As the UK’s aerospace, defence and security trade organisation, A|D|S welcomes the consultation and the Government’s recognition that exports can help drive economic recovery.
Indeed, according to an official statement A|D|S closely associates itself with the Government’s commitment to open, free and fair markets which, it believes, will be in the interests of member organisations who’ve demonstrated their competitiveness in global markets.
A|D|S is understandably keen to inform the coalition Government further around the world leadership role that the UK security, defence and aerospace industries currently enjoy. “They are a strong base on which to build for the country’s future economic strength,” said the trade body.
However, to ensure this degree of success continues, A|D|S has raised particular concerns on maintaining the skills base and the need to sustain Government investment in Research and Development (R&D) which, it feels, is “essential” for exploiting any growth potential.
Cutting-edge home grown technology
To compete internationally, the UK has to develop cutting-edge home grown technology and then exploit it. In the security market, industry is concerned that R&D spend amounts to only GB pound 150 million on an annual basis, while in the defence sector there has been a “precipitous fall” in Research and Technology (R&T) funding of around 20% between 2007-2011. This will directly impact on our ability as a nation to compete on the global stage.
The UK boasts some of the most renowned universities in the world, and the standards of teaching and research are high. However, barely 6% of university students are studying engineering and technology compared to, say, Singapore where 40% of students are tackling engineering sciences.
The UK’s situation isn’t helped by the shortage of apprentices leading to lesser numbers of skilled technicians.
With the four sectors represented by A|D|S being highly globalised, and many companies being non-EU owned, there’s a reliance on the free movement of skilled labour in order to remain globally competitive. The Government’s planned imposition of limits on the number of workers allowed into the UK from outside the EU may exacerbate skills shortages.
‘Jewels in the crown’ of manufacturing
Derek Marshall, the managing director of policy and public affairs at A|D|S, told SMT Online: “The UK’s security, defence, aerospace and space sectors are the ‘jewels in the crown’ of our manufacturing capability. Together, as innovators and wealth creators they employ over half a million people and generate over GB pound 60 billion per year for the UK economy.”
Marshall feels that, as the Government seeks to boost our economic recovery, these sectors provide a strong foundation on which to build further success through global trade.
“For our economy to recover from the recession and grow to boost our national well-being, industry and Government must work in partnership to succeed,” added Marshall. “Ministers across Whitehall have been showing leadership in increasing exports, and we’re working with them. To increase exports in the medium term we need improved investment in R&D and greater attention on improving the skills of young people to give them and the economy a brighter future.”
As far as Marshall’s concerned, today’s British technology leadership is the result of similar decisions taken two or more decades ago. “Our future success depends on getting those decisions right again now.”
Skills, education and training
Other subjects are covered in the consultation response, including that of skills. The training times for new staff are several years in length, and the workforce in the A|D|S sectors is aging. Therefore, the experience of older workers needs to be harnessed while younger workers are brought through and able to benefit from this experience.
During the 1970s and 1980s there was funding available for up-skilling existing workforces, which meant that 50,000 people were trained every year. This level has now fallen to 500 per annum as the focus has moved towards training younger people.
Making long term plans is essential for the security, defence, aerospace and space sectors. Many projects run over years rather than months, and an uncertainty over whether companies can recruit and retain the right staff to complete these projects is a major concern.
An inability to find highly-skilled workers could hamper performance on existing programmes and/or reduce participation in future bids and proposals. Companies may reconsider their investment in the UK, and subsequently take the work to other countries.
Greater support at all levels for trade missions
The need for more affordable advice and greater support to attend overseas trade missions for SMEs is crucial.
A|D|S also feels that greater support from the Prime Minister and other senior ministers with their overseas counterparts to boost trade would also be welcome. The potential return on this investment through increased economic growth is “considerable”.
A|D|S would like to see the UK Government match French and German Government support for the trade show presence of their domestically-based companies and an improvement in the processes of the Export Credits Guarantees Department to maintain UK companies’ competitiveness.
Breaking down barriers and promoting good practice is another area needing attention. The requirement for the UK Government to increase pressure on other Governments around the world to root out extortion and the tacit or overt encouragement of corrupt practices by officials and Government-owned companies is paramount.
In addition to the above:
Strengthening UK ties with the most promising markets
A strengthened economic and political relationship in the BRIC countries would make a difference to the industries it represents.
Also, the UK should seek to strengthen its ties to certain regions, including South and Central America (and also North Asia, where Japan, Korea and Taiwan are seeking to reduce their dependence on the United States).
In the longer term, the Government should either maintain or seek to develop closer relations with Mexico and Australia who have ambitions to become either a major buyer or supplier of space services and products in the next two decades.
Facts and figures on UK defence and security
The UK’s defence sector is the largest exporter of defence and security products to the United States and the largest exporter among EU countries. This reflects the respect with which the industry’s equipment and services are held on the international stage.
Defence export revenues average a healthy GB pound 5 billion per annum, with the 2009-2010 total standing at GB pound 7.2 billion. Exports also support 55,000 of the 300,000 jobs in the UK’s defence industry.
An historically strong record of investment in R&D has made UK defence industry equipment very popular indeed. Around 40% of the EU’s R&D defence funding is UK-based.
Exports equate to 22% of the industry’s UK turnover (more than banking and finance and computers and software).
The UK security sector is a recognised world leader in the supply of security products, systems, equipment, technologies and solutions that help to keep the UK and its allies safe.
This sector can compete internationally and provide the UK with a growing economic contribution.
Figures show that the UK’s estimated 8,000 ‘core’ security companies currently hold a 4% share of the global security market.
Value of UK security exports
Figures issued in March this year by the UKTI Defence & Security Organisation (DSO) stated that, despite the recession, the UK security industry’s exports were valued at GB pound 1.36 billion and that this was an increase of more than 14% on previous years.
The global security market is worth somewhere between US$140-US$180 billion per annum, and estimated to reach US$300 billion in the next decade.
Government and industry share the goal of a major uplift in the performance of UK security exports, with the Government playing a similar role in security to that played in relation to defence exports.
The consultation response can be viewed online (access the dedicated link on the right hand panel of this page)
For more information on A|D|S’ work on ethics access the other web link provided
