Aerospace & Defense Exporter Alert, Apr. 2023

Aerospace Sector

The UK has a very mature supply chain, and new entrants will need to dedicate significant resources to participate.  The UK has a reputation as a global center of excellence for the design and production of engines, helicopters, wings, structures, and aircraft systems (including landing gear). The UK also designs and manufactures wings for all Airbus aircraft platforms.  In addition to manufacturing, the UK has a thriving maintenance, repair and overhaul sector (MRO), which provides services to the huge numbers of military and civil aircraft that fly through and from the UK every year.  

More than 3,000 aerospace companies operate in the UK, and the aerospace sector has the largest number of SME companies in Europe, providing over 282,000 jobs directly and indirectly.  Domestic companies include BAE Systems, Cobham, GKN, Meggitt, QinetiQ, Rolls-Royce, and Ultra Electronics.  Non-domestic companies with a major presence include Boeing, Airbus Group, Leonardo (including its AgustaWestland and Selex ES subsidiaries), General Electric (including its GE Aviation Systems subsidiary), Lockheed Martin, MBDA, Safran, Spirit AeroSystems, and Thales Group.

Airbus in Broughton assembles the wings for all Airbus civil aircraft, including the new A350 XWB.  Boeing has a production facility in Sheffield (Boeing’s first manufacturing site in Europe), and GKN Aerospace produces the Advanced Technology Winglet for the Boeing 737 MAX. Rolls-Royce engines power more than 35 types of commercial aircraft, and the company has more than 13,000 engines in service around the world.  

Drones are becoming an increasingly familiar aspect of life and work in the UK, playing a growing role in areas ranging from emergency services to construction and oil and gas. The increased use of drones in business and public services is predicted to be highly impactful and to deliver significant benefits to the British economy and society. Drones have seen a particularly significant uptake in the oil and gas industry.  Drone use is also well established in the utilities industry, for the inspection of long line assets such as powerlines.

Defense Sector

Defense cooperation between the U.S. and the UK is well established, and the UK is considered a Tier one partner. The UK has significant military capability and seeks to augment its current capacity with the latest technology available. Most technology, if acquired from the U.S., requires an ITAR license, and new suppliers need to be familiar with the licensing application process.

The UK is one of the top NATO countries in terms of defense spending. Building on its record investment in defense announced in 2020, UK defense spending is expected to reach 2.2% of GDP in 2023 (2.29% when including UK military support to Ukraine).  
In March 2023, the UK released the 2023 Integrated Review Refresh (IR23) of its defense and security priorities to respond to growing global volatility. IR23 set out how the UK will tackle new threats from Russia and China, protect its economy, and compete at the cutting edge of technology.  The UK confirmed $6 billion additional investment in defense.  This new spending will be in addition to the defense spending contained in IR21, which provided for $270 billion investment into the procurement of next-generation military equipment over a 10 year period. The additional spending in IR23 is designed to help replenish and bolster vital ammunition stocks, modernize the UK’s nuclear enterprise, and fund the next phase of the AUKUS submarine program.

To address its national security, the UK MOD has highlighted the following areas:

Naval

$2.4 billion investment in the Royal Navy carrier force, the UK ship building industry, and development of greater missile capability.

Production of eight (8) x Type 26 frigates and five (5) x Type 31 General Purpose Frigates and Type 32 multi-role frigates.

Development of a Type 83 destroyer to replace the Type 45.

$277 million for the Royal Marines to evolve from their standby amphibious infantry role into a forward-based, highly capable maritime “Future Commando Force.”

Ground Forces

British Army will reduce troop level from 76,500 to 72,500 by 2025 and reorganize into seven brigade combat teams comprised of two heavy brigades, one deep strike brigade, one air maneuver brigade, and two light brigades, plus one Combat Aviation Brigade.

$30 billion for a modernized long precision fire, multiple launched rocket systems; new air defenses; tactical surveillance drones, new electronic warfare, and cyberspace capabilities.

Creation of a Ranger regiment and Security Force Assistance Brigade.

Acquiring fleet of 50 AH-64 Apache helicopters, with a scheduled final delivery date of 2024.

Purchased 14 MH-47 Chinook helicopters for the UK Special Operations Force.

Beginning recapitalization efforts of their MLRS platform, with initial deliveries set for 2024.

Air

Investing $2.77 billion for Future Combat Air System (i.e. Tempest Program).

Retiring E-3D Sentry in 2021, replacing with three E7 Wedgetails by 2023.

Committed to purchasing additional 26 F-35s bringing the total ordered to 74.

Retiring C-130 Hercules in 2023 and replacing with 22 A400s.

Replacing the 9 MQ-9A Reapers with 16 MQ-9B Protectors by 2024, and investing in swarming drone technology.

Space

Investing $7 billion in Skynet-6 military communication satellite program.

$1.9 billion for a National Space Operations Centre, a Space Command, a Space Academy, an Intelligence, Surveillance and Reconnaissance satellite constellation, and for space domain awareness capabilities.

Investing in a UK space launch capability (both horizontal and vertical).

Cyber and R&D

Increasing cyber capabilities and creating the National Cyber Force, a dedicated career path for cyber specialists.

$9 billion in Research and Development over the next four years.

$415 million for research at Weapons Science and Technology Centre for novel weapons.

Establishing a new government-to-government commercial mechanism for defense and security exports (possibly similar to the U.S. Foreign Military Sales program).

Defense Opportunities

The UK defense industry is sophisticated and mature. Defense suppliers looking to export into the UK can expect to find a highly competitive environment, and must demonstrate a clear competitive advantage. A company with non-British ownership or without a presence in the UK is not necessarily at a competitive disadvantage compared with British firms seeking MOD business. However, a U.S. company must commit both time and resources to enter or expand within the UK defense market. Selling through an established UK company is the least risky market entry strategy for most U.S. defense providers to enter the UK defense supply chain.

Through the Defense and Security Accelerator, the MOD frequently holds industry engagement days and competitions to evaluate equipment and technology. The best way for U.S. companies desiring to engage in meaningful dialogue with the MOD is through these MOD-sponsored industry days and competitions. For announcements on MOD events relevant to a particular defense sector, suppliers should consistently monitor announcements on the Defense and Security Accelerator website.

Commercial Space Sector

The UK space industry is a fast-growing sector, and its income has more than trebled since 2000. It generated an estimated income of $20 billion in 2022 and the space industry supports around 47,000 jobs across all parts of the UK. A higher proportion of revenue and employment comes from downstream services and the ‘Space Applications’ sector was estimated to have produced 74% of the UK space sector’s total income in 2022. 

The stated ambition is to capture 10% of the global space market by 2030.  The UK space sector supports a range of public services, particularly through satellite data and imagery, such as telecommunications, global positioning system (GPS), weather forecasting, and disaster relief. The growing global reliance on satellites and their data and the reducing cost of launching small satellites into space has driven the growth of the space sector in the UK and globally. The UK is also a world leader in nano and small satellites.  40% of all small satellites currently in orbit were manufactured in the UK.  
The market can be broken down into four main components.  Over two-thirds of total market income is derived from Space Applications, followed by the smaller components of Space Operations, Space Manufacturing, and auxiliary services.

Several launch sites for small satellites are currently being developed in the UK. Due to the substantial decreases in launch costs over the past decade and the UK being well-placed geographically to host LEO small satellite launches, the UK Government has endorsed the development of UK launch capability. The Government’s Spaceflight Program, Launch UK, aims to establish commercial vertical and horizontal small satellite launch sites by 2022 so that the UK can be home to the first satellite launch from European soil. The program, originally initiated in July 2018, set out the locations of seven prospective spaceports across the UK. Although seven spaceports were proposed, only one is currently operational, Spaceport Cornwall in the Southwest of England, and two more might become operational over the next couple of years , Space Hub Sutherland and SaxaVord Spaceport in Scotland. 

In early January of 2023, Virgin Orbit attempted to conduct the first orbital rocket launch from UK soil from Spaceport Cornwall, but after a fuel filter became dislodged the rocket failed to propel the rocket and its satellite payloads into orbit.  The quest for a successful launch from UK soil continues. 

U.S. companies looking to partner with British companies should look to the Harwell Space Cluster, which hosts 92 space organizations, including the UK Space Agency, RAL Space, the Satellite Applications Catapult, the Science & Technology Facilities Council and the European Space Agency’s European Centre for Space Applications and Telecommunications. 

Upcoming Events:

For companies seeking in-person opportunities to enter the UK market, there are several upcoming events of interest:

Space-Comm Expo
Farnborough (greater London), UK.
June 7-8, 2023

This event showcases the manufacturing supply chain for products, services and solutions supplying commercial enterprises and developments in Space.  Space-Comm Expo brings together the entire Space sector for business and networking, and provides industry and government speakers, a Meet-the-Buyer program, and face-to-face roundtables. 

DSEI
London, UK
September 12-15, 2023

DSEI is a four-day international exhibition for civilian and military participants in the defense industry, held biennially at the ExCel Center in London.  DSEI will attract over 35,000 attendees from over 100 countries and will showcase over 1,000 defense and security suppliers, including all the major prime manufacturers. 

MRO Europe
Amsterdam, The Netherlands
October 17-19, 2023

MRO Europe is the largest event of its kind in Europe, where airlines, MROs, OEMs, lessors, suppliers and industry experts converge to explore and define the aviation maintenance industry. MRO Europe is the meeting place for all those looking to learn, connect and do business in the commercial aviation aftermarket.

Three Counties Defence & Security Expo (3CDSE)
Malvern, UK
November 2023

3CDSE is a Special Forces-focused event, and is an active touchpoint for leading-edge technology. It brings together defense and security innovators to create a forum for commercial discussions between industry, armed forces, government, law enforcement and emergency services.

Farnborough International Airshow
Farnborough (Greater London), UK
July 22-26, 2024

The Farnborough International Airshow is the second-largest show of its kind after the Paris Air Show, and includes over 1,500 exhibitors from 48 countries.  It is a biennial week-long event to demonstrate civilian and military aircraft to potential customers and investors, and to announce new developments and orders.

Meet PJ Menner
Aerospace & Defense Commercial Specialist
U.S. Embassy U.K.