Aerospace Industry

Iain Wright Excerpts

Tuesday 2nd September 2014 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

May I begin, Mr Hollobone, by saying what a pleasure it is to serve under your chairmanship again? I also want to thank the hon. Member for Mid Worcestershire (Sir Peter Luff) for securing the debate and for advancing his argument in such a characteristically persuasive and courteous, although on this occasion very quiet, manner. I hope that his voice returns soon. I have said it before, but it bears repeating: I am sorry to see him leave the House, especially given the work he has been doing on raising the status of engineering in this country. He leaves a good body of work and I am sure that it will continue outside the House. He will be missed, certainly by the Opposition, for the work that he has done.

As this is the first time I have debated with the new Minister, I want to welcome him to his post. Since he obtained his red box, he has aged about 35 years, so the Government must be working him far too hard. I am pleased that he has been given specific responsibility for the life sciences sector, and I hope that we can soon debate the future of that vital industrial sector, too.

We have had a good debate about the future of the UK aerospace industry, which, as has been said many times, is a remarkable success story. Indeed, it is the very model of what a successful modern industrial sector in the UK in the 21st century should look like: high value added, with a focus on design, manufacturing, production, maintenance, innovation and excellence, as well as a relentless drive in the global export market, providing highly skilled and well-paid jobs and enjoying a long-term, collaborative approach between industry, Government, employees and research institutions.

Over the summer, I was privileged to visit the design team and view the manufacture of the A400M at Airbus in Filton. I have been to Marshall of Cambridge, which is one of only 15 companies out of a total global supply chain of 23,000 suppliers to be presented with a supplier of the year award in 2014 from Boeing. I also visited Rolls-Royce in Derby and the manufacturing technology centre in Anstey to see how innovation and collaboration between industry, research institutions and Government is ensuring that British industry retains its competitive edge.

The aerospace industry is vital to the UK economy, and, as the hon. Member for Strangford (Jim Shannon) said, this country should rightly be proud of it. It is worth noting that the UK aerospace industry grew on average by over 7% each year since 2008. Bearing in mind where we were in 2008, with the global financial recession and the drying up of credit across the world, that is a remarkable achievement. One reason for that, apart from the technical brilliance, drive and entrepreneurialism within the industry, is long-term collaboration between Government and industry. The aerospace industrial strategy, set up by the previous Labour Government and, thankfully, continued under the current Administration, has provided the industry with long-term certainty to plan and invest in Britain with confidence. Labour remains determined to ensure that the UK maintains its position as Europe’s No. 1 aerospace manufacturer, and that Britain remains second only to the US on the global stage.

We are well placed to capture a sizeable part of future growth in the industry. As has been said today, it has been estimated that, by 2032, more than 29,000 new civil airliners will be required, with a value of almost $4 trillion. As the hon. Member for Mid Worcestershire said, according to the data released by the trade association ADS last week, the largest ever month-on-month increase in the industry’s order book will bring it to about 12,000 aircraft and 21,000 engines in total, worth between £135 billion and £155 billion to the UK economy in the next nine years.

Labour Members welcome that and we will actively look to capture greater market share in a growing industry, although, as has been acknowledged today, that will be difficult, given the rapid pace of innovation and technological progress, the intensifying competition and the determination of other nations to secure a firm foothold in a high-value, lucrative and prestigious sector. In direct response to what the hon. Gentleman was asking me, that is why the next Labour Government will prioritise the aerospace industrial strategy as a vital sector. We will maintain the Aerospace Growth Partnership and the Aerospace Technology Institute, and we will emphasise the importance of long-term policy stability to allow the industry to soar ever higher.

A number of issues need to be addressed—many have been aired today—in order to ensure that the ambition for the industry is realised. I was particularly pleased to hear what my hon. Friend the Member for Alyn and Deeside (Mark Tami) said about the importance of the supply chain, because he is absolutely right. It is key that the supply chain is aligned with what the primes require to maintain competitiveness and technological innovation. No one wants to see work leak away from our shores, costing jobs and industrial capability, because of an un-coordinated, uncompetitive or unresponsive supply chain.

The hon. Member for Mid Worcestershire, in his opening remarks, mentioned the report in yesterday’s Financial Times. It is worth the Minister having a look at the report, which questioned the industry’s supply chain capacity to deliver the backlog of orders, especially when combined with the simultaneous emergence of new product development lines. Geoff Ford, who runs Ford Aerospace in my region of the north-east—I have been to see his factory—stated in that Financial Times report that the backlog of orders should give the suppliers the confidence to expand and to increase capacity. He said:

“If we don’t do that we’ll lose out to other countries.”

He is absolutely right.

What is the Minister doing to ensure that British-based companies in the aerospace supply chain are geared up to take advantage of the industry’s great order book? Not only is capacity important, but so is ensuring that technological advances and product development cascade through the primes and into the supply chain. The role of a proper, co-ordinated industrial strategy is crucial. If industry states that composites will be used more in future at the expense of metals, how are the supply chain companies being assisted to make the investments needed, not only to grow capacity, but to stay relevant to the primes’ modern production requirements? What are the Government doing to assist?

Access to finance has not been mentioned as much as I thought it would in the debate, but it is equally crucial, especially in the aerospace supply chain. The nature of the industry means that up-front capital expenditure is often required with long pay-back times. Supply chain work might move from Britain if British companies do not have access to the finance necessary to invest and compete. Will the Minister update the House about progress on the supply chain finance forum set up by the AGP? What tangible improvements have been seen? How many companies have received access to finance for up-front investment costs? Similarly, will the Minister let us know how many companies have benefited from and actually received the cash from the National Aerospace Technology Exploitation Programme since its launch?

In connection with the importance of the aerospace industry, I think about the three S’s: supply chain, skills and certainty. I have already mentioned certainty and the supply chain, but I must make a point about skills as well. Skills are the means by which the industry will maintain its competitive edge. The work force is ageing and, traditionally, the sector has not provided as many apprenticeships as other comparable sectors have done, although that is now changing. There is a need to increase the industry’s capabilities in certain skills and trades. Many companies carry vacancies that cannot be filled because of a lack of suitable skills. Unless that problem is addressed urgently, activity will move away from the UK, because of a lack of suitable skills.

Is the AGP going as far as it can to identify the specific crafts and skills necessary to enable the UK to maintain its comparative advantage? For example, the AGP has introduced standards for an aerospace manufacturing fitter role, and something similar for electrical fitters and machinists is being developed. What other trades are being considered? That is important and would show the benefits of a proper, co-ordinated industrial strategy.

[Gordon Birtwistle]

I agree with the shadow Minister. The craft parts of the industry are critical. Plenty of young people wish to be involved in design and the high-tech part, but the craft side is critical. Does he agree with me and with the big companies such as Rolls-Royce, BAE Systems and Airbus, which are now training more than the necessary number of apprentices? For the benefit of its supply chain, Rolls-Royce took on double the number of apprentices that it needs. Does he agree that some of the bigger companies should be getting on board and doing that for the smaller companies in the supply chain?

[Mr Wright]

The hon. Gentleman is right, and that model works well for the aerospace industry. I certainly want to see that encouraged, because an oversupply of apprentices then cascaded down through the supply chain reassures the primes about quality. It can be a means by which the whole competitiveness of the sector can be maintained and something that we should certainly encourage.

[Jim Shannon]

In Northern Ireland, with Shorts aircraft fitters for example, Bombardier has been anxious and keen to secure recruitment from those in the 50-plus bracket, who perhaps went to another job, but still have the skills. They can come back to do training with Shorts Bombardier. That is an example of where in the United Kingdom that is happening for those over 50, who are not on the apprenticeship scale, but are looking for jobs and have the skills.

[Mr Wright]

The hon. Gentleman makes an important point.

Going back to what the hon. Member for Burnley (Gordon Birtwistle) asked in an earlier intervention, not only with specific regard to particular trades and fitting, but the whole education system, from primary through secondary education and on to further and higher education, the system should be geared up to say, “The aerospace industry: you could have a fantastic career if you choose it.” Going to work in a factory, in particular somewhere such as Airbus in Broughton, is certainly not a sign of failure. I would be absolutely delighted if one of my children won an Airbus apprenticeship. It is a fantastic success story, which we need to encourage. The culture of this country is that we do not make anything in Britain any more, but that is simply not true in practice. What steps are the Government taking on manufacturing in general and aerospace in particular to ensure that that is dealt with?

I mentioned the success of exports for the UK aerospace industry, with 90% of the high-value products made by the sector in Britain exported overseas. However, the industry has told me—the hon. Member for Mid Worcestershire mentioned this—that more support and co-ordination are needed for export sales campaigns. Primes and suppliers have said to me fairly consistently that they would like more advanced information and to be more closely involved when Ministers are travelling on trade missions, or when international delegations are visiting the UK. Will the Minister respond to what seems to be a constant voice?

[Sir Gerald Howarth]

As my hon. Friend the Member for Mid Worcestershire (Sir Peter Luff) said, the UKTI Defence & Security Organisation has done a fantastic job under Richard Paniguian. May I add that, in my experience, our embassies around the world are fantastic? For the record, the late Simon Featherstone, our high commissioner in Malaysia, was one of those diplomats who really helped us.

[Mr Philip Hollobone (in the Chair)]

Order. To draw his remarks to a close, I call Iain Wright.

[Mr Wright]

My final point, as has been mentioned several times, is about ensuring that British firms are competing on a level international playing field. What steps are the Government taking with the European Commission and the WTO to ensure that rules are complied with and enforced, so that there is a level playing field?

Aerospace is a massive success story for Britain, which needs to continue not only next year but for the next few decades. There is cross-party support, and I hope that the Minister will address our points in his response.