United Kingdom - Country Commercial Guide
Aerospace and Defense

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-22

Aerospace

Overview

The UK aerospace industry is the second largest in the world, behind that of the U.S. In 2020, total UK civil aerospace turnover totaled over $34.8 billion, and the sector had approximately a 16% global market share.  The UK aerospace industry is the crown jewel for UK exports and, even though the UK does not produce large civil aircraft, 97% of domestic aerospace production is exported.  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.  It is estimated that there are over 1,300 companies involved in the MRO sector in the UK employing over 57,000 people.

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, and Thales Group.

Airbus UK in Broughton assembles the wings for all Airbus civil aircraft, including the new A350 XWB.  In October 2018, Boeing opened a production facility in Sheffield, Boeing’s first manufacturing site in Europe. The $50 million facility is located near the Advanced Manufacturing Research Centre with Boeing (AMRC).  GKN Aerospace will also produce the new Advanced Technology Winglet for the Boeing 737 MAX.  Rolls-Royce-manufactured engines power more than 35 types of commercial aircraft, and the company has over 13,000 engines in service around the world.  

The UK government has demonstrated significant interest in developing and increasing the domestic supply chain.  UK industry and government established the Aerospace Growth Partnership (AGP), which develops initiatives to encourage UK companies to cooperate closely and to address gaps and problems that affect the sector, tackle barriers to growth, and boost both UK exports and high value jobs. 

The UK commercial space industry is rapidly growing, with turnover of over $22.8 billion in 2020, and has an ambition to capture 10% of the global space market by 2030.  Accelerating growth year-on- year, the UK is a world leader in nano and small satellites.  The commercial space sector is likely to see steady investments in new and existing space technologies and services, with funding coming primarily from industry and venture capital with government support.  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.

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 to oil and gas.  The rising use of drones in business and public services is predicted to be highly impactful and deliver significant benefits to the British economy and society.  Estimates forecast that by 2030 the impact of drones could increase the UK GDP by $53 billion and create over 600,000 new jobs.  Drones have seen a significant uptake in the oil & gas industry.  Drone use is also well established in the utility industry, in particular for the inspection of long, liner assets such as powerlines.

Like the internet and GPS before them, drones are evolving beyond their military origin to become powerful business tools.  Drones have already made the leap to the consumer market, and now they are being put to work in commercial and civil government applications.  This is creating a market opportunity for companies that provide platforms, sensors, and software.  

Leading Sub-Sectors

Space

The UK commercial space industry produced a turnover of over $22.8 billion in 2020.  There are four primary segments of the commercial space market: Space Applications, Space Operations, Space Manufacturing, and Auxiliary Services.  By far the largest segment is Space Applications with 71% of total income and dominated by Direct-To-Home broadcasting (DTH).  Without DTH, the overall space industry income would fall to $12.5 billion.  Space Operations (13.5%) is the second largest segment, followed by Space Manufacturing (12.5%), and Ancillary Services (3.1%).

Analysis by customer type reveals the commercial focus of the UK space industry – 81.3% of total income is commercial, comprised of sales to consumers (including DTH) at 49.7% and sales to other businesses at 31.6%. That said, there is a strong role for public demand (18.7%) – Defense (8.6%), Space Agencies (4.1%), Civil Government including Research/Science (4.3%), and European Commission (1.6%).

A Technology Safeguards Agreement signed in June 2020 will make it much easier for U.S. firms to bring rocket hardware into the UK.  In addition, a barrier to space exploration from UK soil was lifted on May 24, 2021, and the UK Civil Aviation Authority will start issuing spaceflight licenses in August 2021, with spaceports expected to be in operation from the summer of 2022.  Developed with the UK Space Agency and the Civil Aviation Authority, new regulations were created meaning satellites and rockets can launch from UK soil for the first time – with spaceports planned for Cornwall, Wales and Scotland.

Newquay’s airport, located just a few hundred meters from the Atlantic coast, expects to host regular Virgin Orbit launches from early 2022.  Aspiring to be the UK’s only horizontal spaceport Spaceport Cornwall hopes to see up to five launches a year.

Unlike Spaceport Cornwall, Space Hub Sutherland still has a few hurdles to overcome. The vertical launch site is meant to be built in the wilderness of the Moine Peninsula in the very north of Scotland.  The spaceport secured planning permission in August 2020.  However, the development has been challenged by Scotland’s biggest landowner, who owns a neighboring estate.

Shetland Space Centre submitted its planning application in January 2021 and is still awaiting a decision by the Shetland Islands Council, the local authority governing the Islands.  The spaceport eventually plans to operate three launch pads and has lured Lockheed Martin, previously associated with Space Hub Sutherland, to switch to the more remote Shetland base. 

The UK National Space Propulsion Test Facility was created in June 2021 and will allow companies and academics to test propulsion engines. It will also allow new types of more sustainable propellants to be tested, such as Hydrogen Peroxide and Liquid Oxygen which are more environmentally friendly in sourcing, storage, and combustion.

After being removed from access to the EU’s Galileo system, a European Union alternative to GPS, the UK moved to create its own GNSS system.  After cost estimates became too high, the British government scaled back plans for its proposed $6.3 billion sovereign satellite navigation system and has awarded six UK businesses UK government funding to help shape options for the UK’s satellite navigation and timing capability, to protect UK Critical National Infrastructure.  Airbus, CGI, Sirius Analysis, GMV NSL, Inmarsat, and QinetiQ will receive funding to help develop technology for the UK Space Agency’s Space Based Positioning, Navigation and Timing Program.

Helicopters

The UK’s helicopter market is dominated by Leonardo and Airbus Helicopters UK.  Leonardo is the largest inward investor in the UK defense sector, the largest Italian inward investor to the UK, and one of the biggest suppliers of defense equipment to the UK MOD.  Leonardo implements its helicopter division activities through a strong industrial presence in the UK. The company employs around 7,000 people in UK, while supporting a further 10,000 jobs in the supply chain including 1,550 SMEs, serving both commercial and government customers worldwide.

For over 30 years, Airbus Helicopters UK has provided products and services for both the civil and military helicopter markets. With more than 300 civil helicopters customized and delivered in the UK, Airbus Helicopters UK is the leading provider of helicopters in the UK’s civil and para-public market with a 46% fleet share, and it dominates the UK security and emergency services market.

The National Police Service (NPAS) provides air support to the 46 police forces of England and Wales from its network of 15 bases with 19 aircraft.  The NPAS fleet consists of Eurocopter EC135’s and EC145’s.  The Police Commissioner of West Yorkshire plays a lead role in the governance of NPAS and the Yorkshire and Humber Regional Procurement Team is responsible for procurement. All tenders are announced via the Bluelight eTendering portal.  

Emergency air ambulances in the UK are generally helicopter based and are used to respond to medical emergencies in support of local ambulance services. In England and Wales, all air ambulance services are charitably funded and operated under contract with a private provider. Approximately 21 charities operate 40 helicopters. Scotland has the only publicly funded air ambulance service, the Scottish Ambulance Service, which operates two helicopters along with a single charity operator helicopter.

Over 99 percent of offshore oil and gas transportation is by helicopter and the UK and Norway handle most European offshore operations in 11 European countries, mostly serving platforms in the North Sea, offshore helicopters make up a large portion of the UK helicopter market. The leading offshore helicopter operators in the UK include Babcock and Bristow. As the North Sea remains a hostile environment for helicopter operations, several incidents of crashes in the last decade have led to a changing market for the types of helicopters used. 

​​​​​​​Unmanned Aircraft Systems (Drones)

In the UK, delivery drones could become business as usual by 2030. Large retail and logistics companies are investing in delivery drones with the aim of achieving increased efficiency, lower costs, and increased customer satisfaction.  The scope of delivery drones could also be beyond dropping off parcels in the ‘last mile’ of client logistics.  Drones will be ubiquitous in warehousing and able to autonomously conduct real time stock checks by scanning inventory. This will integrate seamlessly with other ground-based autonomous warehouse robotics in an end-to-end management and movement of inventory driven by AI with no human touch.

Delivery drones in the UK could also integrate with other advances in technology, for example a driverless vehicle, loaded with parcels by robotics at the warehouse that automatically dispatches multiple delivery drones when it nears the most efficient point to complete its deliveries.  Such a vehicle would serve as a base station for the drones providing charging and payload swapping as required.  This scenario is some way off, as current technical and regulatory challenges remain such as flying pilotless and beyond visual line of site (BVLOS) in congested urban areas and integrating with other airspace users.

Accident response drones may well be a common sight above roads in the UK by 2030 enabling live data from accident scenes to be shared in real time with emergency services so they know what to expect prior to arriving on scene.  Drones would also be used to store evidence from an accident reducing the time it takes to reopen the road.  Accident response drones may open new revenue streams for the public sector by selling the data to insurance companies.  

UK Search and Rescue organization will also present opportunities for companies that provide technology to assist in rescue operations.  The ability to carry sensors that provide real time information during inclement weather to rescue centers will keep rescue personnel away from dangerous situations while still providing needed information.  In the construction industry, drones are already providing cheaper and more efficient solutions for mapping sites and recording construction progress.  Drones are also providing 3D information and integrating it with existing building information modelling (BIM) systems.    

New UK drone laws came into effect on  November 30, 2019.  These require anyone who flies a drone that weighs between 250g and 20kg to take a safety test consisting of 20 multiple choice questions and to register as a drone operator and flyer.  The operator ID must be displayed clearly on the drone.  This means it’s now illegal to fly a drone in the UK without meeting these requirements unless the drone weighs 249g or less.  Police across the UK have received powers to land, inspect, and seize.  They also have stop and search powers around airports, prisons, and other restricted locations.

Opportunities

The opportunities in this market continue to be those associated with the manufacturing of new aircraft or engine models, or for those companies that employ the latest technology such as composites or additive manufacturing.   In addition, the UK aerospace industry is also seeing an increase in the use of cloud computing platforms, with innovation in integrated solutions such as flight planning tools and digital flight management systems. 

The best prospects in the UK continue to include:

  • Aerodynamics (e.g. wing design);
  • Propulsion (e.g. rotor blades, engine assembly);
  • Aero structures (e.g. fuselage & wing assembly); and
  • Advanced systems (e.g. avionics, undercarriage).

The UK continues to enjoy a record backlog of orders for equipment across narrow- and wide-body aircraft, but to deliver on these orders is an increasing challenge within the UK supply chain.  This backlog of orders is becoming more acute for tier 2 suppliers and below and may cause UK companies to consider forming new alliances to create extra capacity to meet obligations.  Suppliers should consider collaborating with a larger customer with an established presence in the UK which is looking to increase capacity.  U.S. companies should also expect to enter the UK market at a lower tier of the supply chain than they might otherwise usually enter in the U.S. or globally.  Suppliers may also need to consider using a local distributor or agent with established ties within the market.

Entering the UK aerospace market requires patience, investment, innovative products, and competitive pricing. The aerospace supply chain is well-integrated with the primes all looking to reduce the number of their suppliers.  A U.S. company can expect to have to commit both time and resources to enter or expand within the UK aerospace market, especially companies providing what are known as “me too” products and services.  Selling to OEMs as well as tier 1 and 2 manufacturers entails a vendor/product qualification and assessment process.  All U.S. companies desiring to become a supplier will need to register with their prospective customer.  In addition, AS9100 and NADCAP would be considered minimum requirements for doing business in the aerospace supply chain in the UK. All companies desiring to become a supplier to the Ministry of Defence are required to complete Cyber Essentials accreditation.

With such a well-integrated and mature supply chain, new U.S. suppliers must demonstrate a clear competitive advantage if they are to be successful in the UK. With most of the major aerospace manufacturers in the UK looking to simplify their supply chains, there are fewer opportunities to supply, and these opportunities will tend to be further down the supply chain.  If suppliers are compliant with EU regulations/standards, they should not encounter any significant technical barriers to entry.

Resources

Industry Events

Defense & Security Equipment International (DSEI)
September 14-17, 2021
London, UK

One of the world’s largest defense exhibitions, with 1,500 international exhibitors from 54 countries including 180 U.S. companies.

 

Helitech

October 5-6, 2021

London, UK

The UK’s largest event dedicated to vertical products, parts, accessories and services with over 300 exhibitors.

 

The Commercial UAV Show

November 2021

London, UK  

One of Europe’s largest exhibition and conference for commercial UAV professionals.

 

Farnborough International Airshow (FIA)

July18-22, 2022
Greater London, UK

One of world’s largest aerospace exhibitions, with 1500 exhibitors from 40 countries of which around 300 exhibitors are expected from the U.S.

 

Trade Associations

 

ADS Group

UK Space

Farnborough Aerospace Consortium

British Helicopter Association

The Association of Remotely Piloted Aircraft Systems UK

For further information, please contact:

PJ Menner
Commercial Specialist
U.S. Commercial Service
Tel: +44 (0)20 7891 3470
Email: PJ.Menner@trade.gov  

​​​​​​​Defense Equipment

Overview

In March 2021, the Government of the United Kingdom (UK) released three strategic guidance documents: the Integrated Review (IR) of Security, Defence, Development and Foreign Policy, Defence in a Competitive Age (Defence Command Paper), and the Defence & Security Industrial Strategy.  The documents provide guidance on how the $22.7 billion multi-year funding increase, announced in November 2021, will be used to make the UK Armed Forces lighter and more agile, and able to compete in “subthreshold” conflict or grey zone scenarios.  The UK will maintain one deployable division on standby as part of its NATO commitments and should remain shoulder to shoulder with the U.S. in the most challenging areas of global defense. 

The IR makes clear that after leaving the EU, the UK will focus on threat-based challenges and its defense posture to compete with Russia and China.  A “Tilt” to Indo-Pacific indicates the UK’s desire to increase engagement with countries such as India, Pakistan, Singapore, and Hong Kong, as well as Commonwealth countries such as Australia and New Zealand. 

The Government of the UK has outlined through its “Green Book” that all public money awarded to suppliers needs to demonstrate “Social Value”, the net value added to the UK society and economy.  Social Value accounts for 10% of the score when contracts are evaluated and all U.S. suppliers competing for defense contracts need to demonstrate Social Value to remain competitive.  

Leading Sub-Sectors

The UK MOD has highlighted the following areas:

Naval

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

Production of eight x Type 26 frigates and five 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 its 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 fires, multiple launched rocket systems; new air defenses; tactical surveillance drones, new electronic warfare and cyberspace capabilities. 

Create a Ranger regiment and Security Force Assistance Brigade.

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 F-35s beyond current order of 48 but no decision on numbers made until 2025.

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). 

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 they 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 expect to 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 into the UK defense supply chain. 

Through the Defence 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 Defence and Security Accelerator website.       

Resources

Defence Sourcing Portal

The MOD’s Defence Sourcing Portal (DSP) is the official source of UK MOD contracts - giving you instant access to all of its contract opportunities in one place.  You can contact DSP at customersupport@jaggaer.com or on 1-800-233-1121.

Defence Science and Technology Laboratory

The Defence Science and Technology Laboratory (Dstl) ensures that innovative science and technology contribute to the defense and security of the UK. To contact Dstl, send an email to centralenquiries@dstl.gov.uk or call +44 198 095 0000.

Defence and Security Accelerator

The Defence and Security Accelerator (DASA) finds and funds exploitable innovation to support defense and security quickly and effectively. Its mission is for the UK to maintain its strategic advantage over its adversaries through the most innovative defense and security capabilities in the world.

Defence Procurement, Research, Technology & Exportability (DPRTE)

October5, 2021, London, UK

DPRTE provides a platform for both MOD and industry to connect in order to explore the key challenges, programs and future opportunities that exist within the defense acquisition supply chain.

For further information, please contact:

PJ Menner
Commercial Specialist
U.S. Commercial Service
Tel: +44 (0)20 7891 3470
Email: PJ.Menner@trade.gov