SW Aerospace pack

StrategyEye South West Aerospace & Defence Review Trend Analysis and Discussion

Opportunity mapping – Hot Topic Review Introduction UAV/UCAVs Environmental Impact Reduction Nano Composites Software Defined Radios (SDR) Soldier as a Platform Networking the Battlefield Robotic Weapons Microjets for Civilian Use Metamaterials Conclusion

Introduction: Methodology We have reviewed over 250 regional companies in the analysis, 143 of which were relevant Our assessment of regional strengths and weaknesses combines several factors Strengths and weaknesses benchmarked against other regions around the world Regional strengths identified based on: Number of relevant companies in industry categories Size of relevant companies in industry categories Innovation created by relevant companies in industry class / Reputation of relevant companies in industry categories The results are displayed on the Industry SIM We have created a shortlist of opportunities taking into account further industry factors Global market size and growth (Low / Medium / High) South West Ticket to Play (Disadvantaged / Neutral / Advantaged) Takes into account South West strength in relevant industry classes .. .. reputation (of region and individual companies) in relevant industry classes .. and “stickiness” (sustainability) of regional strength Regional strength: strong combination of companies in region Regional weakness: no significant companies in region longlist (trend spider) trend presentation

Aerospace and Defence SIM Key Findings Key findings from Strategic Industry Map Components and Subsystems Strength confirmed in structural manufacturing and associated materials development Additional strengths identified in platform sensors and communications subsystems, power and control subsystems C3I BAE and Thales key regional players Opportunity to build out broader cluster by leveraging on-platform communications strength MRO High value subsector, but regionally distributed Confirmed average representation in the region Integrators and Operators Average regional representation confirmed BAE and AgustaWestland key regional players

Opportunity Description & Market Sizing An Unmanned Aerial Vehicle (UAV) is an operational aircraft that flies with no pilot on-board and is either controlled remotely from the ground or pre-programmed to fly autonomously. Unmanned Combat Aerial Vehicles (UCAVs) are designed for high risk missions and deploy weapons and tactical air-to-air and air-to-ground capabilities. UAVs and UCAVs are increasingly being used in high-risk operations limiting potential human casualties and are considerably cheaper to build and operate. Current global annual UAV expenditure of USD2.7bn will triple in the next decade to USD8.3bn totalling USD54bn with 9,000 UAVs purchased. The US will account for 77% worldwide of RDT&E and 64% of worldwide procurement. The UK Government has invested £32m into ASTREA programme to advance the development of UAV for the civil use in the UK. The consortium includes companies such as Agent Oriented Software, BAE Systems, EADS, Flight Refuelling (Cobham), QinetiQ, Rolls-Royce, and Thales UK. Key Player Profiles 1) UAV/UCAV Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) UAV production and operation is cheaper than manned aircraft Strong military market Civilian and search & rescue use increasing Can be used for monitoring & surveillance, leveraging SW strength in sensors Why Not Emerging technology Uncertain regulatory and legal framework UAV accident rate is 100 times more than manned vehicles Competition from other UK regions (or collaboration opportunity) Ebeni EUROCONTROL Ebeni is specialized in safety and risk engineering services, the company worked on the EUROCONTROL draft UAV Specifications to assess the safety of the military UAV operations. (EUROCONTROL is the European Organisation for the Safety of Air Navigation) BAE Systems Advanced Technology Centre (Filton) BAE Systems has invested heavily in private funding of a series of UAV programmes such as Kestrel, Corax, Raven and HERTI. The Advance Technology Centre in Filton (Bristol) is involved in the research and development of the UAV. Cobham Plc UAVs The Flight Refuelling Division has developed 3 models of UAV: Falconet fast-jet Aerial target (attack manoeuvres and sea skimming operations), Phoenix (battlefield surveillance and targeting system), The Black Kite Towed Target (airborne threat simulation system). In addition Flight Refuelling is part of the consortium to develop the ASTREA project. Key : Company with SW HQ Multinational company with significant presence in SW

2) Environmental Impact Reduction

Opportunity Description & Market Sizing Major airliner manufacturers are investing in research to develop efficient eco-friendly airframes and engines that will both save airline companies fuel costs and decrease the impact on the environment as well reduce noise pollution, required by EU legislation and pushed by the Kyoto protocol. CO 2 and noise emission can be reduced by modifying aircraft aerodynamics and weight ratios as well as optimising engine performance. In October 2006 nine European Aircraft companies announced the €1.7 billion Clean Sky initiative to develop greener aeronautics systems such as more efficient engines. A consortium of university engineers and aircraft manufacturers (Rolls Royce, Boeing and Marshall Aerospace) is also collaborating on the Silent Aircraft Initiative (SAI) . The Strategic Research Agenda (commissioned by ACARE, Advisory Council for Aeronautics Research in EU ) has allocated €1.075 billion to the Aeronautics & Space Industry to support the objective of halving carbon dioxide emissions and reducing nitrogen oxide emissions by 80% by 2020 (“Vision 2020” report). Key Player Profiles 2) Environmental Impact Reduction Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Airliners are being pressured to develop cleaner technology as could reduce climate change. Cut fuel costs Substantial funding from institutions Filton is key R&D centre for next generation airframes and engines Why Not Aircraft maintenance and modification is expensive Impact of aircraft pollution is difficult to assess Noise reduction can potentially reduce engine aircraft performance Issue dominated by large manufacturers High cost of R&D Rolls-Royce Trent 500 Since the introduction of jet-powered airliners, the fuel efficiency of aircraft has improved by around 70 per cent. Rolls-Royce, aims by 2010, to halve engine noise relative to 1998 levels, achieve 10% reduction in fuel consumption in all new engines and cut NOx by 50 %. Airbus UK A380 Airbus forecasts that the A380 will be at least four decibels quieter than the Boeing 747-400. This equates to a perceived 50 percent reduction in noise levels. Operating costs per seat will be reduced by about 15 percent. The A380 wings were designed and are part-built in the Filton facility. Key : Company with SW HQ Multinational company with significant presence in SW

Opportunity Description & Market Sizing Nanotechnology is the development of structures and devices on a nanometer scale (between 1 and 100 nanometers). Nanotechnology has enormous potential to improve the reliability and performance of aerospace hardware using new materials, which are harder, more durable, resistant, lighter and less expensive. It has been estimated that nanotechnology based materials and manufacturing processes will have a market of over US$340 billion within a decade. Federal funding for nanotechnology R&D increased from USD116m in 1997 to USD982m in 2005. University of Bristol’s Advanced Composite Centre for Innovation and Science (ACCIS) researches advanced composites including nanomaterials. Last April Rolls-Royce opened a new University Technology Centre (UTC) in Composites at the University of Bristol to develop advanced composites. The Centre has very strong industrial links, especially in the aerospace sector. Key Player Profiles 3) Nano Composites SW Ticket To Play D . N . A Why (Market and Regional Strengths) Nanotubes are anticipated to become 50-100 times stronger than steel at one- sixth of the weight Development of strong lightweight composites making the aircraft eco-friendly Increasing investments in nanotechnology Bristol is a notable R&D Centre Why Not High cost of R&D Emerging technology – still being tested Unknown environmental impact Uncertain regulatory environment High cost of production Only one relevant commercially active company identified in SW Market Size L M H Queensgate Instruments Nanosensors, nanomechanism The company develops and provides nanopositioning and nanosensing solutions for high technology industries. Some of their clients include ESA, NASA, as well as Research Institutes and Universities. University of Bristol ACCIS & UTC ACCIS at University of Bristol researches in advanced composites including, nanomaterials. The Centre brings together more than 50 scientific researches. In addition Rolls Royce has chosen the University of Bristol to open its Technology Centre (UTC). QinetiQ Nanomaterials QinetiQ Nanomaterials’ complex on the QinetiQ Farnborough site has two Tesima nanopowder production rigs manufacturing a wide range of metal, oxide, nitride, and carbide nanopowders Key : Company with SW HQ Multinational company with significant presence in SW International leading company

4) Software Defined Radio (SDR)

Opportunity Description & Market Sizing Radios that use software to control the modulation and demodulation of radio signals. Software Defined Radio (SDR) can be adapted to handle new frequencies and modulation protocols by changing the software. This will allow handsets to have a single radio transceiver rather one for every networking standard. SDR also allows devices to adapt to the radio environment allowing them to avoid interference by choosing a standard and frequencies that are not being interfered with. SDR allow for a majority of frequencies to be unlicensed which reduces the cost of new wireless services and the barriers of entry to new providers. Five member-nations ( Finland, France, Italy, Spain & Sweden ) of the European Defense Agency (EDA), will work together in the ESSOR project, that will research and develop software-defined radio. The project will be supervised by EDA and is worth an estimated EUR 100 million. Key Player Profiles 4) Software Defined Radio (SDR) Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Potential for next-generation broadband wireless products. Compatibility with multiple frequencies and radio protocols. Frequency licensing no longer needed “ Routes around” interference Simpler handset design Handset operation can be improved with software changes Some major players in region Why Not Emerging technology No real world consumer trials Requires major legislative and regulatory changes to US main driver and developer of SDR UK not active in ESSOR Thales UK MSN 8100-H Thales UK has developed the MSN 8100-H SDR, the first European operational software radio, programmable and configurable multi-channel. This radio, ready to enter in service in 2009, has been designed for naval and ground based applications and will be used by the Royal Navy. BAE Systems JC4ISR radio BAE Systems leads the development of the multi-band JC4ISR radio. The JC4ISR radio is an integral element of WIN-T, the US Army's future-generation network. (JC4ISR stands for Joint Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance.) L-3 Communications Hardware & Software solutions Development and integration of high performance radio receivers, signal classification, detection and recognition. Contractor in Command, Control and Communications, Intelligence, Surveillance and Reconnaissance (C3ISR) Key : Company with SW HQ Multinational company with significant presence in SW

Opportunity Description & Market Sizing Soldier as a Platform refers to the advancements in technology carried by footsoldiers, including digitalized camouflaged uniforms with nanosensors that monitor body functions, flexible body armour and reduced thermal signature, enhanced broadband and network centric communications and helmet displays linked to weapon sights. The UK Ministry of Defence awarded the GBP2bn Future Integrated Soldier Technology (FIST) project to Thales in 2003, to provide the British Armed Forces with an integrated fighting system for dismounted, close combat troops. Thales UK will equip 29,000 troops with FIST (Future Integrated Soldier Technology) in 2009. The acquisition cost is forecast to be approximately £580M. Key Player Profiles 5) Soldier as a Platform Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Substantial government funds available Next generation combat equipment deemed a necessary step to enhance military capability and reduce human casualties Thales significant presence in SW Why Not High technological complexity Risk of schedule overruns UK opportunity currently focused on few companies Protective Products International Tactical Armour Designer and manufacturer of concealable and tactical body armour for the government, military and law enforcement communities. In December 2007 Protective Products will deliver 60,000 Modular vests (worth USD 33.6m) to the U.S Marine Corps. CQC Protective equipment Manufacturer and supplier of protective and personal equipment for defence forces world-wide. Including protective suits, combat body armour, military sleeping bags. CQC has been supplying protective equipment for more than 50 years to Defence Forces, Police and Special Forces worldwide. Thales UK FIST Programme Last year the company signed a contract with MoD for an Assessment Phase Extension (APX) for the Future Integrated Soldier Technology (FIST) programme. Thales UK will equip 29,000 troops in 2009. Key : Company with SW HQ Multinational company with significant presence in SW International leading company

Opportunity Description & Market Sizing Networking the Battlefield refers to technologies employed by military entities to provide communication infrastructure and monitoring technology to analyse and control the battlefield. This broad spectrum includes software defined radios (SDRs), wireless radio systems, tactical computer systems, network centric warfare systems, engineering system support, technical analysis, test support and network training systems. The technologies will exponentially increase tactical intelligence and communication, enhancing risk assessment, mission successes and reduce friendly fire incidents. ITT Ind. awarded with a USD147.9m contract for basic radio spectrum support with potential increase to USD545m. BAE Systems won GBP 200m contract to manufacture communications systems for controlling combat operations. Key Player Profiles 6) Networking the Battlefield Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Substantial funding from Future Combat Systems program and other worldwide initiatives in the UK (FIST) and France (FELIN) Enable more accurate tactical assessments SW Strength in platform communications Why Not Integration of numerous platforms and technologies Untested technologies Selex Communications Command and Control Systems The Communications Command and Control Systems developed by Selex is a distributed information system to be used at the battlefield that provides secure support for: own / enemy force management, operation, planning, decision support, logistic and non-conventional operation management. Cobham Defence Communications The company has developed a Battlefield management Systems which allows units in contact with the enemy to monitor and react to the “chaos of battle”. Battlehawk Command System is designed to accommodate multiple communications channels. BAE Systems Tactical communications BAE Systems develops and produces tactical communication systems such as: SAMPSON, multi-function radar or SPIDER, C2 System that integrates a range of sensors and surveillance systems into a unique tactical picture. Key : Company with SW HQ Multinational company with significant presence in SW

Opportunity Description & Market Sizing Robotic weapons are remote controlled or autonomous vehicles and equipment that function as weapons. Particular emphasis has been put on military robots with integrated weapons. Similarly to unmanned aerial vehicles (UAV), robotic weapons are equipped with cameras, sensors, communication technology and weapons. Robotic weapons can be used in high-risk, hostile environments by military and law enforcement entities to reduce human casualties. US military is increasing its purchases of robotic weapons, with Foster-Miller Awarded $96 million contract in 2007 for additional TALON Robots. BAE Systems Contract For FCS Armed Robotic Vehicles rose to $311.3M in August 2005. Key Player Profiles 7) Robotic Weapons Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Increasingly used by military for high-risk operations, strong demand in Iraq and Afghanistan Reduces potential casualties Why Not Limited power autonomy Emerging technology Most leading development in US Lockheed Martin Squad Mission Support System (SMSS) The SMSS is under development for use in future robotic weapons. The SMSS will reduce time when controlling robotic systems by improving perception of the vehicles’ surroundings on the battlefield. The company plans to introduce SMSS by 2009 and is expecting a market for 4,000 such vehicles. Foster-Miller TALON Robots Foster-Miller (a QinetiQ Company based in US) manufactures TALON robots, lightweight tracked vehicles that are used for explosive ordnance disposal (EOD), reconnaissance, communications, hazmat, security, defense and rescue. The US military has ordered to the company up to 1200 TALON (EOD) robots worth USD 124m. BAE Systems Armed Robotic Vehicle (ARV) BAE Systems is developing the ARV (for the U.S Army) which is the largest unmanned ground vehicle in the Army’s Future Systems (FCS) program. BAE Systems plans to deliver its first ARV by 2010 . Key : Company with SW HQ Multinational company with significant presence in SW

Opportunity Description & Market Sizing A very light jet (VLJ), also known as a microjet, is, by convention, a small jet aircraft approved for single-pilot operation with a maximum take-off weight of under 10,000 lb (4,540 kg). Microjets will be priced at a fraction of the typical corporate jets now on the market, and targeted at executives who seek flexible traveling schedules, amateur pilots, charter services and air taxi services. Microjets are intended to have lower operating costs than conventional jets, and will be able to operate from runways as short as 3,000 feet (900 m). In total, over 3,000 VLJs have been ordered from three manufacturers. The market for VLJs is largely an unknown. In its business aviation forecast published last fall, Rolls-Royce predicted that manufacturers will deliver some 8,000 “microjets” by 2023. Researcher Inflight Management Development Centre’s forecast shows that 847 VLJs will be produced between this year and 2013. Meanwhile, Forecast International foresees 3,476 of the small jets being manufactured by 2014.Hoping to capture a piece of this emerging market, no fewer than 8 companies are currently designing, testing and manufacturing their own very light jet model. None are active in SW. Market Size Key Player Profiles 8) Microjets for Civilian Use SW Ticket To Play D . N . A Why (Market and regional strengths) Manufacturers are experiencing a high level of orders Expected to be an attractive and affordable transport alternative Congestion and traffic in roads and highways is driving demand for alternatives Why Not High risk business No consensus in market forecast Early stage in industry, regulations still to be created and incorporated No significant activity in SW L M H Cessna Citation Mustang The Mustang was the first of its class to receive full type certification, first to receive certification to fly into known-icing conditions, the first VLJ to be delivered to a customer, and is from the first company to obtain the FAA Production Certificate for a VLJ. Adam Aircraft Adam A700 Adam Aircraft announced that they have an order backlog of 282 of its Adam A700 VLJ offering. Adam has a prototype plane flying now, with full certification expected in 2007. 101 copies of the Adam A700 were ordered by future air taxi provider, Magnum Jet. Eclipse Aviation Eclipse 500 Eclipse Aviation has received orders for over 2,350 aircraft, including 239 (plus 70 options) for DayJet, 25 (and 25 options) for JetSet Air of UK and 15 (plus 15 options) for Linear Air of USA. Key : Company with SW HQ Multinational company with significant presence in SW International leading company

Opportunity Description & Market Sizing Metamaterials are materials that gain their properties from their structure rather than directly from their composition. The term metamaterials is particularly used when these have properties not found in naturally-formed substances. Researchers are primarily interested in metamaterials because of the possibility to create a structure with a negative refractive index, with applications including optics, communications and propulsion. Scientists have already created an 'invisibility cloak' made out of metamaterial which can bend electromagnetic radiation around a spherical space, making an object appear invisible. Scientists predict that metamaterials could be of use in military technology, such as in the construction of fighter jets and submarines. The Ministry of Defence will monitor and work together with the Engineering and Physical Science Research Council (EPSRC) and is considering the opportunities for funding research in metamaterials under the Joint Grant Scheme. Boeing is engineering and fabricating metamaterials under its $5.6milion DARPA contract. Key Player Profiles 9) Metamaterials Market Size L M H SW Ticket To Play D . N . A Why (Market and regional strengths) Metamaterials anticipate a revolution in wireless and guided wave communications and in optics. Increasing investments in metamaterials Why Not Emerging technology – still being tested Unknown environmental impact Uncertain regulatory environment No direct development in progress in SW University of Liverpool Invisible objects A unique computer model called GETDP (May 2007), designed at the University of Liverpool has shown that it is possible to make objects appear invisible at close range, when light travels in waves rather than beams. DARPA MetaMaterials Programme DARPA has developed a 4 year MetaMaterials Programme to research relevant military applications such as: (1) magnetic metamaterials for power electronics, electricdrive and propulsion. (2) microwave and optical metamaterials for antenna, radar, and wireless communication applications. Boeing Phantom Works Boeing research scientists (California) are developing metamaterials under a DARPA contract. Boeing anticipates that the materials could be useful in the development of improved antennas, other electromagnetic devices and lenses capable of focusing to limits not achievable by normal lenses Key : Company with SW HQ Multinational company with significant presence in SW International leading company

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