Aerospace Industry

Sammy Wilson Excerpts

Tuesday 2nd September 2014 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure, Mr Hollobone, to serve under your chairmanship. It is equally a pleasure to speak in this debate, and I thank the hon. Member for Mid Worcestershire (Sir Peter Luff) for securing it. He has outlined the case brilliantly, although he did not mention Northern Ireland, so I will do that and correct the balance. That is important, because we have an industrious and successful industry in Northern Ireland that creates many jobs, and I will outline that in my contribution.

As the Democratic Unionist party spokesman for transport, this subject interests me, not only because of its magnitude, but because it creates many jobs in my constituency, both directly and indirectly. It creates jobs directly in the companies, and indirectly through sub-contracting. Many companies come into the engineering sphere because of the good work done through the aerospace industry.

We should all feel immensely proud of the UK aerospace industry, and we have every right to be proud of it. We boast the largest aerospace sector in Europe and we are second globally only to the United States. We should shout our successes, not from the rooftops, because we are not on the rooftops, but in the Chamber. The importance of the continued partnership of the Government and the industry through the aerospace growth partnership cannot be underestimated, as the latest figures from the ADS, which represents the aerospace, defence, security and space industries, suggest. As of 28 August, there was a record backlog of more than 12,000 aircraft and 21,000 commercial aircraft engines orders. With the economy still only making a slow recovery and thousands of jobs not yet secure, that is fantastic news for the aerospace industry and for the United Kingdom overall, with estimates that the backlog will be worth between £135 billion and £155 billion over the next nine years. That is not a paltry sum and it indicates how much the aerospace industry contributes to the economy of the United Kingdom of Great Britain and Northern Ireland.

The aerospace industry is extremely positive. While everything else makes slow and steady progress, the industry has been growing at a pace 10 times quicker than the rest of the economy in the last three years, outstripping many employment sectors. That is another example of the importance of the Government’s partnership with the industry. I am sure that the Minister and the shadow Minister will underline that clearly in their responses. The new orders are simply part of long-term industry growth, with estimates of demand for more than 29,000 commercial airliners between now and 2032, which is in line with the airlines’ desire to carry more passengers and expand their fleets. The future looks positive, and it is positive because of the direct attitude the Government have adopted to the industry, but—as the hon. Member for Mid Worcestershire said—other things need to be done to keep us in a prominent position.

The situation certainly looks promising, and I must admit that I was keen to contribute to today’s debate not only in my capacity as my party’s spokesperson for transport, but also because of the massive contribution that Northern Ireland makes to the industry. The main factory in Northern Ireland is located in Newtownards in my constituency. I am pleased about that, of course, and I can boast of having one of the most technologically advanced and internationally focused aerospace industries in the world right in my constituency, giving job opportunities to many young people.

The hon. Gentleman referred to apprenticeships, as did the hon. Member for Burnley (Gordon Birtwistle), who has commented on the issue before in Adjournment debates and in Westminster Hall, and I am pleased to see such opportunities coming through for people in my area. Bombardier has more than 5,000 highly skilled employees across four sites in Northern Ireland. The site in Newtownards is the biggest, but there are others in Newtownabbey and Belfast. Bombardier promotes many job opportunities, and it is important to see that happening. With first-class capabilities, the site’s operation plays a pivotal role in all of Bombardier’s families of commercial and business aircraft. It also produces and sells components for Rolls-Royce, Airbus and General Electric. Bombardier’s CSeries aircraft has significant UK content, primarily through the advanced composite wings that were designed, and are manufactured, by Bombardier Aerospace in Belfast.

[Sammy Wilson (East Antrim) (DUP)]

The hon. Member for Mid Worcestershire (Sir Peter Luff) emphasised the importance of research and development. One of the ways in which Bombardier has kept its place in the market and, in particular, kept production in Northern Ireland has been through the research and development money made available by the previous Government to ensure that the investment required in Northern Ireland to keep the competitive edge was made. Does my hon. Friend agree with the point made by the hon. Gentleman on the need to think about the long term, because the period of return is long term? It is important to think about long-term research and development incentives if the aerospace industry is to be maintained at its current standard in Northern Ireland and the United Kingdom.

[Jim Shannon]

I thank my hon. Friend for that valuable contribution. He is absolutely right. Sometimes you wonder, Mr Hollobone, whether people have looked at your notes before they make an intervention, because often they raise issues that you were going to come on to. The Northern Ireland Assembly has made a significant commitment to Bombardier—the Minister responsible for that is Arlene Foster—as have this Government and other Governments. We have a huge range of aerospace companies operating in Northern Ireland, including B/E Aerospace, Magellan Aerospace, Goodrich, RFD Beaufort and Thales, to name just a few, so it is perhaps not surprising that one in three of the world’s aircraft seats are manufactured in the village of Kilkeel in Northern Ireland. Look around the world and think of all the planes there are and remember that a third of those seats are manufactured in Kilkeel in Northern Ireland.

Even more good news for Northern Ireland and UK industry was the announcement—this relates to the intervention of my hon. Friend the Member for East Antrim (Sammy Wilson)—of a £6.8 million advanced engineering competence centre in Northern Ireland. That is a commitment to the future and to research and development. The centre will be based at the Northern Ireland Advanced Composites and Engineering Centre in Belfast and will focus on developing innovative solutions in the advanced engineering sector. In other words, it will look at the long-term progression of aerospace, not just in the United Kingdom of Great Britain and Northern Ireland, but in Europe and the rest of the world.

The centre is tremendous news locally, as it will no doubt create more jobs, but it is also brilliant news for the UK aerospace industry as a whole. As opportunities in civil aerospace grow, the UK faces increasing competition from mature and emerging markets, so the new centre will, I hope, develop new approaches for advanced engineering, because being ahead of the competitive market is the only way we can ensure that we remain first in Europe and first in the world. That is the point I want to emphasise. We are aiming at short-term goals, but we are also trying to achieve a long-term strategy.

The figures I gave are testament to just how successful and important the aerospace industry is to the UK economy and our ability to compete globally. That is why I urge the Government to work alongside their partners, not just to encourage technological innovations, which are important, but to lead the way in cutting emissions, reducing fuel burning and increasing aircraft efficiency. Those are important issues that we cannot walk away from, and the aerospace industry is trying to address them. That can be done, and we must do our best in tackling them.

One thing that is close to my heart is my wish to see the Government encouraging students and young people to undertake the necessary courses at universities and technical colleges, as the hon. Member for Burnley said. We need not only aerospace engineers and technicians to replace the current generation—we have to look at that—but staff who can work with new technologies and materials. We need further education at universities and technical colleges to work alongside the industry to ensure that the bright brains of our young people are there to take on those jobs.

I am pleased to learn that almost 70% of UK aerospace companies employ apprentices and trainees. That is tremendous news. Each year we meet some of those trainees here in Westminster, as I did this summer. It was good to meet some of the young men and women who are interested in the industry and looking for opportunities. We have a commitment from Government, both here at Westminster and regionally, to ensure there are apprenticeship opportunities for both genders. This is exactly what the industry needs. Provided we continue to develop and innovate, I believe that the future of UK aerospace is very bright indeed.

--- Later in debate ---

[Sir Gerald Howarth (Aldershot) (Con)]

It is a delight to participate in the debate under your chairmanship, Mr Hollobone, and to follow my hon. Friend the Member for Mid Worcestershire (Sir Peter Luff), who was my colleague at the Ministry of Defence. He has done us all a great favour in raising the debate, which follows a debate we had on 22 November 2012. Many of the key points that have surfaced in today’s debate were also mentioned then. I share his recollection of the Viscount flying over Windsor because I was at school at Haileybury and Imperial Service College junior school in Windsor. Indeed, I used to fly on the Viscount 700 from the then new Heathrow airport to my home in Hamburg in Germany.

I also share an appreciation of the Farnborough air show, which takes place in my constituency. Those present who did not attend the Farnborough air show need to report to my study afterwards to explain why, because the whole world comes to Farnborough. Interestingly, this year the air show was responsible for the signing of a record number of orders for new aircraft and systems. About $83 billion of business was done at the last air show; this year $200 billion of business was signed at Farnborough. It is hugely important to the British economy and to our industry.

Farnborough is home to BAE Systems, the world’s fourth largest defence contractor, and QinetiQ, which is one of the world’s leading research companies. QinetiQ holds more than 1,500 patents, 1,000 patents pending and has 1,000 defence contracts at any one time. Farnborough also has the headquarters of AgustaWestland International. Its senior vice-president in charge of international business is no less than our former colleague Geoff Hoon, with whom I get on extremely well. He is doing a great job promoting the interests of Westland around the world. I also have a lot of smaller companies in my constituency, such as Cam Lock, which makes face masks for every US naval fast jet in operation and for the Royal Air Force. I have EWST, which makes electronic warfare testing equipment. I have Sonardyne, which makes detection equipment. A huge amount goes on in my constituency, and I hope hon. Members will understand why I am keen to take part in the debate.

As my hon. Friend the Member for Mid Worcestershire said, aerospace is a hugely successful business in the United Kingdom. We are world leaders. We have the second largest aerospace industry in the world and the biggest in Europe. We have 17% of the world market. The UK industry is split 50:50 between civilian and military. It employs 109,000 people directly and 120,000 indirectly. It is a massive contributor to manufacturing industry. Everyone is talking about the importance of the manufacturing industry for this country, but we have in our midst the world’s second most successful manufacturing industry. Let us go out there and promote it. It is not just BAE Systems, QinetiQ or Rolls-Royce, but a whole string of companies, whose names I cannot exhaust. I will single out a few: MBDA, which stands for Matra BAE Dynamics Alenia; Cobham; Marshall; Babcock; Serco; Martin-Baker; and Bombardier—formerly Short Brothers. I have seen some of the fantastic work that goes on in Northern Ireland, which is world leading in missile technology.

Aerospace manufacturing is done across the kingdom, including in Scotland, which I hope will remain part of the kingdom. As the son of a Scottish borderer, I am going to Scotland on 15 September—battle of Britain day—to fight for the maintenance of the Union of the United Kingdom.

We have hundreds of SMEs—another success story. In 2008 there were 380 enterprises engaged in this industry, according to the Library’s very helpful brief. Today that figure is 560. This industry is growing, and it provides prosperity to the United Kingdom. That is critically important. Interestingly, the 2009 Oxford Economics paper states:

“A £100 million investment in the defence industry generates an increase in gross output of £227 million, and increases Exchequer revenues by £11.5 million.”

[Sammy Wilson]

Northern Ireland is the ninth biggest European region for the aerospace industry and we therefore greatly feel the pressures. Does the hon. Gentleman accept that there are great pressures on the industry because of the high exchange rate, the difficulty in getting finance from banks—and the effect that has had, especially on the small and medium-sized enterprise supply chain—and the anti-competitive practices in other countries, where certain firms are given advantages that we do not have in the United Kingdom?

[Sir Gerald Howarth]

The hon. Gentleman makes a good point about having one hand tied behind our back. Our businesses are not hugely helped by the anti-corruption legislation that we have put in place, which other countries do not sign up to as readily as we do. In fairness, I acknowledge the huge importance of Northern Ireland in the wider United Kingdom aerospace business: it is an integral part, not an add-on.

The aerospace industry contributes two things. First, there is the prosperity, which I have illustrated. Secondly, it provides us with the sovereign capability to defend ourselves. That is critically important. We can all see what is currently going on around the world. It is devastating for those of us who have been around a bit. Things have never looked so uncertain, volatile and frightening. We need to remember that we have taken our defence for granted. In much of it, we are assisted by the United States of America, its massive spending programme and its lynchpin role in NATO. In the United Kingdom we have the ability to defend ourselves. We are not reliant on other people, who might withhold technology or equipment. We must be able to generate such things in the United Kingdom.

When my hon. Friend the Member for Mid Worcestershire and I were in the MOD we had a battle about whether we should have a defence industrial strategy, and whether maintaining a sovereign capability in the United Kingdom should be a key Government policy. He and I were on the same side. It is common knowledge that some of my colleagues in the Conservative party took the view we should not have any kind of industrial policy. They felt that was interventionist and socialist. I do not accept that. The Government have a responsibility for the defence of the realm. That is the first duty of Government. We have responsibility to ensure we have the means to protect ourselves. Two years ago I paid tribute to Lord Drayson, who produced the defence industrial strategy, and I do so again. It is one of best, most articulate and clearest documents to be produced on this matter. As Lord Drayson said, we have to remember that today’s kit is the result of yesterday’s investment. Therefore, we have to invest today.

I congratulate the Government on what they have done on the aerospace growth partnership and the defence growth partnership. There has been a genuine partnership, with industry and the Government working together. That is the sort of thing we need to do and I warmly welcome it. Industry is also doing well on the skills front. BAE Systems has a huge investment in taking on young people and giving them skills. Leo Quinn, the chief executive of QinetiQ in my constituency, is seriously concerned about the promotion of skills. As my hon. Friends the Member for Mid Worcestershire and for Burnley (Gordon Birtwistle) said, we need to do more to promote the merit, mobility, importance and excitement of the manufacturing industry, particularly in the field of aerospace and defence.

We should, however, be concerned, because the order book of BAE Systems is declining. It stands at £40 billion and that is a massive figure, but it is falling, and we know the pressure that defence budgets are under around the world. There is increasing competition from other countries. We have promoted defence exports—and the Prime Minister has been magnificent in giving a lead on that—but it is not possible to sell anything nowadays without being prepared to transfer the technology. We face a growing challenge from India and China, who want to take their place in this important marketplace. If we will have to transfer our technology every time we seek to sell the Typhoon or other important military equipment, what is there for the United Kingdom? How are we going to feed our people? That is where innovation comes in. That is where investment in technology, and defence research in particular, comes in. I could not agree more with the comment by my hon. Friend the Member for Mid Worcestershire that innovation underpins growth. I have made a note that the only way we can compete is by innovation. We are all on the same page with that.

The Government have a role to play. Unfortunately, there has been a fall in defence research by the Ministry of Defence. The latest figures are not encouraging. In 1990-91 the Government spent, at 2012-13 prices, pretty well £4 billion on defence research. That figure fell to £1.8 billion in 2010-11. Fortunately, industry seems to be spending more. According to KPMG, 75% of respondents to a survey said that they would spend between 2% and 3% of revenues on research and development in the next two years; 16% said they would spend between 4% and 5%. If we are to maintain our position in the world we must do that. We must also decide where we go after the joint strike fighter. I have been visiting BAE Systems at Warton for many years. When I used to go there 20 or 30 years ago, I would always be told “We are okay for the next five or 10 years, and then there is a cliff edge.” The Typhoon came along, and now we have JSF—but where do we go after that? I do not believe that manned fighter aircraft can simply be consigned to the dustbin of history. Manned flight still has a critical role to play, particularly in situation awareness.

I welcome what the Government and BAE Systems are doing with Taranis, which is an ITAR-free programme that I launched to the press, who were not allowed to come within 50 yards of it, I am pleased to say. However, we need to maintain the technology. Taranis is a great technology demonstrator. We need more technology demonstrators and we also need a proper debate on where the industry will go, post-JSF.