Can British shipbuilding be revived?
At one time British shipbuilding dominated the world. As late as the 1950s, a quarter of all ships sailing the seven seas were built in Britain. Now, sixty years later, that figure is less than 1%. In this guest article, Will Green argues greater government intervention could improve this situation.
British shipbuilding would probably now be almost non-existent if government policy did not dictate that all warships (although not naval auxiliary vessels) must be built in the UK. The warship market has just about kept British shipbuilding alive, if not exactly healthy. Now it’s at real risk of dying out.
There are two options that might improve the situation. Firstly, a nationalised body would have many advantages – responding precisely to supply and demand, and able to directly improve the defence relationship with other nations – for example, Navantia, the Spanish national shipbuilder, has recently built vessels for Norway, Australia, and Venezuela. This also has the benefit of allowing the government to build ships in deprived areas, consequently boosting local economies. The alternative is to have a market of similarly-sized independent firms – which lends competition to the industry, and may bring down costs. Instead, in Britain have a single powerful firm, dominating supply, yet outside of state control.
The defence industry in the UK has undergone continuous centralisation since the Second World War. In 1960, a new nationalised body – the British Aircraft Corporation, or BAC – was created from English Electric, Bristol and the aircraft division of Vickers. In 1977, British Aerospace was formed from BAC, Hawker Siddeley and Scottish Aviation – all of which themselves had absorbed many famous old companies. In the same Act of Parliament, British Shipbuilders was formed – a nationalised body containing more than fifteen independent shipbuilding companies. Nationalisation was intended to rationalise the aircraft and shipbuilding industries. However, the Thatcher government came to power two years after the Act was passed, and there was never really time to test the potential of a nationalised body; instead, British Shipbuilders’ assets were gradually sold off to private companies – particularly Marconi GEC.
In 1999, BAE Systems, or BAES, was formed from the merger of Marconi GEC and British Aerospace. BAES has effectively subsumed most of the great names of the UK defence industry – Vickers, Vosper Thornycroft, and Yarrow – and dominates UK defence manufacturing, being the third-largest defence company in the world in 2017. The result is that BAES owns the Clyde and Barrow yards now responsible for the construction of the majority of Royal Navy warships and all of its submarines.
Babcock is attempting to mount a challenge, but its Appledore shipyard recently closed, although the expertise of its veteran workforce has mostly been redeployed to Devonport. A&P (Falmouth and Tyne) and Harland and Wolff (Belfast) all focus on ship repair and offshore work. Ferguson Marine (Glasgow) does actually build ships, but they’re mainly small ferries for Scottish island routes. Cammell Laird (Birkenhead) is primarily a ship repair yard but has won some new-build contracts, notably the RRS Sir David Attenborough. Apart from that, there is little other shipbuilding left in the UK.
Since the government requires all warships to be built in this country, choice is limited. Until the National Shipbuilding Strategy (NSbS), formally adopted by government in 2017, shows some results, BAES will remain the only real option for complex warship construction. The SSRO (Single Source Regulations Office) now restricts profits to 8% on uncontested projects, but there is a widespread perception that BAES does well for itself while not always delivering high-quality products. HMS Forth, the first of the Batch 2 River-class, was handed over to the Navy by BAES with a half-functioning electrical system and snapped bolt heads glued onto the ship. This suggests a degree of complacency from an organisation lacking competitors. The actions of a few individual workers are not necessarily reflective of an entire company’s work ethic, but it’s still disappointing from a yard with so much responsibility.
Post-Brexit, the United Kingdom will need more global influence and to diversify its customers for exports. The last really great UK warship export success was with the Leander-class frigates through the 1960s and 1970s. The Australian and Canadian selection of the Type 26 is an encouraging sign but there is a larger market for less sophisticated vessels. Furthermore, the Royal Navy is stretched to the limit and desperately needs more hulls as the service life of the Type 23s comes to an end. A bigger frigate fleet is needed for diverse tasks across the globe. Put simply, we need more ships and more UK shipbuilding activity – to boost the economy, and to challenge BAES.
Much of the infrastructure is in place, although requiring more investment – for example Cammell Laird has four dry docks at one location. What is desperately needed is a drumbeat of regular work. This government has talked up ‘a growing Royal Navy’ for much of their time in office. The NSbS is a well-meant attempt to rejuvenate commercial shipbuilding in the UK, and could lead to greater competition for contracts. Yet the Type 31e frigate, the centrepiece of the strategy, is potentially hamstrung by a price cap of £250 million per ship – or, to put it more simply, five capable frigates for £1.25 billion, only a little more than a single Type 26 frigate. A greater investment in the Type 31e and a commitment to build more than five ships (whatever its export success) whilst ensuring the Fleet Solid Support ships are UK-built would pay long term dividends.
Keeping people in work saves money – unions estimated that closing the Appledore yard in Devon cost the taxpayer almost £2million a year in benefits and lost taxes. But Tory obsession with avoiding intervention in the economy and maintaining a free market is not helping. This government needs to act now – to safeguard not just the navy, but a vibrant shipbuilding industry; or we’ll become even more reliant on the single, if capable supplier. Events at Appledore show that time is running out.