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SMEs in European aeronautics

Small and medium-sized enterprises (SMEs) can play a vital role in the European aeronautics sector, where state-of-the-art technologies are crucial. But while often at the cutting edge of innovation, such firms have limited financial resources and face serious challenges accessing and benefiting from pan-European research programmes.

Aerospace technician
Small companies with a big impact
© Smith’s Aerospace

The aeronautics industry tends to be dominated by big players, but below the well-known names are hundreds of smaller companies that could potentially have a big impact. Aerospace research is a particularly difficult and high-risk endeavour and the payday often comes only after many years of effort and expenditure. Long lead times, high costs and the preference of big companies to deal with tried and tested suppliers, all tend to work against small companies. The marked consolidation within the sector is another factor that can freeze out small firms.

What is an SME?

The category of micro, small and medium-sized enterprises (SMEs) includes companies that employ fewer than 250 persons and that have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro.

European SMEs take flight

According to European Commission Vice-President Günter Verheugen, SMEs are, “…the engine of the European economy, an essential source of jobs, create entrepreneurial spirit and innovation in the EU and thus are crucial for fostering competitiveness and employment.”

Thanks to Commission support, there has been strong increase in SME participation in industrial research and development over successive EU Research Framework Programmes. European Commission-funded initiatives such as AeroSME, ECARE and SCRATCH have already provided a major positive impetus, creating opportunities for SMEs and larger firms to link up and move forward with important research actions.

According to Kevin Corti of the European Federation of High-Tech SMEs, access to larger firms is crucial to European SME success. “It’s about doing business,” he says, “and doing business, for SMEs, means linking up and partnering with big companies. The big companies, for their part, have to resist the temptation to keep going back to the same SME partners over and over. It is certainly necessary but not necessarily easy for big European firms to find and work with smaller partners.” Doing so, he says, is the only way to ensure that our European industries remain dynamic and at the forefront of technological innovation.

SMEs have a role to play in European aeronautics

Janez Potočnik
Janez Potočnik

In the enlarged European Union of 27 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises. However, SMEs are often confronted with market imperfections. They frequently have difficulties in obtaining capital or credit, particularly in the start-up phase. Their restricted resources may also reduce access to new technologies. For all of these reasons, targeted support for SMEs has become a major EU priority.

Yet, in spite of all this, aeronautics SMEs are getting on with their work, providing real contributions in the field of aeronautics. Make no mistake – as key partners in major research initiatives or as project leaders in their own rights, SMEs are helping Europe to define its priorities and tackle its most pressing issues, leading the way to a new and better air transport future.

– EU Research Commissioner Janez Potočnik


Enlargement: a positive step

François Quentin
François Quentin

Identification of high-potential SMEs in the New European Member States is now a major priority and a major opportunity for European research. François Quentin of aerospace giant Thales has said, “We are constantly looking for new ways of including more players who can contribute to increasing efficiency and innovation. The SMEs and New European Member States are very relevant in this sense, with a lot to offer and still many unidentified potential partners out there.” Quentin is currently serving as Co-Chairman of ACARE, the highly influential European Technology Platform for aeronautics research.

Meanwhile, Axel Krein, Airbus’ Senior Vice-President for Strategic Developments has commented on his company’s ongoing collaboration with Eastern European players, including Russia and the New Member States, saying, “We now have considerable experience in partnerships with their excellent research institutes, but we can do a lot more in terms of identifying and working with their SMEs.”

SMEs in FP7

Some 400 SMEs are already participating in FP6 aeronautics research projects. Under the final FP6 call for proposals, SME garnered almost 12% of EC funding.

In a December 2006 decision, the EU Competitiveness Council urged the European Commission and Member States to ensure that small companies can benefit from the Seventh Framework Programme for Research and Technological Development (FP7) and the Competitiveness and Innovation Programme (CIP).

The European Parliament and the Council reaffirmed the importance of SMEs for Europe's economy and stressed that particular attention should be paid to the adequate participation of SMEs, in particular knowledge-intensive SMEs in transnational co-operation.

The decision also called for the reintroduction of the 15% threshold for SME participation in co-operative research programmes, sending what many believe to be the right message to small firms.

To achieve these goals, the Commission has now raised the funding rate for SMEs from 50% under FP6 to 75% under FP7.

Case study:
‘AROSATEC’ improving turbine engine maintenance

Today, maintenance, repair and overhaul (MRO) of aero engine components involves a chain of processes, including inspection, de-coating/coating, welding, milling and polishing. The EU-funded AROSATEC project, composed largely of SMEs, has developed new processes for the automated repair and overhaul of aeroengine blades, discs and 'blisks' (bladed discs).

“Our first objective was to improve existing repair methods for aero-engine components,” explains Thomas Kosche of BCT GmbH. This was to be achieved through adaptive machining technologies to compensate for part-to-part variation in complex turbine components. The second goal was to develop a new data management system which would constitute the core of a fully automated overhaul process.”

To achieve its objectives, coordinator and SME BCT GmbH enlisted several SME partners. The final AROSATEC meeting took place in Leuven in 2006. BCT President Claus Bremer says, “Our company has already generated business collaborations with two AROSATEC partners, and the aero engine industry has recognised BCT's involvement in AROSATEC. Based on the experience, technology and reputation gathered, we are now setting up a new proposal for FP7.”

FP7 responds in the affirmative

Liam Breslin, the European Commission’s Head of Aeronautics Research, has remarked that, under the Framework Programmes, the Union has already committed itself to increase SME participation in aeronautics.

“The effect of this commitment,” he says, “is demonstrated by the steady increase in participation of SMEs since the Fifth Framework Programme; between the first FP5 call for proposals and the final FP6 call, the number of participating SMEs increased from under 40 to about 150. Over the same period, the budget share for SMEs increased from 4.8% to 9.8%.”

SME participation in EU-funded research takes two forms:

  • As key partners in major industrial research initiatives;
  • As project leaders in their own rights.

Critical opportunities: how FP7 can help

Aero turbine
© BCT GmbH

Under FP7 (2007-2013), says Liam Breslin, the Union will continue to work towards wider SME involvement in critical research initiatives. An important element is the identification of SME-linked innovation in areas of crucial research interest. FP7 also supports the ongoing restructuring of the aeronautics industry, including the integration of the supply chain. Along with the European Union, the large aeronautics industrial players and the industry as a whole are fully committed to opening more doors to SMEs.

Case study:
SME forges ahead with ‘LIGHTNING’

“Our major difficulty has been getting people to invest in our business,” says Angus Flemming of the UK’s Aviation Enterprises Ltd. “Today’s investors want a quick return, to double or triple their money in a year. Basically, they’re out of touch with reality.”

Aviation Enterprises is a specialist design, development and manufacturing organisation specialising inthe light aviation industry and the application of lightweight and high performance composite materials. The company is now playing a critical role as coordinator of the EU-funded LIGHTNING project (Lightning protection for structures and systems on aircraft utilising lightweight composites).

Developing lightning protection for small aircraft

LIGHTNING is addressing developing optimised lightning protection systems for aircraft using lightweight composite structures. It will allow manufacturers to make safe use of the performance advantage provided by such materials, says Flemming.

”This kind of work requires time, foresight, and a huge amount of effort and, of course, long-term funding. Although we came up with the idea for the LIGHTNING project, as a small company we could not have carried out the work on our own. We identified potential partners like Airbus Spain and Diamond Aircraft Industries and were able to convince them to help us. As an SME, you need to be bold, you need to have a clear message, and, in some cases, you need luck on your side. But you can succeed.”

Call for proposals

The total EC grant available for collaborative research in aeronautics under FP7 (2007-2013) is on the order of €1 billion. This opens a vast number of opportunities for SMEs.

The first FP7 call for proposals was issued on 22 December 2006. Research in the field of aeronautics is addressing ‘greening’, time efficiency, customer satisfaction and safety, cost efficiency, protection of aircraft and passengers, and pioneering air transport systems of the future.

Topics for Level 1 projects, i.e. projects oriented towards upstream research with an EC grant typically below €8 million, include production, maintenance and repair, design systems and tools, systems and equipments, flight physics, aero structures, propulsion and avionics.

Level 2 projects, also open to SME participation, involve development to a higher technological readiness and with a high level of integration. Here, EC grants typically range between €8 million and €60 million. Topics will vary from one call to another.

Additional opportunities should be available under the ‘Clean Sky’ Joint Technology Initiative (JTI), which has set aside 12% of the EC contribution for SMEs.

How to Participate

For up-to-date information on calls, participation rules, guidelines for proposals, etc. see the Cordis websiteexternal link

Case study:
‘CELINA’ brings Airbus and SMEs together

Just as SMEs can have a great deal of difficulty finding partners in the aeronautics industry, large aeronautics companies can also have problems identifying potential SME partners.

Airbus Deutschland’s Christine Schilo is coordinator of the EU-funded CELINA project. Launched in 2005 under the European Union’s Sixth Framework Programme, CELINA is looking at hydrogen-based fuel cell systems as electric power sources in aircraft.

“You simply cannot find any large aerospace companies doing this kind of innovative research,” says Schilo. “Therefore, we needed to identify smaller, more dynamic partners to make the CELINA project work – partners like IRD.”

Small but high-powered

IRD A/S is a Denmark-based high-technology SME devoted to the research, development and production of fuel cell materials, fuel cells and fuel cell systems.

“We found IRD through our network of contacts and they have been carrying out some very valuable basic research for the CELINA project,” explains Schilo, “work that larger partners are unwilling or unable to carry out. We have made excellent progress on this project and our collaboration with IRD has been brilliant!”

The CELINA project has already confirmed the potential of fuel cells as primary power sources in airplanes, while a nearer-term application with higher adoption probability could involve using fuel cell-based systems as emergency power supplies.

Helping SMEs participate in EU research

Aerospace technician
© Smith’s Aerospace

“Participating in EU Collaborative Research Project is a challenge,” says Rémy Dénos, Project Officer in charge of SMEs at DG RTD’s Aeronautics unit. “If we want to promote the participation of SMEs, we need to provide them with specific support. With this in mind, we are funding several complementary support actions to tackle different issues.”

Specific information for SMEs, including latest information events and workshops can be found at the AEROSME Helpdesk.

ECARE can help SMEs to establish contacts at regional level, including liaison with nearest regional associations.

Coordinators looking for qualified SMEs to participate in collaborative projects can contact AEROSME for Level 1 projects or ECARE for Level 2 projects.

The SCRATCH consortium is providing free support to potential participants looking to set up projects with an SME dimension under future calls for proposals. This includes developing a partnership, calculating costs and durations that an SME or SMEs can reasonably handle.

Finally, the Don Q Air project is now providing specific support to a small group of countries where R&D investment in aeronautics is particularly low – Poland, Romania and Turkey.

Case study:
‘TATEM’ thinks big

Large Collaborative Projects (Integrated Projects under FP6) are aimed at addressing major societal needs by mobilising a critical mass of research and technological development resources and competences. With clearly defined strategic research objectives they focus on obtaining specific applicable results.

SMEs can play an important part in Large Collaborative Projects research, bringing specialised skills and knowledge, new blood and new ideas. “What it really comes down to is individuals,” says Martin Worsfold of Smiths Aerospace. “Whether you’re big or small, if your people have something to contribute, then you’re worth bringing on board.”

Smiths Aerospace is a leading global provider of technologies and systems to builders and operators of military and civil aircraft and engines and is coordinator of the EU-funded TATEM.

New vision

TATEM (Technologies and techniques for new maintenance concepts) is developing and validating philosophies, technologies and techniques that can turn unscheduled aircraft maintenance into scheduled maintenance, aiming to deliver a 20% reduction in airline operating costs within ten years and a 50% reduction over 20 years.

“The TATEM project includes quite a number of SMEs, all contributing to the project and some of which are really quite outstanding,” says Worsfold. “I would cite Oration S.A. as just one example.”

Oration is an Athens-based SME providing speech-enabled interactive voice response (IVR) applications that allow the automation of contact centre functions. The company offers solutions to a wide range of vertical markets, from voice banking to retail and healthcare speech applications.

“Although they don’t have a lot of experience in the aeronautics sector per se, Oration and other small groups like it have been a valuable asset to our project,” says Worsfold. “In a way, our project is quite basic in nature; we are looking for new ideas and solutions and SMEs such as Oration can sometimes find new and fresh ways to look at things.

“Another important aspect of this kind of large project is the way it brings together partners from all corners of Europe. It forces us to learn and expand, both in technical terms but also in cultural terms.”