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ITAÉREA AERONAUTICAL BUSINESS SCHOOL
Aeronautical Industry
The Aeronautical Industry
in Spain
Spain collaborates in various European, military, and civil programs for aeronautical development and, as a member of ESA (European Space Agency), has increased its participation in the agency’s missions in recent years, favoring a significant return for the country in terms of contracts for Spanish companies and enabling technological sophistication in research for the country’s space scientific community.
In the last 15 years, Spanish participation in the global aeronautical sector has quadrupled, resulting in a representation of 4.7% of our industrial GDP with over 80% dedicated to exports. Spain has become one of the few countries in our environment with the experience, knowledge, technological development, and industrial capacity necessary to design, manufacture, and put an aircraft into flight. More than 10% of the turnover of the Spanish aerospace industry is reinvested in R&D&I compared to the national average of 3%, according to INE data.
According to TEDAE, an association that brings together 76 companies in the sector, the Defense, Security, Aeronautics, and Space industry continues to be a key sector in Spain. At least, this is attested by its turnover figures, which increased by 5.8% in 2018.
As a whole, the Defense, Security, Aeronautics, and Space Technology companies had a total turnover of 11,838 million in 2018, which is 658 more than in 2018. We are talking about a sector that last year had 57,000 highly qualified employees, about 600 more than in 2017, and whose exports account for 66% of total turnover. In global terms, the productivity of these specialized companies is 3.4 times higher than the national average.
By sectors, 76% corresponds to civil and military aeronautics; 15% to Naval and Land Defense; 8% to Space and 1% to Security. And regarding the markets in which they sell their products, 51% is civil and 49% military.
Space
The space sector is experiencing a boom period supported by record figures in an area that had a turnover of 867 million euros in 2018, 1.8% more than the previous year. In addition, 83% of its total sales are exports, compared to 78% in 2017. Currently, our country, with 3,909 employees in the space area, is the fifth in Europe with the most professionals dedicated to space project development, investing 11% of its turnover in innovation (12% in 2017).
legislation
There is also talk of record figures in the field of aeronautics, as last year it had a turnover of 9,029 million euros, 0.9% more than in 2017 and practically double that of 2008. The optimism generated by these figures is reinforced by participation in large and ambitious international programs such as Spain’s recent incorporation into the program for the future sixth-generation European combat fighter.
In 2018, the aeronautical sector accounted for 43,625 employees and exports represented 67% of its turnover, 14 points less than in 2018, which TEDAE attributes, among other reasons, to the fact that military programs such as those of the A400M or C295 aircraft have had a slight decrease or that two units of the Airbus transport aircraft were delivered to the Spanish Air Force.
Defense
Another key area of the national industry that has been growing for nearly a decade. Indeed, regarding 2018, the figures remain almost intact, as last year’s turnover amounted to 4,946 million, compared to 5,379 in 2017. However, on this occasion, the Security area has not been taken into account, which in this report has a separate section and invoiced 155 million in 2018. Therefore, the decrease could be estimated at slightly less than 5%. This “moderate decline” is due to the decrease in military aeronautics sales, which has been compensated by the naval and land segment, with key contracts such as those for the S-80 submarines or Navantia’s supply ship for the Australian Navy.
National Aeronautical Clusters
Among the facilities supporting the aeronautical industry in Spain, there are 5 clusters located in the regions of the Community of Madrid, Andalusia, Basque Country, Castilla-La Mancha, and Catalonia. The Madrid aerospace district is the largest headquarters with the highest number of companies and the highest turnover level (58% of the total) and occupation (50% of the total), while the Basque Country’s aerospace industry contributes 25% of the total national sector turnover creation. The activity of Basque aerospace companies is also supported by the presence in the region of infrastructures to host the most innovative technology companies and offer them a wide range of advanced services in the field of research and technology transfer.
The Supply Chain of the Aeronautical Industry
Given the extreme complexity of the final product of the aeronautical industry, it is practically unfeasible for a company “acting alone” to achieve a sufficiently competitive level in each and every one of the specialties required in the countless processes involved in an aircraft development program.
Traditionally, large manufacturing companies in the aeronautical industry, acting as main contractors, have relied on external collaborating companies that were responsible for supplying materials, services, components, subsystems, and finished modules, which were incorporated at different times throughout the manufacturing and assembly process of each new aircraft model. Therefore, the aeronautical sector has been configured as a system integrated by a set of companies that differ in their size, production capacity, and level of knowledge generation. Its organizational model is characterized by the existence of different levels and types of companies that carry out very diverse activities and can be classified into four large groups:
Leading Integrator Industry (OEMs)
It is formed by those companies that carry out the design, final assembly, certification tests, and finally, the sale of aircraft to end customers. These companies are at the top of the sector’s production pyramid, so that their activities generate, in turn, more activity for the entire production chain (first, second, and third-level subcontractor companies). The European group Airbus, recently organized into three divisions, has headquarters in Spain: • Airbus, which integrates all the development and support capabilities for fixed-wing civil aircraft, has headquarters in Getafe, Cádiz, and Illescas.
- Airbus Defense and Space, which is the sum of the former Airbus Military (military transport aircraft), Cassidian (combat aircraft), and Astrium (former space division of the group). In Spain, it has headquarters mainly in Getafe, San Fernando, Seville, and Madrid.
- Airbus Helicopters, formerly Eurocopter, with headquarters in Albacete.
At an intermediate level between the integrator and supplier industry, Indra’s activities are included, with the capacity to integrate complete air traffic control systems; ITP (Industria de Turbo Propulsores) in the engine segment; and Aernnova, with the capacity to integrate aircraft systems in complete structures and a great capacity for product and production engineering. These are companies of considerable size that have a very solid internal structure with significant levels of investment, technology, and subcontracting, as well as knowledge generation.
Leading Tractor Industry or Modular Integrators (First-Tier Subcontractors or Tier 1)
This business segment is composed of so-called modular integrators, first-tier subcontractors specializing in composite materials, equipment and systems, design and manufacture of aircraft structures, systems and subassemblies, aircraft production engineering services, and tooling design, among others. They have significant logistics capabilities to coordinate their second and third-tier suppliers (Tier 2 and Tier 3); design, engineering, and R capabilities, generating a significant pull effect on companies lower in the supply chain.
The subcontracting relationships of these companies with final integrators are resolved under “full package” schemes, so that these first-tier subcontractors are solely responsible to them. Their size is significant, they operate in international markets and share financial risks with the integrator companies in product development, behaving as active partners who assume business results, which requires them to have high financial capacity. Among the Tier 1 companies are Aernnova, Alestis, and the Aciturri Group.
In some cases, these first-tier subcontractors have begun to open plants in emerging countries with the aim of establishing themselves close to manufacturers producing there, as well as to take advantage of the benefits derived from lower labor costs.
Auxiliary Industry (Tier 2 and Tier 3)
The auxiliary industry is made up of a heterogeneous set of SMEs, working on orders from first-tier companies. These companies develop their activity strictly adhering to the technical specifications set by their client companies and are experts in the production of small subassemblies or specific elementary parts, including all types of forming, machining, treatment of components and parts intended to be part of larger assemblies, as well as small engineering firms that perform calculations and studies associated with various components. It is an essential requirement that they have the capacity to ensure the quality of their products and processes.
Currently, these small and medium-sized companies are subject to high price pressure, with increasing international competition from emerging countries with lower costs. In many cases, they also work for other sectors of activity in order to diversify their production. According to their size, foreign activity, or engineering capabilities, they are subdivided into Tier 2 and Tier 3. In general, Tier 2 suppliers directly supply subsystems and parts to Tier 1, while subcontracting part of their production to Tier 3.
Maintenance Industry
Companies belonging to this group carry out activities related to the maintenance and support of aircraft, engines, components, and systems in service, in accordance with existing official regulations related to the periodic maintenance of airworthiness certificates. The business volume depends on the stock of aircraft in operation. This function is carried out by original manufacturers or companies duly qualified by the supervisory aeronautical authorities responsible for flight safety. The main company dedicated to this activity in Spain is Iberia Maintenance. Other companies, such as ITP, Airbus Defense and Space, or Airbus Helicopters, also carry out maintenance functions.
Return on Investment
Unlike what happens in other national industries, the aerospace industry is characterized by working with very long periods of technology development and amortization (around 20 years) that produce very long-term returns on investment. This raises the need for state industrial policies and long-term R support plans, as well as stable financial frameworks that allow for their sustainability and competitiveness in a global market where state involvement in the sector is very high as a customer, regulator, and even as a shareholder in some cases.
Currently, the Spanish aeronautical industry is experiencing a critical moment in which it is necessary to recover the support it had years ago from the public administration and which, as a result of the economic crisis and slow recovery, it has not been able to maintain in recent years. It is necessary to relaunch a sector plan that includes the participation of administrations, industry, and research organizations. It is not the time to waste time in an environment where our competitors are advancing at great speed and where the decisions we make now will mark the future of our country.
We need to have a strategic plan for the sector and, for this, we need the sustained support of the Administration, regardless of the political moment and the Government.
Spain must become aware of the importance of the aerospace industry, both for the significant return that its investments have for society and for the importance for Spain to continue being a technologically advanced country in the field of aeronautical engineering.
Training in
Aeronautical Industry
Books on
Aeronautical Industry
Conferences on
Aeronautical Industry
News Related to the
Aeronautical Industry
ITAérea Aeronautical Business School has:
- International presence. This determines that the student has access to these international sources of employment. The territorial delegates communicate existing job offers to the headquarters to offer them to all students and alumni of the same.
- Teachers, all of them managers of the sector, who facilitate this job insertion.
- Exclusive dedication to airport and aeronautical management during the last decade.
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