Say no the closure of England’s last complex warship builder

Failure by successive governments to place sufficient and regular orders for warships has caused the Royal Navy to decline but has also resulted in the gradual closure of British shipyards. There are now only the yards in Glasgow, Rosyth and Portsmouth left in the United Kingdom that can build complex surface warships for the RN

(the Barrow yard is now dedicated to nuclear submarine construction, having launched its last surface ship HMS Bulwark in 2001). Both Portsmouth and the Scottish yards are currently employed building the 2 new aircraft carriers but when that work is complete there will be insufficient work before construction of the Type 26 Frigate is planned to begin. LEK, a private consultancy firm (we really need more of those!) has advised that the Portsmouth shipyard is “vulnerable to closure”. With depressing lack of concern for the long-term interests of the Royal Navy, Defence Secretary Phillip Hammond is apparently blasé about the Portsmouth yard and is content to let the owner, BAE Systems, just shut the facility.

(Please note, it is the Portsmouth shipbuilding facility that is threatened with closure, NOT the naval base itself, which has led to some confusion in the media and mischief by Labour politicians)

Why closure would be disasterous

  • In the nightmare scenario of Scotland choosing independence (which we all hope and pray won’t happen), the RN could find its most important supplier in a ‘foreign’ country.
  • Should a future government wake up to the collapse of RN surface warship numbers and want to start a substantial rebuilding programme, the already limited capacity to expand warship construction would have gone completely or require huge investment. For all but the least ambitious rebuilding programme, new warships would have to built abroad. The potential for a bigger, export-led, British naval shipbuilding industry would die, with no way back. Once a capability is lost it is either very expensive or impossible to regenerate.
  • The Portsmouth shipbuilding yard directly employs 1,300 people with up to 4,000 jobs in the area dependent on the yard. Not only would people suffer losing their jobs, but valuable skills & experience would be thrown away and there would be a devastating impact on the local Portsmouth and South Hampshire economy.
  • Like most current MoD ‘planning’, closure would leave no alternative option available to cope with contingencies, unforeseen emergencies, enemy action or ‘sods law’ which could close a yard for a time. It’s bad enough the RN is already reliant on one company for all its vessels, but complete reliance on the Scottish facilities would be a gross strategic error.

Government can take action that will solve the problem & won’t blow the budget

HMS Clyde - BAe Systems Model

HMS Clyde – BAE Systems model

Although the Naval Staff are understandably nervous about requesting corvettes or offshore/ocean patrol vessels (OPVs) it is obvious that the RN could really do with some simple, cheap ships to operate in policing and anti-piracy roles which we have recently had to withdraw from. This could take some pressure off the over-worked frigate and destroyer force. The Naval Staff’s legitimate fear is that the MoD will use OPVs in a future round of budget decisions to justify cutting the fully capable warships which are the Navy’s first priority. Provided there are cast iron guarantees this will not affect frigate numbers, a simple solution to the gap in orders between the carriers and Type 26 is to order at least 2 OPVs to be built in the Portsmouth yard. (We should not accept the MoD’s flawed suggestion of stretching out the construction of the second carrier, Prince of Wales.) This would provide ships the RN badly needs and work in the interim period before Type 26 construction starts. An OPV, HMS Clyde used for patrolling the Falkland Islands was built in Portsmouth in less than 2 years (2005-07) and similar ships could probably be built for around £50 million each. Another alternative would be to order a long-term replacement for HMS Endurance / HMS Protector, the RN’s Antarctic patrol ship. The design and construction experience for OPVs is already in place and it would put minimal strain on Mr Hammond’s ‘oh so carefully balanced’ defence budget, while providing huge benefits. This suggestion has been already put forward in the House of Commons by Penny Mordaunt MP, one of the RN’s few committed political defenders. In fact due to bizarre Terms of Business agreement set by the previous government, the MoD could be liable for £600 Million compensation that would have to be paid to BAE in the event they close the yard. In other words it would far cheaper for the taxpayer to build new ships than close the yard! It’s a crazy suggestion that the RN might actually gain in capability for a change, but it might just work!  (To give a sense of financial scale, £100m pays just one-third of the annual finance charges on the PFI programme to provide 9 refuelling tankers to the RAF for £10bn over 27 years.)

Critical to the future of the RN is the Type 26 Frigate. After being further slashed in 2010, the RN’s frigate force now comprises just 13 Type 23s. This number is far from adequate but the public needs to encourage their MPs to draw a ‘line in the sand’ on hull numbers and for the ships to be replaced on a one-for-one basis. ‘Main gate’ approval for programme is due in 2013 and the sooner government provides funding and commits to an order of at least 13 ships, the less uncertainty there will be for shipbuilders. With 13 vessels the construction could be split between Portsmouth and Glasgow and ensure continuity of work while the RN receives at least 1 or 2 ships per year from 2020.

The naval base conundrum continues

BAE is probably already pushing hard to tie the Type 26 Frigate construction deal to a long-term support contact for the ships based in Portsmouth where they already undertake maintenance work on Type 45s and other vessels. A further political ‘sweetener’ might be that job losses in the construction yard could be partially offset by retaining staff for a lucrative Type 26 support contact. Unfortunately this would almost certainly be the death knell for Devonport Dockyard, the logical base for the Type 26. Devonport has historically been the RN’s frigate base, is the largest naval base in Western Europe, includes a purpose-built covered Frigate Refit Complex and is ready, willing and able to be home to the Type 26. Just like the Portsmouth yard, the resources and skills at Devonport must be maintained for strategic reasons, the long-term benefit to the RN and the city of Plymouth.

BAE’s dismal record of warship exports exacerbates the problem

BAE Systems warship orders history

BAE Systems warships export record
Click here for full size PDF version.

The previous Labour government casually allowed BAE to swallow the shipbuilding arm of VT Group in 2009, (its last competitor) thus allowing them to have a monopoly on UK warship construction. The belief was that a bigger builder would have the critical mass to survive on an ever-thinner diet of orders for the RN and allow it to win in the international export market. VT had a successful heritage of designing and exporting warships overseas (although then based in Southampton). For a company of such huge resources BAE Systems Surface Ships has a feeble track record in warship exports. Since they got into shipbuilding in 1995, they have not won a single new construction order, beyond those already on the books of the companies they took over. These export failures have become a major factor in the threat of closure that now hangs over the Portsmouth yard and government needs to apply real pressure on BAE to actually go out and sell ships to other nations. Their results are on a par with the England football team, vastly out-played by their Spanish, French and German counterparts who have thriving warship export businesses. Besides keeping skills and industry going, an important benefit is that export orders help reduce the unit cost of warships for the RN. Turkey has already rejected offers to be part of the Type 26 programme although other foreign participation remains a possibility. While there are some good people doing their best in BAE’s surface ship division, fundamentally BAE is an aerospace company at heart (the clue’s in the name!). The biggest profits come from the US or building over-priced aircraft for the RAF. Its shipyards are perhaps regarded as merely disposable ‘steel bashers’ of far less importance to the bottom line.