SMEs are taking off thanks to the aerospace industry

Managing Director UK Sales | FedEx Europe

The aerospace industry is flying high, and the UK is one of the biggest players boasting the world’s second largest industry[1].  As a major aerospace exporter, in 2013, almost three-quarters (74 per cent) of total British aerospace exports were outside of the EU. Consequently, aircraft manufacturers’ order books have never been so full, leading to a host of knock-on benefits, especially among Britain’s small and medium-sized enterprises (SMEs).

Soaring growth

The aerospace industry offers huge potential, turning over a staggering £30billion[2] and contributing over £9 billion to the UK economy[3].  In the first quarter of 2015 alone, the value of commercial aircraft deliveries hit a record £5billion[4], emphasising a rise in demand as a result of increasing passenger numbers.

It’s no surprise therefore, the UK government pledged £100 million to boost the aerospace sector[5], in line with its aim to increase the value of the industry to £40 billion by 2030[6].  The UK is however facing mounting international competition, particularly in Europe, with many countries increasing investment in skills, technology and supply chains.  In France, for example, the aerospace industry saw revenues increase by 9 per cent in 2013, and it is now the country’s leading source of exports, with 79 per cent of sales abroad[7].

Positive impacts on SME activities

The strong performance of the aerospace industry is good news for SMEs.  Indeed, a vibrant ecosystem of small and medium-sized enterprises thrives alongside global-scale aircraft manufacturers.  Ranging from firms specialising in the manufacture and repair of aircraft components to suppliers, design firms and aerospace consultants, the aerospace chain is home to a wide diversity of jobs.

Moreover, besides the natural drive in the sector benefiting SMEs, they also gain from the fact that the aerospace industry is very largely export-based.  We’re convinced that overall, SMEs that develop international activities are far more likely to grow[8].

Aerospace SMEs are in a race against the clock

The steady growth in air traffic has resulted in an increased need for maintenance operations, throughout an aeroplane’s life cycle.  As a result, suppliers around the world play a key role delivering aircraft parts from sub-assemblies and structural elements to aircraft manufacturers.

Due to the extremely high cost and rarity of parts, it’s vital for suppliers to be able to honour their incoming orders on time and be able to dispatch these as quickly and reliably as possible.  Otherwise, they could run the risk of paying extremely heavy penalties in the event of late delivery, particularly as keeping an aircraft grounded is a very costly affair.

In short, the aerospace industry has great potential for British SMEs.  The challenges in terms of reliability, innovation and agility are considerable, but the results are well worth it.

To help achieve success in a growing industry, we’ve put together our top four tips about how your business can flourish in this dynamic sector:
1. Stay up-to-date with the latest trends and technologies.  Aerospace is a high technology industry and the UK is on the frontline of any advances, so keep evolving your company so you can stay ahead of the game and boost your business.
2. Research functional safety standards.  Safety is a crucial requirement of the aerospace industry, so always ensure your components meet the strict certification standards.  Not only from a safety point of view but to allow you to work with the major aerospace manufacturers and suppliers.
3. Streamline your supply chain.  Aircraft manufacturers expect all components to arrive on time and in a perfect condition, otherwise they impose hefty fines.  Therefore, work with a logistics provider that offers full visibility and a highly reliable service when transporting your product, so you can remain in control.
4. Keep on top of international regulations.  Many countries have specific legislation when it comes to the importation of aerospace products, and regularly update them.  Even if you’ve been exporting to a region for years, always conduct thorough research to avoid being penalised.

References
1. ADS Group, 9 February 2015
2. ONS, 6 November
3. CBI, 13 November 2012
4. The Daily Telegraph, 28 April 2015
5. Gov.uk, 3 February 2015
6. CBI, 13 November 2012
7. GIFAS Review, 9 April 2015
8. European Commission, 2013

For further information visit: http://www.fedex.com/gb/