Data and Industry Background
Historical Background of the Aerospace Industry and Technology Development
In this section we give a short historical description of the evolution of the global aerospace industry from its beginning to the 1980s with respect to three different layers: industrial and geographical development and the technological evolution. This history is mainly compiled out of ECORYS (2009), Tiwari (2005), Wixted (2009), European Commission (2002), Bonaccorsi and Giuri (2000), Bugos (2010) and Cook (2006).
With the beginning of the twentieth century, the first flights of airplanes took place, which went hand in hand with an adoption of this technology by the military. It was a time when airplanes were developed and produced by pioneers and single
3Subsequent years are analyzed within the main chapters, since our data starts with the year 1987.
entrepreneurs. Their goals and especially their techniques were far from being mature enough for mass production. With the outbreak of WWI, Europe took the lead in aircraft manufacturing from the USA. Governmental funding of research facilities and the establishment of aerospace engineering degrees in university education marked the first steps into establishing the aerospace industry. In the 1920s, a recovered entrepreneurial spirit led to further developments and design- driven manufacturing was prevalent. At that time, a large variety of designs combined with a small market demand was characteristic. In 1925, the first impulse for an acceleration of aircraft production was induced in the USA by the Air Mail Act, which drove the demand for planes and pilots. This went hand in hand with the establishment of a non-military customer base, where the founding of Lufthansa, British Airways and Aeropostale fostered passenger transportation. In the 1930s in the US, the civil sector grew, due to the ability for long-range operations, with competition for passengers and the formation of alliances between aircraft manufacturers and airlines; in Europe this time marks the begin of ramping up production capacities by the defense sector. In the 1940s, war production dominated, with mass production and national focus characteristic—every country drove its own program and they were far from any cooperation. The 1950s, the first after-war period, can be labeled as in-house production era. At that time in Europe market demand increased rapidly. Nevertheless in the aircraft industry there was still an ongoing focus on defense with nearly no cooperation between companies. OEMs designed and produced the aircraft primarily from start to finish. Also during this decade, technological and industrial complements for the first time split into the parts of the aerospace industry known today: civil aeronautics industry, military aeronautics industry and space industry. Nevertheless until today these sectors partly overlap concerning actors and technology and mutually influence each other. In the 1960s the era of collaboration started, as we will see below due to the technological challenges. Further, not only one aircraft program per firm was initiated, but many simultaneous programs in the US and Europe occurred, due to an increasing demand for flights over all distances. In Germany, licensing manufacturing started and the formerly leading aerospace nation began to reestablish its position. In the 1970s Europe’s aerospace landscape changed drastically with the evolution of the first European Programs—the creation of Airbus, a consortium of the leading European aerospace nations. The underlying driver for consortium creation was the increasing project volumes and the need, in the view of the European politicians, to establish a counter balance to the strong US aerospace industry. In the 1980s the deregulation of the US Airline market led to increasing competition. In the following years, large international consortia were formed to spread costs and accumulate knowledge, focusing on cost efficiency, quality and performance. In the large civil aircraft sector, the competition between Airbus, as European champion, and Boeing, its American counterpart, increased. Beside the two market leaders several other OEMs have been present in the market to that time, like McDonnell Douglas and Lockheed Martin. In Europe all involved Airbus nations tried to protect and foster participation of their firms, which led to an extremely fragmented industry structure, with numerous SMEs supplying the supranational enterprise of Airbus. On the industry level, the 1990s and the new century have been marked by crises, consolidation waves, industrial integration and a still ongoing global reorganization. These developments correspond directly to our data set.
The technological development constitutes only a few main changes. While aircraft until the 1960s were equipped with propeller engines, jet engines have since been used on civil aircraft. This technology, as with many others, was developed and engineered for military use in WWII. This new technology was considerably more complex and led to changes in the sector: consortia for jet engines were established, forming a unique sector within the aerospace industry, and many companies went bankrupt while new ones emerged. The change from propeller to jet and turbofan technology marked a technological change (Frenken and Leydesdorff 2000; Nelson and Winter 1977; Dosi 1982). Today, the industry continues to rely on this technology, but several incremental innovations have been added resulting in extremely increased efficiency: compared to the 1960s about 70 % less fuel is needed for the same range today. Since all aerospace OEMs operate near the technological frontier, technological performance was not necessarily associated with market success (Bonaccorsi and Giuri 2001). With the exception of the Concorde, aircraft saw now radical design changes and no new design trajectory is in sight. So engineers may be expected to further develop the existing designs and improve the technology by, e.g. using new materials and intelligent solutions in aerodynamics and a rise in electrification in every part or segment of the aircraft.
Before we analyze the technological, industrial and geographical developments in the European aerospace industry between the years 1987 and 2013, we first summarize the general characteristics of the aerospace industry to provide a better understanding of how the specifics of the industry are related to our findings in Sects. 3 and 4. According to Esposito and Raffa (2006) and Alfonso-Gil (2007) the aerospace industry can be characterized by a high technological level with a high R&D intensity, technological complexity, high and increasing development costs, long product life cycles, long break-even periods and small markets, problematic cash flow situations, high market entry barriers and a high governmental impact in form of ownership, regulation and as customer. The data sources and the procedures of analyzing the data are described in the following section, before our main analysis in Sect. 3 is presented.
-  2 Precursor works on bionics and other aviation specific researches led to the first flights:cf. Moon (2012).
-  An interesting social network analysis about the entrepreneur years of the aerospace industry isprovided by Moon (2012).
-  This especially holds for Europe—except Germany, due to restrictions imposed by the alliedforces, Germany was allowed (if at all) to produce systems and components in license. Nevertheless during the 1950s the US aircraft industry started to establish a pyramidal supply chainstructure.
-  Not only Airbus as the manufacturer of aircraft, but also the defense and space entities werecentralized under the European holding company EADS (a consortium of the national firmsAerospatiale Matra, DASA, CASA) founded in 1998/1999. All remarks assigned to facts beforethat time, are dedicated to different partners building a consortium since the 1970s.
-  Between 10 and 18 % of revenue is re-invested in R&D.
-  On the European OEM-level this changed in 2013, as the French government and the GermanDaimler AG withdrew at least in a direct manner from EADS.