With finance capital dominating and distorting the economy, what’s left of British industry becomes ever more important...
The aerospace industry is a jewel in the crown of our high-tech manufacturing and a big source of skilled jobs. As of mid-June 2013 there were around 113,000 workers employed directly in Britain’s aerospace industry, up 2,000 since 2010.
Blades on the Rolls-Royce Trent 70 engine.
Reproduced with the permission of Rolls-Royce plc, copyright © Rolls-Royce plc 2013
But there are clouds on the horizon in terms of investment and orders. Overall, factory orders fell by 11 per cent in 2010 due entirely to a 29 per cent drop in military contracts that was not wholly offset by a 3 per cent rise in civil orders.
This trend for growth in civil aerospace and decline in military orders is set to continue. The change in market is particularly important given the earlier decision by BAE to sell its 25 per cent civil aviation share in EADS, the maker of Airbus now based in Toulouse, France. The loss of diversification has meant that BAE is now over-dependent on military orders.
The destructive move to sell the stake in Airbus was entirely orchestrated by the last Labour Government. The sale amounted to 80 years of our civil aviation expertise being given to Airbus now run by France and Germany, neither of which for obvious reasons had any significant aviation expertise following their collapse in 1945. This deliberate weakening by the Westminster quislings is central to BAE’s current problems
In 2011 BAE Systems announced the loss of around 3,000 jobs. Two years on, the lack of investment in its British operations continues with a further 1,200 job losses in the shipbuilding division.
BAE Systems is involved in several major defence projects, including the F-35 Lightning II, the Eurofighter Typhoon, the Astute-class submarine and the Queen Elizabeth-class aircraft carriers. The company has been the subject of criticism, both general opposition to the arms trade and specific allegations of unethical and corrupt practices.
In the autumn of 2011, following the announcement of 900 job losses at Brough, where the Hawk jet was assembled, GMB’s Dave Oglesby then claimed that the government had turned its back on the workers and the aerospace industry. A further clue to future intentions came with this year’s appointment of Roger Carr as BAE Chairman.
Carr learnt his asset stripping skills with Williams Holdings during the 1980s. He came from Cadbury, and was applauded in the City for orchestrating the chocolate maker’s sale to US-owned Kraft foods in 2010 (now renamed Mondelez). The view is that Carr has been brought in to BAE to eventually conduct a similar act by selling parts of BAE to various US manufacturers.
Meanwhile Airbus, having been sold off, thrives in the new market conditions. Around 100,000 jobs in Britain feed into the Airbus wing manufacture centred around Broughton for all Airbus aircraft wings, both directly as well as indirectly through an extended supply chain of over 400 companies. This is an extremely high-tech part of civil aircraft. But of course the company could move all that to another country once they learn the expertise developed here.
Also involved in wing manufacture in Britain is the American-owned GE Hamble Plant, and GKN in the Isle of Wight (see page 7). The A350 XWB’s wing fixed trailing edge package is the largest production contract in GE Aviation, and in Hamble's 75-year-plus history.
The aerospace trade organisation ADS said in 2011 that government support would be “crucial for maintaining the long term future of the sector”. But governments have been unreliable on this, for example their lack of support for helicopter production and their decision to discontinue the Harrier. The aerospace companies finance 48 per cent of R&D, while government contributes 24 per cent.
The other major British aerospace firm is Rolls-Royce, which produces the most fuel-efficient aviation engines in the world and has also diversified into other markets, for example, pump manufacture.
Rolls-Royce engine expertise benefits from whichever aircraft company is doing well. The British jet engine manufacturer recently won a $5 billion order from Etihad Airways, the national airline of the United Arab Emirates, for Trent XWB engines to power 50 Airbus A350 XWB aircraft. This takes the total number of Etihad A350 aircraft on order to 62.
It also won a $300 million order from Qatar Airways for Trent 700 engines to power five Airbus A330 freighter aircraft. But it has given up its stake in the V2500 engine programme that powered the Airbus A319.320.321, originally a collaboration with Pratt & Whitney and MTU.
With significant orders Rolls-Royce may be doing well, but does it mean an increase in the British workforce? Where is it concentrating investment? Its website says that the new facility in Singapore includes a Trent aero engine Assembly and Test Unit (Trent 700 for Airbus A330); a Wide Chord Fan Blade manufacturing facility; an Advanced Technology Centre; and a Regional Training Centre. When fully operational the facility will create around 500 new jobs, bringing the total number of employees in Singapore to over 2,000.
Rolls-Royce has also invested another 90 million euros at its site in Dahlewitz in Germany, adding 80 new jobs to the current 2,200 workers. Since 1993 Rolls-Royce has built several competence centres in Dahlewitz, where jet engines are developed, tested, manufactured and maintained. The new development test rig for the Trent XWB engines is to go into operation in just two years’ time. This model is said to be the company’s largest and most environmentally friendly jet engine, and from 2016 on will equip the new Airbus A350 airliner.
Rolls-Royce says it chose Dahlewitz mainly because of the many highly qualified engineers available in the region as well as the depth in other industry partners within the aerospace cluster Berlin-Brandenburg. Its collaboration with Daimler of Germany should be seen in this context. Of course, Bentley cars, now owned by Daimler, and Rolls-Royce cars, now owned by BMW, offer the Germans a useful blueprint.
But why wasn’t Derby chosen? Is there investment from Rolls-Royce in Britain? It has new sites, including the new £60 million technology centre for engine controls at Birmingham Business Park. And on 2 November 2012 the company also announced the opening of the new Rolls-Royce Apprentice Academy in Derby. The new facility will enable Rolls-Royce to train additional apprentices to work in the Rolls-Royce supply chain and East Midlands manufacturing companies.
Rolls-Royce has had an apprenticeship programme for over 100 years. In 2012 the group recruited over 300 apprentices and at any one time it has over 1,000 apprentices on programmes around the world. Ofsted graded the Rolls-Royce apprenticeship programme outstanding in all areas, and the company is one of only two non-educational organisations to be awarded Beacon Status by the Learning & Skills Improvement Service.
Any quality training of engineers should be welcomed – but the new engine programmes are predominantly being produced in countries other than Britain,
so let us not be misled by a bit of Ofsted flannel. Still, the number of students in Britain taking specialised aerospace engineering degrees has risen on average by nearly 7 per cent a year since 2000 and reached 9,825 in 2010.
There is without doubt growing pressure on British engineering companies to lower their wage bill to “compete” with labour costs in Asia, and a company such as Rolls-Royce will be no exception. But this outlook is entirely a function of currency fluctuations. Real efficiency comes from well thought-through domestic planning and investment.
The gross average weekly wage in the aerospace industry increased from £691.30 in 2009 to £712.40 in 2010, an increase of 3 per cent. This figure is 46 per cent above the mean gross weekly wage in Britain. The mean gross annual salary for aerospace employees in 2010 averaged £37,215. This pattern of relatively higher wages is always the case where a semblance of machine tool investment takes place, and doesn’t mean the workers are well paid for their skill.
Alongside demanding higher wages Rolls-Royce Derby workers should be demanding that all new engine programmes are manufactured in Britain and not eventually hijacked by Daimler aided by the same Westminster quislings. ■