FedEx Europe’s David Poole outlines how SMEs can enter and grow in the hard-to-crack aerospace sector.
The British aerospace sector is currently flying high, with the UK boasting the second largest worldwide, with its value set to reach £5 trillion by 2035.
With such a heightened level of activity among UK’s aircraft manufacturers, there are a whole host of potential benefits and opportunities now available for Britain’s small and medium-sized enterprises (SMEs).
Industry reaching new heights
It is of no surprise the UK government is boosting efforts to protect the sector, pledging £100 million, in line with its aim to increase the value of the industry to £40 billion by 2030.
The industry offers huge potential, contributing over £9 billion to the UK economy, and turning over a staggering £30 billion.
In the first three months of 2015 alone, commercial aircraft deliveries reached a record £5 billion, revealing the rise in demand as a result of increasing passenger numbers.
The UK is facing mounting international competition, with EU rivals increasing investment in skills training, supply chains and technological innovation.
For instance, in France, the aerospace industry saw revenues increase by 9% in 2013, and it is now the country’s leading source of exports, with 79% of sales abroad.
Opportunities for SMEs>
The aerospace industry’s strong performance is great news for UK SMEs with a vibrant ecosystem of small and medium-sized businesses thriving alongside the nation’s global-scale aircraft manufacturers.
From aerospace consultants and design firms to companies specialising in the manufacture and repair of aircraft components, the aerospace supply chain is home to a wide variety of businesses.
What’s more, Britain’s SMEs are not only benefitting from the natural evolution of the sector but also from the fact the UK’s aerospace industry is mostly export-based.
Air passenger numbers are expected to reach 7 billion by 2034, leaving aerospace manufacturers around the world striving to keep up with demand.
Therefore, SMEs involved in the sector have the opportunity to explore international prospects.
This is positive for SMEs in this sector as they are far more likely to grow than their counterparts who operate exclusively on a national scale.
The race is on for aerospace SMEs
With such growth potential, the stakes are high for smaller businesses who wish to engage with the aerospace industry.
As international air traffic volumes continue to grow, aeroplanes require a higher level of maintenance during their lifecycle, increasing demand for maintenance operations.
With the high cost of certain parts, it is vital that suppliers have the capacity to honour their incoming orders in a timely fashion, dispatching them as quickly and reliably as possible.
If a business was to fall short, they run the risk of paying extremely heavy penalties, especially in the event of late delivery, as keeping an aircraft grounded is an astronomically expensive affair.
Below, we have put together our top five tips to help SMEs prosper in this flourishing sector:
1. Immerse yourself in the industry. To optimise your activity in the sector, be sure that you are aware of the principal businesses and the latest industry trends. By subscribing to newsletters and attending the events of industry bodies such as the Aerospace Technology Institute, you can be sure your business is providing a much needed service.
2. Streamline your supply chain. Aircraft manufacturers can impose hefty fines if components fail to arrive on time and in a perfect condition.
Therefore, be sure to work with a logistics provider that grants full visibility as well as a highly reliable service for transporting your products, so you remain in control of your enterprise.
3. Be aware of international regulations and red tape. When exporting aerospace products, you will come across country specific legislation, which is updated on a fairly regular basis. Even if you’ve been exporting to a region for years, make sure your regulatory knowledge is up to date, or seek guidance to avoid being penalised.
4. Safety is paramount. Upholding safety standards is an inevitable requirement of being a part of the aerospace supply chain, so make sure your components meet the certification standards.
This is not only critical from a safety point of view but will also allow you to work with the major aerospace manufacturers and suppliers.
5. Prepare for prosperity. Ensure you are prepared for the demand that will accompany increased trade and exporting opportunities.
Funding is often required to support SMEs as they transition to their next stage of growth, so make sure you research the resources available ahead of time.
Useful information is available from organisations such as the UKTI, Federation of Small Businesses or even your logistics provider.
When prepared, the growth opportunities in this sector are truly endless.
David Poole is the managing director UK sales at FedEx Europe.