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AEROSPACE
In 2013, the UK aerospace industry had
a turnover of £25 billion, employed
84,000 people and contributed £9.4
billion to the economy.
29
It is the biggest
in Europe with a 17% global market
share of aerospace industry revenues,
making it second only to the USA.
2
The
sector has grown by 14% since 2011 and
is expected to grow at a rate of 6.8% over
the next few years, driven primarily by a
global growth in air traffic.
29
This growth
has been created by the increasing
demand from rising incomes in emerging
economies and is continuing to benefit
from low fuel prices. Aircraft production
is also benefiting from new technologies
and designs improving fuel efficiency
and safety, making older models
obsolete, creating additional need for
replacements. This is driving record
levels of aircraft production; the period
between 1981 to 2014, saw a 218%
increase in production and continued
growth is expected over the next 20
years.
30
UK Precision Engineers are
internationally recognised for their
talent for providing ground-breaking
solutions to complicated engineering
challenges such as the requirement
to reduce emissions and noise from
combustion engines and the redesign
of aircraft wings.
26
As a result, many UK
Precision Engineering companies occupy
pivotal positions in the supply chains of
customers such as Airbus, Bombardier,
GKN, Goodrich and Rolls Royce and
consequently, “UK Precision Engineers
serving the aerospace industry are
constantly coming onto the radars
of major [investment and corporate]
groups operating in this market. In
November 2011 listed UK aerospace
equipment manufacturer Senior acquired
Weston EU, a UK manufacturer of aero-
structures, for £54 million as part of the
group’s strategy of widening its portfolio
of products for the upcoming Airbus
programmes. On-going consolidation is
expected with the likes of Gardner, GKN
and Meggitt all on the hunt for suitable
targets.”
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AUTOMOTIVE
The UK automotive industry is very
active and successful, currently
accounting for 4% of GDP (£60.5
billion) and providing employment
for more than 700,000 people in
the UK.
24
With increased incomes
and the unprecedented low interest
rate environment
25
leading to
increased spending on transport,
the opportunities for continued
development are encouraging. Exports
represent around 50% of total sales
26
and the industry built 1,597,433 vehicles
across more than 70 different types
of model in 2013, generating exports
of £30.7 billion, equating to 10% of the
UK trade in goods”.
2
These impressive
figures make the industry the second
largest vehicle market and fourth
largest vehicle manufacturer in the EU,
as well as the second largest premium
vehicle manufacturer after Germany.
24
Ernst and Young feel that “Optimism
in the sector has never been higher”
27
and Mike Hawes, Chief Executive of the
Society of Motor Manufacturers and
Traders echoes this positivity, stating “In
recent years, the UK has benefited from
significant investments by many of the
world’s major vehicle manufacturers
including BMW Group, Ford, Vauxhall,
Jaguar Land Rover, Nissan and Toyota.
This attests to the global nature and
dynamism of this sector. The optimism
that exists, however, is not limited to
major manufacturers. The supply chain
that feeds into these companies is also
seeing demand increase with significant
growth opportunities, helping the wider
industry recover after a difficult few
years”.
28
Nevertheless, it seems that investment
from the UK supply chain is not keeping
pace with the opportunities created by
growing vehicle production, with the
Automotive Council identifying a £3.3
billion supply chain opportunity for UK
suppliers in 2012, where parts currently
produced outside the UK, could be
provided locally. KPMG believe that
this opportunity is likely to have grown
to approximately £9 billion since that
time and this is raising expectations for
further investment and employment
growth.
24
For properly funded and managed
Precision Engineers, the possibilities are
exciting, particularly since, “The focus of
numerous UK OEMs (original equipment
manufacturers) such as Aston Martin,
Jaguar, Bentley and Rolls-Royce
on serving niche, premium vehicle
segments allows Precision Engineers
to maintain a competitive advantage in
respect of engineering developments
and supply chain management.”
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In
addition, Precision Engineered products
have an important role to play in the
maximisation of fuel efficiency and
reduction of vehicle CO2 emissions,
both issues which are currently very
visible on the global stage.
These factors make Precision
Engineering entities involved in this
sector attractive propositions for auto
manufacturers looking to vertically
integrate important supply chain
entities into their groups and private
equity firms seeking to capitalise on the
potential value appreciation of these
According to Clearwater Corporate Finance’s report, Precision Engineering Sector Report 2012, Precision Engineering spans, “…
semiconductor chips, to the most advanced medical devices and the most sophisticated drill bits used in oil exploration, Precision
Engineered products play a vital role in the development of the overall economy”.
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Thismeans that Precision Engineering entities have
a symbiotic relationship with many manufacturing sectors whose success or otherwise directly impacts their Precision Engineering
suppliers and currently, that impact is generally largely beneficial. The most important sectors include:
SECTORS
