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Home | Update | LATEST ISSUE | Gallery | FR Profile | Datafiles | FR 2/98 EUROPEAN INDUSTRY SEES BETTER TIMES AHEAD by Norbert Burgner At the beginning of November 1997, the European Association of Aerospace Industries AECMA presented the result of an internal study about the development of the branch. According to the study, the European aerospace industry is progressing as forecasted. Following the end of the Cold War and the resulting defence budget cuts, along with the decline in the beginning of the nineties, which was caused by the Gulf War, the branch has recovered. While the record turnovers of the late eighties have not been reached yet, the industry managed to increase the turnover by 16 percent within three years, from DM74,9 billion in 1994 to DM86,9 billion in 1996. The branch achieved this with 38 percent less employees as compared to 1988. At the bottom line, the success is based on a significantly improved productivity. While in 1995 the revenues were generated in a parity between governmental and commercial orders, this relation has meanwhile shifted towards the private sector (70:30). According to the study, this development is based on an only moderately moving military market on one hand, and on a significantly increasing need for civil airliners on the other. AECMA's study states that while in the USA the above mentioned parity between governmental and private businesses still applies, the European aerospace industry is becoming increasingly independent from the government business. The roots of the European Aerospace Industry (EAI) are clearly linked to the military business. From EAI's 1996 total turnover, reportedly 92 percent was generated by the four leading European aerospace nations, France, Great Britain, Italy and Germany (94 percent of the companies that have generated the total turnover are organized in the AECMA). Approximately 48 percent of the gross earnings are coming from the business with the final product, i.e. the aircraft. 17,9 percent are generated in the engine market, 15 percent are equipment, and 10,5 percent are originating from the space business. A further 6,5 percent are made with guided weapons and 5,4 percent in the production of components. In all of these areas (except for guided weapons) the focus is shifting towards civil applications. In 1996, EAI companies employed a total of 343400 people. The market researchers, who are responsible for the study, believe that another 700000 people are indirectly maintained by the aerospace branch. This means that, all together, the European aerospace industry is generating approximately one million work places. 87,5 percent of these jobs are linked directly to aircraft manufacture. 7,3 percent of the employees are working in the space segment and 5,2 percent are occupied in the guided weapons business. The majority of the jobs are generated again by the four European countries with the largest economical power, i.e. France, Great Britain, Germany, and Italy, followed by nations with small industrial infrastructures, such as Spain, Sweden, the Netherlands, Austria, or Luxembourg. Most of the employees are working in production itself. The 20 percent of the work force that are working in the research and development sections, according to analysts, underline the importance of these two areas for the aerospace business. EAI is spending an average of 18,3 percent of the total turnover (ECU8,1 billion) for research and development work. This is much more than, for example, the booming information technology industry is spending on R&D (13 percent of the earnings). The EAI companies' own financial initiative is almost at the same level as their activities in the frame of government contracts. Most of the EAI companies are small and medium-size firms (with a maximum work force of 1000 employees). Approximately 15 percent of the companies employ 1000 to 10000 people. Around two percent of the companies are large-scale corporations, such as Dasa or the French state-owned Aérospatiale (more than 10000 employees). In 1996, the world's leading aerospace nations generated a turnover of ECU136 billion. The EAI contributed to this with approximately 32 percent. With approximately 55 percent of the earnings, the US aerospace industry, which is structurally double the size of the EAI, kept its dominant position in the world market. However, as compared to the aerospace industries of Canada and Japan, the EAI has a lead by the factor five. The EAI's trade balance of ECU18 billion for 1996 (all exports minus the imports) is essentially positive news. Still, due to extensive imports from the USA, there is room for improvement for the European nations to do business with the other side of the Atlantic. From page 24 of FLUG REVUE 2/98 Home | Update | LATEST ISSUE | Gallery | FR Profile | Datafiles | FR 2/98 Copyright 1998 by Motor-Presse Stuttgart. All rights reserved. Last updated January 9, 1998 FLUG REVUE, Ubierstr. 83, 53173 Bonn, Germany