FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1966
1966 - 0300.PDF
fL/GHT International, 3 February 1966 FUTURE ORGANISATION OF THE INDUSTRY Aero-Engines Competition between Bristol Siddeley and Rolls-Royce at the design ste%e 's somewhat more real. They are both more active than the airframe manufacturers in initiating proposals for new develop- ments before operational requirements are drawn up. This arises from the nature of aero-engine business, and is generally judged to have benefited the technical standards of British engines. ... In the later stages of projects, competition between the groups is modified through a production-sharing arrangement, which the Government has approved. Rolls-Royce and Bristol Siddeley have both said that, as with airframes. the main technical and financial competition comes from abroad. Conclusions on Future of Main Groups The Committee are unconvinced that the existing competition between the main airframe groups and between the main aero- engine groups in the industry is either particularly real or particu- larly useful; and we doubt whether the quality of British military and civil aircraft and aero-engines would suffer if it disappeared. In future, the knowledge that the Government might buy military aircraft from the United States should be a far greater stimulus. Competition between United Kingdom firms is not a consideration which, in our view, need affect decisions on the future organisation of the industry. Against the background of an austere future for the industry, mergers between the two airframe groups or between the two aero- engine groups would no doubt offer scope for economising in over- heads and design facilities, and for rationalising production. Mergers would also remove the present temptation to Government and industry to create work in order to keep the separate organisa- tions alive and strong. But we have come to the conclusion that the future of the defence programme and of international collabora- tion are at present too uncertain for us to make a firm recom- mendation on this fundamental point of organisation. The decision will have to be made when the future workload on the industry can be estimated with greater confidence. But we are convinced that the organisation of the industry must reflect realistically the demands of the programme of work that eventually emerges. We can see no grounds for the Government seeking artificially to maintain the present structure of the industry if the interests of economy and commercial efficiency point later to amalgamations between either the airframe, or aero-engine groups. There is an additional point concerning the aero-engine groups. If circumstances arose in which competition between the groups both receiving large Government-financed research and development con- tracts became destructive and weakened the industry as a whole in relation to its American competitors, amalgamation could well be in the national interest. Handley Page Handley Page have a long and distinguished record in the aircraft industry. Since 1960, Government policy has been not to place contracts with firms outside the main groups. Consequently, apart from their private venture project, the Herald, Handley Page are now left with only conversion and refurbishing work on Victor and Hastings aircraft, and design work on an experimental laminar flow research aircraft on sub-contract from Hawker Siddeley. In view of the prospect of contraction in the industry as a whole, the Committee can see no justification for the Government to depart from its existing policy of allocating orders only to the main groups. Short Brothers The position in the aircraft industry of Short Brothers and Harland, in which the Government owns 69 per cent of the shares, is exceptional since they employ over 7,000 people in an area with a major unemployment problem. The company has for some time had difficulty in securing enough work and in the recent past, in an attempt to prevent unemployment in Northern Ireland from rising. Governments have given considerable direct and indirect support to Shorts. As well as work on the ten Belfasts ordered by the RAF, Shorts are building the small Skyvan freighter, and have orders for Seacat guided missiles from seven foreign countries. They are also part of a design and production consortium with Fokker and the German VFW group working on the Fokker F.28 short-haul jet airliner. tven so, the company's future in the aircraft industry is most uncertain. Belfast production for the RAF, which provides most of the workat Present, is due to end during 1966; no further domestic or «Port orders for the aircraft have yet been obtained. Sub-contractw °rk from BAC on parts of the VC10 will also end in 1966. The company expected sub-contract work from Hawker Siddeley on the 179 HS.681 tactical freighter; but the project was cancelled in February last, leaving a serious void in the programme from about 1967 onwards. On existing orders, employment at Shorts is likely to fall to about 4,000 at the end of 1966, and below this from 1970 onwards. With the general contraction in the industry, Shorts are unlikely to obtain from the Government the main responsibility for any new aircraft project. They are also unlikely to be given any large new sub-contracts by BAC or Hawker Siddeley. These groups will no doubt want to keep as much work as they can to themselves in view of the recent cancellations. Shorts contend that they cannot function efficiently without a labour force of at least something like their present level. They say that if their strength were to fall to, say, 4,000 to 5,000, their overheads would rise, and they would cease to form an economic design and production unit. In spite of this, the Committee can see no justification from the standpoint of the aircraft industry for the Government to take any special steps to maintain the company at a predetermined level. . . . If Shorts cannot survive as an aircraft unit without exceptional measures of support, then, in the Committee's view, they should cease to remain an independent company in the aircraft industry. This conclusion ignores the wider economic, social, and political factors in Northern Ireland of which the Government has to take account. It is not for us to say how important these are. But if the Government were to conclude that special assistance was justified to help employment in Northern Ireland, we believe this should be given by measures for promoting general economic development, rather than to the aircraft activities of Shorts. It would be unfortunate if, as a result of the drop in aeronautical work at Shorts, future sales of the Skyvan and Seacat were prejudiced, or the advantages lost of the co-operative ventures which Shorts have negotiated with European manufacturers. We suggest, therefore, that if there are any radical changes at Shorts, steps should be taken to bring these activities under the wing of one or other of the main British airframe and guided weapons manu- facturers. Internal Organisation of the Major Groups Whether the two large airframe groups combine, or continue to exist separately, they need the most efficient form of internal organisation possible. The task will be to complete the rationalisa- tion begun in 1960 and to adjust to a reducing volume of work. . . . The Equipment Firms The firms supplying electronic and other aeronautical equipment depend for their future in varying degrees on continued activity by the airframe manufacturers in this country. So far they have been able to organise themselves satisfactorily to meet the varying demands made upon them. The Committee see no need for the Government to intervene in their organisation. Care should be taken to see that a fair share of British equipment is included in any aircraft developed on a collaborative basis with other European countries or bought from the United States. . . . CHAPTER 35 .,„.....-. \. : Size • •"•• • • "•3" In the Committee's view, all the evidence points to a reduction in the present size of the industry. In the early stages of our enquiries we considered whether to prescribe some future level of employment for the industry, towards which planning could be directed. We decided that this would not be appropriate. No one could establish to our satisfaction that there is such a thing as an optimum size for the industry. We concluded therefore that the size of the industry should reflect the amount of work it succeeded in obtaining. We then considered whether it might nevertheless be helpful to hazard an estimate of the likely future size of the industry. We decided that even this would be unprofitable. There are still too many doubts about the future programme. Military requirements may be radically modified as a result of the current defence review, and civil demand will depend upon how far new projects fulfil their promise. Nevertheless, we believe that in coming years the total numbers employed in the industry, particularly on airframes, will have to be substantially reduced. The military programme accounts for the greater part of the industry's work, and if, as it seems likely, total orders for the Services are not allowed to grow and some major requirements are met by purchases from the United States, there must be less for British industry. Greater productivity, which the industry must strive to achieve, would also tend to reduce numbers. We think the Government and industry must acknowledge this prospect. We consider it vital that the Government should not do anything to maintain the industry at an artificially high level, and that following the defence review the industry should slim as much as is compatible with the future demand. . . . continued on page 190
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
