“Significant extra investment” is required by the UK government and industry if the country is to retain its position as an aerospace powerhouse, the Society of British Aerospace Companies warned just before the Paris Air Show opened. The SBAC has just released figures for 2008 that show sharp declines in both employment and research spending in the UK industry, but a significant shift toward export markets–particularly defense.

SBAC chief executive Ian Godden told reporters that a critical shortfall in research spending threatens to leave the UK flagging behind the U.S., Europe and other nations with ambitious plans in aerospace, both civil and military.

In the civil sector, Godden stressed the importance of the new short-range aircraft. “With the global market for the new single-aisle replacement for the Airbus A320 and Boeing 737 alone worth an estimated $1 trillion over the next 20 years and a total market  over $2.6 trillion, this is an opportunity that the UK cannot afford to miss,” he cautioned.

Godden added that the A400M military transport aircraft program is central to enabling the UK to maintain its position as the de facto Airbus wing design and manufacturing base. Without that, he said, there would be a gap before the narrowbody replacement where Germany and Spain could take over the wing work–having already taken key areas of composite wing design and manufacture for the A400M.

With a 17-percent market share, the UK has the second largest aerospace industry in the world. Bruno Esposito, SBAC director of air transport, said the UK was responsible for one third of the A380 by value and one quarter of the Boeing 787, with key areas being wings, engines and systems.

Esposito is the author of a strategy seview published by the SBAC just before the show, which says that the UK industry, which comprises some 2,600 companies, is “entering a period of unusually rapid change that will throw up major challenges that could threaten future success. These [challenges] include the two-way pull of ‘dollarization’ and the emergence of high-growth strategic markets in the Middle/Far East and India, coupled with the growth of state-sponsored start-up enterprises aimed at competing with the current prime and tier-one companies.”

The review also says these threats present opportunities: “New regional and business aircraft and emerging platforms from new prime contractors–such as China, Japan and Russia–are targets for the UK sector.” To secure involvement, however, the UK must invest in research and technology development where it has “lagged behind the likes of France, Germany, Italy, Spain and Sweden,” and pay close attention to stimulus packages used by certain governments–notably the U.S. and France–to prop up key industries. These packages, it says, are “building further barriers to competition.”

The strategy review calls for industry to follow the advice of the National Aerospace Technology Strategy (NATS), while extending the timescale in gaining access to new markets and acting to counter protectionist measures. Fifteen demonstrator programs are waiting in the wings, says the review, yet “NATS has still to secure the unequivocal backing from the government.”

In addition the review recommends that the UK give “serious consideration” to creating a single-brand national aerospace research facility to become “the custodian of national aerospace test facilities”–an area where the SBAC believes the UK is at a disadvantage to France, Germany and the U.S.

It also suggests that UK industry and government offer incentives for “UK-based airlines to be early adopters of new aircraft,” which would have the added benefit of “ensuring the fast-track commercial rollout of new technologies needed to achieve environmental targets.”

Finally, the review says, “Seed-corn funding remains vital for the identification and development of new technologies that could lead to the next technological breakthroughs required in the 2020-2050 time frame [aimed at Stage 2 ACARE targets].” The UK, it says, is “in a unique position to make a significant global contribution to the ‘greening’ of aviation…due to its strengths in engines, wings and lightweight structures.”