The Society of British Aerospace Companies wants the new UK Government to increase its "seedcorn" funding of the UK aerospace industry fivefold, to some £100 million ($150 million) a year. Over the next five years, that same industry will give the UK Government £100 million a year in repayments of aid granted to launch Airbus and Rolls-Royce projects back in the 1960s. Is this good business, or bad subsidy?
There is no doubt that UK industry needs this sort of help if it is to remain competitive in the transition years between the demise of the old nationally based European industries and the emergence of a rationalised, pan-European industry. The other major European aerospace industries in Germany, France, Spain and Italy are receiving this sort of help - and they are getting much of it to support their shares of the same projects for which the UK industry is seeking assistance.
None of the European industries is producing a good enough rate of return on its big aerospace projects to cover the costs of restructuring and the cost of investing in future projects and even-more-future technology. If the European Governments want their industry collectively to survive, they will have to help it. Some might argue that if European aerospace projects such as the Airbus and Aero International (Regional) ranges of airliners are so unattractive commercially that their promoters cannot get all their necessary development funding from normal commercial sources, then they should not be proceeded with. That view is wrong.
Most European aerospace companies find themselves short of research and development resources at least partly because their governments have failed in their primary duty of allowing the industry to develop international commercial competitiveness and self-sustainability. Even had all European companies been allowed (or even encouraged) to strengthen themselves through mergers and takeovers, however, there would still be a need for government funding at the sharp end of development. The USA is the single most powerful aerospace nation, with the strongest aerospace companies, but even the US Government continues to find it necessary to fund research in those companies. It sees the benefit of developing strategic technologies to be ready for exploitation when they are needed, and charges agencies like NASA with the duty of ensuring that such strategic investment is made.
Europe does not have a single NASA - but it needs one. It has a scattering of excellent research and development laboratories, both government- and industry-owned, working more or less independently of each other on less-than-adequate funding. If all the funding of the various research establishments in Europe were to be pooled and re-allocated on sensible lines, Europe's aerospace research and development could much more efficient and effective.
For example, there are two European industrial organisations now developing next-generation airliner-wing technology. There is only one application in Europe for such technology (Airbus), in which both organisations are already partners, so one of these two developments is automatically condemned to never see production. With resources so scarce, such wasteful duplication of effort is indefensible.
Even were such anomalies to be addressed, however, there is still not enough funding going into aerospace research and development in Europe, and much of the blame lies with European governments. The UK Government, which happily collects taxes from one of the two biggest industries in Europe, puts a paltry £20 million a year into strategic technology development - one-fifth of what is needed. The French Government, which has underwritten its home industry for decades, has run out of both money and enthusiasm for doing so. Only the German Government is signed up to a reasonable level of funding (on paper at least) - but whatever good it may be doing on that front is being undone by its reluctance to commit funding on the production of the Eurofighter 2000.
As the British have proved (even if their politicians have not noticed), governments can get a real return on aerospace technology: if they do, their expenditure is not subsidy, but real investment. European governments take note.
Source: Flight International
