In this chapter, we look at the background of the aerospace industry. We then focus on the industry as it stands today and discuss BAE SYSTEMS’ position within this sector. Furthermore, by concentrating on several key developments in the industry and the sponsor company, this chapter outlines the general future technological and societal trends and potential directions that BAE SYSTEMS may take in response. This provides a wider context regarding the commercial relevance of this research and is central to the gap analysis carried out in Chapter 6.
2.1 The Wright Legacy
On the 17th of December 1903, Orville Wright took-off from Kitty Hawk North Carolina in the Wright Flyer biplane making the first sustained, controlled and powered flight in history. Although this first flight lasted a mere twelve seconds, it heralded the beginning of a new age in travel transforming the way people looked at and travelled around the planet. Although a humble beginning, the flight heralded the birth of a new industry that is, despite being relatively young, one of the largest in the world .
The research, design and production of airplanes, missiles and spacecraft constitute the aerospace industry. Until shortly after World War II, it was called the aircraft or aviation industry. Production of missiles and spacecraft by the same manufacturers that formerly made only aircraft necessitated the name change. In 1959 the “Aircraft Industries Association” was renamed the “Aerospace Industries Association” to reflect the transition in its members’ products.
By the 1990s, just in the U.S., the major producers of aircraft, aircraft engines, missiles and space vehicles numbered more than two dozen although, as discussed in Section 2.4, this has decreased. Some concentrate principally upon military equipment, others on civilian products. Most, however, manufacture for both markets or are prepared to do so. As vehicles become increasingly complex, companies often work in partnership on major projects. They also depend upon specialised suppliers for many items. Tens of thousands of smaller firms make parts for the primary producers. Overall, the aerospace industry directly employs more than 1.15 million people worldwide .
2.2 BAE SYSTEMS and the Consolidating Aerospace Industry
In April 1977, British Aerospace was formed as a nationalised corporation by the merger of British Aircraft Corporation, Hawker Siddeley Aviation, Hawker Siddeley Dynamics and Scottish Aviation and has a formidable past.
The company’s history is founded on firsts – the Vickers Vimy, first to fly non-stop across the Atlantic; Viscount – the world’s first turbo-prop airliner service; Concorde, the first and only supersonic civilian transport; Vulcan, the first delta wing jet bomber; Harrier, the first Vertical/Short Take Off and Landing (V/STOL) fighter; Seawolf, the first anti-missile missile; and Comet, the first commercial jet airliner .
Following trends in the international aerospace industry, the then British Aerospace’s more recent history was filled with takeovers, mergers and sell-offs. Perhaps of most significance was the recent merger between British Aerospace and Marconi Electronics Systems (MES). A new organisation, BAE SYSTEMS was formed on 30th November 1999. Previous actions by the company include :
- Establishing the BAeSEMA joint venture in 1991
- Acquisition of 49% of STN Atlas in 1997
- Acquisition of Siemens Plessey in 1998
- Acquisition of a 35% stake in Saab in 1998
Further to this, BAE SYSTEMS has been building new alliances with Lockheed Martin through the Tactical Reconnaissance Armoured Combat Equipment Requirement (TRACER) armoured personnel carrier and Joint Strike Fighter (JSF), or F35, programmes in addition to existing links with Boeing and Hughes. The reasons for these consolidations and Joint Ventures (JVs) can be explained through Figure 2.2:1 :
FIGURE 2.2:1 – THE EUROPEAN DEFENCE SITUATION COMPARED WITH THAT OF THE U.S.
This chart shows the difference between the U.S. situation, with a smaller number of defence contractors bidding for a larger defence budget, and the European situation, with a larger number of smaller companies competing for a much smaller budget. This means that, in order to be competitive and effectively bid for contracts on a global scale, the European companies must consolidate and become more efficient. As a result of this, BAE SYSTEMS is seeking to be at the forefront of this consolidation in the UK, Europe and beyond. In order to achieve this, and to become a global player, the various European defence and aircraft companies will have to co-operate and merge into larger, more efficient companies over the next few years. It has been predicted that there will only be two or three large companies in aerospace/defence in 15 years time. This will eventually mean that BAE SYSTEMS will look very different in 10 or 15 years time – probably as part of a much larger, global company.
In fact, the change in name from British Aerospace to BAE SYSTEMS is not merely a product due to the consolidation of two major firms. In my opinion, it is indicative of the future direction of BAE SYSTEMS and the new image that the company wishes to project. The removal of the term ‘British’ to project a more international feel to the firm and perhaps most significantly, the changing of the term ‘Aerospace’ to ‘Systems’. This will allow the company to comfortably concentrate on projects that may not involve aircraft related topics and thus lessen the risks inherent in the aerospace industry – a subject discussed in Section 2.4. More significantly, it will allow the company to move towards a quaternary organisation where the key asset is knowledge. Training, systems integration, Information Technology (IT) and Research & Development (R&D) will be the driving forces of the future. Tertiary aspects such as manufacturing and logistics will be increasingly outsourced to third parties. This is discussed in further detail in a report presented in Appendix B.
2.3 BAE SYSTEMS’ Structure, Finances and Market
The company consists of over 100 offices around the world. Around 45 of these are in the UK, ranging from Aberdeen in the north to Plymouth in the south. Amongst the main sites in the UK are Warton, near Preston – the main Military Aircraft & Aerostructures site – and Filton, Bristol which is the main civil aircraft site, with much of the AIRBUS work based there. An in-house research and development site, Advanced Technology Centre – Sowerby, is also based at Filton.
There are a many companies that go towards forming BAE SYSTEMS as a whole, and the company also has significant share holdings in other companies that are of strategic value to its overall operation.
The defence and aerospace industries are also moving increasingly towards Joint Ventures and Partnerships when it comes to developing new products which would often be too expensive or risky for a single company to develop. Examples of these relationships include the Eurofighter and Tornado, where companies from a number of countries collaborated to develop the aircraft. AIRBUS is a similar case, although by mid 2001, the partner companies floated AIRBUS as a Single Corporate Entity, a separate company with its own executive board and financial structure. BAE SYSTEMS retains 20% of shares in this company, although the company is essentially separate from BAE SYSTEMS.
With such a wide range of products in many different markets, BAE SYSTEMS has a large number of competitors worldwide. It is interesting to note, however, that while on the one hand the company competes with companies such as Lockheed Martin and Boeing, on the other hand BAE SYSTEMS works in partnership with them on different programmes. For example, the Lockheed Martin F22 Raptor fighter plane is a competitor for the Eurofighter Typhoon, and yet BAE SYSTEMS is working closely with Lockheed Martin after winning a JV bid to develop the Joint Strike Fighter aircraft . The AIRBUS aircraft compete directly with Boeing aircraft at all levels – single aisle A319/A320/A321 aircraft compete with Boeing 737, 757 and MD80/90 aircraft, long range A330/A340 aircraft compete with Boeing 747, 777 and MD11 aircraft and yet at the same time there is a team of Boeing engineers working with BAE SYSTEMS on the NIMROD 2000 Replacement Maritime Patrol Aircraft. This is best illustrated by examining the connectivity of aerospace companies, shown in .
While this may seem a little strange, it is common in the aerospace industry. It can make business quite complicated, since there are so many different relationships – co-operative or competitive – between these companies, all of which change over time.
At the commencement of this research in 2000, financially the company was doing well, after having survived some extremely difficult times in the early 1990s. At that time, when the recession hit the business and markets, BAE SYSTEMS’ share price plummeted to around £1 a share. As a result, the last few years has seen some radical re-engineering of the company to take it from near bankruptcy to one of the most profitable aerospace and defence companies in the world with an order book of £22.1 billion, sales of £8.5 billion and profits of £596 million. BAE SYSTEMS’ share price in 2000 was around £5, although this was in fact equivalent to around £20, as the company had a ‘share split’, where each share was split into 4 shares, each a quarter of the original value .
This dramatic turnaround, according to the company’s CEO , has largely been due to the efforts of all the employees in embracing the changes and re-engineering which have been guided by ‘Benchmark BAE’- a huge change programme which has now been running for a couple of years. Furthermore, the company is constantly looking to increase efficiency, improve value and ensure that the customers have the very best product to suit their needs, and there are many examples of how Benchmark BAE has helped to achieve this. One of the most significant examples of this is the major performance improvement in AIRBUS during the late 1990s .
2.4 The Future of the Aerospace Industry
The aerospace sector is now a truly global industry. However, U.S. companies, such as Boeing and Lockheed are far more powerful than their European counterparts, mostly due to the heavy consolidation of the U.S. aerospace industry, as can be seen in Figure 2.4:1 . As discussed, there is consolidation in the European industry, which has in particular led to the formation of global players such as BAE SYSTEMS and EADS in 2000, each of which generates a turnover in the region of $20 billion, thus ranking alongside with US based Lockheed Martin behind Boeing .
Increasingly, though, whilst the U.S. still retains both market and technology leadership within the global aerospace industry, its position is eroding. Europe provides a most formidable competition to the U.S. aerospace industry. According to European Community (EC) statistics, the EC aerospace industry grew almost twice as fast as the U.S. industry during the period 1978-1989. In 1990, the EC industry was nearly half the size of the U.S. industry. Furthermore, the new AIRBUS A380 (formally known as the A3XX), due for a first flight in 2004 and commercial flight in the final quarter of 2005, poses a significant threat to Boeing’s large air carrier, the 747-400. However, some industry observers point out that Boeing and AIRBUS previously collaborated in a super jumbo, but fell out. They stated that there may even be a possibility of Boeing collaborating with AIRBUS on the A380 . This was discounted by the time the A3XX was officially unveiled as the A380, once it fulfilled the minimum number of orders to ensure a financially sound product run; by the end of 2003, over 120 A380s had been sold .
As mentioned earlier, the global aerospace industry will most probably consolidate to form two or three very large aerospace companies within the next 10 to 15 years. This is likely due to the nature of the aerospace market which determines to a great extent the response of organisations. For example, the production and sale of aerospace products are marked by massive entry barriers, huge costs of programme development with commensurately long pay-back periods and ever greater technological complexity, but above all by increasing returns to scale and important benefits of scope. There are few, if any, other industries where size is as important as it is in aerospace. Large civil aircraft for example require a production run of several hundred just to break even and it has been estimated that every doubling of production reduces unit costs by around 20% .
FIGURE 2.4:1 – THE RECENT CONSOLIDATION IN THE U.S. AEROSPACE INDSUTRY
It is the journey that the individual aerospace companies will take within these next few years to merge into the likely super-companies that is of particular interest. A small but, in my opinion, very significant step towards this, was the unification of all the major global aerospace players in the formation of an online business to business (B2B) network for the trading of goods, services and knowledge, headed by Commerce One and powered by Microsoft. Quoting a section from an official Commerce One press statement,
LONDON and NEW YORK, March 28, 2000 – An aerospace and defence industry group including The Boeing Company (NYSE: BA), Lockheed Martin Corporation (NYSE: LMT), BAE SYSTEMS, Raytheon Company (NYSE: RTNA, RTNB) and B2B e-commerce solutions leader Commerce One (NASDQ: CMRC) today announced the creation of an independent enterprise that will develop an Internet trading exchange for the global aerospace and defence industry. This open aerospace and defence exchange, based on the Commerce One MarketSite Portal Solution, powered by Microsoft, will be a secure, electronic marketplace where buyers and sellers around the world can conduct business .
The types of aerospace and defence products, services and technical data provided over the exchange are limitless. Examples include raw materials, expendable parts such as fasteners, fittings and brackets, technical data, aircraft components, defence electronic components, after-market parts and thousands of other items. A typical commercial airplane, for instance, contains as many as six million parts and is supported by millions of pages of technical documentation. In addition, the exchange will be an e-marketplace for the indirect products and services that aerospace companies, airlines and their suppliers need to operate their businesses. See Appendix B for a more thorough discussion.
According to Sir Richard Evans, now ex-chairman of BAE SYSTEMS, “Our industry has always been identified with innovation and the exploitation of innovative ideas. I believe this Exchange to be a good example of that foresight. It embraces established concepts but develops them, capturing the essence of future global trading by bringing together the principals of our industry to serve the market in a truly integrated, global, context… Our intranet is now at the heart of our day-to-day operations and we are seeing major benefits in productivity and our technical performance through the introduction of virtual team working. The Aerospace Exchange will enable us to extend those processes to our many international partners as well as deriving the very substantial benefits we see from streamlined procurement and enhanced customer support.” 
Phil Condit, Boeing chairman and chief executive officer, stated, “This trading exchange can deliver enormous buy and sell side efficiencies to our industry. By using a single e-marketplace, all of us – manufacturers, suppliers, airline and government customers, and service providers – can significantly lower transaction costs and deliver more value.” 
Initially, the Commerce One initiative will facilitate secondary and tertiary business exchanges – manufacturing and services respectively. However, it is believed that the network will have all the necessary mechanisms, and hence in future be used for, the exchange of the much more influential quaternary medium – information. As the transfer of information between companies increase, the boundaries between them will fade away, potentially leading to co-operation and even further consolidation. This is also part of the process pushing Intellectual Property Rights – knowledge and information – into the forefront of the aerospace industry; a trend discussed in Section 3.1.
However, it must be stated that the aerospace market, as it stands, is highly competitive and with the heavy reduction in worldwide defence budget spending, there is a very real risk being a big player in the aerospace industry. With companies backing major projects with all their financial might, a failed project or lost bid could prove catastrophic to even the mightiest of companies.
One very relevant example is the Joint Strike Fighter. The U.S. government has commissioned this new fighter that will be used as replacement for most of the current U.S. air, military and naval forces for the next 20 to 30 years . In fact, it can be argued that the F22, F35 and Eurofighter will be the last generation of manned combat aircraft. This is especially the case when considering that the Tornado has flown for just under 30 years, and the B52 bomber will celebrate its 50 years in service in 2004. Both aircraft have the potential to serve for further decades.
Before Lockheed Martin was declared as the JSF bid winner over Boeing, I wrote:
“Two separate companies will most likely manufacture the aircraft, and competition is heavy – the deal would guarantee manufacturing for a very long time. However, for companies who fail in the bidding process, a mass void will emerge, with no large-scale orders materialising from the U.S. for a very significant amount of time.” 
While BAE SYSTEMS became a significant participant in the final winning bid with Lockheed Martin, it is probably a wake up call for the industry at large; huge, long-term make or break contracts will be an ever-increasing reality. Perhaps, as argued earlier, by changing their name, image and expertise, BAE SYSTEMS is intending to spread such risks by entering new and emerging fields, such as information systems, and using novel approaches to fulfil their customer’s requirements.
It is possible that a government’s capability requirement, a topic discussed more fully in Appendix A, may no longer be met by the design of a conventional aircraft but through the use of unconventional and novel technologies. It is this notion, combined with the fast changing technological capabilities that have thrust technology into the forefront of aerospace companies’ business strategy and focus.
2.5 Technology Shaping the Future of Industry
Information Technology is increasingly crucial to industries of all types. The aerospace industry, at the forefront of innovation, is embracing and shaping this industrial impact of IT. David Hughes, editor of Aviation Week and Space Technology, said in a 1998 editorial that “Information technology is becoming a key part of everything the aerospace and defence industry does for a living, and as the century closes it is computers and software that hold the keys to the future. The [aerospace] industry is being transformed from dependence on traditional manufacturing into something that looks more like IBM and Microsoft with wings.” 
That same statement is true about a host of enterprises other than just defence. Not only are new manufacturing systems computer controlled, they are controlled by networked computers, which, increasingly, are globally connected by public or private internets.
Such advances in communication and information systems technology are causing global changes to market places. These advances have moved from the stuttered progress, seen in both world wars where mass production in the first and the introduction of aluminium in the second played key roles, into a continuous stream that the aerospace industry experiences today.
At the start of the 21st Century we find ourselves on the brink of change more fundamental than anything seen before, reaching into every area of industry. Sir Richard Evans, now ex-chairman of BAE SYSTEMS illustrated this fact with the following statement :
- “Instant communication enables commodities, raw materials, products and services to be bought and sold in a global electronic marketplace. Yes, it drives down procurement costs but also drives down margins;
- Systems capability has become more important than individual technologies and products. Obviously it’s easier to make a single item, however sophisticated, than to integrate it into a large environment of complex devices and understand how it will perform;
- Electronic components are available from worldwide sources, making it easy to build sophisticated devices wherever it’s cheapest to do so;
- Workforces can be anywhere – credit card companies process their data in India – and now some call centres serving the UK may be in India too;
- Perhaps the most overwhelming fact we have to face is that almost anything we can think of is technically possible, but at a price.”
A most vivid example of how technology has impacted industries is in the world of defence. Technology has transformed warfare and will continue to do so. Gaining the upper hand now in what’s called the digital battle-space depends as much on the network of information systems around the battlefield as it does on physical platforms .
A successful operation is now about the ability to collect data, analyse it, turn it into mission plans and distribute it to the forces that can use it, not the thickness of a tank’s armour. This works both ways; by manipulating and denying information to the other side, information dominance will contribute significantly to an operation’s success. The power of this was illustrated in Kosovo, where shutting down the electricity supply did more to end the conflict quickly than invading troops could have managed . In fact the fuel crisis in Britain in February 2001 showed how quickly you can bring a country to a halt without having to blow anything up.
Novel technologies are being developed to remove infrastructures and capabilities. One example is packaged in a unit the size of a coke can and, while it is harmless to humans, it can knock out every computer in a 20m radius .
Based on discussions with engineers at BAE SYSTEMS working on UAV projects, one gets the impression that when it comes to information gathering and even attacking targets, many low-cost Unmanned Air Vehicles (UAVs) are more efficient, cost effective and relatively less risky than the development and logistics around an expensive stealth reconnaissance aircraft or fighter. It was even mentioned that UAVs can be vacuum sealed and left in pristine condition until called upon; ground maintenance, a very significant cost when operating conventional aircraft, can be negligible.
Furthermore, in the move towards capability fulfilment, entire systems of heterogeneous solutions are being proposed. For example, the UK’s Future Offensive Air System (FOAS) is likely to be a mix of combat aircraft, missiles and unmanned air vehicles linked via a new and highly sophisticated Command and Control (C&C) network .
However, the impact of technology on aerospace industry products is not limited to the defence industry. Boeing’s civil aircraft market has taken a significant hit recently when AIRBUS overtook its market share and is looking to overtake sales in the large jet sector, monopolised by Boeing, with the new A380. The AIRBUS aircraft are a generation ahead of the Boeing ones technically, and it has been said that Boeing needs to jump two generations if it is to compete in the future .
This predicted strategy became a reality when Boeing announced a new 250 seat ‘sonic cruiser’ that flies just under the speed of sound, reducing journey times. Using unconventional engine mountings, canards and a delta wing, the proposed aircraft was indeed several generations ahead of Boeing’s current civil aviation products . While this point is presented here to illustrate the importance of technology throughout the industry, at the time of the announcement, I suggested  that the aircraft was a shareholder smokescreen, released just after A380 production was announced and Boeing dropped the 747X – a stretched version of the 747 . In fact, some European airlines remained highly sceptical “It looks like something they have created on their drawing boards without asking the airlines,” said one leading European aircraft purchasing executive. “I don’t see any airline that has asked for such a plane.”  Needless to say, proposals for the aircraft were scrapped shortly after .
The above paragraphs discussed the influence of technology on aerospace products. However, technology is also having a major impact on the support structure for the creation and maintenance of these products.
For example, aggressive targets were set for the reduction of lead-times, the time from requirements to operation of a solution, for producing systems and aircraft at BAE SYSTEMS. A study I conducted as part of this research on the measures taken to reduce aircraft lead-time and the significance this holds for the business can be found in Appendix A. The following points are presented as a summary of that report:
Military aircraft design and production traditionally takes around 15 years. This massive lead-time leads to ‘requirement creep’ – what was a requirement during a project’s initiation may have changed significantly several years later. The rapid pace of new technological advances causes problems in the design and production phase. To cope with this, BAE SYSTEMS has several departments working exclusively to help alleviate these problems inherent in the industry:
- Operational Efficiency Improvement (OEI) concentrates on current and short-term issues that may aid in the reducing lead-time. Examples include Commercial Off The Shelf (COTS) write-once electronic environments. This allows the manipulation of data and designs electronically over the entirety of a project;
- Generic Host (GHost) is a concept whereby each department (avionics, operations, airframe, training etc.) feedbacks into the other departments, in effect causing the design to be executed in parallel, with all parties involved from the start;
- Finally, the Spirit department looks at long-term emerging technology with the aim of aiding long-term technical knowledge and extrapolation.
Ultimately, product design is now based not on customer requirements and specifications, but on capability requirements. This is a move away from conventional aircraft designs to “systems of systems” and novel technologies, with possibly lower lead-times.
The logistics sector is also moving forwards as technology and requirements advance. This is important as it allows organisations to focus on core competencies and outsource non-core work to third-party sources. A detailed look at logistics in the automotive and aerospace industries is provided in Appendix B.
2.6 Network Enabled Systems
Another major factor that is affecting the aerospace industry is the UK, US and Australian changing defence doctrine which is advocating and exploring a move towards what the UK Ministry of Defence terms “Network Enabled Capability” (NEC) [49, 71]. Built on many Network Centric Warfare (NCW) principles , the long-term aim of NEC is to facilitate entities with degree of self-synchronization, meaning a high degree of self awareness within a global context through the “networking of knowledgeable entities that are geographically or hierarchically dispersed” . This is to facilitate “increased speed of command and tempo, and enhanced lethality and survivability” [44, 163].
In the UK, NEC was born out of the “Strategic Defence Review: New Chapter” and marked a commitment by the Ministry of Defence (MoD) to exploit the potential improvements in network technology to facilitate radical changes in the delivery and structure of defence capabilities [21, 71]. Experimentation through synthetic (simulated) environments and live exercises has been hailed as essential to the understanding and implementation of NEC based warfare systems . Examining the literature around NEC, there is little explicit mention of emergent behaviour, although this is understandable as much of the literature is for high-level consumption making it difficult to discern if the beneficial properties of emergent systems (discussed at length in Chapter 4 and Chapter 6) is considered in the move to NEC. Given this perceived lack of emphasis on the utility of beneficial emergence, Chapter 9 explores the emergent organisational behaviour in a “find and remove” scenario simulation test bed loosely based on heterogeneous co-operative UAVs.
2.7 Chapter Discussion – Moving Towards Complexity
Summing up the technological and business trends in the aerospace industry discussed above, a strong argument can be presented that with regards to the industry as a whole, further consolidation will become an increasing reality in the short to medium term; as projects get larger, more complex, and more risky with increased in-service life times and budget reductions, consolidation followed by non-core downsizing will prove an attractive alternative to being left out in the cold.
In my opinion, the risk averse and therefore somewhat unimaginative commercial aerospace sector will have less and less commonalities to the defence aerospace sector it once grew up with and will most likely split away from it, as was the case when AIRBUS was floated (see Section 2.4). Therefore, when talking about giants such as Boeing, Lockheed Martin and BAE SYSTEMS, the term “Aerospace Industry” will become marginalised and increasingly known as the “Defence and Systems Industry”. The Defence and Systems Industry will move away from traditional engineering and towards a “Systems of Systems” (SoS) approach. This is exemplified by the Ministry of Defence’s (MoD) change in doctrine discussed in Section 2.6.
Aside from industry consolidation and specialisation, these trends in technology and business will also impact BAE SYSTEMS directly, and can be broken down into three main areas:
- The Organisation Itself – BAE SYSTEMS is experiencing a generally uniform trend in the products and services it provides – increased technological complexity requiring greater interaction between business units in the company, compounded by the lower lead times demanded by customers.
- The Products It Manufactures – The defence and to a lesser extent civil markets and therefore BAE SYSTEMS are moving away from conventional products, placing the emphasis on capability requirements (e.g. anyplace, any environment, within a day) and information warfare instead of product specifications. This is leading to an emphasis on non-conventional product solutions that may potentially be autonomous, cheap and numerous instead of manned, expensive and resource intensive.
- The Logistics, Manufacturing and Support Structure – As large organisations in the aerospace sector divest of non-core business and focus on the design and support of products, a large network of third party suppliers has emerged. This network is being increasingly integrated to companies such as BAE SYSTEMS through extranets, allowing transparency of information. Cross organisational collaboration is also on the increase. Furthermore, smart manufacturing and purchasing systems are being integrated into the design process.
It is clear that these three areas encompass the entirety of the business. This should emphasise the importance of understanding what these trends will mean for BAE SYSTEMS, and how the company will tackle these realities that present increasing complexities. To paraphrase Sir Richard Evans’s quote presented earlier; we may understand exactly how to build and operate a component, but how it interacts with countless other components remains a difficult question. This critical issue can not only be applied to products but to entire systems and even organisations that exhibit high levels of interactivity and complexity.
This is where BAE SYSTEMS’ in-house research and development departments fit in, where the pursuit of novel technology, both in the product itself and in the manufacturing, design and support process can give the organisation a major competitive edge. The strategic position of these Advanced Technology Centres (and in particular ATC Sowerby) with respect to the wider organisation is covered in the next chapter. Areas of research that are aimed at solving these issues the industry faces, outlined in this section, are also covered.
The idea of capability fulfilment presented in Section 2.4 is one of the central pillars (see next chapter) to BAE SYSTEMS’ strategy and is where the R&D departments fit in, where the pursuit of novel technology, both in the product itself and in the manufacturing, design and support process can give an organisation a major competitive edge.