‘‘ANDALUSIA IS THE IDEAL LOCATION fOR THE UAv CENTRE Of EXCELLENCE’’

What is your assessment of the figures for the industry in 2009, with positive results despite the current economic situation?

Logically, these figures are very positive. The industry has significantly increased in terms of both turnover and employment (by 8% and 16% respectively) despite the difficulties of an economic situation which has seen practically all sectors in Andalusia suffer setbacks. Apart from these figures, there are also global indicators which in my opinion are even more positive, such as the increase in competitiveness and the growth of the auxiliary industry. This confirms Andalusia’s consolidation as Spain´s second largest aeronautical cluster, claiming more than its share of the total market if we take into account other parameters such as the territory and the population. We account for practically a quarter of the national total for the aeronautical sector, with sustained growth and a healthy outlook for the future

Applying a SWOT analysis of the sector in light of these and other figures from the Report by Aertec for the Hélice Foundation, what in your opinion are the main strengths and weaknesses of the Andalusian aeronautical industry?

The sector has two or three very obvious weaknesses which we need to work on. The first of these is its major dependence on a single customer, Airbus. We have been working intensely with companies in recent years to foster diversification, and the latest report by the Hélice Foundation actually shows a significant increase in sales to other major manufacturers such as Boeing, Embraer and Bombardier. However, there is obviously much to be done yet and our main customer continues to be EADS. Our second key weakness is the small size of our companies, which limits their competitiveness and to a certain extent prevents them from taking on larger assignments. We are also working very hard to foster and encourage alliances to take advantage of the synergies between different companies. An obvious example is Alestis, a company which consists of various facilities and workshops which previously all did their job well, but each with their own restricted area of activity. now they have all banded together as an alliance consisting of an industrial partner which embraces all these factories and workshops, various financial partners and an institutional partner. I believe that this is the model for the future and it is far from being the only example. Various other important Andalusian companies have purchased interests in smaller businesses and are now acting as Tier Two suppliers at the forefront of the sector. By increasing in size they have improved their competitiveness and can now opt for larger work packages and new markets which were previously inaccessible. That is the direction we need to go in.

What is being done by the Agency’s Aeronautical Department to combat these weaknesses and foster the sector’s strengths?

What we have been doing and continue to do is to provide an adequate environment and the necessary financial tools to enable these companies to expand and be more competitive, assuming the challenge of international expansion. First of all, we provide companies with all the many tools they need to expand and forge alliances. These include various incentive systems either directly through the Agency or through Invercaria, the Technological Corporation of Andalusia and the Entrepreneur Support network. We have also launched a series of fully repayable funds which will enable industries to breathe a little easier in light of the current economic situation and the difficulty of obtaining financing from financial entities. And finally, we have also equipped the sector with improved business and innovation infrastructures: two technology parks, a Business Centre, the cutting-edge CATEC centre for technological advances, and the Hélice Foundation to support international expansion actions, alliances and modernisation for the entire cluster…

Do you perceive an open-minded attitude and a willingness to change on the part of businesses in the sector which will enable them to take advantage of the infrastructures and support measures established?

I believe that the aeronautical industry is very dynamic and businesses have known for some time now that they have to adapt to these new and constantly changing situations. There are so many developments and innovations in this sector, either you adapt or you get left behind; and I think that the industry has understood this perfectly. That is why our efforts are so important, because there is a clear response and a definite willingness to improve. Perhaps it is more the larger companies which have started in this direction, as is the case in other sectors, but they are showing the way for smaller companies to follow in their footsteps.

Recently, there have been constant rumours regarding the delays in the scheduled inauguration and start-up of the Alestis Plant at Puerto Real due to delays with the A350 programme. Are there any concerns regarding the future of this contract or delays which might affect the company’s activities and outlook?

I think there is a certain amount of confusion in this respect. The plant is practically finished and all that remains to be done is to complete the fittings, and the start-up of the facilities is not dependent upon the work packages associated with the A350. What I wish to make clear is that this plant is not an independent unit separate to Alestis but rather forms part of a business strategy which distributes workloads in the most effective manner possible. Accordingly, it will start functioning regardless of any possible delays in the A350 programme, which in any case I believe will not be significant.

There has also been much talk regarding the interest on the part of Andalusian companies, whether groups or individually, in becoming shareholders in Alestis. Has the Board of Directors received any serious offers?

To be honest, no. The fact is that Alestis is currently very solid and the share capital is well-distributed, although as we have always said, it is open to the possibility of incorporating new partners. However, this would require a serious offer from Andalusian companies with firm intentions and the necessary capital. I also believe that Alestis would logically be open to such an offer, although it must be borne in mind that it currently has various partners and each one has its own opinion in this respect. At the end of the day, we all have the common aim of consolidating a top-level Tier One supplier in Andalusia and I believe that if an increase in share capital was to contribute to this project it would be well received. But as I have said, for the moment no such offers have been made. When that time comes, naturally we will study the options.

There are now three Tier One suppliers in Andalusia: Alestis, which is partly owned by the Andalusian Regional Government; Aernnova, a Basque company which is based at Aeropolis, and now Aciturri (Castilla y León), which has now entered the Andalusian market following its purchase of Aerosur. Can the sector expect different or more favourable treatment in any sense from Alestis in terms of contracting?

In other words, apart from operating according to market criteria as one would expect, does Alestis also take into account factors which enable this investment to revert to Andalusia? Alestis is a company with an Andalusian accent and all its decisions reflect this reality. Logically, such considerations must be compatible with other business parameters, but it is possible to strike a balance. One of the key aims of its activities is to strengthen the Andalusian auxiliary industry so that it is solid and capable in a technological and financial sense. In order to continue advancing in this direction, contacts will be established between Alestis and companies in the sector through the Hélice Foundation, to provide all the necessary information regarding subcontracting so that the sector knows the company´s strategy first-hand and can position itself accordingly, thereby steadily increasing its share of contracting.

Turning to another key programme for the Andalusian aeronautical sector in the coming years, the A400M, what information do you have from EADS regarding its progress and any possible repercussions for Andalusian companies deriving from the delays which it is suffering?

We are in constant contact with EADS, which keeps us informed of the progress of the programme. When we last spoke a matter of days ago all was going well from an industrial standpoint. We now have three aircraft flying and while there was a minor problem with the air traffic controllers that seems to have been resolved now and we shortly expect to see them flying over Seville again. There are also certain delays with the orders because some companies have reassessed their contributions to the programme in light of the current financial situation. However, this will not be decisive, only possibly influencing the programme in a general sense in terms of its dimensions and the number of aircraft manufactured. I think that we can be optimistic because this project is very exciting and it will bring both significant workloads and economic development to Seville and Andalusia.

Another very important project for Andalusia is the EADS Centre of Excellence for UAVs, which we may hear more about shortly, and which will place us in a key strategic position on the future global market. FADA-CATEC and the Agency’s Aeronautical Department have been working intensely to secure its establishment in our region. Is there good reason to believe that these facilities will be based in Andalusia?

We have been working on Unmanned Aerial Vehicles for some time now because we see it as a very important opportunity in the future. More and more civil and military flights are being carried out using UAVs and we consider it to be the future of the aerospace industry, or at least a significant aspect of future business activities in the sector. In Andalusia, the public and private sectors have worked together with universities to develop cutting-edge projects such as ATLAS in the province of Jaén. All this know-how built up over the years is now being applied with the support of InTA to bring the Centre of Excellence to Arenosillo in Andalusia. We also believe that it is the ideal location given that the facilities of InTA can provide additional support, meaning it does not have to start from scratch. It also has access to the coast, simplifying the segregation of airspace and facilitating flights by UAVs. We also have the best professionals and researchers at the University of Seville, AICIA and CATEC, as well as companies such as Elimco. In general, we have the necessary infrastructure and location, institutional support and the capacity to assume this project. In addition, the collaboration with EADS in recent years has been intense and I believe that all of these factors will weigh in our favour. While it is true that the final decision by EADS has been delayed somewhat due to the current economic situation, I have no doubt that Andalusia is the best placed candidate for this project.

I would like to finish off with a reflection on the need to promote vocational training in the industry. We have top-level aeronautical training at graduate and postgraduate level in universities and many courses offered by social entities, the Regional Ministry of Employment and even the companies themselves. However, there is a need for accredited vocational training. Has this been discussed with the Ministry of Education? Has any plan or strategy been defined to improve the range of qualifications and positions available?

Tertiary education is well catered for, and although there is a lack of accredited vocational training, some progress has been made in recent years; Córdoba now offers a Higher Maintenance Course, and the plans for the Higher Avionics Course are nearing completion. However, perhaps we have not advanced as much as the sector needs and as much as we would have liked. We are in constant contact with the Ministry of Education, although with the current situation things simply cannot move as quickly as we would like. For example, we have also highlighted that it would make more sense to have a better range of vocational training positions in the region of the Andalusian aeronautical axis in Seville and Cádiz. But all these things cost money and the establishment of new infrastructure is a complicated matter in the current economic situation. nonetheless, the Agency has made major efforts to support the sector and we will continue to do so. Shortly we will inaugurate the Training Centre in Seville, a key facility which will act as a focal point for numerous professionals from all over the world. This major project is an excellent example of collaboration between the public and private sector. We have also started up the Aeronautic Supplies Village and the Aeronautical Research Centre, which will be one of the emblematic buildings at Aeropolis… all of this reflects the commitment being made to infrastructure and investment in the Andalusian aeronautical sector despite these difficult times. And we make these efforts because we firmly believe in its capacity as a stimulus for economic growth.

What is your opinion regarding the degree of occupation and consolidation of Aeropolis? Are there plans to expand the facilities in the medium term?

There are now 41 companies based in the Park and there is really very little space left. It is at around 90% of its capacity. The possibility of expansion is a matter which will be addressed after due consideration because it is a protracted process. However, we have already held meetings with the Local Council of La Rinconada and the Seville Provincial Council. I wouldn't say that expansion of the park is in our short-term plans, but we are talking about the possibility and working to make it a reality.

And as regards TecnoBahía, and more specifically Trocadero?

TecnoBahía is not on the same level as Aeropolis, which is exclusively for the aeronautical sector, although it is true that it has a significant number of aeronautical companies and it has also practically reached its capacity. We are currently working to develop Trocadero in a manner which makes it as attractive as possible to the sector. The Alestis plant will undoubtedly be an important stimulus, although we are also still trying to determine the best possible manner of integrating the former premises of the Delphi factory, which are in a prime location.