Spanish aerospace and defence turnover plummeted 19% in 2020

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.

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.

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".

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".

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". 

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".

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.