STAR 21 European Advisory Group on Aerospace - Strategic Aerospace Review for the 21st Century

Brussels, 16 July 2002

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Europe's needs

In recent years Europe's leaders have defined far- reaching goals for the European Union which have major implications for the aerospace industry, setting, on the one hand, ambitious targets for Europe's competitiveness and, on the other hand, key objectives for the EU's foreign and security policy.

In its Strategic Aerospace Review for the 21st Century (STAR 21) the European Advisory Group on Aerospace argues that these goals can only be met if the economic and industrial structures in Europe are capable of responding to the new requirements. A flourishing and competitive aerospace industry is essential to ensuring a secure and prosperous Europe. Apart from its contribution to sustainable growth, the aerospace industry is a home to key skills and technologies and an important driver of innovation; it guarantees the means for delivering services from space, and makes an essential contribution to security and defence, thereby helping to safeguard Europe's freedom of action in its external policies.

Industry characteristics

The European aerospace industry is a world leader in several key market sectors, accounting for one third of the world's aerospace business in terms of turnover, compared with almost one half for its US counterpart.

The wellbeing of the industry depends on twin pillars, namely, civil and defence. They are both complementary and mutually dependent. Operating in civil and defence markets means sharing skills and technologies, and enjoying economies of scale and the benefits from a broad product range. Civil and defence requirements both rely on the application of advanced technologies, while serving private and public customers with different needs.

Entry for newcomers to the aerospace industry is very difficult, especially at prime level. This stems from the interdependence of the civil and defence sectors as well as the highly cyclical and capital-intensive nature of the industry. This means also that once the technology, skills and infrastructure are eroded or disappear, they are extremely difficult to re-create.

As regards international competition, US companies operate in the world's single largest home market and benefit from a highly supportive operating framework which is designed to underpin a declared policy aim to maintain US supremacy in aerospace. The direct linkages between defence and civil uses, and the heavy investments in defence to fund research and innovation bring clear advantages to the US industry in terms of beneficial spin-off effects in non-defence aerospace applications. This situation poses a constant challenge to European industry and cannot but affect its competitive position.

Since for most markets, US and European companies will continue to supply the needs of customers worldwide, strong European aerospace capabilities are indispensable to maintaining competition for a wide range of civil and defence products.

Within Europe major restructuring has taken place in recent years, leading to an industry organised on a European scale, as a competitor and partner of its powerful US counterpart. Yet, the policy framework which governs its activities is too fragmented. It is appropriate that, as the aerospace industry itself has Strategic Aerospace Review for the 21st century STAR21

6 Executive Summary restructured on a European level, the issues that will determine its future competitiveness and contribution should be addressed from a European perspective.

Key findings

In considering the issues from a European perspective, STAR 21 has identified four key findings:

• I. Aerospace is vital to meeting Europe's objectives for economic growth, security and quality of life. It is directly associated with, and influenced by a broad range of European policies such as trade, transport, environment and security and defence.
• II. A strong, globally competitive industrial base is essential to provide the necessary choices and options for Europe in its decisions as regards its presence and influence on the world stage.
• III. European aerospace must maintain a strong competitive position if it is to play a full role as an industrial partner in the global aerospace marketplace.
• IV. Europe must remain at the forefront of key technologies if it is to have an innovative and competitive aerospace industry.

STAR 21 notes that while some progress has already been made in a number of areas, the current political and regulatory framework is insufficient to bridge the gap between Europe's ambitions and the capacity to deliver the required results.

Policy recommendations

A coherent, long-term perspective is essential for planning and investment by the aerospace industry. STAR 21 identifies a number of areas in which the European Institutions, the EU Member States and the industry itself must act to maintain Europe's position as a world-class aerospace producer and to provide the capabilities in defence, security and space which will allow Europe to make essential political choices and to be an effective partner for friends and allies.

The main recommendations of STAR 21 cover world markets, the operating environment, governance of civil aviation, European security and defence, and space capabilities. In many of these areas, for example the coordination of civil aeronautics research and the regulation of civil aviation, solid progress has already been made or will be achieved through the implementation of measures already proposed. In other areas, for example defence, space and the level and structure of research and technology in all market segments, which are vital for the development of industry, early decisions are required to avert a closing off of policy options for the future.

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Enterprise DG
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