The need to improve competitiveness in the Aerospace Industry has never been more important. The smaller companies are moving to survival mode. Many have invested in increased capacity and capability on what was going to be the growth years in the early millennium for civil aircraft manufacture. This has now all changed.

FI 2004 reflected how the aerospace sector is changing, with fewer but larger projects coming on line (Joint Strike Fighter, A380, 7E7) and the OEM's looking to reduce their number of direct suppliers. More than ever before small and medium enterprises need to improve their competitiveness if they are to secure future contracts in the sector.

This trend is not a passing fad. A market report, 'The True Cost of Subcontracting Work to Low Cost Economies', by Bravura Consulting Ltd on behalf of the Farnborough Air Consortium shows that the larger companies are using and obtaining significant benefit from low-cost suppliers, but smaller companies appear to be lagging behind.

The UK Lean Aerospace Initiative (UK LAI) was established in April 1998 to support member companies in meeting their improvement objectives and to establish an expertise and resource for the UK Aerospace industry.

Despite this, UK tier 3 and 4 companies are not yet fully awake to the challenges and opportunities that Low Factor Cost Countries present and few have appropriate strategies, or strategic sourcing programmes, of their own.

The SME Purchasing Survey carried out as part of the Bravura study suggests less than 10% of UK aerospace SMEs are using Low Cost Sources. Many companies are complacent about the dangers and others believe they lack the skills and resources to establish and manage suppliers in Eastern Europe and Asia.

Managers of tier 3 and 4 aerospace companies should sign up immediately to Competitiveness Improvement Programmes such as those established by the West of England Aerospace Forum (WEAF), which are specifically designed to aid the SMEs to improve their competitiveness in a global industry.

Details of the market report, UK aerospace alliances and initiatives mentioned on this page are provided at www.engineeringcapacity.com/Resources