Spain's aerospace and defence sector is gradually taking flight

The nearly one hundred companies that are part of TEDAE, the Spanish association of defence, security, aeronautics and space technology companies has invoiced a total of 12,135 million euros in 2022, 4.67% more than in 2021, and provides direct employment to 53,541 people, an increase of 7.89%. 

These figures have just been presented by the international consultancy firm KPMG in its annual report for the 2022 financial year, which analyses the economic and social impact on Spain of companies in the four strategic sectors affiliated to TEDAE, the entity that commissioned the study.

The document highlights the "knock-on effect" of TEDAE companies on their supply chains, as well as the "capacity of its members to "generate qualified, stable and much better paid employment than in the rest of the industrial sectors".  

Although the increase in business in 2022 was 541 million compared to 2021, the president of the association since March 2020, the diplomat Ricardo Martí Fluxá, recognises that "unfortunately, the pre-pandemic levels have not yet been recovered". Sales in 2019 were record and totalled 14.101 billion euros. However, the following year, COVID-19 and the sharp reduction in defence investments brought them down to 11.413 billion, a fall of 19.1 per cent, KPMG notes.  

Nevertheless, Martí Fluxá is optimistic. At the official presentation of the report to his associates and authorities from the Ministries of Defence and Industry - held on 21 November in Madrid - Fluxá stressed that "after the decline in turnover experienced in 2020, the years 2021 and 2022 have allowed to recover the path of growth". And he reiterated that the four strategic sectors of TEDAE are "the pillars of the new economic model that Spain needs".

The aeronautics industry is TEDAE's largest employer

However, stretching upwards the figure achieved in 2022 -12,135 million, equivalent to sales in 2017- to reach the amount of 2019 -14,101 million- entails increasing turnover by 1,966 million in how many years: one, two, three...? The head of TEDAE has not dared to predict how long it will take to achieve this, despite the fact that defence budgets for the current year have risen by 26% and are expected to continue to rise. 

The KPMG Spain report, led by Begoña Cristeto, partner in charge of Automotive, Industry and Chemicals at the consultancy firm, shows that the strategic sector that leads TEDAE's records continues to be aeronautics. With sales of 8,789 million euros, it accounts for 72.42% of total turnover and employs 36,996 people, which represents 69.1% of employment in the association's companies. In short, aviation is "the largest employer" of TEDAE, he stresses.

In the civil scenario, companies dedicated to the production or assembly of aircraft, helicopters, aerostructures and equipment have earned 3,739 million (+5% compared to 2021), accounting for 42.54% of the aeronautical total and providing employment for 19,963 technicians. 

But the lion's share goes to military aeronautics. The KPMG report highlights that "for the third consecutive year, military aviation has overtaken civil aviation in terms of turnover". Its revenue is 5,050 million (+11%) and, curiously, it employs 17,032 workers, which means a greater economic volume with fewer human resources than its civil alter ego.  

The conclusion drawn by Begoña Cristeto's team is that military aeronautics shows "greater potential for resilience and growth in contexts of instability, growing by 11.1% compared to 2021".

The space sector exports 75% of its exports

The second most important industrial group within the framework of TEDAE is that dedicated to defence, which totals 7,139 million euros, the largest link being the aforementioned military aviation, which contributes 5,050 million. Consequently, the weight in 2022 of the naval sector has been 1,210 million (-16%) and that linked to the terrestrial sphere has generated 824 million (-6%), with jobs of 5,485 and 3,546 technicians, respectively. 

In the space sector, Begoña Cristeto assigns a civil turnover of 1,011 million and a military turnover of 54 million, with employment totalling 5,889 people. In her opinion, the security sector has been "the most dynamic in 2022, because it has grown by 34%". However, its business turnover is 246 million and its human resources are 1,626. Overall, "none of the sectors managed to recover the pre-pandemic value".

In terms of exports, the KPMG study shows that they amount to 6,125 million, which represents 50.47% of TEDAE's consolidated total. It means that the foreign market has performed better than in 2021, which recorded 5,433.5 million, 46.9% of the production record. The champion is also military aviation, which sold to foreign countries more than 2,800 million, 55.5% of its turnover.  

Of particular note is the interest in the MRTT, the C295 and the Spanish contribution to international programmes. Civil aviation exported 1,497 million (40.1%), the space sector exported 799 million (no less than 75% of its business), the naval component exported 597 million (49.4%) and land defence companies sent products worth 427 million (51.9%) outside Spain. The red lantern is for the security sector, whose exports are limited to just over 3 million (1.2%).

In the area of research, development and innovation, the investment of TEDAE companies was 1,169 million which, according to the authors of the document, "is equivalent to 12.2% of total investment in R&D&I in Spain", a figure somewhat lower than that of 2021, which was 1,176.96 million. 

Among those attending the presentation of the KPMG report were the director of Armaments and Materiel, Admiral Aniceto Rosique; the head of the Army Logistics Support Command (MALE), Lieutenant General Fernando García y García de las Hijas; the heads of Acquisitions and Economic Affairs of the MALE, Generals José Ramón Pérez and Javier Echeverria; the President of AESMIDE, Gerardo Sánchez Revenga; the CEO of Isdefe, Francisco Quereda; the General Director of Hisdesat, Miguel Ángel García Primo; and the Director of Defence of Sener Aeroespacial, Rafael Orbe.