Susan Dalgety: Old skills, new areas, present success

Scotland's economic recovery depends on the renewal of our traditional sectors, such as heavy engineering. It also requires innovation in new industries such as renewable energy, which makes the aerospace, defence and marine sector crucial to our national wealth.

Recent headlines in the wake of the Strategic Defence Spending Review - in particular the possible loss of more than 5,000 jobs in Moray because of the closure of RAF Kinloss and Lossiemouth - would suggest a sector in crisis.

However a recent study suggests otherwise. The first-ever comprehensive survey of the sector, commissioned by Scottish Enterprise and the sector's trade body ADS Scotland, reveals its significant contribution to the economy.

There are 842 companies, employing more than 40,000 people and generating a combined annual turnover of 5.2 billion.

Some of the notable companies operating in Scotland include Rolls Royce, Selex Galileo, Spirit Aerosystems and of course BAE Systems, which has just held on to the contract for two new aircraft carriers.

There are many less well-known companies, such as Clyde Space which provides power systems for micro spacecraft and battery systems for satellites from its base in Glasgow.

And a new research centre at Strathclyde University hopes to make Scotland a world leader. The Advanced Forming Research Centre is the first of its kind in the UK and will develop the latest manufacturing technologies for the aerospace and defence industry as well as energy and marine.

Little wonder then that Enterprise Minister Jim Mather warmly welcomed the study's findings and talked of the Scottish government's pride in the sector. His endorsement of a sector that builds gunboats as well as civil aircraft and satellites may sit uncomfortably with commentators such as Pat Kane who argued that there must be a "post military engineering dividend" for Scotland.

While there are many Scots who may sympathise with this pacifist stance, the survey shows there are too many Scots whose future depends on the defence industry for it to become the mainstream political view.

Indeed Mr Mather believes that Scotland's defence industry - minus Trident's nuclear weapons - would have a key role to play in an independent Scotland."Our world-class defence industry", he says, "would continue tendering for contracts on the basis of its unrivalled skills, technology and track record of delivery."

ADS Scotland was equally bullish about the prospects of the sector when it set out its ambition recently to double industry sales by 2023.

But when interviewed for Scottish Enterprise's survey, senior industry figures agreed that the "long-run (political) uncertainty and the implications of Scotland seeking independence" was one of the major threats to the sector's growth.

Neil McManus, vice-president of Spirit Aerosystems and chairman of ADS Scotland believes that the biggest challenge is not political, but securing old-fashioned engineering skills.

He points out that the sector's highly skilled workforce - commonly cited as the biggest factor behind Scotland's success in shipbuilding and aerospace - is getting older, and there are just not enough young people interested in a career in engineering to meet demand.

He says: "Our biggest challenge is getting the appropriate skilled workforce for our high tech manufacturing base. Manufacturing is not as attractive as it was, so we need to work with our universities to attract more young people. I would like to see universities more involved with the industry, perhaps through summer placement programmes and internships."

The Scottish Government and Scottish Enterprise would argue that they are doing all they can to promote skills development within the sector through public funding for apprentice schemes and training projects.

The 2009 industry strategy 'Competing in a Global Industry', jointly published by Scottish Enterprise and an industry advisory board, highlighted the skills gap but decided not to "re-invent the wheel" and instead promote great industry involvement in existing programmes.

But trade union leader, Bernie Hamilton, Unite's National Officer for Aerospace and Shipbuilding, believes that more could be done. He says: "The sector has an excellent reputation for the apprentice programmes offered by BAE Systems, Rolls Royce and Babcock Marine to name a few.

"But they are consistently over-subscribed and Unite believes apprentice programmes are a vital and positive initiative to address the skills shortages in the sector and to offer young people the opportunity to train for a worthwhile and sustainable career in manufacturing."

He is concerned that any reduction in funding to Scotland's universities would have serious implications.He warns: "Evidence has shown that if there is not a sufficiently skilled workforce for companies to recruit from they move their factories elsewhere."

Neil McManus sees international markets as both a threat and a challenge, as he explains: "The UK defence market is going to be tough for a few years, we are entering into an age of austerity, so overseas defence budgets now look a more attractive market.

"But we need to be aware of the external competition for overseas, there are plenty of countries where their civil aerospace and defence sector gets strong government support - China and Singapore who clearly want to be big global players are just two examples."

Mr McManus believes Scottish engineering is still a strong brand across the globe.

"Scotland's education system is also seen as strong.We need to build on that brand, focus on high-tech manufacturing. We are never going to compete with countries such as China on low cost, high volume, but we can compete on innovation."

He knows better than most the importance of research and innovation. His company, Spirit Aerosystems, which employs around 850 people at its Prestwick facility, has just won a major contract to design and manufacture the fixed wing structure for the new Airbus A35.

And the company has established a Composites Development Centre at Prestwick that will develop new materials for aircraft manufacture.

"We are moving away from metal wings to composite - plastic ones, and that research and development is happening here in Scotland," he explains.

As the campaign gathers to retain RAF Kinloss and Lossiemouth, there is the potential for thousands more jobs to be created in this highly skilled sector.

And not just in aircraft manufacture or satellite systems.

The same workforce and engineering expertise that builds state of the art aircraft carriers could surely develop new solutions for renewable energy.

Some companies such as Ayrshire-based Inter-Tec have already started diversifying from aerospace into other sectors such as offshore oil and gas. But innovation comes at a price, and Neil McManus has a final plea for the Scottish government.

"If I could ask Ministers to do one thing, it would be to provide even more support for research and innovation - that is what will secure the sector's future, and help contribute to Scotland's economic recovery and long term security."

• Susan Dalgety is a writer, researcher and a consultant to The Scotsman Conferences, which will host Scotland's first Aerospace and Defence conference, in association with ADS Scotland, on Tuesday 7 December. See: www.scotsmanconferences.com