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Friday, 18 May 2012
Sinking without trace? The future of Military Shipbuilding in an independent Scotland
News broke this week that
Scottish shipbuilders could not expect to continue receiving UK MOD contracts
in an independent Scotland. Reportedly Ministers have told Unions that an
independent Scotland would cease to get any future MOD contracts (LINK
HERE), although the SNP has dismissed these claims.
This blog has previously
looked at the reality of independence for the Scottish Military (SDF) and
suggested that independence would probably have major implications for the
Scottish shipbuilding sector (LINK HERE). This report would seem to confirm that. The
question is though, what are the challenges that an independent Scotland would
face in sustaining a military shipbuilding capability?
Launch of HMS DARING at Scotstoun 2006
Any future Scottish
shipbuilding industry needs at the outset to generate a sustainable building
routine. The UK has created a Terms of business agreement with UK shipbuilders
which has contractually guaranteed a set amount of work over the next 10 -15
years. This has enabled the remaining yards in the UK to plan their workforces,
training, investment and export bids with considerable confidence, as they know
that they will be assured a fixed level of income.
The challenge Scottish yards
face is getting a similar agreement off the Scottish Government. It is all well
and good having a shipbuilding capability, but you need to have the ability to
sustain it for the long term. Any future SDF fleet will at the outset comprise
a number of ex-RN vessels which for the most part would not need immediate replacement.
For instance, the RN OPVs and MCMV fleet is currently only mid way through its
life, and would not need replacements until the 2020s or 2030s depending on how
far their life can be prolonged. The Type 23 frigates would potentially be able
to keep running until the late 2020s, early 2030s on current plans.
It is hard to see from the
current in-service RN fleet what would need replacing within the next 5-6
years. This presents a significant gap in the construction market as work on
the T45s comes to a conclusion, and presumably work on CVF is halted after
independence. Barring a major investment and arms build up by the Scottish
Government immediately on independence, there is simply no feasible requirement
for any new orders until much later in the decade, or even into the 2020s.
This presents a serious
challenge – around the world there are plenty of countries which have built
frigates, ceased work and suddenly found that their indigenous shipbuilding
capability has all but been destroyed. The Canadians are a very good example of
this with the Halifax class, and to a lesser extent so are the Australians with
their ANZAC programme.
An independent Scotland would
need to make some tough decisions about the level of complexity it wanted its
yards to build to. Currently the Glasgow yards can build to the level of
complex Frigates or parts of carriers – essentially the highest possible
capability, but this is a highly perishable skill. If work doesn’t appear to
continue this, then it is hard to see how this high end ability will survive.
I see no orders…
The problem for Scottish yards
initially would be to identify nations who are in the market for Frigate sized
vessels within the next 5-6 years. This isn’t as straightforward as it seems.
In Europe the Frigate export market is tied up by the French and Spanish and to
a lesser extent the Germans. The ships built are high quality frigates of
varying designs, for a range of customers.
Within NATO, several countries
have completed acquisition programmes for new vessels (such as Norway and
Spain), and others are relying on 2nd hand sales (such as the Balkan
states and Portugal). This author is not aware of many NATO nations likely to
require complex frigate sized vessels in the next 5-10 years that would be the
subject of an export order. Either they will be built at home, or they would
likely go to one of the existing major shipbuilders.
Looking beyond NATO the
challenge is to find nations who want frigates, but who don’t want to develop a
shipbuilding industry. There is a keen market for OPVs and large patrol craft
up to Corvette size, but not really for larger vessels. Those nations seeking
them, such as countries like Bangladesh, Philippines and so on will almost
certainly look to somewhere like China or Korea for the order, on the grounds
that costs will be significantly cheaper. Sub Saharan Africa is not in the
market for operating frigates (standfast south Africa and Nigeria, neither of
which need new frigate sized ships), and North African nations are either satellites
of the USN or French, and would be highly unlikely to turn elsewhere. Middle
Eastern navies talk of aspiring to buy them, but in reality have tied that sort
of construction into wider and very complex arms & security deals, where
the implicit guarantee of protection and security from a ‘great power’
underwrites the deal to help provide security. With the best will in the world,
an independent Scotland will not be seen by these nations as a great power in
the same way as UK today, France or the USA.
So the reality is that right
now, it is highly unlikely that any nation would have an export frigate order
that Scottish yards could stand a realistic yard of winning. The market simply doesn’t
exist for this type of order.
There is a market for OPVs,
MCMVs and other lower end vessels. However this is the sort of capability which
is often built in the home nation, or could be built more quickly and cheaply
in Eastern Europe or the Far East. The challenge is creating an order book of
vessels which can be built at economic, yet profit generating prices.
The Wider Package…
Building ships is relatively
easy. Most nations can in one form or another construct a ship. Building a
modern warship to military standards with the full kit out of command systems,
electronic warfare packages, weapon systems and so on is significantly more
complicated. Even designing one is not easy.
One challenge Scottish
shipbuilding would need to address is how to support the hulls with the complex
industrial piece. Orders for vessels built in Scotland would be heavily reliant
on equipment from other nations, including from England to be installed, as
there is not a complete ability to do this in Scotland. This means a reliance
on the UK to provide export licences for their equipment to be sold to third
parties. While refusal is not a certainty, it should be remembered that
Scottish yards would not be able to build a complete warship for export
unilaterally. There would be continued dependence on other nations for export
licences, and this is not certain to be approved.
Another key consideration is
the complete lack of a training infrastructure in Scotland for technical military
maritime training. One reason why UK sales packages do well is that they often
include access to UK training facilities such as the Maritime Warfare School,
or FOST Sea Training. This ensures customers learn how to use their equipment to
the best of their abilities. Scotland would need to invest heavily in this sort
of training school to provide a complete package for future orders, otherwise they
would struggle to compete with UK and other European countries which could not
only build a ship, but also train you properly to use it to war-fighting
HMS SULTAN seen from the air.
There is no clear guidance yet
about what the training estate for the future SDF will look like, but until
they have access to the ability to train people fully on hugely complex
equipment, then there is a reduced chance of orders going to Scotland. There
would need to be an equivalent to HMS SULTAN, HMS COLLINGWOOD and FOST set up
in Scotland to provide training on kit, and its not likely that this would come
Its worth noting that many
medium sized navies, from nations of a similar size, if not bigger, than an
independent Scotland do not really maintain this sort of international training
facility. They are reliant on the RN and other high end navies to train them on
technology and weapons. The challenge
Scottish yards would face is making a competitive deal – shipbuilders in the UK
would be able to offer access to not only their yards, but also to the RN
The maintenance of a high end
design team is essential, and its not necessarily clear that one exists in
Scotland. Its all very well being able to build a ship, but nations seeking
warships will be looking for designs too – one key aspect of the recent MARS
tanker completion (LINK
HERE) was the importance not of building the ships in the UK, but of
designing them here.For the Scottish
warship industry to have real success, it needs to be able to keep a design
team going, capable of identifying not only export orders, but also designing
vessels for the SDF when required.
So far it has been fairly clear
that a small shipyard in Scotland would struggle in the years post-independence,
when orders are likely to be few, and money tight. This does not mean that
shipbuilding won’t be a success. It does mean that early planning now is
essential to getting this right. The sort of considerations that need to be
thought about now by Scotland (or by any small country considering independence)
to preserve a shipbuilding capability are below. This is not Scotland specific –
any nation wanting to create a shipbuilding capability would have to consider similar
A serious effort needs to be
started now to identify what shipbuilding contracts are available in the post
independence environment. Its not enough to blithely assume that on
independence the orders will continue to flow in. Ideally some form of shadow ‘Defence
Export Organisation’ would need to be set up to ensure that industry
understands what opportunities it can reasonably bid for.
Set out clear intent on force structure
To help industry determine the
level of investment, it is necessary to set out how much money is available for
new ships, and what building plans the Scottish Government would have. Its not
just a case of saying ‘we want 20-25 ships’. Industry needs to know what types
of ship, what types of equipment, what types of weapons, because that will
drive how much investment now is placed in Scotland. If there is not sufficient
reassurance that orders will be placed, then investment is going to die off.
This ties into building a clear strategy for export planning – if there is no
likely order, then why would any industry investment occur?
Have a clear long term sustainable plan
It is essential to ensure that
Scottish yards have a long term stable build programme. This helps determine
investment over time, and also helps recruitment of construction workers. It is
pointless to build three frigates over the next five years, and then not need a
new one for the next 30. Ships being built today are expected to have long
lives, and not need regular replacement. A high end warship is a complex and
costly project, and the skills required to build one quickly fade.
There needs to be a very clear
business plan set out saying what orders are going ahead, and ensuring that a ‘drumbeat’
capability is maintained in the yards. In other words identify funding now to
commit to building frigates, MCMVs and OPVs in 10,15, 20 years time so that
industry can plan to a basic level of work.
Develop a single Shipbuilding industrial strategy
Its not just a case of saying ‘we
have yards, they can build ships’. An independent Scotland will need to develop
a wider range of skills and experience to draw on to help build these ships.
There needs to be a clear policy developed on the long term sustainability of
shipbuilding, from running the yards to developing technical schools for the
construction workers. There also needs to be clear guidance on investment in
training schools and facilities to ensure that Scotland could offer sea
training and the like.
An independent Scotland faces
a real challenge in terms of maintaining its shipbuilding capabilities. A
likely lack of orders, coupled with no real requirement to replace the RN stock
the SDF would probably inherit means real work is needed to identify what sort
of shipbuilding capability Scotland really wants. The reality is that if
nothing is done, then it will probably be lost forever, as export orders go
south to yards where building can be done next to the training and support facilities.
No one doubts the quality of
Scottish shipbuilding, but it could face enormous challenges for survival in
any independent Scotland unless a lot of work is done, and a lot of money
spent, to safeguard this priceless national asset. Once it is lost, it would be
almost impossible to recover.