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The UK Aerospace Industry House of Commons Trade and Industry Committee The UK Aerospace Industry Fifteenth Report of Session 2004–05 Volume II Oral and written evidence Ordered by The House of Commons to be printed 22 March 2005 HC 151-II Published on 18 May 2005 by authority of the House of Commons London: The Stationery Office Limited £14.50 The Trade and Industry Committee The Trade and Industry Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Trade and Industry. Current membership Mr Martin O’Neill MP (Labour, Ochil) (Chairman) Mr Roger Berry MP (Labour, Kingswood) Richard Burden MP (Labour, Birmingham Northfield) Mr Michael Clapham MP (Labour, Barnsley West and Penistone) Mr Jonathan Djanogly MP (Conservative, Huntingdon) Mr Nigel Evans MP (Conservative, Ribble Valley) Mr Lindsay Hoyle MP (Labour, Chorley) Miss Julie Kirkbride MP (Conservative, Bromsgrove) Judy Mallaber MP (Labour, Amber Valley) Linda Perham MP (Labour, Ilford North) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/t&icom. Committee staff The current staff of the Committee is Elizabeth Flood (Clerk), David Lees (Second Clerk), Philip Larkin (Committee Specialist), Grahame Allen (Inquiry Manager), Clare Genis (Committee Assistant) and Joanne Larcombe (Secretary). Contacts All correspondence should be addressed to the Clerks of the Trade and Industry Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected]. Footnotes In the footnotes of this Report, references to oral evidence are indicated by ‘Q’ followed by the question number. References to written evidence are indicated in the form ‘Appendix’ followed by the Appendix number. Witnesses Tuesday 14 December 2004 Dr Sally Howes, Mr Kevin Smith and Mr Colin Green, Society of British Aerospace Companies Ev 1 Mr Iain Gray, Airbus UK Ev 13 Mr John Wall, Amicus Ev 18 Tuesday 11 January 2005 Sir John Chisholm, QinetiQ Group plc Ev 23 Mr Ken Maciver, Mr Colin Smith and Mr Lambert Dopping-Hepenstal, Aerospace Technology Steering Group Ev 29 Mr John Alty, Mr Malcolm Scott, Mr David Way and Mr Christopher Moir, Department of Trade and Industry Ev 35 Tuesday 18 January 2005 Sir Michael Jenkins, Mr George Hibbard and Mr Steve Ford, Boeing Company Ev 43 List of written evidence 1 Aerospace Technology Steering Group Ev 50 2 Airbus UK Ev 51 3 Air League Council Ev 57 4 Amicus Ev 59 5 BASIC UK Ev 60 6 Boeing Company Ev 63 7 Bombardier Aerospace Ev 66 8 Campaign Against Arms Trade Ev 69 9 Department of Trade and Industry Ev 71 10 DTI (supplementary) Ev 81 11 QinetiQ Group plc Ev 84 12 Rolls-Royce Ev 87 13 Royal Aeronautical Society Ev 90 14 Society of British Aerospace Companies Ev 91 15 Society of British Aerospace Companies (supplementary) Ev 100 16 South West of England RDA Ev 102 17 Unmanned Aerial Vehicle Systems Council Ev 105 18 West of England Aerospace Forum Ev 107 Trade and Industry Committee: Evidence Ev 1 Oral evidence Taken before the Trade and Industry Committee on Tuesday 14 December 2004 Members present: Mr Martin O’Neill, in the Chair Mr Roger Berry Mr Lindsay Hoyle Richard Burden Linda Perham Mr Michael Clapham Sir Robert Smith Mr Nigel Evans Witnesses: Dr Sally Howes, Director General, Society of British Aerospace Companies (SBAC), Mr Kevin Smith, President of SBAC and CEO of GKN and Mr Colin Green, Vice-President, SBAC and Director of Research and Technology, Rolls-Royce, examined. Q1 Chairman: Good morning. Once again, can I and the engine capability in Rolls-Royce is welcome you; this is one of our regular looks at the absolutely superb. We are also very strong in aerospace industry. We do this in part because we international markets and I think that is important. are conscious of the significance of the industry in Of our £17 billion around £12 billion plus of that parts of the country and generally in relation to the actually goes out into the international UK economy, also because it is one of these marketplace, and being able to work in Europe and industries with which the Government is very the United States—and we know there are some closely involved and, while people do not want issues there around market access on the defence interference, they certainly want the money that side—we think has some unique strengths for the interference sometimes brings along. We recognise UK aerospace industry, which we are very proud as well that it is one of the yardsticks by which we of actually. Also, being able to export into judge the eVectiveness of our manufacturing international markets is again another strength for industry and we do feel that it is an important the industry that we have. In terms of the future, industry because it attracts investment into the as you know, in 2002 we carried out a review of country as well as providing us with exports. That the UK aerospace industry with the Aerospace is really where we want to start, if we can get from Innovation and Growth Team, which was the first you an impression of what you think are the main such review for 40 years. It was a comprehensive competitive advantages that the UK aerospace review, it included all stakeholders in the UK and industry has in the international marketplace as it identified a number of areas of work to be able to were. If these competitive advantages do exist, are maintain that position in future. It is an industry they being sustained, are they being improved? that is changing, globalisation is aVecting the That is really where we want to start oV this aerospace industry very quickly, with nations out morning; Dr Howes, maybe you could introduce there with strategies to build aerospace industries. your colleagues and then we can get started. China is going to be building aeroplanes in the not Dr Howes: This is Kevin Smith, the President of too distant future, that is out there, that is real, that SBAC, he began his presidency last September, and is a threat to us and an opportunity to us if we can Colin Green is the Vice-President of SBAC. maintain and enhance the capability of the UK. Mr Smith: Maybe I can start to talk a little bit There are three areas that have come out of that about that, and then if my colleagues want to, they work for us as the Society for British Aerospace can add any points to that. The first thing to say Companies that are extremely important to us in is that we come here as a successful industry; we being able to develop the industry that we have. are the second biggest global player, £17 billion One is skills, one is the technology base and the worth of turnover in the year 2003, £6 billion of third one is what we call process excellence, which value added to the UK economy, over three per is all about productivity, and we recognise that cent of the UK manufacturing jobs and a large there is a lot that we can do in terms of improving positive trade balance for the UK. So as we come our own productivity. All of those areas are about here we do have that very strong position, and you capability, enhancing the capability within this do not do that without having some significant country to be able to continue to compete advantages. The first thing to say is that we have eVectively in that global market. Having done that, a very comprehensive industry in terms of its there are a number of areas where we would like capability and throughout the supply chain we the playing field to be level, we would like market have strong capabilities in the UK. We have major access, particularly on the defence side, in the and I think leading capabilities in wing design for United States and Europe to be more open for us, large aeroplanes, and I know Iain Gray from but all in all my summary would be as we sit here Airbus is here and you can talk to him later on— today that we are in a strong position. Our Ev 2 Trade and Industry Committee: Evidence 14 December 2004 Society of British Aerospace Companies challenges are about how we actually maintain and Mr Smith: No, it was reflected in competitors too develop that position for the future. We have a and I think probably in some respects the companies good plan, the work of our Innovation and Growth working in the US who were not aligned with Airbus Team was good work, came out with good had more significant problems than companies that conclusions and our challenges are all about were aligned with Airbus. In Airbus it actually execution; the link-up with Government in that stopped growth but in Boeing there was a very execution is extremely important for us. Is there significant reduction in output which did impact on anything you want to add, Colin? UK companies too, but it was a global phenomenon Mr Green: No, that is a fairly comprehensive at that time, a very sharp decline in the demand for opening statement.
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