THE UK AEROSPACE SUPPLY CHAIN
Government statistics, compiled by Department for Business Innovation and Skills (BIS), show UK Aerospace sector outperforming the wider economy during the recession, with output growing by an average rate of 7% from 2008-2013. The BIS Growth Dashboard states, “By 2031 the global civil aerospace market is estimated to be worth in excess of $4.5 Trillion. In 2013 it was responsible for 5% of manufacturing GVA and 4.3% of employment; up from 4.2% and 2.9% in 2000. The Government is committing £1bn to fund the Aerospace Technology institute (ATI) – match-funded by industry, to develop technology for the next generation of quieter, more energy efficient aircraft. The newly created Aerospace Finance Forum will see industry and banks work together to tackle access to finance issues in the sector.”
Aerospace Output and employment and Contribution to Manufacturing
Source: BIS Growth Dashboard, July 2014
Aerospace, characterised by long development cycles for new products with large amounts of research and development investment required to drive innovation, leads to long-lived innovations when successful. The scale of investment tends to increase as development gets closer to market because of the need for testing to prove safety at larger scales in real-world situations, with the sector relying heavily on public investment to support this innovation process.
Underpinning academic research does not have to be new to drive innovation. Recent research by Frontier Economics (July 2014) describes how one aerospace company developed an alloy which contributed to the development of new engines entering service in 2008 by drawing on chemistry research from the 1980s. However, a high quality science base is seen as an important driver of where firms may locate their research investments. Companies place value on direct interaction with academic collaborators, and so proximity to science is important: this helps to build trust which plays an important part in successful collaborations where the risks of failure are high. Different companies adopt different approaches to academic collaboration, so it is not clear that there is one more effective collaboration model.
Frontier Economics report, July 2014, produced for BIS indicates that investments in science and innovation are not limited to scientific R&D, but comprise a range of ‘intangible investments’, all helping to drive innovation. The report states that little research has been conducted into the social rates of return of these investments but these are considerably larger than R&D investments, with companies recognising that their innovation investments go beyond pure R&D, even in aerospace. Their report suggests that higher social rates of return are generated from research that is closer to market and to the industry, with their findings suggesting that links to academia are increasingly important in complementing the in-house knowledge of industry in key sectors. Being able to draw on academic skills and new ideas was critical to longer term innovation in aerospace (and life sciences) in particular, but companies in these sectors were concerned at the fragmentation of academic knowledge rather than the creation of centres of excellence, as without these it was harder to spot potentially commercial opportunities.
In aerospace large scale capital facilities, such as Catapult Centres, were seen to provide these central hubs for knowledge-sharing and dissemination. These facilities enabled industry to test new ideas at scale, something that would otherwise be very challenging. Their case studies demonstrated significant amounts of private sector innovation was thought to depend on public funding of academic research and was a key driver in decisions by private firms regarding where to locate R&D investments. In addition there was evidence that links between academic research and business can be useful in driving the innovation process. Spillover benefits from university research were felt most by firms located near to research institutions, with many firms co-locating near to high-quality academic facilities. There was also evidence that far from public investment ‘crowding out’ private innovation investment, it tends to ‘crowd in’ private sector spend.
R&D was seen as one element within a wider set of intangible investments helping to drive innovation and generate economic returns. In 2005 Corrado developed a framework classifying intangible investments around computerised information, innovative property including scientific R&D, product design and development and economic competencies, including training costs, research and brand development and investments in organisational capital and structure. There is evidence that spending on non-R&D intangible investments is larger than R& D spend. Of total intangible investments of £137.5bn, Goodridge estimated that only £15.9bn (11.5%) went on scientific R&D with investment on training, organisational capital, software all representing larger sums with considerable spend on design, branding and innovative property.
Evidence on innovation and collaboration, gathered as part of the Frontier Economics report July 2014, looking at the rates of return to investment in science and innovation, concluded that whilst it was not clear that money invested by the public sector into R&D led directly to additional private sector investment by companies; however, it was clear that it was not replacing investments they would otherwise have made themselves. “Investments in the basic science base in the UK did seem to influence decisions to invest private R&D here rather than elsewhere,” the report concludes. “Public investments which reduce the risks around innovation would also leverage additional private investment, with a need for continuity and certainty of public investment across the development cycle in aerospace being seen as critical.”
The publication by the UK government of ‘Reach for the Skies – a strategic vision for UK aerospace’ and ‘Lifting off – implementing the strategic vision for UK aerospace’, reflect UK government’s view of the critical importance of this sector.
In bringing together the Advanced Growth Partnership (AGP) to articulate its Strategic Vision, “Reach for the Skies”, government was seeking to create a long term partnership, involving over 80 business leaders, trade associations and academia, to develop a strategy looking at technologies, skills and supply chain with the aim of developing and building the UK’s competitive position in aerospace.
These case studies look at government forecasts and challenges for this market sector and the UK producers, the range of bodies established to respond to these, with a review of GKN Aerospace and Rolls-Royce, together with an overview of how both STEM and design are working hand-in-hand to enhance creative inputs and deliver technologically advanced solutions, whilst speeding up development times.
With a vision focussed on retaining the UK’s position as Europe’s largest aerospace manufacturer and second only to the US worldwide, it is about supporting companies of all sizes through the supply chain to diversify and acquire global customers and market share.
Government is forecasting demand for 27,000 new large civil airliners with a market value of $3.2 trillion by 2030, and a global market for around 9,500 civil helicopters, worth around $50bn by 2020. This is partly due to the need to renew aging fleets and partly because of new demand from the developing world. Over this period, average annual aerospace growth is forecast at 4.8% – with much of this taking place in Asia Pacific, due to account for 33% of world traffic by 2030. However, UK growth over the next few years has been predicted at an impressive 6.8%.
These trends are being driven by increasing population growth, urbanisation, demands for market access and continuing global economic growth – especially amongst the emerging economies, as well as for the new environmentally efficient technologies.
Business jets and single-aisle aircraft make up the bulk of this, accounting for 73% of market share. As business jets account for just 19% of market value, compared to 68% for single and twin-aisle aircraft, UK aerospace will continue to be focussed on this latter segment, but with a recognition of the need to diversify this market base. Demand for commercial helicopters is expected to be in excess of 40,000 units worth $165bn.
Reach for the Skies highlights key UK strengths with 17% market share in aerospace, employing 100,000 directly across 3000 companies (with a further 130,000 employed indirectly) and generating £24.2bn revenues in 2011, 75% of which is exported.
About half of the world’s large modern aircraft fly on wings manufactured in the UK and UK companies have world-class strengths in advanced systems (such as landing gear, avionics, fuel and power supply), and in delivering innovative new ways of providing services in maintenance, repair and overhaul alongside the unusual capability, in global terms, to design and build helicopters.
Notable investments include the Airbus A350 wing factory at Broughton in North Wales, GKN’s advanced wing component facility near Bristol, Rolls-Royce’s engine blade casting facility at Rotherham, Bombardier’s composite wing facility in Belfast and Spirit AeroSystems composite development centre in Prestwick.
Rob Irvine, policy adviser, CBI, states that much focus has been on strengthening supply chain capacity and capability. The Advanced Growth Partnership, AGP, was a precursor of the Sectoral strategies. The Aerospace Technology Institute, (ATI), was set up to bring together academic and technological capabilities through the National Aerospace Technological Exploitation Programme, helping suppliers to advance their technology,”CBI analysis indicates that by maintaining current market share, air traffic growth in Asia has the potential to contribute an extra £4.7bn p.a. in UK exports over the next ten years, adding 20,000 high value jobs,” notes Irvine.
The AGP sits alongside a number of initiatives, as a demonstration of government strategy, developed in collaboration with trade association and sector input, whilst leveraging existing programmes and investment.
In 2011, government announced a national UK Aerodynamics Centre, based at Cranfield with £60m investment was announced from government, due to matched by a further £40m commitment from industry partners to support R&D programmes into aerodynamic technology research. Rolls-Royce and Airbus, as major employers were already involved through the National Composite Centre , opened at Emersons Green in 2011, although the Bristol Post, 22 March 2012, suggested that the existing facilities had not been successful in attracting investment from the private sector. Whilst the Aerodynamics Centre would operate across the country, it was intended to focus on existing facilities, including the Centre for Fluid Mechanics Simulation in Bristol.
The Universities of Birmingham, Nottingham, Loughborough, with TWI, were the founding partners of the £40m Manufacturing Technology Centre (MTC) at Ansty Park, near Coventry. The Centre is focussed on seven major technologies – Netshape manufacturing, high integrity fabrication, intelligent automation, advanced tooling and fixturing, electronics manufacturing, manufacturing simulation, metrology and NDT.
A £60m High Temperature Research Centre, funded by Rolls-Royce and the Higher Education Funding Council for England (HEFCE) was also announced, taking place as centre for investment casting, design, simulation, and advanced manufacturing research facility.
The Rolls-Royce’s University Technology Centre, hosted at University of Birmingham and incorporating a Doctoral Training Centre in Structural Metallic Systems for Gas Turbines is linked with the research undertaken by UTCs at Cambridge and Swansea as part of a University Technology Partnership with Rolls-Royce and EPSRC.
All of these initiatives have underpinned a recognition that next generation of aircraft will be based on radically different technologies required to achieve environmental improvements and operating efficiencies, necessitating new manufacturing processes and placing new challenges on the UK supply chain.
‘Lifting Off – Implementing the Strategic Vision for UK Aerospace’, published in 2013, presented government and industry’s joint Industrial strategy for the sector, covering technology, manufacturing, skills and engagement with supply chain competitiveness. It announced the creation of a new Aerospace Technology Institute, representing £1bn investment by government, matched by industry, with companies including Airbus, Bombardier, Finmeccanica, GKN, Marshall, Rolls-Royce, Safran and Spirit Aerosystems and ADS all signed up.
In terms of innovation the industry is characterised by long development times and a lengthy financial returns profile, with considerable amounts of risk and uncertainty. A new generation of single aisle aircraft is expected by 2030 and development of these aircraft is starting now. However the development profiles poses challenges in terms of funding investment. Timescales for return on investment and the associated risks are too great for companies to bear on their own and become harder to bear lower down the supply chain. A number of specific investments in the industry have been made by the public sector including – in the Aerospace Technology Institute, the National Aerospace Technology Exploitation Programme (NATEP) aimed at helping SMEs develop their own innovative technologies receiving £23m over three years 2014-2017, with an additional £17m industry funding, through the TSBs Advanced Manufacturing Supply Chain Initiative. Government has also provided £6m bursary to support 500 new masters level graduate places for aerospace and provided £60m public funding for the UK Aerodynamics Centre with £40m commitment from industry based at Cranfield aimed at developing and implementing aerodynamic technology research in the UK.
The progressive reduction in UK content on new aircraft programmes was recognised as a threat, in particular as, ‘each sale of an Airbus aircraft or an aircraft powered by Rolls-Royce engines currently supports approximately 1,700 UK companies for Airbus and 3,000 for Rolls-Royce in their respective supply chains.’ To tackle these challenges the ATI was allocated £150m funding annually from 2014 over seven years to bring together business and academic communities and focus on four areas –
- Advanced Systems
Improvements target CO2 emissions decreases, looking at reducing 100m tonnes each year from next generation aircraft, the equivalent of taking 20m cars off the road.
Supply Chain and Investment
A key challenge recognised by ATI focussed around generating long term investment, especially in areas where UK capabilities are becoming, ‘increasingly fragmented and fragile as a result of decades of under-investment and the past lack of a long-term strategy…to prevent any further decline …through investment in next generation technology’.
The AGP recognised the opportunity to build on the work of Supply Chains for the 21st Century (SC21) change programme, led by the Aerospace Defence, Security and Space Trade Body (ADS). The report outlines the need for ‘collaboration and alignment’ between suppliers and top tier companies, including greater risk-sharing. ‘A mix of coordination, collaboration, clustering and / or consolidation is required across the UK supply chain’, the report states.
The ATI was formed with a small team of 30-50, seconded from industry and academia, leading on strategy, priorities and scope of programme, as well as mapping capabilities. It was seen as anchoring R&D and future design as well as IP in ‘the real world’. ATI was to provide a key link within the R&D eco-system in developing early stage technologies and providing better alignment with the EPSRC and cross-sectoral R&D delivered through TSB, together with the foundation for large scale-up technology demonstrations – identified as a gap in available support into aerospace.
The formation of the High Value Manufacturing Catapults, implemented as a means of supporting commercialisation of cutting edge technologies, were also developed to provide meaningful links between universities and industry.
The ATI has been mapping the UK aerospace capabilities developing the idea of a Manufacturing Accelerator Programme (MAP) to speed up the transfer of manufacturing technology, know-how and best practice from ‘academia into industry drawing on the Catapults’ as a means of encouraging manufacturing research to be linked into the competitiveness agenda through the MAP.
The Advanced Manufacturing Supply Chain Initiative and Regional Growth Funds have been developed as the primary source of funding for targeted improvements in the supply chain. Collaborative research projects coming out of the ATI, identified technology exploitation aimed at embedding world class manufacturing processes and continuous improvements. This includes putting in place, ‘arrangements for prime and tier one aerospace manufacturers to provide suppliers with a clear vision of their future requirements and the capability and capacity they will need to secure contracts on future programmes. This will go beyond short term cost, quality and delivery considerations.’
GKN Aerospace, a leading Tier One supplier to industry, counts amongst its customers Airbus and Boeing. It has grown rapidly to become the second largest division in the company after Driveline. Turnover has risen from around £500m to £2.243bn and employs just under 12,000 people worldwide across 32 sites. 73% of turnover is generated from civil aerospace and 27% from military, with around 50% of revenues made from sales of engine components and sub-systems ; 45% from aero structures and just 5% from sales of special products.
Aerospace has been driven after the business identified civil aerospace as a growth area – in both established and emerging markets, with a series of strategic acquisitions being made in support of this strategy, as well as positions on key future aircraft programmes having been secured.
Given the global nature of the aerospace industry, firms like GKN Aerospace locate their R&D activities where the potential for conducting high-quality research is highest. Access to public investment in R&D is a critical determining factor, through access to expertise, facilities and opportunities available at all stages of technology development – from academic research to final testing.
Frontier Economics cited continuity of public support across the development process as one factor identified by GKN Aerospace as a critical. Although later stages of the development process involved lower risk, they also required increasing financial resources and present their own technical challenges.
GKN Aerospace works on long term time lines in developing these collaborations with academia to produce newly emerging technologies and bring them towards commercial application. Physical proximity to academic institutions is a key driver in terms of the quality of collaborations, in part through greater mutual understanding of the challenges faced in any particular area of technology.
GKN sees interactions through the High Value Manufacturing Catapult undertaken at later stages of technology developments as a successful example of coordination of public investment in an area of technology.
The innovation process
Technology Readiness Levels (TRL) as defined by NASA, are used as a means of assessing how close technologies are to market readiness. This process is generally thought of in three stages – development, industrialisation and proving.
Over the last 20 years GKN Aerospace has developed its capability in composite materials using them in wing spars, landing flaps, trailing edges and winglets amongst other applications.
Investment in composites was driven by the clearly identified market need to increase fuel efficiency of aircraft, leading to step changes in aircraft performance, with newer aircraft being around 50% more fuel efficient than 15 years ago and with composites making up approximately 50% of the structural weight of aircraft, with this proportion expected to increase. The drive for lighter aircraft stems from cost of fuel, emissions and noise-related legislation, also expected to grow in importance.
New technological developments in composites can take 10-15 years from proof of concept to application.
Drivers of Innovation
GKN customers, the OEMs leading their innovation process, are largely focussed around developing the next generation aircraft, driven by factors including passenger demand and preferences.
From the point at which decisions are made by OEMs it can take 7-8 years to develop an aircraft – with around 5 year’s development time and an additional 2 years or so for flight testing and verification. Having decided on the likely enabling technologies, GKN Aerospace tends to work collaboratively with key customers to conduct research. As these investments are of a significant scale concerns arise around the potential for duplication of effort and resource should a number of suppliers happen to develop the same technologies at the same time. Because of uncertainties around precisely when new aircraft designs will be needed and put into service, a key driver for GKN Aerospace is that their innovations and research investments have a range of applications which might be put into place in existing aircraft.
Process innovation is a key feature for GKN Aerospace, with the business partnering alongside a range of manufacturing, automation and design companies at early stages to develop machines and technologies for automation. Partners may come from amongst existing suppliers, but some may also be new to GKN, depending on the specifications developed. It was in this area that GKN Aerospace felt government and public policy could incentivise activity to a greater extent through developing inter-business partnerships through investment in this kind of collaborative process innovation, based on potential for knowledge spillovers.
Frontier Economics, 2014, cited the case study of GKN Winglet design as an example of increased use of process automation in bringing winglets together more efficiently.
The challenge was to produce the inner structure and one half of the outer skin as a single piece which could be co-cured at the same time in an autoclave, with the second half of the skin then fastened robotically using a technique called auto-drill and fasten, to cut assembly times by around 75%, cut costs by around 20%, and enabling these techniques to be applied to other products.
Whilst the programme started as a wholly funded GKN Aerospace programme at TRL 3, more recently it had been 50% match-funded by public investment. In the first instance, as the innovation reached TRL 2-3, GKN received TSB funding through a Grand Challenge competition, encouraging collaborations between companies by helping with tooling costs. The programme was then developed through a Structures Technology Maturity (STeM) programme, including a GKN Aerospace partnership with Bombardier, Spirit and General Electric. STeM also received support from TSB to fund 50% of the development costs. Further development took place at the Advanced Manufacturing Research Centre (AMRC) at Sheffield, one of the centres in the network of HVM Catapults. GKN Aerospace subcontracted some of the work to AMRC staff, with expertise in the necessary processes, saving on employing, training and maintaining a dedicated in-house team to drive the innovation forward, whilst allowing knowledge to flow between GKN Aerospace and AMRC staff. Another value of Catapults for GKN Aerospace was in their neutral stance, in terms of giving an honest assessment of how long the work would take, along with results provided, as well as being able to source hardware and software from any supplier. These perceived benefits were rated more highly than the alternative approach of running a competition to subcontract the work to other companies.
Further development has been planned through a funding bid submitted to the Aerospace Technology Institute to take the process to TRL5 by 2016, which also includes a substantial amount of work with the Catapult. One of the key values of the ATI funding identified by GKN is the long term nature of the investment, allowing them to invest more strategically in technology development. Previously companies had to bid into a series of short-term programmes to continue development, bending the development to the needs of specific funding opportunities and leaving further uncertainty regarding funding availability at the end of the specific contract.
The Research Process
GKN Aerospace runs its research process centrally, with the aim of avoiding duplication and maximising productivity – but nonetheless challenges remain in terms of disseminating internal research findings and deploying resulting technologies across so many company sites.
Once the required research investments have been identified, their approach has been to identify the most effective location and research method. This is based on a mix of value of public support, current expertise and how support links across the whole technology development lifecycle, moving from academia and collaboration in early stage ideas, through to industrialisation and final proving and commercialisation. This continuity of support across the development process is seen as critical.
Although GKN Aerospace funds most of its research and innovation directly from retained profits, there was felt to be a clear need for additional public investment to support the process given the large upfront costs of development, long lag times, market risks and lengthy payback periods, together with changing consumer tastes and preferences for different forms of transport and the potential impact of disruptive technologies.
Interactions with Academia
All of GKN’s interactions with academia were carried out with commercial applications in mind – the business does not conduct purely basic research. However, the company interacts with academia at early stages in the research process enjoying a strong relationship with University of Bath, where it sponsors a research Chair in Composite Structures Analysis, co-funded by the Royal Academy of Engineering. The chair, held by Professor Richard Butler, who previously worked at GKN Aerospace under a Royal Academy of Engineering Secondment Scheme, which provided him with the insights and understanding required to assess the needs of the company in greater detail, enabling him to propose a collaborative work plan for University of Bath and GKN Aerospace, with the aim of benefitting both partners.
GKN Aerospace also co-funds PhD students in the Bath Research Group, setting projects into the group based on early stage ideas that may develop new useful composite technologies looking forward on a time line of between 10-15 years’ time. Some of the work Professor Butler is helping to develop is focussed around mathematical modelling tools aimed at reducing the costs of composite structures.
As these composites become larger structures the risks of significant defects increase. GKNs approach is based on active experimentation. However, having observed the Volvo Aerospace approach to handling this through mathematical modelling, GKN Aerospace is currently funding a £481k EPSRC project with Professor Butler as Principal Investigator, with GKN’s annual contribution set at around £82k. The project represents a cross disciplinary collaboration between the geology, mathematics, and engineering departments at Bath University, using mathematical modelling techniques to predict the impact of earthquakes on sedimentary rock formations and applying them to develop greater insights into how composite structures deform during manufacturing processes, with the aim of reducing design to manufacturing time. The project is expected to lead to relatively well advanced process innovations (around TRL 4-5) in a period of 4-5 years.
This is not something GKN Aerospace could have developed based on internal knowledge and access to the Bath collaborative network was seen as critically important to the company.
GKN also works with the University of Bristol which hosts the National Composites Centre. The company has also partnered with a spin-off company to develop internal process innovations around how best to optimally mould composite components. The spin-off company identified software enabling better modelling of the results of a particular moulding technique, allowing them to predict future applications for the moulding technique.
As well as institutional expertise relating to commercial needs, proximity between GKN Aerospace and academic institutions is a driver of collaboration. Having a presence within an academic institution through secondments or staff exchanges, including PhD placements at GKN and regular visits between GKN and institutions, helped improve the quality of collaborations in a way which could not be achieved through virtual connections.
GKN also conducts arms length research with more distant academic institutions, but their core activity requires reasonable proximity between academics and the company as well as to facilities such as those at the National Composites Centre.
The research conducted with more local institutions tends to have a higher chance of generating successful outcomes in terms of making it into commercial applications, in part because the academic researchers have a much clearer understanding of the commercial needs of the activity and the ongoing dialogue which is possible between the parties and the collaboration develops.
There is relatively little investment in exhaustive academic literature searches and a preference for network and knowledge driven collaborations with academia. Whilst some academic research could be conducted in house it generally makes little sense to replicate a body of expertise which has been built up and which can be accessed through a collaboration.
Barriers to engagement with Academia
Lack of awareness was identified as a barrier in terms of the difficulties in being able to identify academics with relevant expertise suitable in helping companies develop commercial needs. There was concern about the dilution and spread of academic capability into small, overlapping departments across the country and a lack of clear world-class centres of excellence for the sort of research which might be useful to their company. The current structure of academic departments makes engagement difficult, requiring significant resource and time investments to identify the right people and institutions.
GKN Aerosapce are keen to develop closer and more strategic relationships with a wider network for academic institutions. The company suggested that a move towards greater ‘impact’ in evaluating institutional resaerch might help this to happen, although it was not currently thought to be a high priority for most academic departments.
Interactions with Publicly-funded science facilities
Early-stage innovative ideas are either taken forward internally within GKN or at publicly funded centres. In the case of composite materials GKN have a private development facility at Isle of Wight, a UK Composites Centre of Excellence, and the business is a Tier 1 member of the National Composites Centre (NCC) based near to their facilities in Bristol.
The NCC is an open-access facility, aiming to be a hub for research in composites in the UK. It provides, among other things, access to capital equipment which can be used by companies either directly or through the NCCs own core staff. It is a meeting point for people from industry, academia and government with an interest in composites.
The NCC was set up with £25m from BIS, ERDF and SWRDA and opened in 2011 and GKN is one of the founding partners. The 2012 Autumn Statement announced a further £28m funding for Phase II to increase the NCC size, provide a dedicated high-speed composite manufacturing facility and a training facility. It is hoped that this will increase the presence at the NCC of other sectors as the research is relevant to automotive and will also be used by wider academic institutions and SMEs.
As a founding partner, GKN are one of the leading aerospace companies with a permanent presence at the NCC which operates with 30 staff. Airbus has 60 staff there and GKN Aerospace are expanding their presence there. The Frontier Economics report states that by pooling investment companies have been able to access equipment and technologies which they would probably not invest in as individual businesses.
Whether any development takes place at the NCC depends on a variety of issues including public funding incentives, the availability within GKN of their own private research facilities, IP and commercial sensitivities, the need for input from other specialisms and the value of collaborative development. For example the much larger space at the NCC enables larger composite structures to be developed and tested than would be possible at GKN Aerospace facility at the Isle of Wight.
Another role that NCC has undertaken is in identifying key academic networks (individuals and institutions) in composites research. Given the fragmentation of academic composites research, NCC in acting to provide a central, university-hosted organisation, able to take on the role of helping coordinate Knowledge Transfer from academia to industry, was seen as providing invaluable assistance to the business.
Phil Swash, immediate past CEO European Aero Structures at GKN Aerospace, and recently appointed CEO of GKN Land Systems, is upbeat about growing relationships between industry and academia, “We have been working with a broad range of academics – some are particularly well equipped, such as Cranfield University. As a whole from an industry perspective our relationship with academia has improved significantly – in terms of both blue-sky, or experimental research, as well as near term applied research. Both are important to us and to the country as a whole, and as industrialists we shouldn’t think we have all the answers. More and more universities have recently got hold of industry and the real world and this is greatly enriching their programmes and their student experience, especially where there is a need to deliver and to make a real difference. We have seen a lot of senior people from business and manufacturing, who really understand industry, being recruited into universities and the Catapults which is very encouraging.
STEM and Creative applications
“STEM is hugely important,” says Phil Swash, “and we need people with really good understanding. But innovation doesn’t come from a room full of engineers. One of the things that Josiah Wedgwood did was put people together from different disciplines and backgrounds to get a different answer.”
Richard Hamer of BAe systems, contributing to the Design Commission enquiry into Education, 2011, said, “Because we’ve got a whole range of different businesses – submarines, ships, plants, and because we need skills across a wide range of areas, we need the full range of design skills. We want people who can work on the electronics in the headsets for pilots, down to sheet metal fabrication and design.”
Speaking about transferring innovations across sectors Phil Swash, adds, “There is a bigger role to play in getting creative people together with engineers. We did this in our transparencies business where we wanted to stimulate a different approach in production. We brought in optical engineers and people making spectacles and asked them how they would drive improvements in our production process. They came up with what was for us a radical solution and a very different approach to the one we had been engaged with because it was ‘touchless’. Whereas we had lots of people handling transparencies from the time we fed in the acetate, in the case of spectacles no one touched them in production, it was an entirely clean and automated approach. This gave us a new solution to automation and one which we would not otherwise have produced. We arrived at a highly automated system with the potential for great competitive advantage in this way.”
Although companies within aerospace have enjoyed growth in recent years, many firms operating in the Midlands are dealing with challenges around accessing funding for growth, leading to consolidation as firms scale up to meet these pressures. Whilst annual capital allowances have been increased recently, manufacturers feel the £0.5m threshold level is still too low. Asset and invoice financing is seen as useful, with the Funding for Lending Scheme enabling business to use asset finance to expand and renew machinery requirements.
With 30% of aerospace companies finding it hard to attract required talent to fill vacancies, in particular in areas such as fatigue specialisms, damage tolerance, composites, stress and licensed engineers, there is a challenge with an ageing workforce, together with skills levels amongst existing staff needing upgrading – only 15% of aerospace companies currently offer apprenticeships.
AGP is seen as the mechanism to meet these skills shortages, working with the Aerospace and Defence Sector Skills Group (ADSSG), jointly managed by Semta, the Sector Skills Council for Science, Engineering and Manufacturing Technologies and ADS. Skills priorities focus on promoting STEM through schools, together with the formation of a new employer group to identify skills problems and implement quick and practical answers.
Proposed solutions include creating more apprenticeship opportunities, pre-apprenticeship training, higher and shared apprenticeships in Advanced Manufacturing and Engineering, Centres for Doctoral Training, together with a centre of excellence for learning, skills and employment for aerospace.
Between now and 2017 there will be a requirement for the recruitment of 7,000 engineers, scientists and technologists (1,400 a year).
The Perkins Review of the Skills Pipeline highlighted six actions– changing the perception of engineering, addressing diversity issues including the employment of more women, encouraging sponsorships, strengthening industrial links to students, helping engineers who have left the profession to re-join, appropriate education support for engineering careers, supporting more engineering apprenticeships.
Phil Swash, GKN, was positive about the work of the AGP, acknowledging that the MAPs were ‘starting to have an impact’. “It is very difficult in Germany to access grant funding at local level. A lot of people talk about the Mittelstand, local government, banking and co-determination – all of which works well for programmes of national importance, but beyond that it can be quite hard.”
“In terms of aerospace initiatives, AGP, ATI, and so on,” says Phil Swash, “I have been sitting on steering boards for some time, and these really do seem to me to be coming together to make impactful relationships between industry, government and our universities. It could be better, but in many ways our engagement mechanisms – AGP in aero and APC in auto are more effective than in Germany. I believe in many respects we have caught up. We are not ahead of them overall, but we have significantly closed the gap. Airbus were really impressed by the UK government stand on the AGP programme and people in France and Spain are talking about it.
“Looking at the Supply Chain for smaller innovative businesses I do know that the AGP is really trying to address their funding challenges. For SMEs it is really difficult trying to grow without access to the right people, funds, business case and analysis.
“This is something the Germans do much better. Their ability to get funding into SMEs at reasonable rates without the hard-nosed timescales expected here is impressive. Of course they have much more diverse regional banking and more competition.
“The most serious challenges in aero from my perspective are around lead times and ideally if you are sinking a lot of money into a new and riskier project you would like to have some commitments from your customer, but the customers want competition. This means that most of our innovations are based around technologies adjacent to what we have already as works in progress. The biggest challenge is to get customers, academics, businesses to jointly work on a real proposition- still reasonably open and not so clearly identified so that it could lead to radical innovations, rather than incremental ones.
“The ‘Pay to Play’ scenario means that we are taking big risks as a business – on cashflow, funding, warranties and reputation. But this is our business, we’re a big business, with deep pockets and this is what we do. Airbus, etc, want us to share risk but getting the balance right without over-burdening ourselves is a fine line,” says Phil Swash.
Arrowsmith, (highlighted in Business Desk coverage, 8th August 2014), a Coventry based engineering company, supplying into Rolls-Royce, AEC, Eaton, Pattonair and Meggit, employs 55 people with anticipated turnover in 2014 rising to £4m, up from £3m in 2013. They manufacture precision-engine and braking components. MD, Jason Aldridge is well-networked as Chairman of the Coventry & Warwickshire Aerospace Forum, member of the SC21 MAA Panel and of the Midlands Aerospace Alliance as well as representative on the Coventry & Warwickshire Local Enterprise Partnership. He sees strategic partnerships as critical to their success, enabling greater time and focus on the front end, adding value through design and development as well as through manufacturing solutions. However, they were reported as having to invest £2m, demonstrating their commitment to their customers by up-skilling their workforce.
Jason Aldridge was quoted as saying, “We work in an industry where expectations are high and our business has to meet those expectations. Our customers are demanding the levels of quality they want us to reach and that’s a challenge, but we have to show them we can achieve that. In so doing we recognise there will have to be an appropriate level of investment by us.” Most of the funds they raised have been off balance sheet, but, he says, ‘it has been an ordeal’.
Businesses repeatedly state that they cannot access lending without collateral, usually secured against property and certainly not against cashflow projections in business plans, made on the back of anticipated orders. They say that in certain sectors reputation works against them with a presumption against loans being made, so many businesses are simply unable to access the funding required for expansion. Whilst some government funding is available, it often requires a percentage of match-funding.
Cubwano is another case in point – highlighting the difficulty of accessing growth funds in young and highly innovative businesses. Also illustrated by Business Desk, 8th August 2014, this Sutton Coldfield company is known for producing Unmanned Aerial Vehicles – or drones – exporting almost 100% of its output.
They employ highly creative engineers to develop engines to high performance, tolerance and flexibility specifications, powered off heavy fuel, gasoline and other sources, designing their engines from the ‘ground up’ to meet stringent aerospace and military requirements. The business uses latest material and manufacturing technologies, pushing the boundaries of rotary engines, developing ceramic tip seals and specialist coatings to eliminate tip wear, with a focus on component optimisation.
All engines are manufactured to AS9100 quality standards, with full traceability to ensure consistency. Their ‘Bobcat’ has been recognised as the ‘most mature UAV in its range on the market today’.
However, getting the engines to market has not been easy, explained Craig Fletcher, MD, speaking to Business Desk. “I was able to get massive funding for development and I could get to the point where I had a new product full of new technology. But trying to get it into production was a different matter. I had no help with that.
“I had offers from India, the US, even Israel, but then all the intellectual property I had developed would have gone straight out of the door and into those countries. I would have lost everything I worked for.”
“To protect my prototyping and rapid developing I am bringing this in-house. I have to kill the lead times on rapid development items.
“The good thing from our point of view is that with suppliers here investing in the capabilities to produce parts more cheaply and effectively than abroad I have no reason to go outside the UK for anything I need. Control is a big advantage and I’d rather keep it. (Bigger Companies)are letting the smaller firms pioneer the work and then buying them up,” notes Craig. With collaboration as a key means of accessing new markets, especially in the Far East, Cubewano are searching for new ways to display engines worldwide.
|Extract The ATI website, http://www.ati.org.uk/the-centre (August 2014)|
The Aerospace Technology Institute exists to protect, exploit and position leading advanced UK capabilities, preserving design and manufacturing jobs in the UK.The Aerospace Technology Institute
Within the Aerospace Technology Institute (ATI) world-class academics and industry experts drive the UK’s intellectual leadership in aerodynamics, propulsion, aerostructures and advanced systems supported by a small team of staff. ATI is currently a ‘virtual’ centre, in that it does not as yet host onsite research and development projects.At present, ATI experts:
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