Uncertainty Grips The Aerospace & Defence Industry

Aerospace Sector Update –  3/2018

It was the Farnborough Airshow last week and it is clear that the sector is being gripped by two major concerns: Trump and Brexit.

US manufacturers told me that they face a threat from the trade wars with the EU and China which President Trump seems hell bent on fostering. US manufacturers are already seeing their costs escalating with many US-based raw material suppliers reducing the validity of their price quotes from the usual 30 days to just 14. Quite literally “Buy it now before prices go up!”

Meanwhile, Brexit remains a real concern to just about everyone.  The US manufacturers, in particular, find the whole concept to be perplexing.  They simply cannot understand the thought process that that leads someone to vote to walk away from membership of the world’s largest and most successful market place.

In talking with European colleagues, a major concern is that the EU will be vastly weaker without the UK than with it. Without exception they would like to see the Brexit process reversed and for the UK to remain. Equally, whilst I am sure that there must be some UK aerospace professionals who support Brexit, I’ve yet to meet one!

However, on a slightly more positive note, orders do seem to be remaining relatively stable. But as time passes there is clear evidence that uncertainty is really beginning to grip the sector where, overwhelmingly, the major UK aerospace & defence contractors simply want greater visibility as to where the UK is going.

The message is that costs are going up and will continue to do so until the trade wars end and our future relationship with the EU agreed. Perhaps even more worryingly the current uncertainty hinders investment so that productivity improvement becomes even more key to maximising performance.

At Ramsey Hall we believe Aerospace and Defence organisations should prepare now by:

Stepping up investment in Lean – Operational Excellence and Continuous Improvement. Clients who work with us to improve change readiness and employee capability benefit from better attitudes and discretionary behaviours.

Invest in skills Talent in this sector is scarce and people are reluctant to move.  We have advised on several significant aerospace appointments recently and finding good people is a real challenge.  Our approach is never to give in to the temptation of making a poor hire as invariably this will prove far more damaging than not recruiting at all!

Develop a high-performance culture Many manufacturing organisations lack high performance work practices.  Clarity around roles, responsibilities, behaviours and work practices have long been high priorities for clients of our sister practice, The Occupational Psychology Group.  Their advice has helped clients to reduce waste, retain precious skills and maximise profitability.

There is no doubt that aerospace and defence sector organisations need to make their businesses lean and agile before the gathering, competitive ill wind hits the sector.

Do please email me if you’d like to chat: pboyle@ramseyhall.com

Phil Boyle is a past Chairman of the Board of Trustees and a Past-President of The Royal Aeronautical Society.  He is widely recognised as a leading advisor on leadership and organisational matters within the Aerospace and Defence sectors.