DIW0003

Written Evidence submitted by Airbus

1.            About
 

1.1.      Airbus is built on a proud 100-year British heritage and is a world leading aerospace, helicopter, defence and space company. Our strong and enduring relationship with the United Kingdom is a vital element in Airbus’ ongoing success across the globe.
 

1.2.      We make a major contribution to the UK economy and are increasing our workforce to 12,000 through expansion across our 25 UK sites. Throughout the UK, Airbus supports an additional 86,000 jobs across an extended supply chain of 2,200 companies, 30% of which are SMEs. We are also dedicated to developing the UK’s next generation of engineers, having supported over 750 graduates and trained more than 4,000 apprentices in the last ten years. As a national champion of aerospace innovation and skills, we collaborate with more than 20 UK universities and invest £235 million annually in UK R&D.

1.3.      We are particularly proud of our commitment to Wales and to the Welsh economy, contributing an estimated £311 million to Wales’ GDP. Airbus is one of the largest employers in Wales with over 5,500 employees in North and South Wales.  Broughton is Jewel in Airbus UK’s industrial crown and the global centre of excellence for wing manufacture. Airbus has invested over £2 billion in Broughton in the last decade.  In 2020 a further 11,600 jobs in Wales were sustained by Airbus. Airbus  works with 131 Welsh Suppliers and 56 Welsh SMEs with an annual spend across the Welsh Supply Chain of £148m.

1.4.      At our Newport site, home to 500 employees, Airbus Defence and Space specialises in secure communication services, cyber solutions and cyber security. Through its state of the art CryptKey solutions, it is one of the very few organisations that protects the Ministry of Defence’s vast secure communications network at home and overseas, and also delivers NATO’s Deployable Communication and Information System.

1.5.      RAF Valley is also home to 3 Airbus H145 Helicopters which are used as part of the MOD’s Military Flight Training School Contract which will train the next generation of military pilots.

1.6.      Airbus welcomes the opportunity to respond to the Welsh Affairs Select Committee’s enquiry into defence manufacturing and cyber security in Wales.

2.            How important are the defence manufacturing and cyber security sectors to the economy in Wales?

2.1.      Airbus views defence manufacturing as synonymous with the aerospace sector. The two go hand in hand. Without one, the other’s success would be highly limited.

2.2.      Wales has a strong advanced manufacturing heritage. Broughton, North Wales has been home to aviation manufacturing since 1939 when it was established as a shadow factory at the start of the Second World War for the large-scale manufacture of the Wellington and Lancaster bombers. Today, the world flies on Welsh wings, manufactured by over 5,000 highly skilled engineers from Airbus in Broughton, North Wales.

2.3.      The aerospace industry is a vital component of the UK’s national security, providing the military with a sovereign capability to develop and manufacture advanced aircraft, engines, and avionics, especially during crises. Airbus in Broughton manufactures the wings for the global A330 Multi Role Tanker Transport - MRTT - fleet.  A military variant of the Airbus wide body A330 aircraft, the MRTT is used to power air to air refuelling (AAR) for military customers in NATO, Australia, France, Saudi Arabia, Singapore, South Korea, the United Arab Emirates and the UK.

2.4.      The RAF MRTT fleet, also known as Voyager, acts as a ‘petrol station in the sky’, offering AAR to RAF Lightning and Typhoon fighter jets and also operating as a strategic air transporter. NATO’s MRTT fleet operating with Welsh wings are also playing a critical role protecting Ukraine and Europe's Eastern flank. The Alliance’s ‘Air Shielding’ mission has safeguarded the skies and borders of eight member countries - more than 2,500km of territory, stretching from Estonia to Bulgaria, providing AAR to allied fighters, increasing their interoperability, flight time and readiness.

2.5.      Aerospace and defence industries are inextricably intertwined with Wales’ thriving aerospace manufacturing sector, supporting defence in many different ways, including:

2.6.      Advanced Technology: Aerospace develops high tech solutions that have dual use or ‘spin off’ applications across the wider defence, security and space sectors. For example, the development of new materials, propulsion systems, and avionics can help improve the performance of military aircraft and other defence systems in the long term.  Airbus’ Wing of Tomorrow programme is researching the benefits of folding wing tips which have both civil and UK military applications. Similarly, Airbus UpNext, which tests new technology programmes, is exploring hinged wing-tips capable of reacting and flexing to wind gusts have the potential to alleviate wing loads and increase roll rate compared to fixed wing tips to deliver improved aircraft performance. Furthermore, Artificial Intelligence and Quantum technologies being researched within the Airbus Commercial technology roadmap also have an exploitation pathway that can support defence.  

2.7.      Highly Skilled Workforce: Wales’ aerospace sector is home to a rich resource pool of skilled workers who have the competencies to support defence and wider UK plc during times of national crisis. Most critically, during the coronavirus pandemic, Airbus’ highly skilled engineers transformed the Advanced Manufacturing Research Centre in Broughton (AMRC Cymru) into an assembly line to produce medical ventilators at an unprecedented scale. During a three month period, the same engineers manufactured over 13,000 medical ventilators, more than had been produced in the UK in the past 20 years. The country's ability to defend itself often depends on its aerospace skills and manufacturing capabilities, particularly for military aircraft and other defence systems.

2.8.      Supply Chain Resilience: Airbus works with over 131 suppliers in Wales who deliver products and services to the highest standards meeting rigorous airworthiness controls and strict quality measures. These high standards make Airbus suppliers more attractive to the defence sector which has complementary controls, quality drivers and standards. Consequently, Airbus looks to proactively pull through current commercial aircraft suppliers to support our defence, space and helicopter divisions. For example, we have developed our relationship with Tritech, an advanced engineering company based in Wrexham North Wales from supplying fuel connectors for all single aisle aircraft to delivering components for our A400M military aircraft. Furthermore, we have recently onboarded Tritech as a new supplier in our space systems business, enabling them to scale up and grow.

2.9.      Inward Investment: Airbus’ world leading advanced manufacturing capability in North Wales, combined with the scale of Broughton’s infrastructure, globally renowned safety record and highly skilled workforce makes it the prime location for growth and inward investment. This is why Broughton has been selected as the manufacturing location for the Airbus H175M helicopter which the company will offer to the UK MOD for its New Medium Helicopter programme launched to  replace the current inservice Puma fleet of helicopters. As part of the Airbus Helicopters bid we will militarise the H175 in the UK and we plan to establish a production line in Broughton. This will be the only production line for the H175M, which will also mean that all future overseas sales of the H175M will be UK exports. We anticipate c. 400 new jobs will be created in Broughton, RAF Benson and our Oxford Headquarters, helping to drive a competitive environment for UK helicopter production. We are aiming for 70% of the NMH programme to be UK content and our H175M UK taskforce is actively engaging with the UK supply chain, SMEs and research organisations including those in Wales' thriving aerospace sector.

2.10.      These examples demonstrate the benefits that Wales’ thriving advanced manufacturing and aerospace industrial base can bring to defence manufacturing in Wales. Having a strong advanced manufacturing ecosystem generates opportunities for collaboration, research and development and inward investment. The recently announced Advanced Technology Research Centre (ATRC) at MOD Sealand, Deeside demonstrates how engagement with industry and wider potential partners aims to deliver research that ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌responds directly to some of the biggest long-term challenges and opportunities in defence such as cyber security, software engineering, space, radio frequency and advanced sensing technologies and next generation propulsion. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

2.11.      Airbus values the defence manufacturing and cyber security sectors to the economy of Wales, and thinks they are deeply important to the prosperity of all its people.

2.12.      Indeed, Airbus’ activities in Wales are imperative to UKs national resilience delivering the  sovereign capability Britain needs in order to operate in an uncertain and insecure global environment. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Airbus’ Cyber business secures information, intelligence and communications that enable aircraft to fly, ships to sail, troops on the ground to communicate and even communications with satellites in space, providing the information advantage on the battlefield and in strategic command.

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2.15.      All of our skills are home grown in Newport South Wales. It takes 7 years to develop full competency in what we do. We do something so unique that every skill has to be learned, practised and learned again - which takes time and investment. We currently employ over 260 highly skilled Cyber experts,10% of our workforce are graduates, apprentices or interns.

2.16.      With a salary of over £57,000 - the second highest average salary in the entire Airbus Defence and Space UK cohort and more than double the average salary in Wales, Airbus recognises the importance of investing in our employees to ensure a sustainable pipeline of talent, not least in the cyber security sector.

3.            What are the opportunities for growth in defence manufacturing and cyber security in Wales in the future?

3.1.      Airbus sees Wales as a hub for opportunities in defence manufacturing - particularly military helicopter production - and cyber security exports.

3.2.      Airbus is currently bidding to provide the H175M to the UK MOD for its New Medium Helicopter (NMH) programme that will replace the current Puma fleet of helicopters (approximately 36-44 helicopters)  with a budget of £1.2bn. If successful, Airbus Helicopters will militarise the H175 in the UK and build a brand-new rotary wing production line in Broughton North Wales, drawing on the skills and expertise of the Welsh based workforce. This will create c. 400 new jobs in Broughton, at RAF Benson and our Oxford helicopter headquarters along with sustaining many more in the UK supply chain.

3.3.      Airbus’ commitment for 70% of the total content of the NMH programme to be generated locally in the UK will support opportunities throughout the UK supply chain including in Wales, Scotland and Northern Ireland.

3.4.      Airbus success in the NMH competition would drive competition and innovation in the UK helicopter industry and further elevate Broughton as a global hub for exports by acting as a catalyst for strong military helicopter export sales bringing millions into the economy.  If won, NMH represents a 500 aircraft export opportunity over a 25 year period, creating new highly skilled jobs, beneficial to Wales’ local and regional economies for the long term. 

3.5.      There is a one-in-a-generation opportunity for Wales to deepen its defence capacity and expertise. Through the replacement of the Airbus Puma 2 aircraft and other Airbus platforms such as the Dauphin 2, Wales has a unique opportunity to dramatically expand its contribution to the national defence economy. This allows for a diversification of investment and employment opportunities right across the United Kingdom through growing the overall defence pie. This will deepen the UK’s resilience by developing engineering skills which are essential for sustaining future defence technologies.

3.6.      Furthermore, our trusted heritage in UK sovereign delivery of CryptKey technology has the potential to be exported to markets around the world, including NATO, Five Eyes, and the CPTPP.

3.7.      The UK Government’s own Defence and Security Industrial Strategy (DSIS) names CryptKey as one of four strategic imperatives. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX. Our Cyber capabilities, based in Newport, and anchored between MOD in Abbey Wood and NCSC in Cheltenham, are therefore at the heart of the Government’s own defence agenda, and our plan for internal and local growth.

3.8.      In the last two years alone, our Cyber business in Newport has increased its headcount by 100%, with plans to further increase this. And in September, we will launch a  brand new Cyber Apprenticeship Programme, alongside our already successful graduate programme which will see a cohort of additional eight graduates join us in the autumn.

3.9.      Airbus also associates Wales with the opportunity to develop our military space landscape, with critical suppliers and experts being located across the nation. The creation of MODs Space command can look to the existing Welsh Space industrial base, research excellence and test facilities as an enabler for growth.

3.10.      Airbus strongly welcomes the Government’s commitment to level up across the UK and to increase regional prosperity, and we look forward to lending our support wherever possible. We rely on 12,000 skilled employees over 25 sites across the length and breadth of the country to deliver our sector leading products and services. Wales is key to this. Whether it is through the manufacture of wings in Broughton, or securing connectivity and cyber security in Newport, we have a long history of providing high-skill employment to communities nationwide. We also spend £5 billion each year with UK suppliers. Through this expenditure we support a supply chain comprising more than 2,200 companies and a further 86,4000 UK jobs.

3.11.      We know that such investment is vital for the innovation that can help unlock global progress and deliver a step-change in economic growth. That is why we spend £235 million on UK R&D each year and collaborate with more than twenty British universities to anchor key IP in Wales and UK facilitating collaboration on wider research topics that benefit multiple sectors including defence, space and nuclear. This includes Airbus’ largest R&D project, Wing of Tomorrow, which is anchored in Wales and focused rethinking the design, manufacture and industrialisation of novel wing concepts, and how we could de-risk the future wing industrial system through radically new approaches.

4.            How important are Wales’ defence manufacturing and cyber security sectors to the overall UK capability?

4.1.      The aerospace, defence and cyber security sectors are highly strategic. In a post-Brexit United Kingdom, our sovereign security capabilities will be even more essential. As we pursue opportunities beyond Europe, Britain’s national sovereign capability will need to be reviewed and reaffirmed. Whether this is through providing the wings for every RAF MRTT in the world, protecting our Armed Forces via our bid to build the UK’s new Medium  Helicopter in Broughton or defending government, military, businesses and other critical national infrastructure from cyber threats in Newport, Airbus is ready to continue playing its part to deliver national sovereign capability for the United Kingdom.

4.2.      Through delivering national sovereign capability, Airbus supports an extensive and highly skilled Welsh supply chain while employing a highly skilled workforce in Wales. These jobs, particularly in manufacturing, are very important to the wider aerospace industry and, once lost, are almost impossible to recover. The defence and security industry therefore requires a consistent pipeline of research and manufacturing work from government customers to ensure that we can retain these skills. Not only does the industry ensure our national security is capable of being entirely independent in the decades to come, but it also provides significant transferable research, which anchors advanced aerospace and communications technology in the UK.

4.3.      There are very few nations in the world that possess the capability to support their national Government in having a global impact through CryptKey, of which is recognised as one of the strategic imperatives as named in the Defence and Security Industrial Strategy. Wales is key to enabling the UK’s sovereign capability, not least through cyber clusters like the one in South Wales which Airbus operates in, which ultimately enable defence capability.

4.4.      In enabling the UK to possess sovereign capability, Wales delivers freedom of action for the whole UK, allowing our nation to be less reliant on that of other nations for its own defences.

Aerospace manufacturing is also critical for national security. A country's ability to defend itself often depends on its aerospace manufacturing capabilities. Therefore, Wales’ strength in aerospace manufacturing can help to maintain the UK's sovereignty, acting as a strong ‘insurance policy’ protecting against potential threats.

5.            What role should the UK Government play, in collaboration with the Welsh Government, in promoting and maintaining defence manufacturing and cyber security in Wales?

5.1.      Airbus would encourage the UK Government to explore the possibility of replicating models such as Airbus Endeavr Wales - which seeks to stimulate innovation in technology by funding the development of early stage research to the point where commercial value can be realised - across other areas of Wales, and specifically more so to the defence manufacturing sector.

5.2.      Airbus would also ask the UK Government to support research and development investment in the sectors identified, specifically through tax credits and providing further support to catapult centres such as the Advanced Manufacturing Research Centre in Broughton.

5.3.      The Advanced Manufacturing Research Centre in North Wales (AMRC Cymru) is a powerful partnership between the Welsh Government, local authorities, growth and enterprise agencies and a world-leading R&D centre in advanced manufacturing demonstrates the importance of collaboration between local regions, industry, academia and government. Airbus believes that this could go further, replicating sectors beyond solely manufacturing, to others including defence and cyber security. We hope the planned Advanced Technology Research Centre (ATRC) in Deeside stimulates the same volume of collaboration for R&D and innovation in Wales for defence as the AMRC Cymru has for aerospace.

5.4.      Airbus continues to encourage collaboration between local Government, industry and academia to grasp the fullest possible opportunities that lie ahead, and to discourage competition over co-operation. Indeed, we take full advantage of partnership between private and public entities. Our Airbus Endeavr model - a joint initiative between Airbus, Cardiff University and the Welsh Government, was established to support innovation in Wales, while fostering the skills needed for the future.

5.5.      Centres of regional excellence developed through City Deals and regional powerhouses also provide a springboard for export and international growth. For example, Airbus’ Cyber Security business located in the Western Gateway region represents a key opportunity to export its world leading capability to other countries bringing further high value jobs to the region. 

5.6.      Whether it be through fostering academic partnerships or supporting local skills, Airbus recognises the social value that it generates by being present in Wales. As the committee will be aware, social value now represents a minimum of 10% in all MOD contracts. We would therefore ask the UK Government, in symmetry with the Welsh Government, to continue to recognise the importance of social value, especially in the defence manufacturing and cyber security sectors.

5.7.      Skills are vitally important for the defence manufacturing and cyber security sectors. These sectors are people based and people driven. We would therefore urge the UK Government to work in close partnership with the Welsh Government to invest in the skills of the future which are imperative for the sustainability of these sectors. Complementary to this should be initiatives by both Governments to support businesses to not just upskill, but retain skills as well, which will eventually drive further opportunities for these sectors in Wales.

5.8.      Collaboration is critical to harnessing the skills of the future. That’s why Airbus works with over 20 universities across the UK, including several in Wales including the University of South Wales and Glyndŵr University in North Wales, and supports a vibrant supply chain comprising over 2,200 companies, including Tritech in Wrexham. Airbus would urge the UK Government to work with the Welsh Government to continue to incentivise collaboration between business and academia, and also the private and public sectors, in an effort to deepen cooperation, and avoid competition for the benefit of the UK’s, and Wales’, defence manufacturing and cyber security sectors.

6.            Summary

6.1.      Defence in Wales is vitally important, not only for a prosperous and secure United Kingdom, but for that of the international community. It is fundamentally supported by Wales’ thriving aerospace sector that develops dual use advanced technology, creates a robust collaborative ecosystem supported by a highly skilled workforce, offers a resilient supply chain and importantly stimulates inward investment. There are many opportunities to grow Wales’ defence and cyber footprint particularly through the MOD’s New Medium Helicopter programme and support for exports of both military helicopters and CryptKey to customers around the world. We would therefore urge the UK Government to consider our submission when exploring Britain’s sovereign capability, investment in skills, and seeing the huge opportunity that Wales offers to deepen defence manufacturing and cyber security sectors in our great nation.

May 2023