By Graeme Davies
While many lament the demise of heavy industry in Wales, and it is true that some major employers of the past have fallen by the wayside, this is not just a Welsh problem – it is a disease which has infected much of the developed world as business was exported to cheaper regions.
But Wales retains some industries which thrive, one of which is aerospace. Indeed, the Welsh aerospace sector is well placed as the global aerospace markets, especially in civil aviation, are in a structural growth phase driven by booming demand from emerging markets where aviation is in a long term growth trend.
This is particularly good news for the Welsh aerospace industry, which is home to 160 different companies at all stages of the supply chain and who employ a total of 23,000. While this may pale in comparison to the numbers employed in the ‘heavy lifting’ industries of yesteryear such as coal and steel, it is still a significant number to the Welsh economy.
The Welsh aerospace industry is neatly diversified between the civil and defence markets, indeed defence has enjoyed many years of positive conditions but central government spending cuts in the developed world have introduced a little more uncertainty into forecasts for defence spending. Wales boasts the likes of GE Aviation, General Dynamics and Raytheon which serve primarily the UK and US defence industries.
But the biggest player in the Welsh aerospace sector by far is Airbus, which employs 6,000 at its facility in Broughton, North Wales and is manufacturing the wings for a range of Airbus planes including the A380 ‘super jumbo’ which has secured billions of euros worth of forward orders from many of the fastest growing aviation markets in the world as well as closer to home as western airlines renew their fleets.
Welsh aerospace is not purely about a handful of major players though, among the 160 companies operating in the sector there are companies providing services to the major players such as Airbus, and also decommissioning and refurbishing air liners for resale as well as a host of technology and aerospace research businesses. And the growing reputation of Wales for high tech engineering and services is benefiting the industry in an era when the trend for offshoring and shifting to low cost economies has seen some retrenchment and a growing trend for some companies to shift to ‘near shoring’.
Threats do exist though. In countries such as China domestic players are being heavily backed by their government to play a much larger part in the booming aerospace story there. This is a genuine issue that Welsh aerospace operators need to be alive to.
But the global aerospace sector is a huge market and is still forecast to grow at a rapid pace in the coming years even though commercial aviation production is at record levels. Global airline profit is forecast to hit $7.5bn in 2013, up from $4.6bn as recently as 2009.
The growth of emerging markets is reflected by the fact that Asia Pacific will account for almost a third of all air traffic by the beginning of the 2030s. This reflects the scale of the opportunity available to Welsh aerospace businesses but challenges remain, including for those who are plugged into defence markets in Europe and the US where pressure on spending is likely to remain significant for some time to come.