The UK’s aerospace firms are being ‘hammered’ by the crisis in the aviation sector, engineering unions told MPs at Westminster this week.
Union leaders hope Wednesday’s mass lobby will increase the pressure on ministers to offer greater support to the sector, in line with financial aid offered to the struggling aviation industry by both the US administration and the European Union since 11 September.
More than 100 shop stewards from the UK’s major aerospace firms, including BAE Systems, Rolls-Royce, Smiths, Lucas and Westland took part. Staff were granted leave by their employers and many had their travel expenses paid.
Firms face bankruptcy
Alan Robson, general secretary of the Confederation of Shipbuilding and Engineering Unions which organised the event, said many small firms within the sector were being ‘hammered’, as aircraft makers, hit by falling orders from airlines, had begun to look elsewhere to reduce costs. ‘Throughout the supply chain there is anecdotal evidence that a number of small and medium-sized engineering firms could be facing bankruptcy,’ said Robson.
Launching a report into the aerospace industry, the AEEU warned this week that 9,830 jobs had already been lost in the UK aerospace sector since 11 September. Industry leaders warned the government last week that up to 40,000 jobs could be at risk throughout the supply chain – or 10% of the sector’s workforce.
Union leaders are calling for the government to agree financial assistance for airlines where banks are reluctant to continue supporting them, and to bring forward MoD aerospace orders where possible, including finalising its procurement of the A400M with its European partners. ‘That would take the pressure off the civil sector by allowing a transfer of skills within the aerospace industry. If we can increase military spending, companies can put work packages across to their civil teams to ease the pressure in the short-term,’ said Robson.
Greater government support for investment in research and development is also needed, to prevent levels falling even further behind those in France, Germany and the US.
Three options for a proposed R&D tax credit were unveiled by chancellor Gordon Brown on Wednesday, in time for the government’s long awaited Manufacturing Summit in Birmingham. The first is a credit at a single rate on all R&D spending. The second is a higher rate of tax relief on up to £100m and a lower rate with a higher limit to target medium-sized companies. The last option would be volume-based payments on all spending calculated from specified company baselines.
John Quigley, AEEU national officer, who chaired this week’s lobby said investment in R&D in the UK had been falling over the last two years – at the same time as it had been increasing in France and the US. The Bush administration’s huge military budget helps to support spending on new technology within the US industry, while the UK’s Export Credit Guarantee Department has been criticised for acting more like a traditional bank than a support service for exporters.
Some argue the sector has already received a fair amount of government support, such as the £1bn launch aid to BAE Systems and Rolls-Royce for the Airbus A380. The Treasury will receive cash for each of these aircraft sold as part of the agreement – money that has not been planned for in the public accounts. This should be released to the civil aerospace sector, the unions argue.
Cuts across all sectors
Meanwhile, latest figures from the Chartered Institute of Purchasing and Supply show manufacturers across all sectors are cutting jobs at the fastest rate for three years.Demand fell again across manufacturing in November, leading to a cutback in production and a fresh round of job cuts.
The CIPS’s employment index (where a level of 50 indicates ‘no change’) fell to 42.7 in November from 45.0 the previous month as manufacturers reported they could no longer justify existing staff levels.