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5 September 2018
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Norman Armstrong, partner, Grant Thornton, takes a look at the forces driving the aerospace industry to success in the 21st century.

Long recognised as the home of British aerospace, from the first powered flight through to the development of advanced technologies such as the jet engine and carbon fibre, the South East continues to have a strong presence in the sector; albeit one that’s less about manufacturing and more about engineering, design and innovation.

Over the past 18 months, Grant Thornton, Hampshire County Council and the University of Southampton have joined together to research the successes and challenges of the sector. We recently opened up our findings to 45 business leaders at the Aviator Hotel in Farnborough, to discuss how a thriving and diverse aerospace and defence sector could play an even more influential and expansive role in the development of the ‘Innovation South’ economic region.

With multiple opportunities emerging across AI, augmented reality, digitalisation, autonomy, drone technologies, and space – to name but a few – the market segments and routes to product are blurring, and innovation and development of new products and services are being widely demanded. The recent Farnborough International Airshow was a prime example of the tremendous innovation and capabilities that exist in the region.

There’s no question that businesses are working to exploit these opportunities. Our research highlights over 12,000 businesses, employing over 100,000 people,which have grown the industry at an average rate of 6.2% per annum since 2011, significantly outpacing UK GDP growth. 62% of these businesses are based across four key clusters – Solent, Farnborough, Gatwick and Dorset. We also identified 140 ‘hyper-growth’ businesses – those posting 20% plus annual growth over three years, along with a further 160 with the potential to do the same, many located in the Solent and Farnborough area.

However, there are challenges facing the sector, highlighted by the in-depth debate we had with leaders from across the aerospace and defence ecosystem. Skills and talent were a huge concern for everyone in the room and a clear challenge facing the industry as a whole, but the disconnected nature of the industry across the region and it’s capability to meet the speed of change was also hot debate. Whilst international growth has been significant for many, the global competition is intense. To compete, the future needs of the sector demand significant and systematic change in skills development at all levels, along with greater connectivity and collaboration.

Uncertainties regarding Brexit, rapidly shifting global and market dynamics, technological advancements and the ‘hollowing out’ of traditional segments all complement the sector specific issues to present a potential ‘perfect storm’ of challenges to the industry. So where do we go from here?

During our debate, there was a clear consensus that education and businesses could work even more closely together to develop skills at all levels. To reach out to the next generation of engineers, technicians and developers much earlier – capturing the imagination of youngsters before they are 10 years old. While challenging, there was confidence that solutions were there to be grasped, and with Airbus and Gulfstream among those agreeing to explore how they might work more closely with education providers, we can expect step change in the near future.

All the evidence points to there being both significant challenges and opportunities. To be successful, this sector – and our region – must recognise the challenges ahead. By addressing the individualism and disconnection that exists, trading on the sector’s excellence and innovation, we can come together to create a common sense of purpose and direction for the industry across our region, and beyond.

Any queries, contact Sarah-Beth Hutchins:

[email protected]

grantthornton.co.uk


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