Hon Phil Goff
Minister of Trade

9 October 2008

Speech Notes

AVEX Aviation Expo

Hamilton

Thank you Wayne (Green, AVEX chairman).

Deputy Mayor Peter Lee, Chairman of the Aviation Cluster John Jones, Hamilton International Airport Chief Executive Chris Doak, Chief of Air Force Air Vice-Marshall Graham Lintott - thank you for the invitation to visit the inaugural New Zealand National Aviation Expo.

I also want to acknowledge the last surviving pilot of the Dambusters Raid of May 1943, Squadron Leader Les Munro. Les' exploits as part of 617 Squadron continue to inspire the men and women of the Royal New Zealand Air Force.

Our aviation industry owes much to the foresight and enthusiasm of its early pioneers - people like the late Ossie James who the as the founder of James Aviation Ltd was at the forefront of the New Zealand aviation industry, particularly topdressing and other agriculture work. I would like to acknowledge Ossie's daughter, Lynette, who is here today.

From early pioneer beginnings, New Zealand's aviation industry has grown strongly.

Today, there are over 4,319 aircraft in New Zealand.

In 2000, an average of 119,000 people flew each week within, or to and from New Zealand, on 840 flights. This increased to an average of 172,000 people each week, on 1,130 flights, by the end of 2007.

Over 14,100 New Zealanders are employed in the aviation industry. A further 3,090 serve in the Royal New Zealand Air Force.

Growth in the aviation sector internationally has been equally strong, although record oil prices and the recent credit crisis in the United States will slow this.

That said, forecasts suggest that 10,000 more passenger aircraft will be needed in the next decade, adding a further $75 billion to the cost of maintaining and servicing the global fleet.

Exports from New Zealand's aviation sector are valued at over $800 million. Aviation New Zealand is predicting this to grow to $2 billion by 2020.

Reaching this target will be assisted by the Free Trade Agreement with China, and the conclusion of agreements with ASEAN and the P5, which includes a deal with the United States.

In China alone, 55,000 new pilots will be needed by 2025, while in the United States sales in the civil and defence aerospace industry are expected to grow by US$210 billion this year.

There is also a lot of work being undertaken with governments and industry to address regulatory barriers in Europe. The long-term goal is the full mutual recognition agreement between our regulatory agencies. This will reduce export costs and improve recognition for New Zealand exports.

The challenge for the New Zealand aviation industry is to position itself so that it is well placed to take advantage of the improved access we have, or will have, in these large markets.

There are a number of companies already leading the way.

New Zealand aluminium smelters supply high grade aluminium for the wings of the new Airbus A380, while Air New Zealand already provides a repair centre for the A320.

The Spider Tracks system, developed by a Manawatu-based company, is one of the most advanced portable tracking systems in the world, and is already being used in 26 countries.

Pacific Aerospace built their 600th aircraft this year and with Micro-aviation and Alpha, the Waikato region has built more than 900 aircraft.

And nine of the top US aerospace companies use the 3D product management system designed by Right Hemisphere which allows them to source, sell and service products more effectively by delivering 2D and 3D product graphics direct to customers.

Of course, increasing overseas sales isn't without its challenges - which is why agencies like New Zealand Trade and Enterprise are working closely with you to help improve the productivity of aviation manufacturing, encourage the development of a component manufacturing industry, and assisting businesses to take their products to international markets.

You will all be familiar with the support NZTE has provided to the Hamilton aviation cluster through a $2 million grant from the Major Regional Initiative Fund. I understand this is progressing with the development of shared facilities for specialist aviation painting, heat treatment and composite manufacturing.

The Government is also investing in the aviation industry through its investment in the Royal New Zealand Air force.

Under the Defence Long-Term Development Plan, the Air Force is undergoing a major renewal of every flying platform worth nearly $1.9 billion. Key projects include:

The modification of the Air Forces two Boeing 757s so that the aircraft can carry both freight and passengers.

The upgrade of the P-3 Orion mission systems and the upgrade and life-extension of our C-130 Hercules fleet.

The Air Force's aging Iroquois and Sioux helicopters will shortly be replaced by state-of-the-art NH90 and Agusta-Westland A109 helicopters.

And next year the Government will consider options for replacing the Air Force's advanced pilot training capability.

Through-life operating and maintenance costs for these acquisitions are estimated to be well-over $4 billion, a large slice of which will go to the New Zealand aviation industry.

Companies already benefiting from this investment include Beca Applied Technologies, which in March signed a five-year contract with the Air Force to maintain the upgraded software of our P-3 Orion fleet. For the New Zealand aviation sector, the contract breaks new ground - it is the first long-term, high-tech partnership between the Air Force and local industry.

Safe Air is the preferred New Zealand sub-contractor to L3 Spar and L3 Communications in the United States, and will carry out work on the upgraded P-3 Orion and C-130 Hercules fleets worth over $52 million.

Safe Air also has a six-year contract with the Air Force worth $110 million for heavy maintenance work on nearly all of its aircraft.

Investment in defence capability also has benefits for the New Zealand aviation sector outside the Air Force. The New Zealand Army, for example, has taken delivery of a new low-level air defence system produced by the EADS group, and maintained in New Zealand, while Air Affairs New Zealand is the principal provider of air target services to the navy and of in-service support to the Bridge Simulator at Devonport.

There are many more opportunities and there are several entrepreneurs taking advantage of them.

A key challenge in the future will be making the aviation industry more sustainable.

Aviation is estimated to produce two percent of global greenhouse gas emissions. Consumers are becoming more environmentally concerned. Bringing this emission rate down is critical to the long-term viability of the sector, of which science and technology has an important role to play.

For this reason, the opportunity provided by this Expo for industry to exhibit its products and services and to share its ideas is welcomed.

Thank you.

ENDS

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