Cold War British Aviation Industry

After World War II, the United Kingdom’s aeronautics industry comprised about 70 aircraft manufacturers. By the early 1960s, this number had been reduced significantly through takeovers, mergers, and bankruptcies. In 1992, BAe and Rolls-Royce contibuted over two-thirds of the United Kingdom’s aeronautics industry’s $18.6 billion in sales, the majority of which were exports. At the end of 1992, BAe employed about 63,000 persons in its aircraft group. Its aircraft-related activities achieved sales ofabout $9.6 billion. BAe exports the mqjority of its products, with about 64 percent of its 1992 sales achieved overseas. Rolls-Royce, the world’s third-largest aircraft engine manufacturer, employed about 29,500 persons in this capacity. About 70 percent of Rolls-Royce’s 1992 sales represented exports.

The years after 1945 were a time of triumph and and then tragedy for the British aviation industry. From the early triumphs of the world’s first jet airliner and world speed and altitude records, there soon followed the rapid decline of a major industry and closure of many manufacturers. Various designs showed promise, but were underdeveloped by cash-strapped companies and a government without the wherewithal to produce them.

Britain emerged from the war with a massive aircraft industry, and 1945 might have been a propitious time to rationalize the industry. However, in the absence of a long-term strategy, the political pain of doing so and putting many famous names out of business proved too great. When such rationalization became inevitable in 1957, Britain had already lost its leadership in aviation technology, and the program cancellations and corporate mergers served only to demoralize the workforce.

A world leader in jet aircraft technology in 1945, Britain needed only a little more than a decade to lose its lead decisively in the development and production of both military and commercial jet aircraft. This was the result not merely of inept political decisions—such as the 1957 Defence White Paper that cancelled many aircraft programs on the grounds that guided missiles made manned aircraft obsolete—but also of poor management at many levels within industry itself.

Why was the DH.110 so poorly designed as to break apart in midair, killing two aircrew members and 29 spectators at Farnborough in 1952? Why did the Hawker Hunter take so long to enter operational service, allowing the North American F-86 to dominate world export sales? Why did the de Havilland Comet airliner take so long to develop and deliver, even before the disastrous accidents that forced its withdrawal from commercial service, leaving the field to the Boeing 707? Why were the British still flying straight-wing Gloster Meteors and de Havilland Venoms in the late 1950s while the French, whose aircraft industry lay in ruins in 1945, began operating the swept-wing Dassault Ouragan in 1952 and the Mystère in 1954?

The real problem was a lack of systems engineering expertise below top management. As a result, Britain could develop cutting-edge prototypes but could not manufacture large quantities of high-quality aircraft in a timely and economical manner. This problem prevailed not only in the aircraft industry but also in British manufacturing as a whole, contributing to the decline in national competitiveness from the 1950s onward.

After World War II, aircraft manufacturers began the development of jet airliners. In 1952, British Overseas Airways Corporation (BOAC), now British Airways, started jet passenger flights with de Havilland Comets. But the flights were stopped after several Comets exploded in the air. Investigators discovered serious flaws in the plane's structure. De Havilland engineers then designed an improved Comet. In 1958, BOAC used the new Comets to begin jet passenger service across the Atlantic Ocean.

Beginning in the 1950's, several large aerospace companies were formed by mergers. Duncan Sandys, then Minister of Aviation, launched the Government's plan to rationalise the British aircraft industry. The strongest pressure was brought to bear on the firms, and as a result by 1962 there were two big consortia of the Hawker-Siddeley Group and the British Aircraft Corporation, each incorporating many formerly independent firms and a large number of factories. This reflected the growing cost of major civil and military aircraft programs, which were becoming too expensive for the relatively small aviation companies of prior decades.

Whatever misgivings some may have had, there was the hope that these groupings would lead to greater efficiency and thus to a greater volume of business, and, of course, employment. Politicians had seen the tragedies of Squires Gate, the Isle of Wight and Broughton, areas whose existence to a large extent had depended on the aircraft industry, and we hoped that further similar misfortunes might be avoided elsewhere.

However, the firm of Handley Page elected to remain independent, and it soon felt the consequences. Business dried up; new orders went to Sandys's big combines. For a time, optimistic statements by the directors of various concerns appeared to justify this hope. For example, at the 1961 annual meeting Sir Thomas Sopwith, the Chairman of the Hawker-Siddeley Group, was able to announce that total sales of the group for the 17 months to December, 1960, amounted to £458 million, and, perhaps more important still, that the order book at that date stood at the record total of £366 million. He also said: ‘We have 125,000 employees and it is on their skill and loyalty that our future depends".’ He added: ‘I share with the people of Britain a sense of joy in the knowledge that we are now launched on a journey into tomorrow.’ There was nothing in the balance sheet and nothing in the Chairman's statement to indicate that, within a few months, many of those 125,000 skilled and loyal employees were going to be launched into a journey into redundancy, but that was exactly what happened.

By 1965 it was the intention of the Government to cut down the aircraft industry. The Plowden Committee was set up ‘To consider what should be the future place and organisation of the aircraft industry in relation to the general economy of the country, taking into account the demands of national defence, export prospects, the comparable industries of other countries and the relationship of the industry with Government activities in the aviation field; and to make recommendations on any steps and measures necessary.’

Internationalization became an important trend in the aviation industry beginning in the 1960's. The term refers to cooperative manufacturing programs in which firms from different nations share research, development, and production costs. The consortium formed by the British and French to build the Concorde SST was an early program of this type. Some U.S. firms have formed partnerships with foreign companies to manufacture European-designed aircraft in the United States. For example, during the 1980's, McDonnell Douglas produced the British-designed Harrier -- a V/STOL (Vertical/Short Take-Off and Landing plane) -- in partnership with British Aerospace.

	Approximate mid-point of development	Contribution at outturn prices (£ million)
Ambassador	1951	2
Princess	1951	9
Comet 1.4	1956	10
Viscount	1951	2
V 100	1955	2 (est)
Twin Pioneer	1955	0.05
Britannia	1955	6
Rotodyne	1956	3
Argosy	1961	0.1
Herald	1962	1
VC 10	1963	10
Trident	1965	26
BAC 1–11	1965	19
Islander	1968	0.05
Jetstream	1968	1
A. 300B	1968	1
HS 146	1972	7
Shorts SD 330	1975	6

The major aero engine manufacturers in Britain between the wars were Armstrong Siddeley, Blackburn, Bristol, de Havilland, Napier, and Rolls-Royce. The leader among these was Bristol which, in 1959, merged with the motor car and aero-engine maker Armstrong Siddeley. Three other smaller engine companies were absorbed into Bristol Siddeley and Rolls-Royce in 1961. Finally, the capability of the British aero-engine industry was consolidated when Rolls-Royce and Bristol Siddeley merged in 1966.

There was a steady process of rationalisation within the industry on purely commercial grounds. BAC was an amalgam of Bristol, English Electric, Vickers and, in the early days, Rolls-Royce. Hawker Siddeley Aviation was De Havilland, Hawker and Armstrong Whitworth. The process of rationalisation was already in train. Westland was an amalgam of Saunders Roe, Fairey Helicopters and Westland Helicopters.

The UK aerospace industry was the third largest in Europe, with 2009 exports of $26.4 (in 2009 dollars). UK aerospace sector growth is due primarily to the maintenance, repair and overhaul (MRO) market, which is driven by increasing demands for air travel. The UK is home to several of the world's leading aerospace companies, including BAE Systems PLC and Rolls-Royce PLC. In addition, U.S. aerospace companies such as Boeing, Honeywell, Raytheon, Rockwell Collins, and Lockheed Martin also maintain a presence in the UK. According to the Society of British Aerospace Companies (SBAC), UK aerospace companies directly employ 112,585 people, plus 40,091 people located in the United States.

One of the earliest and most aggressive adopters of an outward mobility strategy was Rolls-Royce. Beginning in 1995, Rolls-Royce acquired the Allison Engine Company, based in Indianapolis, Indiana and renamed it the Rolls-Royce Corporation. This acquisition gave Rolls-Royce a significant U.S. presence, allowing the company to offer engines in virtually all market segments from helicopters to large civil aircraft. Subsequent acquisitions of oil and gas ventures, engine repair and overhaul facilities, and marine engine manufacturer Vickers established Rolls-Royce as a major presence in the U.S. aerospace industry. Rolls-Royce was considering additional shifts in its industrial base away from the UK to lower-cost, dollar-denominated markets.

GOVERNMENT CONTRIBUTIONS TO AND RECEIPTS FROM THE LAUNCHING OF CIVIL AIRCRAFT PROJECTS SINCE 1945 UP TO 31ST MARCH 1976
£ million
Type	Contributions current prices	Receipts current prices
Aircraft—
Shotland	2.25	N.A.
Sandringham
Solent
Tudor
Air Horse
Apollo	1.25	Nil
Hermes	1.30	N.A.
Comet 1–4	10.25	4.11
Ambassador	1.85	0.15
Princess	9.10	Nil
Viscount	1.80	3.00
V-1000	2.35	Nil
Twin Pioneer	0.05	0.05
Britannia	6.40	5.10
Rotodyne	3.05	Nil
Argosy	0.10	Nil
Herald	1.10	0.05
VC-10	10.25	1.07
Trident	26.10	1.01
BAC 1–11	19.05	3.53
Islander	0.05	0.06
Jetstream	1.20	0.10
Airbus	1.15	Nil
HS 146	7.11	Nil
Concorde	278.90	0.30
	391.11	18.53

Probably the primary challenge facing the UK aerospace industry was the impact of an appreciating British currency against the U.S. dollar. A large portion of the global aerospace market is US dollar denominated. As a result, the rapid appreciation of the British pound sterling to historic highs against the dollar had a direct impact on the costs of research, development, and production as well as sales for UK aerospace manufacturers. In fact, the dollar-to-pound exchange rate compelled some UK aerospace producers to move production and other activities abroad to dollar-denominated locations. Further appreciation of the British pound would likely expand and accelerate the trend of outward mobilization across the UK aerospace industry. Other challenges facing the UK aerospace industry include consolidation of SME manufacturers in order to enable them to better compete globally.

London's 1996 export figures showed a banner year for the UK defense industry, with more than 5 billion pounds worth of exports representing a 25 percent share of the world defense market. Over 360,000 U.K. jobs were directly dependent on these export sales. The British understood the importance of defense exports.

Bristol Aero Engines and Armstrong-Siddeley Motors merged to form Bristol-Siddeley in 1958, which then absorbed other engine companies in the 1960s. In 1966, Bristol-Siddeley was, in turn, bought by Rolls-Royce, which today is the United Kingdom’s only manufacturer of large civil aircraft engines. Rolls-Royce also has an industrial power group, which designs, constructs, and installs powergeneration, transmission, and distribution systems, and major equipment for mining and marine propulsion. In 1992 it employed about 22,300 persons and had sales of about $2.6 billion.

British Aerospace (BAe) was created in 1977 by the merger and nationalization of the United Kingdom’s two remaining major airframe companies: Hawker-Siddeley Aircraft and the British Aircraft Corporation. BAe was privatized in 1985 and was by far the United Kingdom’s largest civil aircraft manufacturer. BAe is responsible for the majority of the United Kingdom’s major military and civil aircraft programs. The company manufactures aeronautics products ranging from combat aircraft to supersonic and subsonic commercial aircraft and jet trainers. Its major aeronautics-related business divisions were defense (which includes military aircraft) and commercial aircraft. BAe did not typically build aircraft alone but rather was usually a partner inEffortsinternational efforts to build them. The company is in partnership with aeronautics companies from more than 20 countries. One of its most successful collaborative efforts is its involvement in Airbus, forwhich it designs and constructs the aircraft’s wings.

The US and UK defense industries demonstrated a clear desire to enhance their collaboration. Soon after the signing of the Declaration of Principles in February 2000, a number of transatlantic collaborations occurred. BAE Systems' acquisition of both Lockheed Martin's Control System (06/2000) and Lockheed Martin AES (Sanders) (11/2000) made BAE North America a leading supplier of defense electronics to DoD and the sixth largest defense contractor in the U.S. overall. A variety of other companies across product sectors have also been involved, including: Smith Industries' purchase of the Fairchild Defense Group of Orbital Sciences (10/2000); Cobham's acquisitions of Econ Microwave (8/2000) and Datron Systems' Microwave business (11/2000); and Filtronics' acquisition of Sigtek (8/2000). A number of U.S. companies similarly had holdings in the UK defense industry, including Raytheon, Lockheed Martin, TRW, and General Dynamics. Once a binding agreement with the United Kingdom was in place and implemented, the United States revised its International Traffic in Arms Regulations to permit the export to qualified companies in the United Kingdom of most unclassified defense technology without a license.