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 standards.
|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 cheap.
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 training facilities.
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 issues.
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.