3% OF GDP WITHIN 7 YEARS

Portugal 2019 | AEROSPACE & DEFENSE | VIP INTERVIEW

TBY talks to José Cordeiro, President of AED Portugal, and Dr. João Romana, General Director of AED Portugal, on the cluster effect, value addition, and competitiveness in the Portuguese economy.

How does AED Portugal provide a platform facilitating networking between the strategic industries of aeronautics, aerospace, and defense?

JOSÉ CORDEIRO: One of the most important factors was being a founding member of the European Aerospace Cluster Partnership (EACP). We also signed MoUs with other European clusters in Hamburg, Bavaria, Seville, Galicia, Toulouse, among others related to aeronautics. It is also essential for us to attend main events around Europe.

JOÃO ROMANA: We set out together with the local clusters to support our networking efforts. Recently at ILA Berlin event, we have planned B2B meetings beforehand, and planned a networking agenda among the Portuguese and German clusters. Such efforts applies to aeronautics, space, and defense. By joining the European Space Agency, back in 2000, a fast gateway was set up for space industry in Portugal. Back in 2000 there was less than 10 active companies in space, but in the last 10 years things have totally changed. The national investments in science for the last 20 years are now paying off. In defense, Portugal has also a long tradition of building capability in cooperation with NATO. In the scope of the European Research and Innovation Programmes (FP6, FP7, H2020) Portugal shows a record of significant achievements, in the fields of aeronautics (Clean Sky), space and ICT. As a consequence we now have companies that are world leaders in satellite ground control systems, providing most of the control systems for the geostationary satellite market, worldwide. It has been a remarkable progress. In aeronautics a similar progress took place, only faster and with a stronger economic impact. In fact, in 10 years Portugal has grown from a young MRO player to a mature medium size supplier of most of the existent OEMs in the world market. The key push factor for aeronautics boom was the decision of Embraer to install two facilities in the south of Portugal back in 2006. Everything has changed in the last 10 years with many international aeronautic companies moving to Évora, coming from Brazil, France, Spain, UK, and other countries. This exponential growth has left behind many gaps and needs, we are currently mapping and diagnosing. Training, certification of SMEs, better supply chain structure and need for clustering industry for sizeable contracts, are some of the needs and gaps found.

What more would you like to see in terms of value addition to accelerate the process going forward?

JR: Presently the number of highly educated PhD students working in industry is residual (less 5%). This tells us there is still a long way to go in terms of innovation and knowledge transfer to industry. We are also in the early stages of the process of bringing players together for increasing critical mass and addressing larger contracts. Technologically, the potential is high with Research Centers and industry developing beyond state of the art. Such centers are interesting enough to attract a wave of young professionals to this field and hope best for the future.

JC: Facts speak clearly, there are over 26,000 PhD students in our university and only 700 of them work in industry; we still have a long way to go.

What have been the most successful initiatives to raise the overall visibility of Portugal's aerospace sector and promote its internationalization?

JR: We have recently raised funds up to 2020 from national and European programmes to develop a strategy for 2022, build the respective action plan and fund internationalization activities allo over the world. Such project's funds add to Cluster's membership fees. As a result of this combined funding we can now address Europe as well as Canada and the USA. Such activities are keeping us extremely busy and drives a positive momentum.

JC: We also have also set up strategic objectives for the next seven years. The first is to double the present share of the Portuguese GDP and bring it up to 3%. Another is to promote Portugal as a innovative destination and become a main player in these areas. This means we must participate in large events around the world and broadcast the competitiveness of Portugal among companies that seek to invest.

To what extent does the AED cluster have positive spillover effects in other high-tech sectors and how does this contribute to the overall competitiveness of Portugal's economy?

JR: That is definitely happening. we see more mature industries, such as the automotive cluster, increasingly interested in joining the aeronautic and aerospace sectors. We receive many IT, metallurgic and automotive companies looking for opportunities in aerospace. The Portuguese metallurgical industry has a contribution of about 30% to our GDP, meaning there is huge potential out there, especially for hard metals machining and tooling. The qualifications and certification are a huge barrier to new comers, given other sectors are less stringent than aeronautics. This is something that needs to be further paved in the future. Trying to address and measure the spillover factor of aerospace, several studies were conducted. Such studies show a factor varying from two up to four, the real value to be determined. Overlapping technologies show large potential, being the case of 3D visualization for controlling machines, and importing to aerospace Industry 4.0 developments developed for wine industry. This is corroborated as we have been able to attract other players to the AED Cluster, mostly companies from IT and engineering. We still have a long way to go before we become part of the supply chain, this being the tricky part.

What are your expectations for the performance of the AED cluster?

JC: Our goal is to reach 3% of Portugal GDP in seven years. To reach this goal, and given most of the Portuguese companies are SMEs, we have to improve the national supply chain and enlace SME to grow around large OEM, Tier one and Tier two companies.

JR: We need to attract more foreign investment in these sectors. This will require improving Professional vocational training, and supporting foreign companies in their move to Portugal. The national training institute (IEFP) has been a key factor in training over 2,000 new aeronautic technicians for the last 10 years. This IEFP training is free for companies, who report highly pleased with the human resources provided by IEFP. IEFP has been able to fill that gaps identified by the aerospace industry. One of the major gaps we have identified is international promotion and we need to address it. Given we do not have much financial support, we have gathered the main Portuguese stakeholders including the prime minister office, the Ministry of Defense, the Ministry of Science and the Agency for promotion of the Alentejo region, under the flag “Portugal Looks Up.” We just created this brand-and have already been in India, Canada, and soon Berlin and the USA. It will be a global effort to promote Portugal under the same flag initiative.