Homaid Al Shemmari, CEO of Aerospace and Engineering Services, Mubadala, on opportunities and threats

The UAE defence and aerospace sectors are growing rapidly as our country assumes a greater presence on the world stage. This growth comes with unique opportunities for foreign investors, not just to increase sales, but to engage with an emerging global hub. Like the armed forces in many other countries, the UAE Armed Forces are moving towards the outsourcing of key services as they seek to enhance value for money and increase the quality of the products and services they use. Globally, government customers continue to demand technical excellence and innovation, while operating with constrained budgets and increasing expectations of contractors. This is encouraging companies to evolve from being solely manufacturers to becoming defence industry suppliers as well, and this requires a new approach from the industry.

More than ever, the industry must focus on providing value to the customer through new forms of collaboration and partnership. The aviation industry must also continually invest in developing its technology and ensure that it is positioned to take advantage of new areas of growth, especially in high technology. Unmanned aerial vehicles are one such sector, where global expenditure is expected to double over the next decade to as much as $90bn. As new and more complex strategic challenges emerge in the 21st century, many militaries across the world are reallocating capital to new areas, while also seeking to reduce the overall cost of their defence capabilities. This represents both a challenge and a tremendous opportunity for those players in the industry that are open to change and evolution.

In the UAE we have recently achieved an important milestone in the evolution of our defence industry, pulling together the combined capabilities of leading UAE defence industries into a single national integrated platform under the banner of the Emirates Defence Industries Company. The benefits of this new model include increased economies of scale, supply chain rationalisation, and a single point of contact for customers and partners. The creation of this integrated platform will also accelerate the development of the industry’s technological capabilities and create new job opportunities for UAE nationals in high-value, high-tech industries.

In the aerospace sector, fleets around the world are set to double by 2032, with Asia at the forefront of this growth. Boeing has estimated that about 533,000 new commercial pilots will be needed worldwide in the next two decades to meet this upsurge. A total of 41% of the global need will come from Asia, which will require about 216,000 pilots in the coming 20 years, while the Middle East will need 55,000 pilots. The industry also must respond to consumer demand for more fuel-efficient aircraft by investing in next-generation engine technologies to promote efficiency and reduce the country’s carbon footprint, reducing aircraft weight through the use of composite materials and leveraging new manufacturing technologies to produce composite parts faster, as well as cutting the cost of aircraft ownership by decreasing maintenance costs.

UAE-based airlines are also expanding rapidly, with record-setting orders placed at the 2013 Dubai Airshow. Abu Dhabi-based Etihad Airways ordered 56 new Boeing aircraft in November 2013, representing an investment of up to $25.2bn at list prices, including related engines. This deal made Etihad a launch customer for the 777-8X, expected to enter service early next decade. The airline also ordered 30 Boeing 787 Dreamliners, becoming one of the largest customers for this pioneering aircraft, of which over 50% is made of composite materials. These orders will support aerospace and engineering services to continue building up the UAE’s aerospace, defence services and information industries. We have done this in part by building infrastructure and investing heavily in human capital so that we have the capacity to grow and sustain our economy.