LONDON - British aerospace defense sales rose last year, but figures in the annual industry survey launched June 9 by the trade organization ADS confirmed the good times are coming to an end for the sector, as orders plummeted by nearly one-third compared with 2009.
Part of the defense orders downturn could be accounted for by the abnormally high bookings in 2009, but last year also saw the impact of a slowdown in defense spending in the U.K. and Europe, said Graham Chisnall, the managing director of aerospace and operations at ADS.
The survey, which is a barometer on the health of the aerospace sector here, said defense orders from Britain to the European Union slumped 65 percent to 1.43 billion pounds ($2.35 billion).
The European Union remained Britain's biggest customer overall in aerospace sales at 6.53 billion pounds. Sales to the U.S. came in at 3.07 billion pounds, an 8 percent boost.
U.K aerospace sector orders overall fell 11 percent to 29.1 billion pounds, but that was entirely due to the downturn in defense as order delays and weak bookings signaled tougher times ahead as many nations begin to cut defense spending to help resolve wider financial problems.
Britain's aerospace industry is reckoned to be the world's second-largest, behind the U.S., and a leading driver of high technology manufacturing in the U.K. Chisnall warned, though, that Britain would have to invest more in basic research and technology if it wanted to retain its position in the aerospace world.
Industry is investing heavily in program development but that masks the fact that work on enabling technology is "declining year-on-year in both sectors but is particularly prominent in civil aerospace," he said.
"A strong industry partnership together with sustained public and private investment will be crucial to maintaining the long-term future of the sector. We have made an encouraging start with high-level meetings that involve industry seniors and are chaired by Vince Cable [the government's business secretary] and Mark Prisk [the business minister]," he said.
Civil orders registered a 3 percent rise to 19 billion pounds. Sales in the sector were up 1.5 percent to 19 billion pounds, and Chisnall said growth projections in such places as China and India offered the potential for civil growth rates not seen before.
The growth was of such magnitude that it could replace the downturn in defense "if companies can exploit it," he said.
It wasn't all doom and gloom for defense, though. The story on revenues generated for the year by the defense aerospace industry was more upbeat with a 2.8 percent rise for the year to 12.11 billion pounds.
Even domestic defense sales rose marginally, by 0.6 percent. Chisnall said that figure had been boosted by government spending on urgent operational requirements for the British military fighting in Afghanistan.
With British combat troops due to be out of Afghanistan by 2015, spending on urgent operational requirements may not provide a sticky plaster for domestic defense aerospace sales for much longer.
Among the various defense sectors, the ADS survey pointed up a 27 percent slump in missile sales from the U.K. to 780 million pounds. The sector is dominated by MBDA but also includes Thales UK and Raytheon.
Defense still accounts for 52 percent of British aerospace sales. Just more than 30 percent of that comes from the export market. A graph produced by ADS showed Britain was massively more dependent on the export market for its total aerospace sales than either the U.S. or the European Union average.
The U.K. figure is 19 percent while, at the other end of the scale, U.S. dependency on its government for aerospace sales stands at 57 percent.
Part of the defense orders downturn could be accounted for by the abnormally high bookings in 2009, but last year also saw the impact of a slowdown in defense spending in the U.K. and Europe, said Graham Chisnall, the managing director of aerospace and operations at ADS.
The survey, which is a barometer on the health of the aerospace sector here, said defense orders from Britain to the European Union slumped 65 percent to 1.43 billion pounds ($2.35 billion).
The European Union remained Britain's biggest customer overall in aerospace sales at 6.53 billion pounds. Sales to the U.S. came in at 3.07 billion pounds, an 8 percent boost.
U.K aerospace sector orders overall fell 11 percent to 29.1 billion pounds, but that was entirely due to the downturn in defense as order delays and weak bookings signaled tougher times ahead as many nations begin to cut defense spending to help resolve wider financial problems.
Britain's aerospace industry is reckoned to be the world's second-largest, behind the U.S., and a leading driver of high technology manufacturing in the U.K. Chisnall warned, though, that Britain would have to invest more in basic research and technology if it wanted to retain its position in the aerospace world.
Industry is investing heavily in program development but that masks the fact that work on enabling technology is "declining year-on-year in both sectors but is particularly prominent in civil aerospace," he said.
"A strong industry partnership together with sustained public and private investment will be crucial to maintaining the long-term future of the sector. We have made an encouraging start with high-level meetings that involve industry seniors and are chaired by Vince Cable [the government's business secretary] and Mark Prisk [the business minister]," he said.
Civil orders registered a 3 percent rise to 19 billion pounds. Sales in the sector were up 1.5 percent to 19 billion pounds, and Chisnall said growth projections in such places as China and India offered the potential for civil growth rates not seen before.
The growth was of such magnitude that it could replace the downturn in defense "if companies can exploit it," he said.
It wasn't all doom and gloom for defense, though. The story on revenues generated for the year by the defense aerospace industry was more upbeat with a 2.8 percent rise for the year to 12.11 billion pounds.
Even domestic defense sales rose marginally, by 0.6 percent. Chisnall said that figure had been boosted by government spending on urgent operational requirements for the British military fighting in Afghanistan.
With British combat troops due to be out of Afghanistan by 2015, spending on urgent operational requirements may not provide a sticky plaster for domestic defense aerospace sales for much longer.
Among the various defense sectors, the ADS survey pointed up a 27 percent slump in missile sales from the U.K. to 780 million pounds. The sector is dominated by MBDA but also includes Thales UK and Raytheon.
Defense still accounts for 52 percent of British aerospace sales. Just more than 30 percent of that comes from the export market. A graph produced by ADS showed Britain was massively more dependent on the export market for its total aerospace sales than either the U.S. or the European Union average.
The U.K. figure is 19 percent while, at the other end of the scale, U.S. dependency on its government for aerospace sales stands at 57 percent.
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