Spanish aerospace and defence turnover plummeted 19% in 2020

A KPMG report on the economic impact of TEDAE companies blames COVID-19 as the main reason why sales fell to 2016 levels
The KPMG report for TEDAE presented in Madrid on Thursday, 21 October, was led by Begoña Cristeto, partner in charge of the Automotive and Industry sectors

PHOTO/JPons  -   The KPMG report for TEDAE presented in Madrid on Thursday, 21 October, was led by Begoña Cristeto, partner in charge of the Automotive and Industry sectors

The turnover of the Spanish defence, security, aeronautics and space industries collective in the 2020 financial year was €11,412.8 million, representing a fall in overall turnover of 19.06%, according to data provided by a monographic report that the international consultancy firm KPMG has just presented in Madrid.

The study attributes the decrease in sales compared to 2019 - which that year was 14,101 million euros - to the significant decline in global economic activity caused by COVID-19, which in Spain had a particular impact on the four aforementioned sectors more than on the rest of the national industry. Nevertheless, "they maintained growth above the GDP", with the exception of the civil and military aeronautics sector.

El sector de la defensa en su vertiente naval aportó una facturación de 1.381,6 millones, el 12,01% del volumen de negocio global. Su mayor exponente es el astillero público Navantia
PHOTO/Navantia - The naval defence sector contributed a turnover of 1,381.6 million, 12.01% of the global turnover. Its greatest exponent is the public shipyard Navantia. 

The report stresses that the civil aeronautics industry was the hardest hit by the pandemic crisis and the decline in demand for new aircraft. The main reason for this lay in "its close relationship with the air transport industry", whose flights were suspended for much of 2020, the report explains, leading to a general decline in production activities.

The end result was that the 2020 turnover of the companies grouped around TEDAE fell to 11,412.8 million euros, a figure even lower than those of 2016, which in the aforementioned financial year was 11,480 million euros. By sector, the aeronautical turnover was 8,141.2 million (71.3%), of which 4,335 million in military aviation. In defence, the naval field contributed revenues of 1,381.6 million and land 760.5 million. The space sector had a turnover of 965 million and security 164.5 million. All this allowed direct employment to be maintained at 47,983 people.

La facturación en el ejercicio 2020 supone una caída del 19,06% respecto a 2019. En la imagen, Begoña Cristeto, socia de KPMG y Ricardo Martí Fluxá, presidente de TEDAE
PHOTO/JPons - Turnover in the financial year 2020 represents a fall of 19.06% compared to 2019. In the picture, Begoña Cristeto, partner of KPMG and Ricardo Martí Fluxá, president of TEDAE.
Four key sectors for recovery in the medium term

In contrast to the notable decline in sales experienced in 2020, the KPMG document reflects that between 2014 and 2019, the overall evolution of the national defence and aerospace fabric was always positive, to the point of being "the industrial sectors with the highest growth in Spain".

In those five years, aerospace, defence and security industrial activity increased by an average of 6.9%, above the gross value added (GVA) and national GDP. For KPMG analysts, this annual increase shows that "the degree of dependence" of the Spanish economy on the defence, security, aeronautics and space industry "increased progressively".

El volumen de negocio de 2020 fue de 11.412,8 millones de euros, cifra incluso inferior a la del año 2016, que se sitúo en los 11.480 millones de euros. El más afectado por el descenso fue el sector aeronáutico
PHOTO/Airbus DS - Turnover in 2020 was 11,412.8 million euros, even lower than in 2016, which stood at 11,480 million euros. Most affected by the decline was the aeronautics sector. 

The consultancy firm's study is based on data provided by the Spanish Association of Defence, Security, Aeronautics and Space Technology Companies (TEDAE), which brings together the 90 main companies that design, develop and manufacture weapons systems and equipment for the Armed and Security Forces and also for the civil and military aerospace world. 

Under the title 'Economic and social impact of the defence, security, aeronautics and space industry', the report highlights four positive aspects. Firstly, the "significant resilience" of the four sectors, with expectations that "their weight will continue to increase" and that they will play "a fundamental role in the growth and recovery of Spain in the medium term".

El sector que menos ha sufrido la caída de la facturación ha sido el espacial, que ha logrado ventas por valor de 965 millones de euros, con un 65,8 por ciento de ingresos por exportación
PHOTO/Airbus DS - The sector least affected by the fall in turnover was the aerospace sector, which achieved sales of €965 million, with 65.8 per cent of export revenues.
Tractor and export sectors

Despite the shrinking market and sales, the consultancy firm also highlights the commitment of TEDAE companies to investment in research, development and innovation. In these three fields, in 2020 "a total of 1,030.4 million euros were allocated for own projects, 9% of turnover". KPMG has identified that national defence and aerospace companies are "among the main industries driving innovation in Spain".

Thirdly, it emphasises the fiscal contribution to the public purse by TEDAE companies, which it estimates at a direct revenue of 1,116 million euros. The KPMG analysts also stress that the four sectors are "tractors" and "eminently exporters", as evidenced by the fact that in a year characterised by international economic difficulties such as 2020, "50.1% of production was sales to third countries". 

El sector aeronáutico, con 8.141,2 millones de euros en ventas, representa el 71,3% del volumen de negocio global de las 90 empresas que integran TEDAE
PHOTO/Airbus DS - The aeronautical sector, with 8,141.2 million euros in sales, represents 71.3% of the overall turnover of the 90 companies that make up TEDAE. 

At the public presentation of the report on Thursday, 21 October, the Director General of Industry, Galo Gutiérrez, highlighted the importance of strategic capacities for national sovereignty, the pre-financing of 19,000 million provided by the Ministry of Industry for projects, of which he recalled that "16,500 million have already been executed" and the support provided by his department in "accompanying companies in the opportunities offered by the European Union".

The president of TEDAE, Ricardo Martí Fluxá, said that the figures in the report are "encouraging" when it comes to the four sectors being able to meet the challenge of supporting the recovery of the Spanish economy. At the same time, he called for "a State policy" with a long-term vision, "to guarantee the investments that will consolidate these strategic sectors".

El subsector español de la industria militar terrestre es el menos beneficiado por la política de adquisiciones del ministerio de Defensa español. Su facturación en 2020 fue de 760,6 millones de euros, el 95,9% dedicado a exportación
PHOTO/MDE - The Spanish sub-sector of the military land industry is the least benefited by the procurement policy of the Spanish Ministry of Defence. Its turnover in 2020 was 760.6 million euros, 95.9% of which was dedicated to exports.

The KPMG report was led by Begoña Cristeto, partner in charge of the Automotive and Industry sectors and former Secretary General for Industry and Small and Medium Enterprises between 2014 and 2018.