’S Digital Signalling Has Helped Increase Capacity Across London Underground THE CONTRIBUTION OF THALES TO THE UK ECONOMY MARCH 2019 Thales’s digital signalling has helped increase capacity across London Underground. The contribution of Thales to the UK economy TABLE OF CONTENTS Foreword 4 Executive summary 8 1. Introduction 10 2. The direct impact of Thales in the UK 14 2.1 Direct contribution to employment and skills 14 2.2 Direct contribution to GDP 20 2.3 Direct contribution to tax 21 3. Multiplier impacts 22 3.1 Supply chain impacts 22 3.2 Worker spending impacts 26 4. The total economic impact of Thales in the UK 28 4.1 National-level impacts 28 4.2 Regional impacts 30 5. Thales’s economic impact by business area 32 5.1 Defence business 32 5.2 Civil business 35 6. The ‘catalytic impacts’ of Thales on the UK economy 36 6.1 Research and innovation 36 6.2 Supporting productivity in other sectors 38 6.3 Wider skills initiatives 40 7. Conclusion 44 Appendix 46 This report is confidential to Thales Group and may not be published or distributed without its prior written permission. Images are published with kind permission of Thales Group and Thales Alenia Space. The modelling and results presented here are based on information provided by third parties, upon which Oxford Economics has relied in producing its report and forecasts in good faith. Any subsequent revision or update of those data will affect the assessments and projections shown. Contains public sector information licensed under the Open Government Licence v3.0. 3 FOREWORD Thales in the UK is a key part of a global We pride ourselves on delivering the most technology company that employs 65,000 demanding programmes and capabilities to people worldwide. We have a proud heritage our customers across key markets – defence, in the UK, stretching back more than 130 years, aerospace, transport, digital security and space. along with a presence in nearly every region of All these activities are underpinned by a strong the country. Combining a unique diversity of focus on research and innovation. Our £130 expertise, skills and talents, our 6,500 people million of R&D in 2017, both self-funded and in the UK deliver extraordinarily complex and funded by customers and partners, ensures technological solutions to our broad range of we remain at the cutting edge of technology domestic and export customers. in all our markets. Critical to this continued leadership is our relationship with academia, We took the decision to commission Oxford where we support and promote the research Economics to better assess Thales’s economic capability that generates new ideas and impact in the UK and to quantify the value we nurtures the talent of the future. bring to the nation and local economies. While the benefits that we bring to ‘UK Plc’ This report shows that, in 2017, Thales are clear from this report, it is the experience contributed over £1.7 billion to the UK’s GDP. of our employees that I believe best tells the I am particularly proud that Thales’s labour story of Thales in the UK. Our apprenticeship productivity was approximately 40 per cent and graduate programmes continue to develop higher than the national average. We spent and deliver a stream of diverse young people £700 million with UK suppliers, and a third of into our business who are passionate advocates our UK business’s domestic procurement was for STEM and next generation technologies. with small and medium enterprises (SMEs). Likewise, our smart working approach focuses With this extensive UK supply chain, Thales on both the wellbeing of our people and the supports 27,200 jobs across the country, a productivity of our teams and, I believe, sets multiple of 4.2 of our direct employment, the standard for future working practices. helping to underpin the prosperity, as well as the safety and security of the UK. Thales facility in Glasgow. This report demonstrates our economic impact in the UK and our commitment to the development of the skills, R&D and innovation that will continue to support our UK activities into the future. As we look to that future, I am ambitious for Thales to expand and grow our activities in the UK, so that we continue to lead in key technologies, such as digital security, autonomy and big data analytics, which will deliver the security and prosperity of tomorrow. Victor Chavez Chief Executive, Thales UK FEBRUARY 2019 THE SCALE AND The contribution of Thales to the UK economy INFLUENCE OF THALES ACROSS THE UK UK CAPABILITIES REGIONAL IMPACTS Aerospace Space Defence • Air traffic management • Satellite propulsion • Surface ship, mine hunting & submarine sonar • Cockpit communications • Satellite payloads • Advanced weapon systems Total GDP contribution • Cabin connectivity • Earth observation • Mission systems integration • In-flight entertainment services • Space exploration • Managed services • Digital services • Satellite navigation • Intelligence, surveillance & reconnaissance £120 m 710 Direct employment • Training and simulation • Electronic warfare & countermeasures • Maritime, land & airborne optronics systems Transport Security • Avionics Glasgow • Rail signalling systems • Digital security systems • Queen Elizabeth-class aircraft carrier • Rail traffic management • Critical infrastructure • Unmanned aerial vehicles • Road information services protection • Radio communications • Driverless systems • Secure communications • Air traffic management • Predictive maintenance • Platform self-protection £30 m • Digital services • Autonomous systems £60 m 20 510 £120 m UK EMPLOYEES 500 £70 m In 2017, Thales Engineering Customer Bid & project Business Belfast directly employed & R&D support management support 200 Doncaster 6,500 3,400 1,200 700 1,200 Cheadle UK workers Cambridge 50 m £60 m 120 £170 m 60 £70 m Bury St Edmunds TOTAL ECONOMIC IMPACT The average productivity 280 of a Thales worker is Aberporth 130 Direct Indirect Induced Thales’s total contribution Total jobs supported £77,400 Ebbw Vale £320 m to GDP in 2017 was 40% above the * 2,370 630 27, 200 national average £1.7 billion Bristol 6,500 £210 m £460 m London £600 m £600 m Total tax £500 m £130 m 1,010 11,200 contribution Crawley £140 m Templecombe 9,400 £450 £180 m Reading million Plymouth *Total does not sum due to rounding 6 THE SCALE AND The contribution of Thales to the UK economy INFLUENCE OF THALES ACROSS THE UK UK CAPABILITIES REGIONAL IMPACTS Aerospace Space Defence • Air traffic management • Satellite propulsion • Surface ship, mine hunting & submarine sonar • Cockpit communications • Satellite payloads • Advanced weapon systems Total GDP contribution • Cabin connectivity • Earth observation • Mission systems integration • In-flight entertainment services • Space exploration • Managed services • Digital services • Satellite navigation • Intelligence, surveillance & reconnaissance £120 m 710 Direct employment • Training and simulation • Electronic warfare & countermeasures • Maritime, land & airborne optronics systems Transport Security • Avionics Glasgow • Rail signalling systems • Digital security systems • Queen Elizabeth-class aircraft carrier • Rail traffic management • Critical infrastructure • Unmanned aerial vehicles • Road information services protection • Radio communications • Driverless systems • Secure communications • Air traffic management • Predictive maintenance • Platform self-protection £30 m • Digital services • Autonomous systems £60 m 20 510 £120 m UK EMPLOYEES 500 £70 m In 2017, Thales Engineering Customer Bid & project Business Belfast directly employed & R&D support management support 200 Doncaster 6,500 3,400 1,200 700 1,200 Cheadle UK workers Cambridge 50 m £60 m 120 £170 m 60 £70 m Bury St Edmunds TOTAL ECONOMIC IMPACT The average productivity 280 of a Thales worker is Aberporth 130 Direct Indirect Induced Thales’s total contribution Total jobs supported £77,400 Ebbw Vale £320 m to GDP in 2017 was 40% above the * 2,370 630 27, 200 national average £1.7 billion Bristol 6,500 £210 m £460 m London £600 m £600 m Total tax £500 m £130 m 1,010 11,200 contribution Crawley £140 m Templecombe 9,400 £450 £180 m Reading million Plymouth *Total does not sum due to rounding 7 The contribution of Thales to the UK economy EXECUTIVE SUMMARY Thales Group is a major aerospace, space, defence, ground transport and security company, which generated global revenues of £14 billion in 2017. With links in the UK dating back billion to the 19th century Thales has a long-established track record £1.7 of producing high-tech products and associated services for the Total contribution armed forces and private sector. to UK GDP by Thales Group in 2017. This report examines several dimensions through which Thales’s activities deliver important benefits to the UK economy. Our assessment covers the operational activities Of this, over £500 million of Thales in the UK; the purchases made by UK and overseas was directly contributed by Thales entities with UK suppliers; the spending of workers Thales’s UK operations. employed by Thales in the UK and of those employed in the Group’s UK supply chains. In addition, this report outlines how Thales contributes to the long-term competitiveness of the UK economy through technological innovation, and initiatives to upskill both its workforce and the wider community. CORE ECONOMIC IMPACTS We calculate that Thales’s aggregate GDP contribution to the UK reached over £1.7 billion in 2017. Of this headline figure, Thales’s direct activities contributed over £500 million to UK GDP. Thales Group procurement spending with UK suppliers was £700 million in 2017. These supply chain purchases contributed £620 million to GDP. A third of spending by Thales’s UK operations was with small and medium-sized enterprises. Spending by employees of both Thales in the UK and the Group’s UK supply chains supported a further £610 million of 27, 200 economic activity. UK jobs supported by Thales’s activities We find that Thales Group supported 27,200 jobs in the UK in in 2017, including 2017. As well as the company’s 6,500 direct employees, its supply via its supply chain chain spending supported 11,200 jobs, and workers’ spending and consumer supported a further 9,400 positions.
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