As we have heard, the North West has one of the most important clusters of aerospace activity in the UK – over 20 per cent of the overall industry. That is a remarkable achievement.
But the question I want to pose today is how we make sure that the North West, and the UK as a whole, retains its position in the global industry.
A snapshot today reveals plenty to be cheerful about – the UK has the second largest aerospace industry in the world, after the US; order books are full, and the market is expected to continue growing at around 4.5 per cent every year.
Of course, this creates challenges of scaling up; it reveals skills shortages and production bottlenecks. And puts a strain on the supply chain. But the solid market fundamentals are very important.
Not that everything is rosy. The obvious challenges are Brexit, increased competition from China and other countries, and environmental pressures.
Apart from these external pressures, there is also the $64,000 question about what the next moves within the industry will be. As you know better than I, when the product mix changes the entire industry responds, and there are winners and losers in that process, locked in or out, often for long periods of time.
We all therefore await with interest the possible launch of a new middle of the market aircraft and the effect that may have on the industry. And looking further ahead, the possibility of radical new aircraft designs, hybrid-electric propulsion, autonomous or nearly autonomous flight, and disruptive concepts such as urban air taxis. All accompanied by a raft of transformative events in the worlds of engineering and manufacturing.
What is the ATI’s role in preparing and positioning the UK for this future? I know that many of you already know this, so I won’t dwell on it too long. Fundamentally, we have two roles:
• Firstly, to create a technology strategy for UK civil aerospace; and
• Secondly, to develop a portfolio of R&D activity that will make the strategy come true.
The strategy is market-led; it aims to anticipate market needs in the short, medium and long terms, and to translate those into technology requirements. We focus on areas of UK strength, such as propulsion, structures, and systems.
We also devote time and resource to the whole aircraft, even though we no longer make large civil aircraft in the UK.
We do this because we believe that if we are to continue producing large and critical components and systems, we need to understand how they integrate into whole aircraft physically, and what effect they have on the whole aircraft performance.
Do look at the strategy, called Raising Ambition. It is available on our website, and – I would say this – it is packed full of insight and information. Some of you here helped us write it, which is of course why it is so good.
We have bolstered the overall strategy in recent months with some more focused publications on digital technologies, through-life engineering, product verification, emerging systems technologies, and emerging propulsion technologies.
Moving onto the technology portfolio, so far, we have launched almost £2bn worth of research and development projects. The concept of committing a large sum of money for the long term is proving its worth.
Major companies are responding to the certainty it provides by committing to large, ambitious and strategic projects which should create the building blocks for future success, at least for the medium term.
Rolls-Royce’s UltraFan programme marks a step change in gas turbine performance. Airbus’ wing of tomorrow is exploring a series of design possibilities enabled, or driven by, new materials, different engine configurations, manufacturing demands, and the constant search for improved aerodynamics. GE and BAE Systems are working up new cockpit concepts for the future flight deck, and GKN is driving forward new approaches to structures and manufacturing, mainly in composites and additive manufacturing.
So far so positive. After just over three years of operation, however, we can see what is working well and where some tweaks to the ATI model may be in order.
This is not just a matter of comparing our progress against the mission we were given at the outset, although that is clearly part of it. In addition, we have to take stock of changes in the sector and in the outlook for the future.
To take one example, when we started out in 2014, it was expected that a new single aisle aircraft was fairly imminent. But that has moved to the right. Other things have happened in the single aisle world, with upgrades rather than replacements. There is the focus on the middle of the market, as I mentioned earlier, but that is a different proposition from the new single aisle envisaged five years ago.
Similarly, nobody took aerial air taxis particularly seriously in 2014. Now they do. Indeed, the two major technology areas of electrification and autonomy have recently taken much more prominent roles in the thinking about the future.
What does this mean for the ATI? We have seen that whilst interest in developing technologies for the short and medium terms is very strong, there has so far been much less interest in developing technology for the longer term – the more disruptive and speculative technologies which could be connected to the moves towards electrification and autonomy, that I mentioned a moment ago, or could be other things.
We are keen to do something about this. Nobody knows when the next major shift in aircraft technology will take place, but if we assume that it happens in the 2030s, the UK needs to start preparing itself now. There is a lot to do. In basic science, in safety, in aircraft configurations, and in manufacturing.
We are therefore casting the net widely on how to better support disruptive innovation, and how to attract the best of it into the UK.
We are looking at what other countries are doing, analysing innovation support mechanisms, the role of academia, and successful disruptive ecosystems.
A lot of our work on disruption will be with other people and organisations. Universities and other institutes are the main specialists in early stage research. But the ATI expects to play an important role in catalysing activity that would not otherwise take place, coordinating groups of interest – or even competitors – and ensuring alignment between technology and the market.
We will also not forget the need to advance with more immediate priorities. Whilst we all want to succeed in the markets of the further future, we need to address the issues of the present and the near future in order to tackle the long term at all.
More work on longer-term technology is therefore one important area for us, and as you may be aware, the ATI has recently fronted two expressions of interest into the Industrial Strategy Challenge Fund – one on high value design, called the Brunel challenge; and one on electrification in air transport. [more on these?]
A related but separate issue is the supply chain. You will have noticed when I gave examples of ATI-supported research earlier that I focused on big building-block projects led by companies at top of the supply chain – Airbus UK, Rolls-Royce, GE, GKN etc.
I make no apology for that – it is important to anchor major, complex systems and components in the UK and to provide a firm footing for the rest of the industry here.
But there are many reasons to want the whole supply chain engaged in innovation, not just the top tiers.
Firstly, the top tier companies want an innovative and competitive supply chain, to maximise day to day operational performance.
Secondly, I mentioned earlier that dramatic changes in engineering and manufacturing are on their way – new materials, additive layer manufacturing etc; the entire supply chain needs to be able to respond to those changes to remain competitive.
Thirdly, it is becoming apparent that some of the newest, most disruptive technologies are likely to come from the supply chain, not from Primes.
Fourthly, there is a general economic point about spreading innovation as far as possible throughout the economy – innovation accounts for around 40 per cent of economic growth, so promoting it further in a sector like yours where productivity is so high relative to the rest of the economy has clear advantages.
You may wonder how much supply chain engagement there is in the ATI portfolio. It is a difficult question to answer, since strictly speaking the entire UK aerospace sector is in the supply chain – in the absence of a UK Prime. However, to take an imperfect approximation, the number of SMEs, there are around 120 involved in our projects, out of a total number of 217 organisations.
And there will be more who are active as subcontractors but may be unknown to us.
However, it is also the case that many of those SMEs are involved with us not because they are consortium members of our strategic projects, but because they applied for support in one of the open R&D calls that we have run.
For whatever reason, we see few applications from the supply chain outside of bespoke initiatives aimed at them. This is a pity.
There is nothing to stop supply chain companies, or groups of companies, from pitching propositions to us, and I hope more will do so.
The ATI is already fully engaged in working with the supply chain through NATEP – known to many of you, I know, but if you are not familiar with it, it stands for the National Aerospace Technology Exploitation Programme. We have just closed a second NATEP call under the ATI, the eighth call for NATEP overall, and the applications will now go into the scrutiny process in the regions before a final decision is taken on the successful projects in the summer.
ATI took on NATEP for a trial period of two years and with a budget of £8m. One clear signal we have received from NATEP is that demand for it is high. This has resulted in our using the budget faster, and we are therefore already beginning to consider whether and how to roll the programme forward into a further phase.
NATEP, it is worth stressing, is designed to help companies that are new to R&D. Projects are small – up to £150,000; companies are supported by technology managers, they receive significant amounts of feedback from industry peers in the regional advisory panels, and they are supported by an end user company which is interested in exploiting the resulting technology.
Once companies know the R&D ropes, however, NATEP is inappropriate. We are therefore thinking about how best to encourage companies that start off down the R&D route to continue to innovate.
I think it is well known that the ATI is considering a further open collaborative R&D call in 2018. We have in mind a call for projects that are larger than NATEP – above £300,000, but below £2m gross. We want to make it quite focused, concentrating on stimulating particular outcomes for the sector and the UK economy.
That is partly about the technologies it should cover, and we are consulting on those with a wide range of industry advisors. It is also partly about the time period for the technology. At one end of the spectrum, we want to encourage industry leaders to clarify the technologies they want the supply chain to develop – primarily perhaps ideas that improve products and operations and reduce costs.
At the other end of the spectrum, we want to encourage companies to come forward with ideas for disruptive technologies. I mentioned before that we are trying to encourage more R&D activity in that space. We also want to test the proposition that much disruptive technology is likely to come from the supply chain.
And we want to give supply chain companies with radical ideas a way of bringing those ideas on.
So that is a brief glimpse into the plans we are working up at the moment. I hope we will be able to bring these to fruition later this year.
In conclusion, therefore, the ATI programme has been operating for almost five years. It has established a set of large ambitious programmes in the UK’s main areas of strength to position the industry for the anticipated next stage of progress. It is turning its attention more to disruption and to stimulating more innovation in the supply chain. NATEP has demonstrated a high level of interest and helped a number of companies and impressive technologies get off the ground. We are discussing another round of NATEP calls. We are also working up a plan for an open collaborative call later this year that could cover both the near term and/or future-looking disruptive technologies. But don’t feel you have to wait for this. The ATI programme is open to all. If you have an idea, please come and talk to us.