The aerospace industry in the UK needs to take urgent collective and individual action to develop e-business strategies, in order to counter the threat of market consolidation and domination by US operators, according to the DTI and PA Consulting Group (PA). These are the implications from a UK Aerospace report commissioned by the DTI and carried out by PA, which revealed that the industry is struggling with how best to embrace e-business.
The most probable scenario for the UK aerospace industry, given its lack of e-business awareness, is one characterised by contraction and a marginalisation of their contribution to global aerospace trade, if the market becomes increasingly dominated by US aircraft manufacturers (primes).
The study, supported by the Society of British Aircraft Companies (SBAC) and the UK Council for Electronic Business (UKCeB), found that the UK aerospace industry is certainly aware of the potential impacts of e-business for enabling potential cost savings and market transformation. However, while there is much discussion of web enabled e-business, this has still to be translated into positive business benefits, as there has been little significant impact on the sector by e-business to date.
Critically the report reveals that neither customers nor suppliers in the UK are applying pressure to adopt e-business. However, it highlights the pressures from US primes, acting as both e-enabled suppliers and customers to UK companies. The perception in the UK is that the driving force for web-enabled collaboration will be US primes, mandating links into customer specific systems.
Jeremy Hammant, e-supply chain expert and PA consultant responsible for the study, commented on the implications for UK aerospace manufacturers, particularly those in the SME market.
"The widespread adoption of web enabled e-business will almost certainly result in the acceleration of existing industry consolidation and globalisation and a drive for cost reduction. The result will be that UK design authority may be increasingly relinquished to overseas competitors, impacting long-term on UK competitiveness in both manufacturing and lifetime support of aircraft and systems."
There is an imperative for individual and collective action
The report urges that on an individual basis, UK aerospace companies should urgently consider reviewing their overall business strategies in the context of e-business opportunities, and prioritise their e-business initiatives.
"They can then begin the process of developing collaborative approaches, through sharing information with trading partners", Jeremy Hammant adds.
Collectively, the UK aerospace industry could be establishing a shared website providing links to current initiatives and sources of relevant e-business information. The aerospace industry associations (including the SBAC and regional bodies) and UKCeB are well positioned to provide the focal point for these communications.
The DTI itself has already taken positive steps by producing an interactive CD-ROM version of the report, providing details on other non-aerospace e-business initiatives of value to SMEs.
However, Jeremy Hammant comments:
"An industry-specific, externally-driven initiative is essential to bring together companies operating at different positions in the value chain and project lifecycle, and help break down the barriers currently inhibiting the realisation of industry-wide e-business benefits."
He concludes:
"To take no action would be to miss the opportunity for the UK to secure an international advantage through e-business in the aerospace industry, and risk increasing domination by more thoroughly e-enabled US competitors."
