February 22, 2016, by Herve Morvan

Britain in the EU: Research and Technology, Aerospace and the Supply Chain

So, this is it. We know that Britain will be voting on staying or leaving the EU on the 23rd June this year.

The debate has rapidly ramped up this weekend as a consequence of this date being set. However, to date the debate seems to have focused primarily on the incidental – for example on which politician was going to join which camp not on the pros and cons of each position. In truth, very few facts have been aired. It is not that these facts are unavailable; the aerospace industry, universities and the science sector for example have published figures and used these to determine their respective positions,  which could form part of the debate. These figures highlight two things: (1) the key role played in the UK economy by the aerospace and defence sector and (2) the benefits to the UK of remaining in the EU.

Naturally, there are two sides to the argument involved ahead of the forthcoming EU referendum, political and economic. This post is choosing to focus on the economic case rather than the political.

Being Part of the European Network

Most aerospace companies trade in Europe, work across several European countries and benefit from research funding for the sector. Being in Europe means that the UK companies are part of a strong network and can influence the political and economic agendas –Ric Parker, Rolls-Royce CTO, for example, is chairman of the Clean Sky Governing Board. With the UK being the second largest aerospace economy in the world, being well connected and part of a simple, free trading Europe is very important to the industry in terms of sustaining this position. Giants such as Airbus and Rolls-Royce are therefore strongly behind the IN campaign.

At a time where no company is able to build an aircraft or engine single handedly, being part of such a network is a key strength. One potential area of concern for British companies is the lack of influence (and connectivity) they would have should Britain leave the EU, not to mention the risk of fast becoming isolated. This, besides the funding and some of the other practical considerations perhaps, is what is central to their view. The same is true for academia, for which shaping the agenda, sharing knowledge and being part of a rich network is vital too.

R&D Investment and Skills

Figures exist here too to make this case, viz. The Royal Society overview issued in December 2015. Britain attracts over 50% more in EU monies to support research than it invests in the EUUniversities UK have come out strongly to make this case and to support Britain remaining in the EU. On the training front, Britain also receives over 25% of all the Marie Curie funding that is allocated, which means two things: (1) we can attract the very best of talent to study within our networks and work on projects we have defined; (2) a lot of this talent stays in the UK and, where it doesn’t, the UK can still project its ways of thinking and culture onto the rest of the world –influencing the agenda and making the UK a pivotal place.

Local Jobs

We see here that a factual economic argument demonstrates the benefits for the UK and UK industry of staying in Europe. This argument extends beyond the large OEMs and academia too; the local supply chain is a benefactor of the investment made by the likes of Airbus in the UK for example. Another clear illustration here was given last week by the president of Boeing UK, Sir Michael Arthur at a NATEP event at which he stated that up to 65% of an aircraft was made in the supply chain. Having strong and active large players on-shore benefits the local economy, and being in Europe is a determining factor too in this instance, as it provides stability which more readily enables inward investment to support the local production tool and, in turn, leads to the creation of jobs in the broader local network.

The next few months will be interesting. One must expect that the debate will progress onto the more concrete and factual. On balance, it is my view that, for science, research & technology and the continuous delivery of innovation to the aerospace sector, across the manufacturing tiers, with associated productivity gains and jobs creation, the benefits are greater in Europe than out.

Source of the featured image: www.tes.com

Posted in Director's ThoughtsEuropeFundingIndustry InsightR&TSkills