Wednesday, 6 November 2013

The death of UK shipbuilding has been greatly over exaggerated

The news in the UK is dominated today by the announcements of mass redundancies in  the BAE shipbuilding business, with almost 2000 jobs being lost at three sites in Portsmouth and Scotland. The news is very sad, particularly for those families involved, but offset slightly by the news of a planned order of three new OPVs for the Royal Navy, ostensibly to replace the current River class vessels. The news has been seen as highly damaging to the UK shipbuilding industry, and resulted in headlines claiming the end of 500 years shipbuilding as we know it in Portsmouth (in fact utter nonsense as Portsmouth has gone many decades without building warships other than HMS CLYDE - it had only recently regained construction of blocks for the Type 45 project) and leading to unpleasant suggestions about it being a sop to the Scots ahead of the referendum.

In reality this day was always going to come, and has been realistically expected for many years. Despite the regular outbreaks of claims that the UK is no longer a credible maritime power and that our shipbuilding industry no longer matters, the reality has been that for the last 15 years, there has been a very substantial programme of shipbuilding, ending the cold war decline in  orders, and focusing instead on replacing older hulls with newer more capable ones. The sheer size of the CVF project, which in terms of work packages and displacement alone is almost akin to building the equivalent of 20 Type 45 destroyers, has meant a glut of work for the yards, which in turn followed on from the construction of the Type 45 class.

The problem has been that at some point the work was going to dry up for a while and there was no credible way of filling this gap. The intention had always been that the Type 45 work and CVF work would run parallel to each other, then turn into primarily CVF based work as both hulls were under construction. This is a reflection on the capacity within the industry as a whole, where the CVF project has involved many different yards building blocks for fitting out.

One reason why the MARS project wasn’t built in the UK was the sheer lack of capacity in the current timescale – the UK needed new tankers several years ago, but funding cuts and delays meant they were not ordered until last year. In the projected timeline for delivery they would have been built while CVF construction was at its peak, meaning there was simply no capacity in UK yards to build them as well without delaying CVF or the tankers. Consequently its worth noting that no UK builder bid for the work knowing it wouldn’t be possible to complete them in the UK. But despite this glut now, there has always been a window in the post CVF completion timeline when the workload would reduce and slow ahead of work increasing on the Type 26 project. This was the reason behind the Terms of Business Agreement signed under the last Government, which essentially sets out how to sustain a level of shipbuilding in this fallow period ahead of work increasing as the Type 26 began to enter service.
Portsmouth Dockyard - Shipbuilding to cease, but base to remain

The problem has been that budget cuts over the last decade have stripped away many of the projected Type 45s, with the class reduced from an original 12 to just 6 hulls, although it remains questionable whether there would have been sufficient capacity to build another 6 T45s and the CVF at the same time. But in reality, this issue started being a problem when the decision was taken to reduce the planned Type 45 buy, and again delay the acquisition of the Type 26 (a frigate that the author first heard about in 1993). Arguably had there not been the challenge of balancing the equipment programme to reflect TELIC, HERRICK, the global financial crash and the perception that Defence was underfunded relative to its aspirations in the last decade, then today may not have happened, or may have happened on a reduced scale.

But, equally it is far too late in the day to do much to solve the problem – there is no way that an additional order for new complex warships now would save the jobs – the gestation period for a design is just too long, and the period required to fabricate material too great. In an era when it takes on average nearly 3 years just to build a modern fighter aircraft, it is fair to say that an order in the last 18 months would not have emerged in time to prevent job losses. Additionally there has just not been the money out there to add extra vessels in to the programme, meaning any order would have been for ships built without funding, manpower or clear role. While it may have been good politically to order new ships, it would have been embarrassing to then park them while the RN worked out how to afford to run and operate them (just look at the fact that the decision on running a second carrier is something which will need to be raised in the SDSR as an example due to the much wider ramifications on Defence). For more information on the challenges faced, Humphrey suggests reading Add Two Type 45s to Your Shopping Basket?

That is why the news that three new OPVs would be ordered came as something of a surprise today. While it is clear that the River class would eventually need replacing, the decision to replace them before they are 15 years old seems to imply either that the class has been worked too hard and is in dire need of replacement, or that there is no other package of work which was affordable and which could be ordered in time to guarantee the workflow.

Already many of the ‘fantasy fleets’ brigade on some websites are speculating about the design and whether it will complement or replace extant units. To Humphrey there seem to be several factors at play here. Firstly, the fact that the SDSR reduced the RN size to 29,000 of whom some 15000 are in the surface fleet. This may sound a lot, but in reality the RN career managers have a daily challenge to ensure that there are sufficient people of the right training and qualifications to fill billets. Assuming the three vessels need 40-50 crew, and that they will usually require at least three people to fill one crew slot (manning, shore leave, patrol patterns and the like), then this has suddenly meant that effectively the RN needs another 450 sailors to man the ships. In reality these sailors will only be available either by coming from the plot for the River class, or from another source.
The future of the RN - a Type 45
The next challenge is that the ships actually need to enter service – there is an SDSR looming, and there is as yet no guarantee on the financial settlement which will underpin it. Just because these vessels have been ordered does not mean they will ever see RN service – Humphrey is sufficiently cynical to wonder whether in due course they may be deleted in the SDSR and sold on. After all there is a strong ‘Frigates first’ mentality in many quarters, and a cynic may see the RN worried that these OPVs could be the first slippery slope to a downgraded (but far more affordable) Type 26 design. Is it beyond the realm of possibility to wonder if they may be offered up as a savings measure in order to protect the purity of the escort fleet?

The other thought though is that if the next SDSR saw further cuts to the escort fleet, then the crews and operating costs could be found by removing a Frigate or two from service, but running on the River class. The news that an RN frigate has paid off, but the RN is gaining three lovely new and far more capable OPVs is a way of implying that the RN is getting as a result of the review – a very easy political win to make.

The problem that exists is that whereas in previous years the shipyards could rely on some limited export orders for lean times between RN orders, the export market now seems pretty much closed off. Although a small number of vessels are still under construction (indeed a new Irish OPV was launched only yesterday at Appledore - LINK HERE), the market for high end construction is very limited. The dilemma is that nations in the market for frigates and corvettes increasingly want to build this sort of vessel at home – they see acquisition of a shipbuilding industry as a crucial part in their industrial and military development. Alternatively, for those nations who don’t have similar designs, but who do want to keep themselves in a reasonable navy, the far eastern shipyards of Korea and China can churn out reasonable quality vessels at very low prices which no western shipyard can compete with. One only has to look at the proliferation of Chinese derived escorts of all sizes from OPVs upwards across much of Africa and the Far East to realise that they’ve pretty much cornered the market. The only area left is the discerning customer, or loyal ally, who wants a high quality product at a less competitive price. It is telling that as far the author can see, there are no such export competitions out there which the UK is poised to win. Is it too much hyperbole to suggest that in the authors very personal view, the UK will never again build a Corvette or above sized vessel for export? Probably not.

CVF - another example of the exciting future ahead
While this does cast a depressing pall on proceedings, it is worth though considering what the prize is for UK shipbuilding, rather than focusing on a long expected announcement. Despite the gloom, Humphrey is positive that the future building programme is actually pretty impressive, both in tonnage and quality. One only has to look at the next 10 years to see that right now the UK is building, ordered or planning to construct two aircraft carriers, finish one last destroyer, three OPVs, complete five more ASTUTE class SSNs, commence construction on the SSBN project, and take delivery of four new fleet tankers plus work on the specialist MARS vessels like new AORS and other auxiliaries. This is without considering the work on the Type 26 which is also well underway. In tonnage terms, there is nearly half a million tonnes of naval construction on its way right now – that’s the equivalent of nearly 200 Leander class frigates worth of work.
This is also work which is not cheap and cheerful designs – this is bringing vessels into service which are the most complicated naval designs possible – most navies in the world would struggle to bring a carrier into service, let alone an SSN or SSBN, but the RN has all this work in different phases right now.

Lets be clear here, when we get down about the RN, lets ask ourselves how many other navies in the world right now are in the process of introducing a new carrier, a new SSN, a new class of Air Warfare destroyer, designing a new SSBN and all the support vessels to go with it. The answer is one other  - namely the USN, although the Chinese navy isn’t far behind. We may do ourselves down, but we need to realise that no matter how depressing the news today, the RN is still very much a global leader in naval construction. More importantly  the RN has a world class ship design industry behind it – one only has to look at the work of companies like BMT to see that the UK has a capability which is keenly valued by our allies, many of whom are working with UK companies to help design and build their vessels. It may not be an export order, but it does keep irreplaceable skills here in the UK and allow us to remain a nation able to design vessels as well as build them.


Of course there is risk to this – its likely that programmes will see further delay, and there is no gurantee that all these ships will eventually enter service, but every navy in the world faces similar uncertainties. It is critical though to realise that as HERRICK draws to a close, and the UK looks to adopt a force posture built around power projection from the sea, that actually the future for the RN looks pretty bright indeed. Today is a sad day for those affected, but as we look to the future, one can hopefully see a very bright future indeed for UK shipbuilding. 

18 comments:

  1. A clear and common-sense analysis. Very different to the misplaced hype and hand-wringing going on in the DT at the moment! My expectation is that the existing Rivers will decommission early to make way for the new OPVS, and if it comes to a choice between losing frigates or OPVs the latter will be most definitely be sacrificed.

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  2. Interesting but the current Rivers happily run a 3 watch system with in the region of 40 personnel in total. So your 450 some way off.
    I think we are 2 far out to guess how this affects T26 numbers but agree with first poster.
    If it is a choice between losing an escort or 2 and keeping the original Rivers then the military will say bye bye Rivers.

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    1. When i referred to 450 people i meant the fact that you need a ratio of roughly 3 people to keep one at sea - one at sea and two on shore billets for career development, shore time and the like. While the rivers may only need 40 odd crew, there are plenty more needed in the system to ensure there are always 40 available.

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  3. Good article, however regarding this point "the UK will never again build a corvette or above sized vessel for export?"
    BAE Systems Maritime is currently building the Khareef class corvettes for the Royal Navy of Oman, the first ship Al Shamikh has just entered service, and Al Rahmani and Al Rasikh are under construction at Portsmouth. In terms of capability they would perhaps be better designated light frigates.
    The three Amazonas class OPVs were also recently delivered to the Brazilian Navy.
    And further back:
    The Nakhoda class corvettes for the Royal Navy of Brunei (vessels now sold to Indonesia)
    The Qahir class corvettes for the Royal Navy of Oman
    The Lekiu class light frigates for the Malaysian Navy
    The River class OPV HTMS Krabi for the Royal Thai Navy.
    So I think you are being a bit pessimistic and the UK could still have some success in the export of this type of vessel, perhaps more so than the T26.

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  4. No jobs should have been lost had the 4 new RFA's been built here rather than South Korea (The order was only placed 9 months ago and we are now sacking 1800 shipbuilders, the South Korean themselves must think we are mad!!!!). Even if it had cost more up front this would have been more than offset by retention of the jobs and strategic skills. Also a long term plan for commercial shipbuilding is needed. The money invested by BAE/MOD in the skills and equipment for our warships should enable us to win orders for the more complex hi value end of the commercial market. There are operators out there ordering specialized support vessels from foreign yards every day. To say it is not possible to sustain a commercial shipbuilding industry on the back of our proven warship building ability is simply defeatism in my opionion, no doubt shared by those to be made redundant.

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    1. Well of course it might have helped if a UK yard had actually bid to build the tankers. The real problem is that BAE dominates shipbuilding and as a company it is top heavy with management, employs its workforce and materials in a grossly inefficient and incompetent fashion, and charges as much as it can at every stage. It is unfit to be a contractor to MOD. The UK would do better forcing BAE out of shipbuilding and either nationalising their shipyards or encouraging a competent company to buy them.

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  5. "Is it too much hyperbole to suggest that in the authors very personal view, the UK will never again build a Corvette or above sized vessel for export? Probably not."

    I hope not - one of the reasons for the flexibility and modular nature of the Type 26 is to attract foreign orders.

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  6. Good to see an upbeat article on the RN. However, your point about all the new hi-tech tonnage hits the nail on the head. The RN always goes for "gold plated" gear when perhaps something cheaper and good enough for the job would do - and attract foreign orders.

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  7. I would suggest that this is part of a cunning plan to pass the three existing River class OPVs to the Scots in the event of a Yes vote for independence. That should just about fit their budget and requirements of a newly created Scots Navy and will mean there is no question of handing over a valuable Type 23 to Alex Salmond and his friends. And the UK will then still have three brand new OPVs to protects its territorial waters. If the vote is No there will be plenty of potential customers for the existing vessels and there might even be a case for keeping them (how about one each deployed to the Caribbean and Falklands?).

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  8. Does Sir H feel for the employees who will be out of work?

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    1. Very much so. Any job loss is a desperately sad time.

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  9. The list of supposed ships built by BAE were in fact built by Vosper, taken over by BAE...sadly, as part of another of Grodon Brown' master plans that went wrong. The effects of political input into the long term health and well being of the Navy is astoundingly poor

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  10. "The death of UK shipbuilding has been greatly over exaggerated " - TRUE - but the death of English shipbuilding has not!

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    1. Portsmouth is not the only shipyard in England. its just the only BAE shipyard in England
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  11. Can Barrow still make surface ships? This site seems to imply that the facilities are there: http://www.navalshipbuilding.co.uk/navalship_home.asp?ID=HOM2

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  12. I have gone through a number of entries in this blog and I am still of the view that the MoD fails to understand its job. As a lieutenant I remember getting a dressing down when I asked the then Minister of Defence if I could meet my civil servants from the MoD (at that point there were around 2 for every person in uniform) according to the MoD's own figures. In this day and age with computerised systems and so on, there is no need for this level of civilian staffing in a defence organisation and in many respects the result of too many people involved in the process are the huge levels of wastage in the budget from procurement to day to day wastage.

    Until such time as there is a clear understanding of the priorities in defence spending - equipment, training and capability first with non uniform personnel second, then the UK armed services will continue to be underfunded, over stretched and screwed over by Sir Humphrey and his chums.

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  13. I ask is there now anything special about shipbuilding?

    All of the techniques are used elsewhere.

    Obviously design is another matter.

    Surely if ships are to be built at a future date then I would have thought facilities could be set up at any convenient point. Mobile cranes are now available with heavy lifts the days of the big hammerheads are gone (goliaths are nice though!)

    Some of the foreign yards appear to be pretty basic and deliver the goods.

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