FUTURE SKILLS ISSUES AFFECTINGINDUSTRY SECTORS IN WALES

Aerospace Sector

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Aerospace Sector

Aerospace Sector

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FUTURE SKILLS ISSUES AFFECTING INDUSTRY SECTORS IN WALES

Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p6

2. The Aerospace Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p7

3. Sectoral Skills Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p12

4. Action on Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p16

Annex A: References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p19

Annex B: Sectors in Context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p19

Annex C: Supply and Demand of Manufacturing Skills . . . . . . . . . . . . . . . . . . . . . . . p22

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Aerospace Sector

IntroductionThis document is one of a series commissioned by theFuture Skills Wales Research Forum. The overall projectaims to extend and complement the work begun by theoriginal Future Skills Wales project, which forecastfuture generic skills needs across Wales usingforecasting and survey data. The current project addsstudies of future vocational skills needs within keysectors in Wales. Each sector study is based on deskresearch and qualitative interviews with practitionersand employers, and aims to provide an overview of thesector, the skills issues, and current and potentialactions to further strengthen the sector.

Businesses and employees in each of the sectors studiedhave achieved great successes; that is why these sectorshave become important for Wales. Our focus on currentskills issues should not obscure these achievements orthe determination of all concerned to meet current andfuture challenges.

Aerospace Sector ProfileActivity and Employment: there are currently around17,000 people employed in the aerospace sector inWales and over 70 companies that are involvedessentially in the manufacture of, maintenance andoverhaul of and equipment supply for aircraft.

Firms: major employers in Wales include BAE Systems,BA Maintenance, GE Systems and DARA. Firms areconcentrated around Cardiff in the South-East, and in theNorth, but there are examples outside theseconcentrations.

Sources of change: There has been a very rapidconsolidation among the US primary companies andmajor suppliers. A similar process of consolidation is ongoing in Europe with most notably the creation of EADS(European Aeronautic Defense and Space company).There is a subsequent risk that UK companies could bedisadvantaged in terms of scale and by the emergence ofa vertically integrated customer base.

A continuing peace dividend means that the armedforces are contracting in size and consequently there arefewer highly trained engineers leaving and wanting tocontinue in civil aviation. This combined with the longterm decline of the industrial and manufacturing base hasmeant that traditional sources for recruitment by the civilaircraft engineering industry are less productive.

Prospects: the Airbus consortium recently announcedthe launch of the A3XX, a plane that will provide 35%more seats than the 747. It is estimated that of the22,000 or so jobs that will arise from this project, some8,000 will be at BAE Systems. This will impact on theplant at Broughton, which is building the wing box andsome sub-assemblies for the A3XX.

It is clear that civil air transport is expected to remain agrowth industry and so provide many businessopportunities. Some forecasts indicate that the industry isset to grow twice as quickly as the rest of the economyover the next 15 years.

The industry DTI Foresight Report notes that the UK’s currentstrong market position is in part based on government andindustry R&D investments made in the 1970s and 1980s. As

Executive Summary

current R&D investment is far below the levels enjoyed backthen, the report notes that some analysts believe that theindustry is ‘living on borrowed time’.

Skills IssuesCyclical training patterns: historically, the industry hasexperienced cyclical patterns in demand that have beenreflected in the stop-go training activities of thosecompanies affected.

Impact of lean methodologies: the introduction of thelean model of manufacturing, a derivation from an earlierexample in the US automotive industry, has hadimplications for the structure of the workforce. Thefundamental principle of decision making at the lowestlevel has resulted in a flattening in middle managementand an emphasis on those with technical skills to takemore team leadership roles.

Shortage of engineers and engineering graduates:evidence from a jointly sponsored SBAC/DTI UK-widesurvey undertaken in 1998 showed that skills shortageswere predominantly in engineering areas. Companieshave also noted a shortage in the quality of engineeringgraduates, in particular their lack of work experience andapparent weaknesses in communication skills.

Managerial Skills: three key challenges for theirapproach to their managerial employees were identified:

• developing change management skills;

• developing communication skills;

• developing leadership skills.

IT Skills: there is a continued shortage of softwareengineers and technicians, this despite the increasednumber of computer studies trainees and an overall risein the basic IT skills levels of new entrants. One reasonfor this is the increasing levels of competition from hi-technology firms.

Action on SkillsThe sector is working actively on the issues identified aspart of an overall strategy to meet current challenges andexploit the potential for the future. The table below setsout recommendations in support of this existing work. Amore detailed explanation of the recommendations isprovided in the main report.

Recommendations for Future ResearchWork needs to be done to identify any ‘latent’ skill gaps,where a company operates a sub-optimal productionstrategy to conceal skill deficiencies.

The prospects for employment growth from the A3XXdevelopment and manufacture in North Wales need to betracked, so that sub-regional training provision is kept underreview with a view to meeting potential increases in demand.

Research needs to be undertaken to evaluate skillsissues around Cardiff International Airport.

Further examination is needed into the extent to whichthe contraction of the armed forces and industrial andmanufacturing base will affect the future supply ofappropriately skilled labour.

Aerospace Sector

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Key Recommendations

Theme Rec Action Timescale Key PartnersNo: No:

1 1a Facilitate cross-sector working group on lean techniques From 2000 Various foralinking to existing initiatives

1b Review vocational qualifications to check applicability 2001/02 NTO/CETW/to lean manufacturing Emps

1c Review/update assessor training and awareness of 2001/02 NTO/CETW/lean paradigm Emps

2 2a Increase the number of training places available to students 2001/02 CETW/WDA

2b Address the gap of JAR 66 training courses in North Wales 2001/02 SWAG/CETW

3 3a Facilitate the expansion of the SWAG to involve more 2001 SWAG/Empscompanies including those based in North Wales

4 4a Support existing programmes promoting sector plans and 2001 Emps/EBPsprospects to schools, young people and communities SWAG/CS

4b Proactively seek partnerships with local schools, 2001 Emps/EBPs/EBPs, FE and HE CETW

4c Develop a sector pack and sub-sector packs 2001 Emps/CETW/CS

4d Develop sector/sub-sector web pages with links to 2001 Emps/CETW/CSfora and electronics companies

4e Review feasibility of a Wales version of the UK Skills Show Now for 2001 NTOs/Assembly/(NEC 5-9 July 2000) UK Skills/fora

5 5a Consider cross-company sector mentoring at management/ 2001 Emps/CETWteam leader level

6 6a Audit NVQs/course curriculum against industry standards 2001/02 Emps/CAA/NTO

6b Develop better liaison/more formal links with colleges Ongoing Emps/SWAG/and universities FE/HE

6c Proactively offer teacher/pupil/student placements 2001 Emps/SWAG/FE/HE

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Aerospace Sector

1. Introduction1.1 This document is one of a series commissioned by

the Future Skills Wales Research Forum. The overallproject aims are to extend and complement thework begun by the original Future Skills Walesproject, which forecast future generic skills needsacross Wales using forecasting and survey data.The current project aims to add studies of futurevocational skills needs within key sectors in Wales.

1.2 Businesses and employees in each of the sectorsstudied have achieved great successes; that is whythese sectors have become important for Wales.Our focus on current skills issues should notobscure these achievements or the determination ofall concerned to meet current challenges.

1.3 The FSW Sectoral Skills project takes particularnote of the importance of the manufacturing sectorfor the Welsh economy and for employment inWales. In particular it covers four manufacturingsub-sectors (although for convenience in individualsub-sector reports we will refer to them as sectors).These are:

• food processing;

• aerospace;

• electronics;

• automotive manufacturing.

1.4 This report covers the aerospace sector. It sharessome elements with the other reports, andparticularly with the other studies of manufacturingsub-sectors, but deals specifically with vocationaland other skills issues in aerospace in Wales andWelsh regions.

1.5 Each of the individual sector reports iscomplemented by a report on management andinformation technology skills issues across thesectors studied. This reviews the situation in eachsector and draws out common themes andimplications.

Method1.6 The first phase of the study proceeded mainly by

desk research and telephone discussions alongside some meetings with industry experts.

1.7 In the second stage, further meetings were heldwith sector representatives, and employer casestudies were undertaken to extend and deepen theanalysis of vocational skills issues.

1.8 The aim was not to conduct quantitative primaryresearch, but to consult with sector representativesin order to identify perceived skills issues, theactions being taken in response to these, and thepotential for further action or policy development.The published reports should therefore provide aclear introduction to the sector, a ‘snapshot’ ofsector issues, and pointers to current and potentialaction.

Aerospace Sector

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2. The Aerospace SectorDefinition2.1 The aerospace sector is primarily concerned with

the manufacture of aircraft and spacecraft (seeTable 2.1), a more detailed breakdown of activity isshown in Figure 2.1 below:

2.2 The UK’s aerospace industry (UKAI) is one of themost successful manufacturing sectors andcurrently provides about 2.5% of UK manufacturedoutput and 5% of manufactured exports1. Theindustry is characterised by several largecompanies who are global in their operations, and alarge number of small firms.

Welsh Development Agency “There are many types of operations in Wales includingstate-of-the-art aerospace equipment manufacturing,supply and maintenance, repair and overhaul (MRO)operations.”

Society of British Aerospace Companies“...The UK Aerospace Industry enters the new century asa highly successful and competetive industry, whichmakes a major contribution to the national economy andto the quality of employment in the United Kingdom.”

Figure 2.1: Description of the Sector

Sector CharacteristicsFirms2.3 Over the past 15 years, companies in Wales have

invested over £17billion. The Welsh DevelopmentAgency (WDA) estimate that the aerospace industryin Wales currently incorporates over 70 companies,this tally rises to over 100 if companies providingsupport services are included.

2.4 Descriptions of some major firms in the sector:

• BAE Systems employ approximately 4000 peoplein Broughton in North Wales, and is involved inthe manufacture of wings for the European Airbus;

• GE Aircraft Engine Services Limited employsaround 1500 people at Nantgarw near Cardiff,and overhauls and repairs aircraft engines andcomponents at one of the world’s largest enginemaintenance facilities;

• British Airways Maintenance employs about 800people at Cardiff International Airport, carryingout airframe maintenance on both the Boeing 747and 777;

• DARA (Defence Aviation Repair Agency) employsaround 3700 personnel at St Athan near Barryand 1700 in Sealand in Flintshire, primarilymaintaining defence aircraft;

• Raytheon Aircraft Services Limited maintaincorporate jets and is an employer of about 40people at Broughton;

• British Airways Avionic Engineering based at TalbotGreen, involved in the repair of in flight avionicequipment, and British Airways InteriorsEngineering based at Blackwood, which is involvedin the repair and overhaul of aircraft seating,employ around 300 and 150 people respectively.

Locations2.5 Figure 2.2 below shows that the majority of

companies are situated in South East Wales, withan additional concentration in the North-East, butwith examples of companies in other areas.

Figure 2.2: Location Map of Welsh AerospaceEmployers

Table 2.1 Definition of the sector

Description Standard Industrial Classification Code

Manufacture of aircraft 35.3and spacecraftSource: Engineering and Marine Training Authority (EMTA)

1 Source: DTI OST Defence and Aerospce Systems Panel ‘Foresight Contribution to UK Civil Aerospace Sector’.

key

MRO company

2 or more MRO companies

Manufacturing company

2 or more Manufacturingcompanies

Equipment supplier

2 or more Equipmentsupplies

UK Aerospace Industry

UK Government

Global Aerospace

Industry

Other Customers*

£2.52bn

£2.03bn

£5.51bn£7.21bn

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Aerospace Sector

2.6 Table 2.2 below shows that the regional distributionof employment in aircraft manufacturing is set toremain constant over the next ten years. Thisanalysis has been constructed using the coreaerospace definition (See Paragraph 2.1) thatexcludes a number of workers who are involved innon-manufacturing activity e.g. maintenance andoverhaul. Employment is predominantly in theNorth, where just over half of all Welsh aerospacemanufacturing employees are based, and in theSouth-East, which accounts for a further two fifthsof employees.

Employment2.7 Estimates from the Welsh Development Agency

(WDA) show that there are some 17,000 aerospaceworkers in Wales. Employment figures for thisindustry are difficult to ascertain precisely becausemany firms supplying to the aerospace industrymay not necessarily be regarded as aerospacecompanies.

2.8 On 15 June, BAE Systems announced that they willbe cutting 3,800 jobs due to “overlapping productcapabilities, duplication of facilities andopportunities to improve efficiency” that have arisenfollowing the merger between its former self BritishAerospace and Marconi Electronic Systems.However most of these cuts affect the North-Westof England and Humber regions. Conversely, it isenvisaged that some 22,000 jobs could be createdfrom the manufacture of the A3XX (See paragraphs2.26 and 2.27) and that some 8,000 will be at BAESystems2.

Sector Profiles2.9 Figure 2.3 below, shows a profile of the

occupational frequencies in the nine sectorscovered by this study that were produced byBusiness Strategies Ltd. It is clear that theoccupational breakdown in aerospacemanufacturing, in common with manufacturing ingeneral, is dominated by the operatives and, to alesser extent, by the craft professions.

Figure 2.3: Sector Occupational Profiles

2.10 Aerospace manufacturing is more stronglyrepresented in terms of employment in Wales thanin the UK as a whole, a trend that is set to increaseover the next ten years. Estimates of employmentquotients, that show Welsh aerospacemanufacturing employment relative to that in theUK, are 1.36 for the year 2000 and 1.58 for 20103.

Markets2.11 The total UK aerospace order intake in 1998 was

£21.02bn4 and orders were split 49:51 between civiland military respectively. Figure 2.4 shows that thedomestic market, incorporating the UK governmentand UK aerospace industry, accounts forapproximately a quarter of the sector’s sales. Thelargest single category of customers (described as‘Other Customers’) includes overseas governmentsand airlines and contributes over £7 billion to thesector. In total over £8 billion is generated by saleswithin the industry, both domestically and overseas.

2.12 The industry’s main products are aircraft systemsand frames, which account for over two fifths of theindustry’s turnover. Other significant groups ofproducts are aircraft equipment and aircraftengines, which account for 27% and 17% of theindustry turnover respectively (See Figure 2.5below).

Figure 2.4: 1998 UK Aerospace Turnover byCustomer

* including Overseas Governments, Airlines etc

Source: SBAC UK Aerospace Statistics 1998

Figure 2.5: 1998 UK Turnover by Product Group

Source: SBAC UK Aerospace Statistics 1998

Exports2.13 The aerospace industry has seen unprecedented

change, which has caused the industry to moveirrevocably from a national or, in some casesregional basis, to becoming a global industry withmany British companies consolidating theirpresence in North America and Western Europe.

Table 2.2: Location of Aerospace ManufacturingEmployees (2000, and forecasts for 2010)

Year Welsh Regions (%)South East Mid West North

2000 39 0 6 552010 37 0 6 57

Source: Business Strategies Ltd.

0% 20% 40% 60% 80% 100%

Farms

Social Care

Tourism etc

Bus/Finance

Media/New Media

Automotive

Food Proc

Electronics

Aerospace

Managers Professions Technical Clerical Craf t

Personal Sales Operatives Other

2 “BAE Systems website www.bae.co.uk” 3 “Derivation of forecast by Business Strategies Ltd”4 “SBAC UK Aerospace Statistics 1998”

Aircraft Engines17%

Aircraft Equipment27%

Aircraft Systems &Frames

42%

AircraftMaintenance 11%

Missiles 1%

Space2%

Aerospace Sector

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This is evidenced in the results of the first FSWReport5, which showed that aerospace industriesare more outward looking than average, having27% of total sales/turnover coming from overseascustomers compared to just 4% for all sectors.

2.14 The Department of Trade and Industry’s EngineeringIndustry Directorate (DTI EID) provided the followinginformation regarding the destinations of exportsfrom the sector. Of the £11.7 billion UK exports in1998:

• 37 per cent went to the Americas;• 33 per cent to the EU;• 17 per cent to the Middle East and Africa;• 9 per cent to Asia and Oceania;• and other European countries accounted for the

remaining 4 per cent.

Figur 2.6: 1998 UK Exports

Source: SBAC UK Aerospace Statistics 1998

Workforce Qualifications2.15 Information from the Labour Force Survey shows

that around a quarter of the Aerospace workforce inWales hold degree level qualifications (See Figure2.7 below). Over half of the workforce holdsqualifications up to NVQ level 2 or equivalent (e.g.five or more GCSE grades A*-C, RSA Diplomas,City and Guilds Craft, BTEC Firsts or tradeapprenticeships and other professional orvocational qualifications). Due to low sample sizessome of the data may be statistically unreliable.These figures show that the Aerospace workforce inWales is more highly qualified than themanufacturing workforce as a whole.

Figure 2.7: Highest Qualification Held

Source: Labour Force Survey

2.16 The new Joint Aviation Requirement Part 66, (JAR66) is a harmonised set of requirements for theinternational qualification of aircraft maintenancestaff. The licence may be considered as providing aqualification in aircraft maintenance thatdemonstrates the achievement of an underpinninglevel of knowledge and competence. The licencestructure is divided between Mechanical andAvionic trade disciplines and there are variouslevels within the licence which allow the holder toperform certain roles:

• Category A Line Maintenance CertifyingMechanic;

• Category B1 Line Maintenance CertifyingTechnician (Mechanical);

• Category B2 Line Maintenance CertifyingTechnician (Avionic);

• Category C Base Maintenance CertifyingEngineer.

2.17 The new licence is being phased in from June 1998until June 2011. Holders of the old JAA/NAA licencehave until the latter date to obtain a limited JAR 66that reflects their existing licence or authorisationprivileges. Holders of the JAA/NAA who wish toobtain an unlimited (full) JAR 66 must undertakeconversion training before 2011, after this theywould have to sit all relevant examinations.

2.18 As shown in Table 2.3 below, the largest area oftraining takes place in South East Wales (40.5%)but Mid Wales only accounts for one in twentystudent qualification aims. In addition to the trainingoffered by FE providers a number of training anddevelopment initiatives have been undertaken in thesector, the details of which are described in‘Section 4: Current Action on Skills’.

Sources of Change2.19 There has been a very rapid consolidation among

the US primary companies and major suppliers. Asimilar process of consolidation is on-going inEurope with most notably the creation of EADS(European Aeronautic Defense and Spacecompany) by the merger of much of the German,Spanish and French aerospace industries. Therecently renamed BAE Systems, formally BritishAerospace, represents the merger with GECMarconi Electronic Systems. There is a subsequentrisk that UK companies could be disadvantaged interms of scale and by the emergence of a verticallyintegrated customer base. One potential threatcould come from France’s Thompson CSF whichhas just acquired Racal Electronics6 in the UK, thusestablishing itself as an alternative UK supplier toBAE Systems in the UK market.

Table 2.3: Distribution of Manufacturing andEngineering FE Students

Welsh Regions (%)South East Mid West North

Percentage of of student 40.5% 5.0% 29.3% 25.6%qualification aimsSource: 1997/98 Individual Student Records and HESAStudent Record

NVQ 5

NVQ 4

NVQ 3

NVQ 2

NVQ 1

No qua

lifica

tions

05

1015202530354045

% ofWorkforce

g g

5 “Details of the project reports can be found on www.futureskillswales.com” 6 “Financial Times supplement ‘Aerospace’ 24 july 2000”

Asia and Oceanania9%

Middle East andAfrica 17%

European Union33%

Americas 37%

Other Europeancountries 4%

NVQ 5

NVQ 4

NVQ 3

NVQ 2

NVQ 1

No qu

alific

ation

s

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Aerospace Sector

2.20 The Royal Aeronautical Society Seminar on 22February 2000 noted that a continuing peacedividend means that the armed forces arecontracting in size and consequently there are fewerhighly trained engineers leaving and wanting tocontinue in civil aviation. This, combined with thelong-term decline of the industrial and manufacturingbase, has meant that the traditional sources forrecruitment by the civil aircraft engineering industryare less productive. John Sawyer, General Secretaryof the Association of Licensed Aircraft Engineers(ALAE), noted that this problem is beingcompounded by the widening gap between thehigher pay of engineers in the armed services andthe lower pay in civil aviation. The implications of thisare clear, for example in South Wales the supply ofpeople from RAF St Athan is declining.

2.21 There are currently over a dozen internetprocurement sites either operating or in preparation.Boeing, Lockhead Martin, BAE Systems andRaytheon announced their plans for a business-to-business marketplace this March. The aerospacesector is coming to the idea that a single e-marketplace can sharpen efficiency and reducecosts of doing business, a concept which has beenlong embraced by the automotive and other sectors.

2.22 The UK Lean Aerospace Initiative (UK LAI) hasimpacted on the structure of the workforce in thesector (See paragraphs 3.22 and 3.23). John Rex,co-ordinator of the People Management componentfor the Society of British Aerospace Companies’(SBAC’s) Competitiveness Challenge, notes thatone result of this is that jobs in the industry arechanging in response to the efficiency drive inbusiness processes. One common effect has beenthat increasingly there are fewer ‘middle-management’ roles and instead, there is anemphasis on the technically skilled occupations totake team leadership roles and increase theirawareness of managerial/strategic issues.

2.23 The Skills Task Force noted in their Research Paper7, that in the past Britain has offset relatively lowerlabour productivity, compared to the Continent, withlow labour costs (See Table 2.4 below) and anenvironment of lighter labour regulation7. In addition,it should be noted that in terms of industrialproductivity, the UK achieved the highest ValueAdded at each stage of the manufacturing processof any European country in 19998. However inrecent years this advantage has proven to bevulnerable to exchange rate movements. AsSterling’s value appreciates relative to the Euro thiscost advantage is lessened.

2.24 The Skills Task Force note that the reaction of manycompanies in order to remain competitive has beento contract and further cut their costs. This hasimpacted on the training budgets available for staffdevelopment. Should this pattern continue thentrade with the Euro-zone is likely to be less fruitfulfor British companies. Furthermore, if Britain is atsome point down the line to join the Euro, then thesize of the potential benefits of pursuing a similarpolicy are dependent upon the exchange rate parityat which Britain decides to enter.

Prospects for the Future2.25 There is strong evidence to indicate that there will

be a sustained increase in demand for air transportover the next ten to twenty years. The RoyalAeronautical Society (RAeS) Task Force published apaper in May 1999 stating:

‘Market trends indicate a strong and continuingincrease in the demand for air transport atminimum cost, but high safety standards’.

2.26 This is corroborated by evidence from marketforecasts by some of the sectors leadingcompanies. Airbus UK’s Global Market Forecastestimates that passenger traffic will grow by around6% a year and that in response the number of seatsin passenger service will more than double over thenext 20 years. Should the A3XX and A400M beginproduction as planned then the company is set forfurther expansion. On 16 May 2000, the UKgovernment announced that the A400M is the long-term choice to replace its remaining fleet of C -130Hercules military transport aircraft, with theprogramme set to be launched in the near future. Intotal, the A400M programme is expected to create10,000 jobs of which around 3,400 will be at BAESystems sites, the number of jobs that may becreated in Wales is currently unknown.

2.27 The A3XX is currently under development at AirbusIndustrie and will offer 15-20% lower seat operatingcosts compared to the 747 while providing 35%more seats and 650km more range9. To date eightcompanies have already expressed an interest inthe A3XX. BAE Systems at Broughton is home to amain manufacturing site for Airbus and is involvedin the construction of wings for the A320 andA330/340 family. The plant is also hoping to buildthe wing box and some sub-assemblies for theA3XX when launched. It is estimated that of the22,000 or so jobs that will arise from this project,some 8,000 will be at BAE Systems, albeit theproportion that will be based at Broughton is notknown at present.

2.28 World Tourism Organisation statistics forecast thatthere will be a 4.1% increase in the number oftourist trips taken world-wide every year until 2020.It is clear that civil air transport is expected toremain a growth industry and so provide manybusiness opportunities. The West of EnglandAerospace Forum newsletter has quoted forecaststhat the industry is set to grow twice as quickly asthe rest of the economy over the next 15 years.

Figure 2.4: Total Hourly Compensation Costs inUS$ for Production Workers inManufacturing

Ireland 13.33UK 16.43France 18.28Germany 27.20Netherlands 20.57Spain 12.14USA 18.56Japan 18.05Source: US Department of Labour

7 “Source: Max Munday of the Welsh Economic Research Unit, University of Wales Cardiff” 8 “Source: SBAC UK Aerospace Facts and Figures 1999”9 “Source: Airbus website www.airbus.com”

Summary Sector SWOT

Aerospace Sector

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2.29 If the aerospace industry is to grow in response tothis increased demand, this will present aconsiderable challenge to the sector’s resourcesand airport and air traffic managementinfrastructure. Factors which might constrain thesector’s growth include:

• increased competition for people from othertechnically orientated sectors;

• over-stretching of maintenance resources;

• shortages of appropriately skilled labourbecoming available from the armed forces,manufacturing sectors and airline apprenticeshipschemes;

• airports and air traffic management systemswould have to accommodate about double thecurrent number of passenger flights;

• competition from Europe and the United States;

• increasing competition in the maintenance sectorfrom lower waged countries such as Hungary andChina;

• strength of the pound, in particular relative to theEuro and the US dollar which might adverselyaffect the price competitiveness of British workersand British products.

2.30 The industry is important to the UK science andtechnology base with a total industry R&Dexpenditure of approximately £1.7bn during the last10 years. The industry DTI Foresight Report notesthat the UK’s current strong market position isbased on government and industry R&Dinvestments made in the 1970s and 1980s. Ascurrent R&D investment is far below the levelsenjoyed back then, the report notes that someanalysts believe that the industry is ‘living onborrowed time’. Already, Rolls Royce has chosen todevelop some variants of its successful Trentengine in Canada rather than in the UK after R&Dfunding was made available by the Canadiangovernment.

2.31 The performance of many aerospace companies inWales has historically been closely linked to theboom and bust cycle in the economy. At presentthe Welsh economy has sustained a relatively stablegrowth path for a number of years. Furthermore,there is no clear evidence of warning signs thateconomists might look for to indicate that theeconomy is reaching over-capacity or thatinvestment levels are unsustainable, signs thatmight signify an economic downturn. Forecasts forthe Welsh manufacturing sector estimate that it willgrow at an average annual rate of 2.5% over thenext five years10.

Strengths

Global industry -substantial presence oflarge companies in NorthAmerica and WesternEurope

Value added by SMEs,equipment suppliers andsystem integrators verystrong

Large world classcompanies

South Wales AerospaceGroup

Financial buoyancy

The SBAC’sCompetitivenessChallenge and Youth inUK Aerospaceprogrammes

Strong increase indemand for air transport

Opportunities

Growing market demand

Lean Aircraft Initiative

A3XX and other largecontracts

Foresight Action

Supply ChainRelationships inAerospace (SCRIA)

‘Women into Aerospaceand Engineering’programme

Joint AviationRequirement Part 66,Maintenance PersonnelLicensing (JAR 66) andthe related ‘JAR 66Human Factors’programme.

Weaknesses

Levels of performanceand operational efficiencybehind best practiceelsewhere

Perceived image ofengineering jobs hinderrecruitment

Industry faces uncertaintyas there is a dependenceon one-off contractualdecisions

Decline in the supply ofappropriately skilledlabour from traditionalsources

Threats

Increasing integration ofsupply chains means newcompetition and demandson SMEs

Competing against USwhere governmentsupport has been muchhigher

Impacts of the Peacedividend

10Cambridge Economics Regional Economic Prospects February 1999

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Aerospace Sector

3. Sectoral Skills IssuesCurrent Vocational Skills3.1 The sector’s main vocational skills are within the

following occupations (See Paragraph 2.9 for anoccupational breakdown of the numbers employed):• professional engineers (incl. maintenance,

electrical etc.);• software designers;• technicians;• craftsmen and women;• plant and machine operatives.

Future Skills Demand3.2 It is clear that the current level of skills in aerospace

companies falls short of the establishment’sprojected requirements. Figure 3.1 from theDTI/SBAC survey of UK aerospace companies(1997) shows that 17% of businesses are notconfident about the fit between current skill levelsand future business needs.

Figure 3.1: Coincidence in fit between currentskills and future business needs

Source: SBAC People Management Report

3.3 Around three quarters of employers believe that theskills levels of their employees need to rise to keeppace with changes in technology, work organisationand the changing basis of competitive advantage.The SBAC’s People Management Report 1998notes that another important trend is indicated bythe claim by some employers that increasing levelsof skill are required to perform new jobs. It is clearfrom our consultations that the focus of increasingexpectations will increasingly fall on graduateengineers who must be able to perform a widervariety of tasks.

3.4 The introduction of the Joint Aviation RequirementPart 66, Maintenance Personnel Licensing (JAR 66)is seen as setting a new standard for engineeringlicences (See paragraphs 2.16 and 2.17). Concernwas expressed by a member of the RoyalAeronautical Society that the mathematicalcomponent of the examination might be toocomplicated, particularly with mind of currentlicence holders wishing to transfer from the JAA tothe unlimited JAR 66.

3.5 Following our consultations with employers andsector representatives it is clear that the A3XXproject will have a significant positive impact on theoutput of the sector and that the effects will knock-on through the supply chain. The emergence of along-term market in the larger aircraft arena, once

dominated by Boeing, will have a positive impact onthe number people required with skills in this area.

Vocational Skills - Future Supply3.6 The aerospace sector has traditionally faced

cyclical skill supply and demand problems. On thewhole these have been due to the boom and bustnature of its business environment and the lack of aconsistent history of established training practice.Furthermore, there is evidence that this trend is notchanging. In a survey conducted by EMTA (1998Labour Market Survey of the Engineering Industry -Report for Wales), 40% of establishments facingrecruitment difficulties would respond by improvingjob advertising and related activities. Only 14% offirms would re-train existing staff or increaseinternal training.

3.7 As noted in the Skills Task Force Research Paper 7,the main occupational areas in which engineeringrecruitment difficulties periodically recur -technicians, graduate engineers and craftspeople -are those which require relatively long periods oftime for trainees or students to acquire thenecessary skills and knowledge. During periods ofrecession there are strong cost pressures onemployers to reduce expensive long term trainingprogrammes, which has long lasting consequencesfor the future availability of skilled labour. In periodsof rapid growth the time taken to train new staff istoo long to alleviate shortages of skilled labour.

3.8 In line with this pattern, the current growth in theglobal aerospace market has been paralleled by anincrease in perceived skill shortages in the sector.Evidence from the EMTA survey found that 54% ofengineering establishments in Wales wereexperiencing current recruitment difficulties. Fromour consultations with sector representatives andemployers it is clear that there is concern thatcompanies are tending to respond to theirshortages by ‘poaching’ staff. For example, it wasnoted in our consultation with the South WalesAerospace Group that there is a pattern ofmovement of staff from RAF St Athan to BritishAirways Maintenance Centre, and then on to G.E.Systems. The primary concern raised was that thismovement results in escalating wages and doesn’taddress strategically the ‘grass roots’ problem of ashortage in the overall supply of qualified people.

3.9 The experience of periodic recessions may alsohave lasting effects on labour supply to the extentthat young people may be reluctant to seek trainingopportunities or consider taking engineeringdegrees because of negative perceptions regardingtheir employment prospects in the industry. Thisissue may be compounded by the less thancompetitive pay on offer to civil aviation engineersthat was noted by John Sawyer (ALAE). In contrast,military pay notwithstanding, the SWAG felt thatcurrent levels of pay were comparable with otherengineering industries, although it is clear that therates of progression in pay lag behind some hightechnology industries.

3.10 A primary reason for what he felt to be the lowerpay was highlighted by John Sawyer as the lack ofa militant union to voice the engineers’ concerns, asituation which it was felt was unlikely to change in

very confident

quite confident

confident

not very confident

not at all confident

05

1015202530354045

% ofEmployers

a d utu e bus ess eeds

very confident

quite confident

confident

not very confident

not at a

ll confident

Aerospace Sector

13

the near future. In a recent study of sevenaerospace companies it was found thatrelationships with trade unions varied considerablyand that in some of the firms an aggressive anti-union stance had been adopted with the result thatunions had been either marginalised or de-recognised11. It is clear that unions in the aerospacesector have less of an impact than in some others.Conversely, there is clear evidence of good practicein effective employee relations that is consistentwith firms production arrangements, with somefirms for example establishing union-managementjoint problem solving groups to look at specificefficiency and waste reduction issues.

3.11 A breakdown of employment in the Welshaerospace manufacturing industry shows that in1998, 91.9% of workers were male, whichcompares to a similar figure of 93% in 1993.Furthermore, in the FE Institutions in Wales thenumber of females aiming to obtain qualifications inEngineering courses was 1711 in 1998, just 8% ofthe total. It is clear from our consultations that onereason for lower female participation is that theperceptions of the engineering profession as beinga male job still persist, and as a result a large poolof potential talent is being left untapped.

Skills Issues3.12 Evidence from the DTI/SBAC survey of aerospace

companies showed that just over 30% ofestablishments believe that the skills levels of theiremployees are ‘medium to low’. It also found thatskill shortages are predominantly in the engineeringarea, with the following four job titles being themost frequently mentioned:

• CNC machinists;

• Software engineers;

• Skilled technicians;

• Design engineers.

3.13 It is clear that many of these jobs take aconsiderable amount of time to develop people intoand some are in areas, particularly technicallyorientated occupations, where there is considerableinter-industry competition.

3.14 EMTA’s UK survey (1998 Labour Market Survey ofthe Engineering Industry - Main UK Report) hasfound that the main areas of skill deficiencyreported in the aerospace sector are embraced by awide range of ‘practical skills’ (defined as ‘the abilityto carry out job related tasks’). This problem wasidentified by 54% of establishments surveyed. Alsoimportant in the survey were a number of genericskills including computer literacy (38%), problemsolving skills (38%) and communication skills (29%).

Fig 3.2: Areas of Skills Deficiency

Source: EMTA Labour Market Survey of the Engineering Industry 1998

3.15 The Skills Task Force Research Paper 7 noted thatthe skill deficiencies identified in this survey couldconceivably underestimate the problem.International comparisons of matched samples ofengineering establishments indicate that firms mayoperate product strategies that conceal ‘latent’ skillgaps, although this effect has yet to be quantified.

3.16 The DTI/SBAC aerospace survey found that the fourmain causes of skill problems in the aerospaceindustry were identified as follows:

• not enough suitably skilled people (approximately80% of establishments);

• lack of practical skills (approximately 50% ofestablishments);

• too much competition from other employers(approximately 30% of establishments);

• not enough people interested in doing this sort ofjob (approximately 30% of establishments).

3.17 It is clear from our consultations to date that theshortage of appropriately skilled labour is primarilydue to a contraction in the supply of skilledpersonnel from the armed services, manufacturingsectors and the traditional airline apprenticeshipschemes. Furthermore, there is a significant issue inthe negative perceptions of the industry that areheld by some potential entrants.

3.18 Brian McCarthy, EMTA National Manager for Walesnoted that the recruitment of engineering graduatescontinues to be a problem, especially for SMEs.The Skills Task Force elaborate on this issue notingthat “most engineering recruitment difficulties in1998 were found to have far more to do withperceived shortcomings in the quality of graduates(for example, their lack of work experience andapparent weaknesses in communication skills) thanany shortfall in their quantity.”

Management Skills3.19 Evidence from EMTA’s survey revealed that 32% of

Welsh engineering companies reported deficienciesin management compared to 25% in the UK. Giventhat more than three out of ten establishments donot think that they have sufficient managerial talentfor their future business needs, recruitment anddevelopment of managerial talent will be animportant issue for aerospace establishments in theyears ahead.

Practical skills

Computer literacy

Problem solving skills

Skilled craftspeople

Management skills

Communication skills

01020

30

4050

60

% ofEmployers

11 “Marc Thompson ‘People Management in UK Aerospace: Case Study Findings’ 1999”

Computer literacy

problem solving skills

Skilled craftspeople

Management skills

Communication skillsPractical skills

14

Aerospace Sector

3.20 Evidence from the DTI/SBAC survey showed thatalthough 87% of aerospace companies see trainingtheir managers as critical to future businesssuccess, only 47% ‘strongly agreed’ or ‘agreed’ thatthey invest heavily in the skills of their managers. Onaverage those who agreed that they invested heavilyin their managers skills provided 5.8 days of off-the-job training (compared with an average of 4.3 daysacross all establishments). This is broadly on a parwith the manufacturing sector as a whole.

3.21 Aerospace companies tend to develop their ownmanagerial talent with around a third of companiesrecruiting from the external labour market(DTI/SBAC survey). Those companies recruitingoutside the business indicate that they have greaterproblems recruiting effective managers. Thisproblem was especially prominent in largercompanies (over 1,000 people).

3.22 The introduction of lean methodologies has fiveprinciples which have direct Human Resourceimplications12:

• optimise capability and utilisation of people;

• make decisions at the lowest possible level;

• develop relationships based on mutual trust andcommitment;

• promote lean leadership at all levels;

• nurture a learning environment.

3.23 In a study of seven UK aerospace firms, MarcThompson Research Fellow at Templeton CollegeOxford University found that one of the definingcharacteristics of the lean model is the devolutionof decision-making to the lowest level. In practicethis means that middle management is flattened,and that subsequent discussions with the remainingmiddle managers in the restructured firms foundthat “they felt ill prepared, unskilled and oftenconfused in their new roles”13. This feeling was alsoreflected by some of the new ‘cell-leaders’, whocomplained about the lack of clear roles and thefact that many felt as though they had been left tosink or swim in their new roles.

3.24 In the DTI/SBAC survey three key challenges fortheir approach to their managerial employees wereidentified as either ‘very important’ or ‘vital’ byestablishments. These findings were supported bythe consultations we had with employers. Theywere:• improving communication skills (76% of

establishments);• developing leadership skills (75% of

establishments);• developing change management skills (60% of

establishments).

IT Skills3.25 The Skills Task Force Research Paper 7 notes that

in the mid-late 1980’s there was a particular scarcityof software engineers and technicians inengineering industries. However, that since thenthere has been considerable growth in the numbersof people qualifying at different levels in computerscience and software engineering and muchemployment based training has covered the use ofmicroelectronics-based equipment. Furthermore,

many firms in the sector point to the fact thatchanges in the prevalence of computers at homemost new recruits are more IT literate than theirpredecessors.

3.25 These developments may have helped reduce thegap between supply and demand for software andIT related skills during the most recent economicupswing in the sector. It is clear however thatdemand still exceeds the supply of people in theseoccupations, an increasingly significant reason forthis being that the competition for softwareengineers from other technically orientatedindustries is becoming more intense. In line with theUK average, 38% of Welsh engineeringestablishments surveyed identified an IT skilldeficiency in the existing workforce.

Case Studies3.27 The case studies below provide current illustrations

of the issues discussed here.

Employer Case Study 1 (Interiors Maintenanceand Overhaul):British Airways Interiors EngineeringB.A.I.E. is a wholly owned subsidiary of British Airwaysbased in Blackwood and has won the Best NewEntrant in the 1999 Wales Quality Awards. Formed in1996, it is a one-stop shop for aircraft interior repairand refurbishment. Over the last four years thecompany has grown rapidly from 50 to 200 people.

Current training As the company continues to grow and because of aforthcoming change from the traditional working hoursto shift work, there will be a need to recruit morepeople. In the past the company has not struggled toget reasonable applicants and are optimistic aboutfilling any gaps that might arise. Over a two and a halfweek period the new recruits will be trained jointly byBAIE and Ystrad Mynach college, areas of study willinclude the development of general tool handlingcompetencies and time with the seats themselves. It isexpected that the recruits will be able to produce areasonable output after three months. Additional in-house training is offered where more advanceddevelopment is required such as for work on Captain’sseats, it is felt that this can be a fairly time consumingand expensive process.

Attracting young people into the IndustryMike Edwards, General Manger of B.A.I.E., a SWAGmember and school governor of a local school, is wellaware of the challenge of attracting young people intothe industry. He believes that the solution must involvea change in the culture of schools to make the pupilsaware of what opportunities are available to them ifthey don’t automatically go on to higher education,which isn’t the best option for all pupils. Changes thatcan have an impact on this would be to encouragepupils to think about continuing Design andTechnology past GCSE age and to involve morepupils, at an earlier age, in work placements andYoung Enterprise programmes. B.A.I.E. for example,would be prepared to take on more work experiencestudents.

12 “Marc Thompson ‘People Management in UK Aerospace: Case Study Findings’ 1999.” 13 “ibid.”

Aerospace Sector

15

Employer Case Study 2 (Components,Mechanical and Avionics Maintenance andOverhaul):Defence Aviation Repair Agency (DARA)Formed in April 1999 from the RAF and RN aircraftrepair and maintenance organisations, DARA isEurope’s largest government owned facility of its kind.The target market is the UK, NATO and other militaryarmed forces but the Agency now has the capacity tooffer its facilities to the wider aviation market,providing a ‘one-stop shop’ for aerospacemaintenance, repair and overhaul. There are threebusiness units on four sites across Great Britain, twoof which are in Wales.

DARA St Athan employs around 750 service personneland 2200 civilian personnel; expertise is in the repair,

maintenance and modification of mainly militaryaircraft and aerosystems. DARA Sealand employs 200service personnel and 1000 civilian personnel; they areprimarily concerned with the repair, modification andcalibration services for electrical systems, flight controlsystems, instrumentation etc.

Becoming more commercially minded Steve Hill the Chief Executive at DARA, is aware of thedemands that a changing market will have on the skills oftheir employees. Where in the past there was a guaranteeof work, the market is now open to wider competition.

For the business to perform effectively in a morecompetitive environment DARA relies on its people,and as part of the continual development of staff, theAgency is introducing a behavioural competencyframework. Examples include (for Directors and SeniorTeams) ‘Driving Commercial Focus’ that includeslearning about internal and external customers throughpeople at all levels at DARA; and ‘CommercialProblem Solving’ for Product Managers that includesacting to define and meet customer needs.

JAR 66 As a member of the Welsh Aerospace TrainingAdvisory Group, Peter Kennedy, DARA Training andDevelopment, has been involved in the ‘JAR 66Human Factors’ initiative. He says that DARA isparticularly conscious of the need for its maintenancestaff to gain civilian recognition. This is part of theprocess to develop the client base.

Profile of TraineesDARA St Athan currently offer 86 trainee places a yearin Wales. Whilst the ages of applicants varied, therewas a continuing trend of predominantly maleapplicants, and in fact no women were selected thisyear. DARA are aware of the need to attract morefemale applicants and to this end, amongst otherthings, the Agency is committed to the ‘Women intoAerospace and Engineering’ programme.

In addition, the emphasis is on softer people skills,such as leadership and teambuilding.

Employer Case Study 3 (Manufacturer): Doncaster’s Blaenavon LtdDoncaster’s Blaenavon has 40 years experience offorging and is a leading supplier of Nickel, Titanium,Aluminium and special steel casting and ring forgingfor the aerospace and industrial gas turbine industry.The Doncaster’s name has 220 years of forging historybeing established in 1778 and at present employsaround 150 people.

Impact of the ‘5 year business cycle’Historically company performance, as is typical ofmany in the aerospace industry, has been linked veryclosely to the five-year business cycle. During theperiods of downturn, because of the need to maintainslim margins, the company has had no other feasibleoption but to delay taking on any new apprentices.This has not impacted significantly on the skills of theworkforce as during an economic upturn, as a newmachine operator for example, can be trained to aproficient level within 6-12 months.

Implications of ‘Lean manufacturing’ The introduction of the Lean ideology has cut down onany waste in manufacturing areas. The primaryimplications for the workforce at Doncaster’s has beenthe increasing importance of ‘multi-skilling’, it is nolonger felt that there is one man-one job. Furthermore,there is a more streamlined role for administrative andmiddle-management positions.

Shortage of Graduate EngineersNigel Tutton, Site Manger at Doncaster’s, is aware thatthe most notable skill deficit in the current workforcewas of metallurgical engineers. In the past, thecompany has recruited at graduate entry level fromSwansea University, but feels that at present there is ashortage. Implicit in this problem is perhaps the higherexpectations of the range of skills required ofgraduates such as a greater awareness of thebusiness environment.

16

Aerospace Sector

Employer Case Study 4 (AirframeMaintenance and Overhaul):Raytheon Aircraft Services LtdRaytheon based in Broughton is an authorised servicecentre for Hawker, Beechjet and King Air in the UK,Continental Europe, Middle East, CIS and NorthernAfrica. Formed in 1993 the company currently employsaround 120 people in Wales and has recently won amajor contract to repair a range of corporate aircraft.

Management SkillsThe Raytheon workforce incorporates 30-40 year oldmechanical engineers that have around 15 years’experience of the job. There is a feeling that whilst thetechnical skills were invariably very strong, thebusiness acumen and awareness of the bigger picturein the middle managers is in need of somedevelopment.

Training Provision There has been a difficulty in finding training related tothe J.A.R. 66 maintenance licence locally, and in thepast the company has sent its trainees to Oxford andPerth. This has proven to be an expensive processand the company has called for local provision tailoredtowards licensed engineers. It was recognised thatpooling resources with a consortium of companiesbased in North Wales would be the most effective wayof spearheading an initiative to satisfy therequirements.

Attracting young people into the IndustryRoger Smith, Personnel Director at Raytheon, is also aschool governor at a local school and is mindful of theproblem of attracting young people into the industry.At present, it is felt that there is an intention byschools to encourage pupils to stay on, which is felt tobe at times misguided. It was felt that the role forEducation-Business Partnerships was becomingincreasingly important through the provision of workexperience for pupils and ultimately encouraging themto enter the sector.

4. Action on skillsCurrent Actions4.1 As noted by John Rex (SBAC) larger companies

conduct much of the training within the industry and itmight be argued that they are less in need of anyassistance in this area. In fact, some of the companiesare including staff in their in-house training from thesmaller companies in the supply chain. In addition tothis the smaller companies are able to and havetended to recruit from the bigger companies after theirstaff has received appropriate training.

4.2 Increasingly, the aerospace industry is introducingoutsourcing as a new method of recruiting people,particularly for activities such as finance, distributionand computing. In a recent Aerospace ForumRecruitment Seminar, it was noted that greaterflexibility and improved cost effectiveness through asystem of payments on results are two of the mostcompelling reasons for outsourcing recruitment.

4.3 The introduction by the UK Civil Aviation Authority(CAA) of the JAR 66 will give engineers qualifyingunder that regime an international standard. Theintroduction of category ‘A’ licence within the JAR 66clearly allows a greater recognition of individuals’incremental progression in their job. We are aware ofat least one course provider in Wales, Barry College,which has integrated the new licence requirementsinto the curricula offered.

4.4 The South Wales Aerospace Group (SWAG) consistsof British Airways Maintenance Centre, DARA, BritishAirways Interiors Engineering, Nordam Europe Ltd, GEAircraft and British Airways Avionic Engineering. Thegroup is fully active in promoting aerospaceengineering as a career in schools and colleges,addressing the skills gap and representing the needsof industry to industry.

4.5 The implications of the need to attract new entrants tothe engineering trades is reflected in the SBACinitiative to promote the industry more effectively toschool and university leavers through its Youth in UKAerospace programme. A similar campaign, launchedat the beginning of 2000 by the SWAG aims toenlighten pupils on what a career in aerospace couldinvolve. Part of the solution is to tackle the oldstereotype of engineers as the ‘oily rag brigade’. Theysay the industry provides exciting new technology,excellent job opportunities, modern workenvironments, a good salary, excellent training, careeradvancement prospects, and scope for travel14. Aspart of this process the SWAG has recently produceda video-pack designed to communicate this messageto pupils.

4.6 In addition, a number of promotional and training anddevelopment initiatives are currently emerging in thesector, including ‘Aerospace Wales’, ‘JAR 66 HumanFactors’ and ‘Women into Aerospace andEngineering’. It is too early to forecast what thepotential impact of these might be, but it is a clearindication of aerospace companies and organisations’commitment to address sectoral skills issues.

14 “Gina Groom ‘get ready for ...take off’ actionetwork issue 19 June 2000”

Aerospace Sector

17

4.7 The Supply Chain Relationships in Aerospace (SCRIA)programme gives support, services and training toparticipating companies. SCRIA aims to develop theright behaviour, culture and skills to promote healthyworking partnerships. The primary tool that SCRIAuses is training workshops that address the issue ofhow to manage supply chain relationships - at least3800 people have received this training. This is one ofthe programmes under the umbrella of theSBAC/DTI’s Competitiveness Challenge initiative.

4.8 The UK Lean Aerospace Initiative (UK LAI) is acollaborative programme between the SBAC, theEngineering and Physical Sciences Research Council(EPSRC) and a consortium of four universities that hasbeen running since April 1998. The impetus for theprogram was the US Lean Enterprise Model (LEM) ofbest practice in manufacturing. The programme’sinitiatives have included the establishment of ‘infactory’ change implementation by using Masterclasses and 29 best practice case studies have beencollected and shared with participants.

Key Themes for Action 4.9 The various players in the public and private sectors

need to agree an integrated approach to skills issuesin the aerospace sector. There is a need for:

• a collective and agreed statement of the key issues;

• developing a closer dialogue and partnershipbetween SWAG employers, employers notrepresented in the SWAG, providers (both currentand potential), and national or regional public sectorbodies;

• based on this partnership and dialogue, an agreedstrategy to address the skills issues via a specificschedule of activities by each partner.

4.10 This Skills Strategy for the Aerospace sector in Walesshould dovetail with more general skills strategies foreach region and for the manufacturing sector as awhole. These in turn should form part of the nationalskills action plan which will be developed as an aspectof the national economic development strategy.

4.11 Terry Davies of South East Wales TEC (SEWTEC)noted that the appointment of an aerospace skills co-ordinator, a position that would be fully resourced bythe TEC, would be an effective way of managing aregional strategy, a suggestion that has beensupported in the employer consultations. Clearly in anextended Welsh aerospace group, a co-ordinatorwould provide a natural driver and focus of policy.

4.12 Based on our desk research and fieldwork, there are anumber of key themes for action. Many of thesethemes also appear in our reports on othermanufacturing sectors, particularly automotive andelectronics. They are as follows:

4.13 Theme 1: supporting the changeover to leanmanufacturing at management and professionallevels and supporting the development of skills forlean manufacturing. To reflect what is becomingincreasingly recognised as best practice, the emphasisis on training provision that is attuned to teamworking, waste minimisation, problem-solving, andcompetitive advantage via manufacturing flexibility andefficiency (recommendations 1a, 1b and 1c).

4.14 Theme 2: widen coverage of JAR 66 courseprovision where gaps exist. The continuing shortageof qualified engineers can be targeted, in part, by ageneral increase in the provision of courses tailored tothe new JAR 66 requirements (recommendation 2a).Furthermore, it is clear that in North Wales, as isillustrated by Case Study 4, there is significantly lesstraining available for maintenance engineers locally, agap that we feel needs addressing (recommendation2b).

4.15 Theme 3: the South Wales Aerospace Group issuccessfully active in addressing the multitude ofissues affecting the sector. It is recommended thatthis group be widened to incorporate companiesacross the whole of Wales (recommendation 3a).The group currently consists of British AirwaysMaintenance Centre, DARA, British Airways InteriorsEngineering, Nordam Europe Ltd, GE Aircraft andBritish Airways Avionic Engineering. Key players thatwould undoubtedly add strength to the group fromNorth Wales include BAE Systems and Raytheon.

4.16 Theme 4: attracting new recruits into the sector bysupporting and building on existing programmes. Anumber of the misconceptions about the engineeringand manufacturing industries are formed at an earlyage and these negative perceptions of the engineeringindustry are a barrier to potential entrants. Thisincludes students at school who are deciding not tochoose maths and science subjects as well asgraduates who are choosing IT-related rather thanmanufacturing careers. In addition to ensuring thatcurrent actions to address this problem (SeeParagraphs 4.4, 4.5 and 4.6) are fully supported(recommendation 4a), we recommend that thefollowing actions be initiated. Developing links withschools/ Education Business Partnerships(recommendation 4b), promoting the aerospace sectoras a legitimate (and exciting) career option via sectorpacks (recommendation 4c) web pages(recommendation 4d) and skills shows(recommendation 4e) can be effective ways ofgenerating interest with the younger age group.

4.17 Theme 5: developing team leaders and inparticular raising their awareness of the range ofskills necessary in the industry. From ourconsultations with companies it is clear that they areaware of the need to develop their team leaders anduseful lessons can be learned from the experience ofthose companies, throughout the manufacturingsectors, that are already upskilling their supervisorsand team leaders (recommendation 5a).

4.18 Theme 6: improving the work-readiness ofintermediate and higher level entrants to theworkforce, particularly graduate engineers.Ensuring a good match between the commercial andtechnical skills being taught at Universities andColleges and industry requirements can be achievedby having a closer dialogue with National TrainingOrganisations and periodically auditing the curriculumagainst industry standards (recommendation 6a). Inaddition to this the industry needs to considerdeveloping more formal links with academic andlearning institutions (recommendation 6b) and pro-actively offering more sandwich placements(recommendation 6c).

18

Aerospace Sector

Potential Impacts of Action4.19 “The availability of top class people - more than

anything else is what has led to Wales’emergence as a centre for world-classaerospace operations” - Prime Minister, the Rt.Hon Tony Blair MP (April 6 2000, opening the newAircraft Seating Centre in Cwmbran).

4.20 It is clear that to ensure the continued success ofthe industry the following key challenges existwhich our recommendations are designed toaddress:

• breaking the cyclical training strategy. There is aneed to break away from the history of trainingthat responds to a boom and bust cycle. It isunfeasible to have a radical restructuring ofcompany training patterns but it is felt that inconsortium, companies and educationalorganisations could effectively spearheadinitiatives to provide the industry as a whole witha consistent supply of new talent.

• Addressing the shortfall of skilled staff fromtraditional sources. By undertaking aconsolidation of the training and qualificationsavailable and by marketing career opportunitiesdirectly to schools, colleges and universities thesector should aim to create a sustainable supplyof new skilled labour.

Recommendations for Future Research4.21 Work needs to be done to identify any ‘latent’ skill

gaps, where a company operates a sub-optimalproduction strategy to conceal skill deficiencies.

4.22 The prospects for employment growth from theA3XX development and manufacture in North Walesneed to be tracked, so that sub-regional trainingprovision is kept under review with a view tomeeting potential increases in demand.

4.23 Research needs to be undertaken to evaluate skillsissues around Cardiff International Airport.

4.24 Further examination is needed into the extent towhich the contraction of the armed forces andindustrial and manufacturing base will affect thefuture supply of appropriately skilled labour.

Key Recommendations

Theme Rec Action Timescale Key PartnersNo: No:

1 1a Facilitate cross-sector working group on lean techniques From 2000 Various foralinking to existing initiatives

1b Review vocational qualifications to check applicability 2001/02 NTO/CETW/to lean manufacturing Emps

1c Review/update assessor training and awareness of 2001/02 NTO/CETW/lean paradigm Emps

2 2a Increase the number of training places available to students 2001/02 CETW/WDA

2b Address the gap of JAR 66 training courses in North Wales 2001/02 SWAG/CETW

3 3a Facilitate the expansion of the SWAG to involve more 2001 SWAG/Empscompanies including those based in North Wales

4 4a Support existing programmes promoting sector plans and 2001 Emps/EBPsprospects to schools, young people and communities SWAG/CS

4b Proactively seek partnerships with local schools, 2001 Emps/EBPs/EBPs, FE and HE CETW

4c Develop a sector pack and sub-sector packs 2001 Emps/CETW/CS

4d Develop sector/sub-sector web pages with links to 2001 Emps/CETW/CSfora and electronics companies

4e Review feasibility of a Wales version of the UK Skills Show Now for 2001 NTOs/Assembly/(NEC 5-9 July 2000) UK Skills/fora

5 5a Consider cross-company sector mentoring at management/ 2001 Emps/CETWteam leader level

6 6a Audit NVQs/course curriculum against industry standards 2001/02 Emps/CAA/NTO

6b Develop better liaison/more formal links with colleges Ongoing Emps/SWAG/and universities FE/HE

6c Proactively offer teacher/pupil/student placements 2001 Emps/SWAG/FE/HE

Aerospace Sector

19

Annex A: References‘The Aerospace Industry in Wales: A Report forEmployers 1998-2007’, Future Skills Wales Partnership - details can be obtainedon www.futureskillswales.com

‘Foresight Contribution to UK Civil Aerospace Sector’,DTI OST Defence and Aerospace Systems Panel

‘UK Aerospace and the Regions’, Society of BritishAerospace Companies - details can be obtained onwww.sbac.co.uk

WDA Website www.invest-in-wales.com

BAE Systems Website www.bae.co.uk

‘UK Aerospace Statistics 1998’ and ‘UK AerospaceFacts and Figures 1999’ Society of British AerospaceCompanies - details can be obtained on www.sbac.co.uk

‘JAR-66 Aircraft Maintenance Licences - informationfor new applicants’ and ‘Flow Chart for JAR-66Licence’ UK Civil Aviation Authority - details can beobtained on www.srg.caa.co.uk

‘Aerospace’, Financial Times supplement 24 July 2000

‘Research Paper 7: Engineering Skills Formation inBritain: Cyclical and Structural Issues’, Skills TaskForce - details can be obtained onwww.uuy.org.uk/projects/ten/nstf

Airbus website www.airbus.com

‘Regional Economic Prospects February 1999’,Cambridge Econometrics

‘People Management in Aerospace’ Society of BritishAerospace Companies, DTI and IES - details can beobtained on www.sbac.co.uk

‘1998 Labour Market Survey of the EngineeringIndustry in Britain: Report for Wales’ and ‘1998 LabourMarket Survey of the Engineering Industry - Main UKReport’, Engineering and Marine Training Authority

‘People Management in UK Aerospace: Case StudyFindings’, Marc Thompson, Templeton College OxfordUniversity (1999)

‘Get ready for ...take off’, Gina Groom, actionetworkissue 19 June 2000

Annex B: Sectors in Context A Brief Overview of the Relative Size andImportance of Welsh Sectors

The following information relating to the Aerospacesector is calculated using the BSL definition whichdiffers from the WDA definition (See Paragraph 2.1)used earlier in the report. The implication of this isthat these figures understate those previously quotedin the report.

This paper presents an overview of the sectors selectedfor study within the Future Skills Wales Sectoral Skillsproject. It aims to give the relative scale of the sectorsinvolved and some idea of their relative importance inWales.

The data on employment used in this section is takenfrom the latest estimates from Business StrategiesLimited (August 2000). Data on business units are takenfrom NOMIS. Some of the values given (for example forthe number of businesses within Wales, or the size of theworkforce, for a given sector) will not agree withestimates or calculations from other sources. This is dueto differences in the detailed definitions of sectors, or inmethods of estimation. However by using one source inthis discussion, consistency in measurement orestimation is established, and better comparability isensured. This is appropriate since here we are concernedwith the relative sizes of sectors and their workforces, asmuch as with absolute numbers.

Sector Size: Workforce NumbersFigure B.1 shows the employment figures for each of thesectors (employees and self employed) as a percentageof the total for Wales. By this measure Tourism, Leisureand Hospitality is the largest of the selected sectors,followed by Business and Financial Services, Social Care,and Agriculture and Farm Enterprises.

Together, the nine sectors selected for study in thisproject provide work (either as employees or in selfemployment) for around 26% of people working in Wales.This indicates the scope and potential importance of theexercise for the understanding of skills issues in Walesand the formulation of policy responses. (The rest ofemployment in Wales is accounted for by a large publicsector, including government, education and publicsector healthcare, and by the primary, construction,transport and distribution sectors, including retail).

Figure B.1: Employment as a percentage ofWelsh Employment: by Sector

Source: BSL FSW Sector Forecast

0.0 2.0 4.0 6.0 8.0

Aerospace

Automotive

Electronics

Food Processing

Agriculture

Tourism

Social Care

Media

Bus. & Fin. Services

20

Aerospace Sector

Employment Location QuotientsFigure B.2 provides a different view of the sectors, interms of their importance within Wales relative to the UKas a whole. It does this by comparing the employmentlocation quotients for the sectors. Employment locationquotients are used to express the degree to whichemployment in a given sector is located in a selectedregion. To calculate a location quotient, an averagepercentage is first calculated for all employment in theregion. Using the BSL estimates, for example, one findsthat 4.3% of all employment in the UK is located inWales.

Figure B.2: Employment Location Quotients forWales: by Sector

Source: BSL FSW Sector Forecast

Therefore, if employment in a given sector is distributedevenly over all regions of the UK, one would expect 4.3%of its employment to be in Wales. The sector’s Welshemployment percentage, at 4.3%, will be equivalent tothe average employment percentage for Wales.

To calculate the employment location quotient, thesector’s percentage is expressed as a ratio of the Welshaverage percentage. For example if a sector has 5.2% ofUK employment, the employment location quotient willbe the ratio of 5.2 to 4.3, or 1.2. Quotients of more than 1therefore indicate over-representation of employment inthe Welsh sector relative to the UK as a whole. Quotientsof around 1 indicate that employment in the sector inWales is much as one would expect given the overalldistribution of employment across the UK; and quotientsbelow 1 indicates that the sector in Wales is relativelyunder-represented in terms of employment.

Figure B.2 shows that the strongest Welsh sectors, inthese terms, are Agriculture, plus three of themanufacturing subsectors - Automotive, Aerospace andElectronics Manufacturing. UK employment is relativelyconcentrated in Wales for these sectors, despite the factthat some of them are small in relation to Welshemployment as a whole (Figure B.1). The Social Caresector also shows employment strength, while FoodProcessing and Tourism, Leisure and Hospitality areapproximately in line with the Welsh share of UKemployment.

Media and New Media, and the Business and FinancialServices sector, are both under-represented in Wales inemployment terms, with employment location quotientswell below 1.

Sector Size: Number of BusinessesAn alternative method of comparing sectors is by thenumber of business units in each sector. This can be lessstraightforward than the employment location quotientmethod used above. Here we are using data on businessunits in Wales and for Great Britain as a whole, providedin NOMIS. The main difficulty is the definition of abusiness unit within the published figures. This does notmake a distinction between separate businesses, andlocations representing branches or sites within onebusiness. It also omits small ‘one-person’ business siteswithout formal employees.

This means, in particular, that these figures are apt to bemisleading as applied to the agricultural sector, sincethey represent agricultural businesses with employees,rather than all farms. They therefore greatly under-represent the number of agricultural enterprises in Wales.Although the business unit figures for agriculture havebeen included in the following analysis, they are thereforenot a reliable guide to agricultural sites in Wales.

Figure B.3 shows the sectors studied in terms of thenumber of business units in Wales. It shows that, by thismeasure, the Tourism, Leisure and Hospitality sector is bysome way the largest. According to the NOMIS figures,this sector contains 12.4% of all Welsh business units, -around 1 in every 8.

A further 6.6% of Welsh business units are in theBusiness and Finance sector, and 3.2% in Social Care.The next largest sector, Media and New Media, includesa large number of businesses classified under ‘Othercomputer related services’. Many of these may be ‘NewMedia’ businesses within our study definition. Others,however, may be providing services which are notrelevant within this definition. As explained above, thefigures for agriculture do not represent the farming sectoraccurately.

In total the sectors covered by the study account for over25% of business units located in Wales.

Figure B.3: Number of Business Units - Selected Sectors

Source: NOMIS

Site Location Quotients of Welsh SectorsFigure B.4 shows the site location quotients calculatedfor the sectors covered by this study. These arecalculated as for the employment location quotients usedearlier, but using business unit figures instead ofemployment numbers. Four of the sectors have quotientsgreater than 1. In other words, these sectors are ‘over-represented’ in Wales relative to what one might expecttaking Great Britain as a whole. These quotientsrepresent a degree of concentration of business units in

0 0.5 1 1.5 2 2.5

Aerospace

Automotive

Electronics

Food Processing

Agriculture

Tourism

Social Care

Media

Bus. & Fin. Services

0 2000 4000 6000 8000 10000 12000 14000

Agricultural Businesses

Business/finance

Media/New Media

Social Care

Tourism

Aerospace

Automotive

Electronics

Food Processing

Aerospace Sector

21

these sectors within Wales. These sectors are Aerospace,Tourism, Hospitality and Leisure, Social Care, and FoodProcessing.

The Automotive Manufacturing sector in Wales, with alocation quotient of 0.96, is close to the size one mightexpect (in terms of numbers of business units). In otherwords, Wales has ‘a fair share’ of business units in thissector, according to these NOMIS figures. At the otherend of the scale, the Business and Finance sector, with asite location quotient of only 0.6, is under-representedwithin Wales - confirming the findings of the first FutureSkills Wales study in 1998.

Again, the quotient for ‘Agricultural Businesses’ reflectsthe limitations of the method, although it may indicatethat Welsh farms and agricultural businesses tend to besmaller than the average for Great Britain, inasmuch asfewer of them are large enough to be included asbusiness units.

Figure B.4: Site Location Quotients

Source: NOMIS

Selection of Sectors for the StudyThe above discussion sheds light on the reasons forselecting this set of nine sectors. The reasons vary, butcan be simply expressed as follows (some sectors areselected for more than one reason):

• sectors with significant proportions of Welshbusinesses and/or workforce (Tourism, Business andFinance, Social Care);

• sectors which are important components ofmanufacturing industry within Wales (Aerospace,Electronics, Automotive, Food Processing);

• sectors which are relatively strong in Wales(Aerospace, Tourism, Social Care, Food Processing);

• sectors which are relatively weak in Wales, but areimportant for future growth (Business and Finance,Media/New Media);

• sectors with particular significance for Welsh cultureand communities (Agriculture, Media/New Media).

The Manufacturing SectorManufacturing has been more important in the Welsheconomy than for the UK as a whole. In 1998employment in manufacturing (including but not limited tothe sectors studied in this project) accounted for 19.7%of Welsh employment. This contrasted with 16.6% for theUK - a difference of 3.4 percentage points. Projections

for 2004 show manufacturing employment as a lowerpercentage of employment in both cases - 17.3% inWales, against 14% for the UK. Although the percentagesare smaller, the difference between Wales and the UK, at3.3 percentage points, remains almost unaffected. (DfEE,Skillsbase/IER, June 2000).

Although these projections show a fairly significantdecline in the size of the manufacturing sector as apercentage of overall Welsh employment, the absolutenumbers involved change less significantly. This is due toa projected rise in the total numbers employed in Walesover the period 1998-2004. Thus, the figure of 227,000for those employed in manufacturing in 1998, becomes205,000 in 2004 - a decline of 22,000, or just under tenpercent.

When considering the future demand for skills it isimportant to keep in mind that, as illustrated above,relative decline in the manufacturing sector does notimply lack of future demand for manufacturing skills. Thiswas one of the insights behind the original Future SkillsWales project methodology.

This point is further illustrated by the replacementdemand projections for occupations associated withmanufacturing. Figure B.5 shows the replacementdemand projection for skilled metal and electrical trades(SOC 52) for the period 1998-2004, across the UK. In thisperiod, 145,600 jobs in these trades are expected todisappear - part of the overall decline in employment inmanufacturing noted above. However, losses from thesetrades are projected consisting of 248,000 fromretirement, and 56,600 from occupational mobility(movement into other jobs), a total of 304,600 workers tobe replaced. This more than offsets the effects ofdeclining employment, leaving a net requirement figure of169,500. This represents the requirement for new, trainedentrants to these trades in these six years. These may benew entrants to the workforce, or existing workers whohave upgraded or added to their skills and qualifications.

Based on the assumption that Wales would require about4.5% of this number (this being the approximate size ofthe Welsh workforce relative to that of the UK), thisimplies a net requirement for some 7,600 skilled metaland electrical tradespeople over this period for Wales.

Figure B.5: Replacement Demand: Skilled Metaland Electrical Trades, 1998-2004 (UK)

Source: DfEE Skillsbase/IER

0 0.5 1 1.5

Business/finance

AgriculturalBusinesses

Electronics

Media

Automotive

Food Processing

Social Care

Tourism

Aerospace

22

Aerospace Sector

Annex C: Supply and demand ofmanufacturing skills

The Supply of Manufacturing and EngineeringQualifications in WalesIt is far from straightforward to produce meaningfulfigures on the provision of skills in relation to sector skillsneeds. However it is at least possible to look at theprovision of qualifications in the Welsh FE and HEsectors, and to examine the profile of these in relation tooverall demand in the manufacturing sector in Wales.

The latest comprehensive figures on Welsh provision arepublished by the Wales Funding Councils and relate tothe academic year 1997/98. In other words they describeprovision which will generate skills and qualificationswhich typically became available to the labour marketfrom late 1998 and (in the case of students in the earlieryears of three year courses) in 1999 and 2000. Figures for1998/99 should be published in late 2000.

The 1997/98 figures for all of Wales show that withinFurther Education, around one per cent of students werepursuing qualifications relating to Manufacturing. Thisrepresents some 5,441 students from a total of 398,044enrolled at Welsh FE institutions. (These figures and thosebelow are based on both full and part-time studentenrolments).

In addition to this, approximately 4 per cent of FEstudents (16,543) aimed for Engineering qualifications.

These proportions are broadly reflected in the figures forthe Welsh regions (Table C.1). There are slight variations:Manufacturing qualifications, for example, are morestrongly represented in West Wales, and Engineering inthe North, perhaps reflecting the emphasis of localdemand.

As for the rest of the UK, Wales displays a stronggender bias to this enrolment pattern. Of those aimingfor Manufacturing qualifications, 83% were male (4,529).Of those seeking Engineering qualifications, almost 94%(15,506) were male. This contrasts, for example, with thecase of IT qualifications, where males represented justunder 43% of the students enrolled.

For 1997/98 and the succeeding years, this total of21,984 students enrolled will form the main input (fromFurther Education) of new skills and qualifications thatare specific to the manufacturing sectors. This input willbe complemented by entries to manufacturing of FEstudents with less sector specific qualifications and skillsin, for example, sales and marketing, science andmathematics, or IT.

In Higher Education, there are no comparable figures forManufacturing related subjects, but student enrolmentsare recorded for Engineering and Technology. The totalenrolled for these qualifications in Welsh HigherEducation Institutions in 1997/98 was 7,800. These

enrolments are concentrated in institutions in the South-East and South-West of Wales (Table C.2). The mainexception is North East Wales Institute, with 857enrolments, though Bangor also has 233 enrolments inthese subject areas.

Again, there is a very pronounced gender bias in terms ofenrolments - 92% of students in this subject area aremale. Only 1.6% of female students are enrolled in thesesubjects, as against 15% of male students.

In 1997/98 a total of 990 first degrees were awarded inEngineering and Technology by Welsh Higher EducationInstitutions (HEIs), mostly by full time and sandwichstudy. A further 776 other undergraduate qualificationswere awarded, the majority via part-time study, giving atotal of 1,766 awards at undergraduate level.Postgraduate qualifications were awarded in 256 cases.

There are no comparable published figures for awards bysubject area from FE. Estimation of qualificationsawarded per annum in Manufacturing and Engineeringwould need to take account of the average length ofcourses and the retention and attainment rates for thesesubjects. From the 22,000 students enrolled, for example,

Table C.1: FE Enrolments in Manufacturing/Engineering by Region 1997/98

SE W Mid N Totals

Manufacturing 1,697 1% 2,721 3% 174 1% 849 1% 5,441 1%

Engineering 7,204 4% 3,728 4% 824 3% 4,787 5% 16,543 4%

Totals 8,901 6,449 998 5,636 21,984

Table C.2: Engineering & Technology Enrolments,1997/98

Institution Enrolled in Total Enrolled Engineering at HEI

& TechnologyUniversity of 2,014 15,148Glamorgan

University of Wales 0 9,743Aberystwyth

University of Wales 233 10,017Bangor

Cardiff University 1,394 20,294

University of Wales 0 2,313Lampeter

University of Wales 1,323 13,085Swansea

Univ. Wales Coll. 0 3,208Of Medicine

Univ. Wales 415 7,853Institute Cardiff

Univ. Wales 976 7,757College Newport

North East 857 4,952Wales Institute

Swansea Inst. . 588 4,272of Higher Ed

Trinity College 0 1,590Carmarthen

Welsh Coll. of 0 599 Music & Drama

Total for 7,800 100,831Welsh HEIs

Aerospace Sector

23

assuming two year courses, a retention rate of 83% (theaverage for all subjects), and an attainment rate of 60%(actual rates vary between 49% and 70% by qualificationtype), we can construct a rule-of-thumb estimate forannual output of these qualifications by FE. This wouldbe 11,000 x 0.83 x 0.6, or 5,480 awards.

Taken with the 2,000 outputs from HE, this gives a figureof around 7,500 qualifications in manufacturing,engineering and technology subjects per annum at alllevels. A complication is the relative lack of data onstudent destinations. Especially for Higher Educationawards, students receiving the relevant qualifications mayleave Wales before entering employment. This may bepartly balanced by inflows of Welsh students who havecompleted studies at other UK universities. Therefore thisis in many ways a rough estimate, but it does providesome basis for comparison with the size of themanufacturing sectors now and in future.

To this figure we also need to add qualifications obtainedvia non FEFCW funded provision - primarily vocationalqualifications gained in sixth forms, and those gained viastudy with employers and private sector trainingproviders, funded by the Welsh TECs. The yearly cohortsize for pupils aged 18 or over leaving Welsh schools isaround 12,000 (Digest of Welsh Statistics, 1999, NationalAssembly for Wales/Government Statistical Service, TableB.3). However most of these will leave with non-vocational qualifications and skills; no figures forvocational awards were available at the time of reporting.

We do not have a comprehensive set of figures forqualifications gained, by vocational subject area, via TECfunded provision. Figures provided by Mid Wales TECand South East Wales TEC suggest that a total of around1,000 students per annum enter manufacturing relatedvocational courses in these two regions (at ModernApprentice and National Traineeship level: adult trainingnot included). Given the preponderance of the populationin the South-East, one might assume that not more thananother 1,000 per annum enter across West and NorthWales. This gives a maximum estimate of 2,000 perannum for possible outputs of learners with manufacturingspecific vocational skills and awards from TEC provision.

Taking all the key sources of supply, therefore, we arriveat a rough estimate of 9,500 for the annual supply of newpeople with manufacturing specific skills andqualifications.

Manufacturing Sector Employment DemandWe can compare these estimates for annual supply withthe BSL forecast for job opportunities in Wales, includedin the original Future Skills Wales report. Table C.3 showsgross job opportunities per annum in occupations thatare closely related to the qualification subject areasanalysed above (The Future Skills Needs of Wales, AllWales Report, Table 6.8). These figures take into accountthe effects of expansion or contraction in theseoccupations as well as retirement or movement out of theoccupations due to occupational mobility.

The table shows that the forecast for new entrantsneeded in these largely manufacturing-specificoccupations was 18,200 per annum - almost double ourestimate of the annual supply of people with directlyrelevant and newly acquired training and qualifications.

Manufacturing Specific Skills/Qualifications:Supply versus Demand

Given that our estimate of an annual supply of 9,500 isroughly correct, this implies that the remaining 8,700 newentrants to these occupations per annum will fall into oneof the following categories:

• people with no training or qualifications;

• people with training or qualifications not in relevantvocational areas;

• people with relevant training and qualifications fromoutside Wales.

To this extent, one might speak of a mismatch betweensupply and demand for vocational manufacturing skills inWales. However, more qualitative evidence fromemployers suggests that they are often concerned aboutthe quality of skills on offer, rather than the numbers ofpeople applying with qualifications in the right area and atthe right level. We must be cautious, therefore, in drawingconclusions about the need to change the balance ofprovision, based on the estimates presented here.

There is little in the analysis to suggest that therelationship between supply and demand will besignificantly different in different Welsh regions. It doessuggest, however, that the supply of people withmanufacturing qualifications is strongly biased towardsmales - a situation which is unlikely to assist in theelimination of existing gender imbalances in themanufacturing sector workforce as a whole. In particularit would seem that workers with relevant qualifications -and therefore a better chance of progressing within theworkforce - are much more likely to be male.

This attempt to analyse the fit between supply anddemand has indicated some of the difficulties arisingfrom limited current availability of provision data, andsome of the complexity inherent in this task. While suchan analysis can probably not provide a complete andaccurate basis for provision planning (which, anyway, willbe strongly affected by student demand), it does serve toindicate the relative scales of provision and occupationaland sector needs. In the case of manufacturing, itprovides food for thought about the balance of provision.

Table C.3: Forecast of Who Will Take Up JobOpportunities in Wales,1997-2007(000s per annum)

Occupation Gross Job People OthersOpportunities already (new

p.a. working entrants)in Wales

Skilled 3.7 1.8 1.9Engineering

Other Skilled 7.9 3.7 4.3Trades

Industrial 14.4 6.8 7.5Operatives

Drivers/ 5.6 1.1 4.5Machine Operatives

Total 31.6 13.4 18.2Source: FSW All Wales Report, BSL 1998 (ONS and LFS data)

24

Aerospace Sector

AcknowledgementsJohn Rex – Society of British Aerospace Companies (SBAC)Brian McCarthy – Engineering and Marine Training Authority (EMTA)Roger Thompson – Welsh Development Agency (WDA)Colin Lyons – Barry College Centre for Aircraft Maintenance TrainingRoger Smith – Raytheon Aircraft Services Ltd.Terry Davies – TEC South East WalesNigel Tutton – Doncasters Blaenavon LtdPeter Kennedy – Defence Aviation Repair Agency (DARA)Mike Edwards – British Airways Interiors EngineeringJohn Harard – Flying Service Engineering and Equipment LtdJohn Sawyer – Association of Licensed Aircraft Engineers (ALAE)Jim Harrison – Vale of Glamorgan Unitary AuthoritySouth Wales Aerospace Group Human Resources ManagersMax Munday – Welsh Economic Research Unit, University of Wales CardiffDepartment of Trade and Industry (DTI)SPSS/Labour Force Survey (LFS)Business Strategies Limited (BSL)

The views presented in this report are those of York Consulting Limited. Matthew Lawless, August 2000.

Notes