Speech to Aviation Export Strategy Conference, Copthorne Hotel Wellington

This conference marks an important milestone. It means that the research for the Aviation Industry Association, funded under the government’s Sector Initiative Fund, is nearing an end. That work will soon be finished, but the action is just starting.

The research, as you know, is to develop the parameters of an aviation strategy that will deliver sustained growth in three key areas - aviation engineering, airport technologies and flight training.

Internationally, the aviation industry is booming. It has recovered from the events in New York and from the threat of SARS. Growth projections are immense. To give a few examples:

• Boeing expects global passenger growth over the next 20 years of 4.9 percent per annum.
• Rolls Royce estimates 51,000 aircraft will be delivered between 2006 and 2025.
• I have seen projections that China will need 55,000 new pilots by 2025.
• The ground handling market alone is estimated at between NZ$42 billion and NZ$57 billion per year.

These figures are in the reports you are work-shopping today. The challenge you have is to break them down and to pinpoint the opportunities for the kiwi aviation industry. What does this growth mean for New Zealand? What does it mean for your individual companies? How can New Zealand capitalise on those opportunities?

As we know, the aviation industry is typical of most sectors in New Zealand. There is one dominant player, underpinned by a limited number of medium sized companies, but the majority are small firms.

The sector here does have highly skilled companies. In a safety conscious, highly regulated aviation world, 12 aviation design and 12 aviation manufacturing organisations have been certified by New Zealand Civil Aviation.

But I think there is little doubt that we could do more and the development of a robust aviation strategy will be a critical step.

A successful aviation strategy should contain many parts - it should look at growing existing businesses and activities in New Zealand and attracting more international companies to New Zealand to work in partnership and alongside kiwi firms.

We already have some excellent examples of overseas companies becoming involved in New Zealand and helping the aviation sector to grow.

There is Pratt and Whitney and Air New Zealand Engineering in
Christchurch, European-owned CTC Aviation which is partly based in Hamilton and offers aviation training for airline customers around the world, and Alpha Aviation which marries French technology with Australian and New Zealand business interests.

As an aside I am told that Alpha Aviation normally receives around 3,000 hits per day on its website.

Within a few hours of the FAA (Federal Aviation Authority) announcing certification for the Alpha 160A, it received 19,000 hits. If just one percent of these can be converted into new business, demand will be huge. Think of the supply implications for the New Zealand component industry.

New Zealand companies are already producing components for local and
international aerospace companies. There is considerable scope for
expanding and upgrading this industry using advanced materials such as
light metals and composites. NZ has excellent potential for this based
on the marine industry, but will need to take another step up to tackle
aerospace requirements.

It is clear there are transformational challenges facing the industry that our industry needs to grab hold of and make the most of.

I want to be clear that the challenges your industry faces are not unlike those facing the New Zealand economy as a whole. That is why the Labour-led government has put in place an economic transformation agenda that seeks to work with businesses to grow New Zealand into an economy which is very much export-led, innovative and high wage. A key to this work is creating an environment which will grow more globally competitive firms.

New Zealand does need to carve out a unique economic national identity which is tailored to and plays to our strengths in innovation and technology and our natural resources and talents, while taking account of the challenges we face - such as our isolation from key global markets.

I’m particularly keen to encourage this type of thinking here as it is exactly what Export Year 2007 is all about. Export Year 2007 is a government-NZFirst -business initiative that aims to increase New Zealand’s long term export performance.

It is not a solution in itself but it's aimed at focussing all our minds, and hopefully will be a springboard into ongoing action to lifting our exporting performance.

The government isn’t an exporter and no government schemes or actions can address the issues on their own. The private sector needs to be part of the solution too and it is great to see business organisations around the country coming on board and contributing to the Export Year programme .

Unfortunately, there is no short-term answer and no single "silver bullet" that can lift New Zealand’s export performance. The key is to think in terms of long-term goals rather than applying stop-gap measures.

I'm really pleased to see that Export Year 2007 Business Champion Ken Stevens is here to tell you more about Export Year. Ken has been a great advocate and mentor in this area.

In terms of lifting the performance of your aviation industry, I think the questions you need to focus on is how to become a specialised, 21st century technology-based service and manufacturing industry which international customers prefer to deal with.

Other issues to grapple with is how to grow an industry that is more globally-connected, and profitable but that is also sustainable in the context of other work that is going on to reduce the impact of climate change.

Can the New Zealand aviation industry generate higher value, both through its expertise, innovation and its intellectual property in these areas where demand for answers is growing?

Government to government links are important and these should be taken into account when developing commercial imperatives. Your work through the Aviation Industry Association today and in the coming weeks, to agree and clearly articulate where those commercial opportunities best lie will be important to the government and be assured that government will listen carefully to what you have to say.

The size of international opportunity generally is large.

What can we achieve through collaboration? Should we be collaborating more with Australia? Think about collaborating to develop the critical mass that will mean New Zealand can capture bigger projects.

I suspect that the bigger the project the New Zealand consortium can deliver, the greater the value to us.

Access to reliable and timely market intelligence on offshore opportunities is vital. The strategic partner development work that New Zealand Trade and Enterprise can do internationally, can help deliver on this. But there needs to be closer co-operation to ensure that the industry’s priorities are reflected in New Zealand Trade and Enterprise’s activities.

I suggest too that as the aviation industry builds scale and develops critical mass, you will want to think about branding. How can the successes of the companies today and tomorrow be built on to achieve the larger successes of next week and the week after?

You have a lot of challenges ahead. The Peet Aviation reports identify many international opportunities. React to them. Bring your international knowledge to this. Prioritise them. Start thinking more seriously about how New Zealand can deliver on these opportunities.

I look forward to hearing more about the outcomes of the conference. I am particularly keen to learn more about your intended action plan. Through a number of government agencies including New Zealand Trade and Enterprise, Civil Aviation and the Ministry of Economic Development we are very keen to help you deliver.

Thank-you.