Aerospace Industry

Emma Reynolds Excerpts

Wednesday 12th September 2012 Westminster Hall

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner. I am delighted to speak in this important debate, and I congratulate my hon. Friend the Member for Wrexham (Ian Lucas) on securing it. I also want to take this opportunity to congratulate the Minister on his promotion.

As several hon. Members have already said, the UK’s aerospace industry is tremendously successful. It is an industry that we should be incredibly proud of. It is the largest aerospace industry in Europe, and globally we are second only to the US. In addition, huge growth in aerospace is expected, particularly in the commercial sector. Therefore, it is no surprise that there is a great deal of interest from Members from all parties in this debate. As the hon. Member for Pendle (Andrew Stephenson) mentioned, given that interest, I re-established the all-party group on aerospace a year ago. I would like to put on record our thanks to the Business Secretary for addressing our last meeting.

I am sure that it will come as no surprise to Members that my constituency has a vital aerospace presence. Indeed, Wolverhampton has a long and fascinating history of aviation and aerospace development. I will not attempt to recount it all in the time that I have available today, but I will talk about one small nugget. Although Sunbeam is better known for its motorcycles and world-beating cars—the first British car to win a grand prix was a Sunbeam made in Wolverhampton—the company first manufactured aircraft in Wolverhampton in 1912 and made aircraft during the first world war.

Today, Wolverhampton is home to a significant and thriving aerospace cluster, with Goodrich Actuation Systems, which was recently bought out by UTC Aerospace Systems, being the biggest employer; indeed, Goodrich has taken on 150 new employees since the start of 2012. There are other aerospace companies in the city, such as Moog, Timken and HS Marston, which is part of Hamilton Sundstrand, a company that, like UTC Aerospace Systems, is owned by United Technologies. So parts for the world’s most high-tech and impressive civilian aircraft, such as the Boeing 787, Bombardier C series and Airbus A380, are made in Wolverhampton. Beyond Wolverhampton, the aerospace industry is vital to the wider British economy, as hon. Members have already outlined.

Despite the vitality and success of the British aerospace industry, we must not be complacent about its future. The whole aerospace industry is more global than ever before, and with that the British industry faces fierce competition from the world’s largest economies. The US aerospace industry remains the world’s largest, but it is worth noting that huge investment is being made in China and other emerging economies. The global competition that the British aerospace industry faces today is fiercer than ever before, and the competition that it will face in the years to come will be of a different scale and magnitude from the competition that it has faced in previous years.

Continuity of policy is therefore imperative. I want to make that point strongly. We need cross-party agreement about the strategic importance of the industry and about the Government’s role in supporting it. Although two and a half years seems a long time in politics, it is important to the industry beyond 2015 that it receives ongoing support from whichever party—or parties—happens to win the next election.

I welcome some of the steps that the Government have already taken, and I echo the comments of my hon. Friend the Member for Wrexham in welcoming the aerospace growth partnership, which provides an excellent framework for co-operation between the Government and the industry. I have had positive feedback from industry representatives about the AGP, which, as my hon. Friend has said, is modelled on the success of the Automotive Council.

I also welcome the announcement made in the Budget this year—unfortunately, it was one of the few announcements made in the Budget that I do welcome—that the Government will provide £60 million to fund a new world-class centre in the UK for aerodynamics. I would be grateful to the Minister if he gave us some more detail about that centre at some stage. When will it be opened? Will the Government commit to fund it beyond the initial two-year commitment that they have made?

Unfortunately, there is reason to believe that other countries around the world, including those in our own neighbourhood, are much more astute and generous in supporting aerospace research and development. I wonder whether the Minister shares the concerns in the industry that, if we are not careful, our competitors will simply out-compete us if their Governments give them far greater support for that essential R and D.

The industry also has concerns about intellectual property rights, and I would be grateful to the Minister if he assured the industry and Members that the Government are keeping a watchful eye on any further weakening of IPR for aerospace companies.

Whenever I visit aerospace companies in my constituency and whenever I meet representatives of the industry, they always raise the issue of skills, which the hon. Member for Pendle has already mentioned today. Given the sheer growth of the industry and the existing skills shortage, there is likely to be a cliff edge in five years’ time, with an acute shortage of engineers, technicians and skilled workers. Moreover, engineering graduates unfortunately do not always go into engineering jobs. Some are attracted to the City and some are attracted not to the aerospace industry but to other industries. There is a real concern in the aerospace industry that it will not be able to maintain its global position if more engineers are not attracted to it in the years to come.

The big names, such as Airbus, do not have trouble finding apprentices. I spoke to a representative of Airbus earlier today who told me that the company received 1,300 applications for 85 apprenticeship places, which is quite astonishing. However, the big names are concerned that it is sometimes more difficult to attract apprentices and a sufficient number of skilled workers for the posts that are advertised further down the supply chain.

I want to follow up the point that my hon. Friend the Member for Wrexham made about the EU’s emissions trading scheme. Aerospace companies are investing to reduce the emissions that their aircraft produce and are producing ever-lighter and more fuel-efficient aircraft, but it is absolutely essential that we strike the right balance between tackling climate change and ensuring that European rules—I am an admitted pro-European, so I am in favour of some European rules—do not disadvantage European aerospace companies to the benefit of non-European ones.

As the Minister is aware, there is a real fear that, if the ongoing ETS dispute with China is not resolved, China will threaten to suspend its order of 45 A330 aircraft. That will simply push the production of those aircraft from Airbus here in Europe across the Atlantic to the US. As recently as yesterday in Berlin, he was made aware of these concerns by Airbus, and I would welcome any reassurances that he can give about what the Government can do at a European level to mitigate the risk of losing such a significant order.

In conclusion, we must not be complacent about the future of the British aerospace industry. Although we should continue to celebrate its successes, we must be alive to the growing and fierce global competition that it faces today and in the future. Again, I want to stress that cross-party support for the industry and long-term continuity are incredibly important, given that it is such a long-term industry. In that vein, I look forward to hearing the Minister’s response.

--- Later in debate ---

[Mark Tami]

Yes, that is true. We have mentioned Brian Fleet, who has retired from Airbus but started off as an apprentice there, left and then came back. That is telling. Such people have a real feel for all levels of the company and are loyal to the aerospace industry and to this country.

Nevertheless, we cannot rest on our laurels. There are threats to Airbus, not only from Boeing in America but from growing industries in Russia, Brazil, Canada and China. When orders are given to Airbus, or indeed to Boeing, part of the deal will often be that some production function will end up going to one of those countries. We might not like that, and in an ideal world it would not happen, but that is how it works, and the challenge for us is to stay ahead and always be moving forward so that no matter what we end up giving away we have something to replace it with, the skills and value of which are hopefully higher than what we have lost.

Airbus is a European partnership, and we are fortunate to have the wings. Spain, Germany and France would love to have the wings. Although we have had a good order book, going back, as I mentioned, for many years, it is always about the next aircraft. We have the A350, and the next one will be the replacement for the A320, which is the real workhorse of the fleet for most airlines. Clearly, we want that here, and it should be here, but Spain, Germany and France will make a good case for its being elsewhere. If we lost that work, the long-term future would not be good. It is vital, therefore, that we invest now. Composites are the future—in fact, they are not the future, they are now. Aircraft are being built with composites now. The UK was behind in composites, and is now catching up, but we need to invest more if we are to bridge the gap that is still there.

The Government need to invest. They have put money in and given support, but I am concerned when I hear that government is not about picking winners. I do not have a problem with picking winners; I have a problem with picking losers. We must invest in success. In the past, the Government too often waited for companies to fail and then threw money at them. That perhaps delayed what was going to happen anyway, but rarely did it turn around a business that had probably gone too far to be saved. I do not have a problem with investing early in the success of a company. There is a huge and growing market out there to exploit, and we are fortunate to be in a strong place in it.

Mention has been made of the military side of things, which unfortunately is sometimes seen as totally different from the civil side. Clearly the planes are different, but the ways in which planes are developed, whether via composites or a whole host of engineering changes, often come from innovations made through military aircraft. The 400M military transport aircraft is the first aircraft to have composite wings produced in Bristol. A lot of work has been done there that could be used for composites in civil aircraft as well. We have only to look back to the Boeing 747, the entire development of which was, I think, paid for by the US military apparently because it was going to be a military transport aircraft. Clearly, it was never going to be that; it was just a way of being able to pay Boeing’s development costs for what became a successful large-scale airliner. We cannot, therefore, separate civil and military; they are both important.

Colleagues have already addressed some of the main issues regarding the EU emissions trading scheme, so I will not go into great detail, but the point I will make is that China and America are concerned and angry about how the scheme operates. I am not saying that we should just scrap it, but we need to consider ways of getting through the issues, otherwise we will end up with a repeat of what we had in the World Trade Organisation, with the different sides throwing rocks at each other and no one really winning.

Mention has been made of the orders that are potentially under threat. It is not just Airbus that would lose from that, but the whole supplier chain, including Rolls-Royce, which would supply the engines for the aircraft. It is important that the situation should not spiral out of control.

The motor industry has also been mentioned; clearly the industry in the UK went through a dramatic decline. I am pleased that we now produce more cars than we ever did in the past—or, if we are honest, we assemble more. However, the supplier chain has not recovered and we have lost quite a lot of the design stuff. Some has not come back—perhaps it never will. Even the aerospace market is very competitive, and there is pressure to get suppliers to give the best price. Sometimes those suppliers will come from abroad; but we still have a good supplier chain in this country, and we need to invest more in it.

Training has been mentioned, and perhaps, whether with Airbus or anyone else, we need to focus lower down, because we still have skill problems. We must be honest about that and address it. It is a major problem, and it relates not just to technical skills but some basic skills. I think many employers are struck by the fact that there are still such problems.

[Emma Reynolds]

Does my hon. Friend agree that the Government might consider the Rolls-Royce model of taking on more apprentices than are needed, and, at the end of the training, making the extra apprentices available further down the supply chain, so that it has those skills available to it?

[Mark Tami]

That is a good point. One of our problems is from the days of privatisation. Whatever faults people may have found in state-run companies, they trained a lot of people to a high standard. After privatisation, one of the first things to change was that many people were not trained any more. I am thinking of electricity supply companies. Many people trained in the public sector ended up going into the private sector. Complaints are made to me about Airbus or other bigger companies poaching people from the supplier chains to feed their needs. That can only happen for a while before the supplier chain—and quality—suffers. Then Airbus or whichever company is involved will look elsewhere for support.