The aircraft maintenance industry has been in recession for some years mainly brought about by the Gulf War. The Gulf War had a dramatic negative impact on air travel worldwide and, consequently, aircraft utilisation rates fell to record low levels. With aircraft spending fewer hours in the air the requirement for airframe maintenance also plummeted. A situation of scarce supply rapidly turned around to significant overcapacity resulting in depressed market prices for maintenance work. The short and medium term outlook for the Irish aircraft maintenance industry should be looked at in this context where there is 30 per cent overcapacity. This has led to a progressive decline in market rates which have fallen significantly since 1990.
It is estimated that 3,600 are employed in aircraft maintenance, including components, in Ireland out of an estimated 5,200 in aerospace activities i.e. maintenance, manufacture and international services. This industry sector is thus an important one, not only for those workers and families dependent for their livelihoods in this area, but also to the Irish economy and the Exchequer.
The National Aerospace Task Force report of 1992 identified strategic alliances and joint ventures as opportunities for the aircraft maintenance industry. The report was prepared by representatives from industry, Government Departments and State agencies. At that time, market conditions were generally regarded as good not only in Ireland but worldwide. The Federation of Aerospace Enterprises in Ireland — established in 1994 under the auspices of the Irish Business and Employers Confederation — is reviewing the task force report and expects to complete this exercise by mid-summer. I look forward to the outcome of the federation's review and I expect that it would represent an important input to policy development in the aerospace industry.
The short and medium-term prospects for the Irish aircraft maintenance industry are bound up with prevailing international market conditions, at European and world level. Key factors in improving the industry's competitiveness and viability will be restructuring measures to increase cost efficiencies and productivity and measures to strengthen marketing and to secure long term contracts. Rationalisation is currently under way in Europe and elsewhere, which should benefit the industry here.
The view in the industry is that strategic alliances are still relevant and may figure in some company plans over the long term. The pursuit of such alliances is primarily a matter for the industry itself but the relevant industrial promotion agencies are available to assist the industry in this process.