In a previous article we discussed the importance of the Fleet Solid Support (FSS) ships to the future of the RN. Here we focus more on the industrial aspects of the project and look at why building these ships in the UK is the only sensible way forward.
When the Tide class oil tankers were ordered in 2012 (a remnant of the Military Afloat Reach and Sustainability (MARS) project), no British company had bid for the construction work. There were two main reasons, most UK yards were occupied working on the QEC aircraft carriers blocks but they also knew they would not be able to compete on price with foreign state-subsidised shipyards. The controversial decision to look abroad made sense at the time, the MoD got four ships at a bargain £452M and no British shipbuilder could claim they would go under without the work. (£150M was spent in the UK with BMT who designed the ships together with A&P Falmouth who are fitting them with additional military equipment). Five years later the landscape has changed significantly. The QEC construction project is in its final phase but one of its very positive legacies has been to help stimulate a modest revival in commercial shipbuilding and there are now yards hungry for further naval work.
“We plan to procure the three Fleet Solid Support ships, announced in the Strategic Defence and Security Review 2015, through international competition” (Harriet Baldwin, Defence Procurement Minister, 5th September 2017).
The National Shipbuilding Strategy (NSS), published in 2017 stated that the contract to build the FSS ships would be subject to an international competition and this policy has been reiterated several times by Ministers in Parliament. The NSS says the reason for the open competition is to incentivise British companies to become more efficient and able to match the prices offered by overseas shipyards. This may be a worthy goal but unfortunately, the ‘open competition’ may not be as fair as it appears. Many foreign shipbuilders receive support from their government, either in the form of direct or indirect subsidies, loan guarantees or even complete bail-outs following bankruptcy. This may allow them to submit high-risk, low-price bids which a UK shareholder-owned yard cannot match. British shipyards, entirely reliant on maintaining a sustainable and profitable business, are therefore not competing on a level playing field.
“The defence industry plays an important role in the prosperity agenda of the nation.” (Phillip Dunne, Defence Procurement Minister, September 2015)
Open competition may be in line with Conservative party policy which is broadly against intervening in the free market, but it should not be against intervening in a rigged market. Many foreign governments, even within the EU, have no compunction in subsiding their shipbuilders and government should recognise this. Should UK companies lose out to an overseas yard, it would be a direct contradiction of the Conservative ‘prosperity agenda’ which has been part of their manifesto on UK business since 2010. Placing substantial shipbuilding contracts within the UK has very obvious benefits to the local economy and the wider supply chain. There NSS admits there is a need for a clearer definition of the ‘prosperity agenda’. The Type 31e is supposed to help create a framework that would allow the economic benefits of shipbuilding contracts in specific, and often deprived parts of the UK, to be quantified.
As the QEC project has already demonstrated, building in Britain would help industry invest and become more efficient so as to be able to compete for future work. When the MoD next needs to place a shipbuilding contract it would then have more choices available from a broader and healthier industrial base, offering more competition and value for money. It may also provide another stepping stone towards British yards moving back into the commercial shipbuilding market which could provide a sustainable future.
Five options for competition
There are essentially five possible options government can consider when seeking contractors to build the FSS ships.
- Hold an ‘open competition’ with no caveats or restriction and open to any British or overseas companies (assuming only non-aligned nations such as China or Russia are excluded). This appears to be the option that government is pursuing at present.
- Hold an open competition but exclude any companies that have been bailed out of bankruptcy by its government or received any form of state subsidy. This would level the playing field and exclude a very broad swathe of foreign shipyards such DSME in Korea, Naval (formerly DCNS) in France, Navantia in Spain or Fincantieri in Italy.
- Exclude all foreign companies and allow only British companies or consortiums to bid against each other.
- Ask British companies to form a single consortium to share the work.
- Form a single consortium of British companies of which the MoD owns a percentage (using a similar model to the Aircraft Carrier Alliance)
EU rules no longer apply?
For security reasons, warship construction is allowed under EU rules to be restricted to sovereign nations. Under existing EU regulations, the construction of support vessels must be open to international competition and government is using this as one of its justifications for not restricting bids to domestic companies. Britain will leave the EU in March 2019, so by the time the FSS construction contact is placed, it is likely we will no longer be bound by such rules and could quite reasonably ignore them for the competition phase. For better or worse, Brexit can be seen as a signal that the public wish government to pursue an industrial policy in British interests and exists as a clear mandate to place the FSS contract in the UK.
They may not be warships but the FSS vessels could be more accurately described as “complex naval support ships”. The project to build the three 35,000 tonne ships is expected to cost at least £1Bn, a clue that these are no ordinary vessels. The need to safely embark, store and transfer explosives adds complexity to the design beyond simple merchant vessels or even the Tide class tankers. Ammunition and explosives require careful handling and storage so the ship must be equipped with measures to mitigate the effects of blast and additional fire protection far beyond what is found on a standard merchant vessel. Otherwise the design is intended to follow merchant ship practices where possible and the NSS states that there will be “a focus on ensuring that the military features and standards that deviate from the commercial norms are minimised”.
Tight timetables
Within Navy Command, Brigadier Jim Morris RM, Assistant Chief of Staff (Maritime Capability), was appointed Senior Responsible Owner (SRO) of the FSS project in September 2017 and is expected to have this role until at least December 2019. QinetiQ beat off competition from BMT and Frazer-Nash to secure a 4-year, £10M contract with the MoD to provide analysis and consultancy services for the assessment phase of FSS. The project began its initial assessment phase in back April 2016 and a pre-qualifying questionnaire will be issued to potential bidders in the next few weeks. The competition phase will begin officially on 30th April 2018 so there is only a short window of opportunity for Government to decide to revise the terms.
The timing of the FSS and the Type 31e projects presents an interesting conundrum for the Navy. If we assume the Type 31e is not intended as a carrier escort and if carrier strike is the RN’s stated priority, then why is FSS scheduled to pass main gate approval in December 2019, a full year after the Type 31e? The geometry and design arrangements of the RAS rigs on the three current Fort class ships do not permit them to resupply the aircraft carrier’s full range of needs. They do not have heavy RAS rigs compatible with the carrier (capable of supplying big items such as F-35 engines). The only alternative would be vertical replenishment (VERTREP) using helicopters to transfer loads which is a slow process and fatigues the airframes. Effectively a key component that enables the carriers to deploy globally will be missing until the first FSS ship is delivered sometime around 2025. Should the FSS not then be taking precedence over T31e as the more urgent requirement? (Type 26 deliveries can replace the initial Type 23 frigates being disposed of).
The Pound has been devalued by at least 20% since 2012 so any foreign bid for FSS, while still potentially lower than UK yards, is unlikely to be able to match the bargain we got with the Tide class tankers. The only possible benefit from allowing the FSS ships to be constructed overseas might be a lower price which benefits the MoD’s cash flow in the short-term. The Treasury should take the longer-term view that a very substantial part of any money spent in the UK is returned to the Exchequer through VAT, corporate taxes, income taxes and healthier local economies and may outweigh any savings made by foreign construction.
As a matter of urgency, we call on government amend its policy and restrict the FSS project to a domestic competition only, to the long-term benefit of British shipbuilding and the naval service as a whole.
Related articles
- Fleet solid support ships – an important part of the naval logistic chain (Save the Royal Navy)
- Fears new ships to back up Royal Navy will be built overseas (Daily Telegraph)
- QinetiQ wins ‘customer friend’ role for UK Fleet Solid Support project (IHS Janes)
Related articles
Fleet solid support ships – an important part of the naval logistic chain
Defence Committee demands answers from government on Fleet Solid Support Ship competition rules
MoD awards £1 Billion Royal Fleet Auxiliary ship support contracts
Another Royal Navy supplier goes under – the closure of Appledore shipyard
The Treasury doesn’t care about UK industry. Just the City.
It’s not about the treasury, but the monopoly shipbuilder in the UK that can design, deliver and accept the RN’s warships and auxiliaries.
The sums for MARS were 4 ships built in S Korea for £452m, for the same price Italian yards could have built 2 and British yards 1. British yards must become more competitive.
So you mean we should give interest free loans, bailouts and grants to make our yards more ‘competitive’?
David all our few remaining shipyards should expect is the same treatment as other industries. So yes lets have some bailouts just like the bankrupt Banks or subsidies as our Farmers receive and lest not forget guaranteeing inflation linked returns for a nuclear power station.
Nissan UK in Sunderland (Nissans top performing factory in the World) receives UK taxpayer subsidies, as do other car manufacturers.
This is not unusual but for some reason the govt doesn’t want to support certain core industries such as steel manufacturing and shipbuilding.
There is also a tendency to support foreign investors instead of uk home grown talent.
I wonder how much help James Dyson has received, not much I bet.
For an Island trader nation with friends and commitments overseas it is unprecedented lunacy to have allowed our shipbuilding and merchant marine to have degenerated into the present microcosmic state.
Most of the ferries and ports are foreign owned and I would guess only a tiny percentage of our trade is carried in British built or owned hulls.
We should look at how the Dutch, Danes and others organise their maritime affairs.
We do affairs but Navel gazing is the closest most of our politicians get to an interest in things Naval. Completely irresponsible.
Lenin was wrong about a lot of things, but right when he said ‘A capitalist will sell you the rope you hang him with’. Profits above all, including national security. Also, anything to bust unions.
Dyson products are made abroad.
Only banks get this. Bank asset stip industry as the top one did RBS! They were bailed out but serve no one but themselves.
Total crap. 452 million for 1 tanker is crap.
“EU rules no longer apply”
Er yes they do now and they probably will still apply when it comes to down select of a preferred offer. As it stands the UK has just enough time in 2018 to negotiate a transition period to follow Brexit in March 2019. Any transition period will require the UK to follow EU procurement rules, the end game of the transition period might well be staying in the Single Market and the Customs Union anyway.
True – but no one else implements the rules and we’re offski so we should do as others do
What do you mean nobody else obeys the rules? State aid is not barred under EU regulations a country has to go through the correct channels and processes first to do it. Just the same as the UK governments failure to implement immigration restrictions already allowed under EU rules they have failed to make use of the mechanisms available to them when an industry needs bailing out! Other EU countries like France and Italy are just better at making use of the options available to them.
The sooner people wake up to how pointless and self destructive Brexit is the better!
I agree 100% we’ve not applied mechanisms available (more fool us) but also the other countries don’t really follow the rules like we do. Very good friend high up in EU admin and she often says we were in a fully letter and spirit bracket of 1 in a club of 27. I voted remain BTW but that’s done now so best crack on eh.
You are so right about other Governments working around the Regulations but as a reluctant leave voter I hope you are wrong about the UK staying in the Single Market and Customs Union as that will further detach vast numbers of voters from our politicians, which is not the sign of a healthy democracy.
What leaving will do is to take away the UK Governments (and Civil Servants) ability to hide behind EU law and Regulations when selling out UK interests to the lowest bidder which is quite often state owned and subsidised businesses in Europe. Whilst this suits the Tories who would sell their granny for a fiver I hope a future leader may emerge that understands not all state subsidy and control is a bad thing nor is taking a narrow nationalistic view. These ships are perfect candidates to be UK built but the Tories will prefer to buy cheap from elsewhere.
Leaving the Single Market and Customs Union would be one of the greatest self inflicted acts of vandalism on an economy ever! I appreciate Leavers both eager and reluctant have been sold that this will be the path to milk and honey but it is anything but.
Trade regulations exist to improve trade via harmonisation not as a mechanism to hold a nation back. We trade with the world now with the clout of 28 nations! All that will happen is we will need to continue following regulations but with no say in how they are drafted.
As i said we have barely enough time to negotiate a transition deal in 2018, anything else would be vastly destructive to the economy.
a) What does this have to do with the Royal Navy
b) We also trade with the liability of 28 sets of hands on the steering wheel, many of which have inefficient labour intensive industries which they wish to protect. Hence why our consumers pay a 25% tariff on low cost clothing that we don’t make here to preserve jobs in Portugal. In terms of “vastly destructive” well a 2.5% tariff on a minority of our trade offset by the same tariff o theirs is the worst possible outcome.
c) What has this to do with the royal navy
The Civil service has been irresponsible in the pursuit of selling out the UK in several key areas and if their power is somewhat diminished I shall be glad.
After we sold Pilkington’s to the Japanese and the other parts of our glass industry to the French ( who also bought cement industry, china clay etc) I went to inspect French glass works. I was struck by lack of ‘elf and safety.
De-industrialisation may be some peoples aim but its not in the public interest anymore; if it ever was.
All British car makers sold. All British train makers closed. British steel production smaller than tiny Belgium. British coal mining destroyed. British aeroplane making destroyed. British armoured vehicle making destroyed. Etc., etc., etc.
We are the ONLY major European country having this done to us, France, Germany, Italy and Spain still have massive heavy industries in several different fields. This is a humiliation for a major European country like Britain.
EVERY SINGLE chance they get to attack British heavy industry they get they take it. EVERY SINGLE TIME. The trains recently ordered for Britian’s East Coast mainline, foreign. West Coast Mainline, foreign. HS2, foreign. We should set up a brand new train factory with modern state of the art equipment and give them the orders. We will always need trains in Britian, thus is an industry we could sustain. What are we going to do, just go cap in hand to a foreign company every single time Britain needs trains from now until forever? (and in every single other field too mind you).
This has went on for so long and to such an extent that it is COMPLETELY OBVIOUS that there is a deliberate and organized war being waged against British heavy industry, it has being going on for decades and it is still being waged to this day.
STOP THIS DELIBERATE AND ORGANIZED WAR AGAINST BRITISH HEAVY INDUSTRY
But you have the wonderful financial ‘industry’. How’s that worked out…we are making the same mistake in the USA, everything for bankster scum, screw the country!
I really do think it’s time for a complete rethink on naval procurement. We should have a thirty year rolling program to keep all shipbuilding in the UK. Do as France does and see it as a genuine partnership across all our yards. Certainty, partnership long term planning and sufficient volume of work should allow Govt to mitigate lack of competitive.
Yep, totally agree. The RFA may not get the same coverage as the RN warships but they are just as, if not more, important. A rolling program, like you say, and long-term planning would help increase the competitiveness of our yards as well as drive down costs. Definitely the way for the govt to proceed.
For me the RFA is critical to the RN’s success and needs to get the same sort of focus as the combat ships, even more so now as we have the ability to refocus attention and capability into some large multi role amphibious support and logistics ships.
A 25 year build programme for the whole fleet could ensure we have an escort led fleet with several current standalone assets rolled into a single multi role class.
The UK clearly has an issue where it needs a certain sized amphibious capability, the ability to take losses in this fleet and a more mundane day to day support fleet. The Dutch Karen Doorman class whilst not perfect is the current benchmark for such a dual purpose vessel and one I think the RN should concentrate on improving and replicating.
It is crazy to have amphibious ships tied up as a matter of course and it is no wonder that these assets then become targets by the accounts dept when budgets are under pressure. So these vessels can be used in their support role for 80% of the time and provide amphibious capability at any other point in time.
We should build 9 of these vessels over the next 20 years as well as another 4 Tides. This will get a great capability in play, provide work to underpin the NSS and give our service people the kit they deserve.
Seems like a win/win to me. All that is required is a bit of vision by our new Defence Secretary.
And how would the Defence Secretary fun your plan? If defence is very very lucky it may get its share up to 2.25% of GDP.
Canada also recently releases a national shipbuilding strategy, in it they say all ships for the Navy, from the biggest to the smallest, all will be built in Canada, and if the facilities are not there, put them there ahead of time. THAT is a proper national shipbuilding strategy. Many, many of our Navy ships will be open to foreign competition, that is Britain’s national shipbuilding strategy is it? What a joke.
We have to end this war against British heavy industry and rebuild and support it, this is what us British people demand.
Bravo. These look so much like warships you could excuse one thinking they were , especially if such important parts of the jigsaw have decent defensive armament. Interesting to see what the courts would say.
I subscribe to the belief we should have a go at home build, especially as the Aircraft Carrier Alliance has demonstrated it can be done.
Flag wavers won’t like it but can we not share building of support ships with NATO allies? Costs could be shared as well as industrial job creation here and the continent. This is likely to be appreciated by our EU partners looking to negotiate our trading future post Brexit.
We could share the resulting ships, which could be deployed for the UK dependent on military need.
There is no flag-waving going on here and sharing the cost never saves money.
Most international programmes sooner or later fail… Nato frigate, even the Darings/T-45 come from a project initially started up with other countries. The Italians and French built their own AAW-destroyers (albeit only two of each).
The failings are because of a) politics, b) protection of own industry, c) cost…
If the building of RFA’s abroad means more money in the kitty for warship’s built in British yards, is this not a good thing ?
Why not move every single British job abroad, it will be cheaper after all, and that is the only thing that matters, right? Wrong.
Did you actually read what I said before you jumped off the deep end ? I would love to see more warship’s built in British yards, so where did ‘move every single British job abroad’ come from?
The truth is that the money for a large new fleet isn’t forthcoming and even if it were, there is limited capacity now, and the main supplier relies on the ‘only to be built here’ policy to keep it’s prices high. We buy foreign aircraft, tanks, missiles etc, so why not a few support vessels, and let the British yards concentrate on the more complex and high end warships.
It’s a valid point, and one that BAE probably doesn’t want answering.
Whilst consecutive governments allowed the whittling away of fighter aircraft, missile, support vehicles, attack helicopter production etc, somehow front line warships are off limits.
Much as I would prefer all defence manufacturing and maintainance to be UK based, it seems rather hypocritical to red circle one branch of military manufacturing.
Perhaps if BAE had competition from Germany, Spain, US etc, it may focus their minds over pricing, and we may get a better fleet for less money in good time.
I have every confidence that our shipbuild is cheaper than US (Burkes to Type 45’s is one example), Germany, and also Spain
Properly tax bankster and City filth, the money will be there.
These are complex and high end warships.
The Tides being built abroad cost us 452 million with no money kept here and no tax receipts. It is a total fallacy.
Can’t run a Navy without a Fleet Train.
No. It should be a sovereign capability as with frontline warships or any UK taxpayer-funded contract. We cannot have foreign bodies telling us what to do with our own money. As a top-tier Country and navy (we are still) If we cannot or rather not allowed to provide this, we should not have a navy.
No, it is not because no tax has been clawed back or opportunity for investment in more efficient facilities and people etc. We have seen the MARs tankers built abroad, yet we still see the Navy cut back.
The Conservatives insistence that the free market reigns supreme and should be left to it’s own devices has always been at odds with bailouts for seemingly special cases such as the financial sector and longstanding (albeit mainly EU) subsidies for farming, fishing etc. It’s a straight contradiction to pump money into certain areas whilst stating with a cold heart that the steel and shipbuilding industries to name a couple have to stand on their own two feet or die trying.
I completely agree with the article and other commentators that government policy should be to either level the playing field by not taking bids from foreign shipyards that rely on national subsidies and/or incentives or to actual follow suit with our own companies.
Either way it’s important these new RFA’s are built here to nurture a slightly revived but still fragile industry. We have the facilities and the talent and if this Tory government is really serious about a ‘global Britain’ with a more balanced economy and strengthened manufacturing and industry then it really needs to put it’s money where it’s mouth is!
I like the idea of BAE and Cammell Laird teaming up to bid for the T31 but the design will still represent a stretched Khareef Corvette which in itself is a stretched River Class. The BMT/Babcock Arrowhead/Venator synthesis looks more original and promising so perhaps thinking in big picture terms it would be better to give them the contact for the T31 but then try to get Cammell Laird lined up as the lead builder for the Future Solid Support contract.
That would make alot of sense as long as Cammell keep their house in order, there’s a bit of union militancy recently and reports of a strike – we don’t want to go back there.
I don’t know why BAE ever got into surface warship building, it’s simply not their game, they should be concentrating on JSF, Successor, Taranis and then Reaction Engines.
These 3 fleet solid support ships for the Royal Navy are invaluable to British shipbuilding. There are 3 of them and they are large, they will give British shipbuilding something to really get our teeth into. If the facilities are not there put them there. The facilities and experience gained from building these will allow us to start bidding for cruise ships like other European countries do, then we British shipbuilding will not be reliant solely on Navy work.
I think any long-term future for British shipbuilding must involve diversification. Harland and Wolff’s move into the off-shore energy industry and Cammell Laird’s rebirth as primarily a ship repair yard are good examples of companies that aren’t reliant on ship construction but have the ability to pick up either RN/RFA contracts or commercial orders if the opportunity presents itself.
Yes. Also, there is a study of the types of ship we are very competitive in which runs into many many 10s even 100s of billions of work, and we have not even scratched the surface. Yet! But is must be realised that eu and eu members do not want to see Britain being an industrial country anymore. The costa midship section was a classic after Cammell Laird showed ambition in building cruise ships, as they had won the two Luxus orders before the Costa set up. Inchgreen and Cammells will be the places to watch. Inchgreen will not become a housing leisure, bar and restaurant pre-2007 development nightmare either. If it does, we would have lost the plot and deserve everything we get. There is so many new type of ship to build, including un-manned or nearly un-manned technology too (People are still employed, but in other areas).
Given our increasing ties with Japan, might there be room for cooperation on future logistics craft? (not necessarily building them in Japan, mind)
In the 5 options, there is a 6th one too which is similar to the second one. The UK government has to take into account the extra energy costs imposed largely by UK and eu regs, with any other regs that cost UK industry that others abroad do not have the burden of and tax receipts lost from the individuals and companies through the project directly which has been mentioned here.
It’s not just a consortium to share work, but also the simplification of building the same piece will make it quicker and more efficient. It can be one or two designated hull blocks for one facility, say cargo and liquids could suite say Pallion (less outfitting), and machinery sections suite Cammell laird, with more shaped sections suiting a facility on the Clyde or/and Belfast (this could mean less outfitting and suite Pallion with main parallel midship bodies suiting other facilities along with value), all to be finally assembled at say Rosyth or a new ambitious Inchgreen shipyard facility (on the Cammell laird website with a huge amount of land crying out for a new facility for ships other than military in the future), Wilton Marine Port Clarence where the topside deck super structures of the Bays for Swans were fabricated, and so on. Taking cranage abilities, all round capabilities and business models of these businesses who wish to be involved into account… There are many options.
Even if a group win the contract, that is not to say that the facilites with a losing bid may not be asked to build a certain piece as it could fit in with an overrall plan for the build of these and other projects in the future. UK shipyards should not look at wiping each other out as it seemed to be the case with BAE with wanting to dominate in just warship building in the UK. Friendly rivalry yes, but not to undermine UK shipbuilding to allow foreign builders to move in. A closer consortia of Northern facilities could be the case with lesser distances, simplifying mate up and may be making it cheaper than moving a hull section 600 miles from the south coast to Clydeside, Rosyth or Merseyside in the future.
The 150 million to BMT, BAE (who complained about far east subsidies to their yards, yet team up with them) and other vested interests with 10 million to A&P Falmouth to weaponise them means those tankers are warship like and military, but any taxpayer funded ship and project being given abroad is suspicious be it vested interest and foreign regs that kill UK industry from developing, also they cost over 610 million pounds, the 452 million was just for the shipbuild to make them look cheaper. The UK content is surely unfair if that is the case. The 150 million given to BMT and BAE who got into bed with a foreign shipyard is wrong. But how much to design abroad and then build in the UK? We can not have these ship designed abroad. Why not, would they not be cheaper and better (and build here), as people like to be expert in saying regarding the actual manufacture.
The 452 million pounds from South Korea was not a good deal, why? On average, most UK workers end up seeing from 36% upwards of their income find it’s way back to the UK exchequer. Even if UK rates were the highest, this tax claw back alone should kill off any argument about too higher wages. But UK wages are not the highest. German wages, French, Italian and many others including Japan’s are higher with South Korea nearly the same! This is not saying ours are bad, but they are competitive, the hourly production is still low here, (may be due to just building warships, older facilities, unions, officials meddling, changes in spec, lawyers, reports on reports for every item etc, slowing the build down) but contracts like these with conditions from Government for investment in modernizing facilities and also the workers with UK innovation will up this rate. Energy in a lesser way compared to steelmaking needs to be addressed and is not fair! But UK steel mills working closer with the UK yards will make us even more efficient. That said we have taxes on the companies and VAT etc… Some say overall, the tax claw back could be at minimum 38-40% on ships like MARS tankers.
So 452 million pounds divide by 60% then multiple by 100 gives us just over 753 million pounds as a fair price from UK yards for those MARS Tankers or true cost just for the shipbuild bit, the net and gross need to be identified, but the net figure (this is in effect) is given for South Korea which is not fair either. The tax from South Korean yards to their Government is irrelevant and of not interest to us. If we look at the Wave tankers and reverse this including the design and UK content for those ships and inflation from back then, they are very competitive indeed (it’s all online to find out). Lets say the tax back from BMT BAE expertise is less because the higher earners in these fields know legal loop holes etc, so 35% from the 150 million gives 97 million plus A&P tiny bit which is extra say 100 million plus 753 million gives 853 million pounds in cost with this DSME BMT BAE rig up. Why would any UK yard or consortia of UK yards bid for something when the rules were changed so they get pushed out of it and face rejection by their own UK government? I am sure there will be or is already UK government reports citing that here is no socio or/and economic benefit in building those tide tankers here or even any benefit in building the Fleet Solid Support Ships here, in some perverse study.
There was a time in the 2000s when several interested parties in the MARS program voiced about the constant delay, one was Swan Hunters (closed because of delays and cost overruns with the Bays or Lyme Bay in particular, in which the end price was said to be fair by the national audit office. Is now in effect, Babcock Rosyth) the others were the boss of Pallion shipyard and KOFAC the voice for BARROW shipyard (BAE owned, so no chance as they see any shipbuilding as low and mere metal bashing which is an appalling wrong and bad attitude).
Cammell Laird are building the Polar ship (albeit smaller, but far more complex ship) for 150 million pounds (been stated at 200 million, but 150 million pounds looks to be the actual figure, and compare that to Canada’s new Polar ship, although bigger, it is far more expensive along with other ships being built in Canada, but they are realizing it makes sense to build in Canada, as Germans italian French and all other capable shipbuilding nations do). How much tax claw back for the UK exchequer and treasury? 30 million, 40 million pounds or if the low figure of 38% is taken into consideration 57 million pounds, so the ship actually cost the tax payer 93 million quid, which is still circulated around the UK less the foreign sourced bits (with may be import duties), which sadly is the outside shell plate because our plate mills at Appleby-Frodingham and Dalzell were and in some case still been devastated by lack of UK government interest and care, Subs, Frigates, Bridges etc is sourcing steel from abroad, but we have new entrepreneurs in these steel making sectors now.
People love Facebook, but Facebook if it stopped now, would only give us more time (as we are not wasting time on it) and not really devastate us, but lose a steel making facility, which the world still uses in a vast amount, then you have a different story. We need to get our priorities straight. Facebook does not really change the world, steelmaking does.
This was one big rip off to oblige eu rules and nothing else. I hope people understand this. As a minister said or said to this effect back in 2011 or 2012 (Luff?), we got away with that without the public knowing (2011-2012 to the first 2 Tides coming into service in 2017-18, so much for superhuman fast building, they are late). But the insult is the excuse given of value for the taxpayer and people should not be taken in by it. If that’s the case, 6 billion pounds to do some electrical work painting and stone work for a building should not be happening (Westminster Palace) or bank bailouts etc. Why are these contracts given the excuse of value for the taxpayer as a cover? The other excuse was and is, we do not build ships like these or do not build ships like these anymore, or have not for a long time. We have not built Real carriers (1940s-50s) or indeed Frigates for some time either. The open competition is in line with Conservative policy and it was with Labour too as they had to introduce it and scrap the UKIndustry/MOD alliance (an Andrew Tyler rings a bell) structure because of eu regs. This competition as an army officer recently said does not produce anything better or cheaper and he wants more equipment made in the UK.
Much can be found online through reading defense journals finding out the cost of ships and doing our own homework and figuring it all out for ourselves. Much in explanation is very clearly written in Civitas reports too (catch 22 is one report). But it is all out there, and this is my conclusion.
I thought it was all wrong in the first place. The QM2 set up was the first rat for me in knowing something is very wrong (one excuse was that we did not have the carpenters to be able to do the interior), and so it has continued next with the ro ro ships and with the axing of the UKindustry/MOD alliance (MARS ships) in favour of eu rules dictating where UK taxpayers money should be spent for buying stuff and in their eyes should be given abroad in effect, in the hope it stays in this eu, as this eu sees it as money and tax staying in eu (as this eu sees itself as a country), the fly in the ointment was that the MARS tankers went to a non eu Country. The other conclusion is this, looking at warship cost and cross referencing with the BofE inflation history charts and so on, our warship costs are pretty competitive, and heck knows what we could do with proper modern facilities, but it needs investment with belief from industry that can beleve in it’s own Government beleaving in it’s own industry, if that makes sense, along with the ambition, desire and drive from all sides.
I am suspicious of the likes of Baldwin (DE&S) and Earl Howe (Minister of Defence). Watching their performances, what they say, I feel they are not on our teams side. Baldwin’s attitude to some industry is questionable when she states about not propping up losing industries, but which industries are they (she is a typical independent school Oxford educated worked at JP Morgan Chase and pro eu too), banks that lost us much (albeit past governments bailed them out to our cost after our non manufacturing economic model was found out in 2007/08)? So, I am guessing that means potential future winners that are up against entirely unfair competition in manufacturing.
In saying that, I will be deeply shocked and in despair if these big ships also get given away abroad to pretend lowest face value bidder, and we know about the lowest price is not the best price in other walks of life.
The Fleet Solid Support Ships will give UK shipbuilding a far better feel for shipbuilding than the frigates, the tonnage alone is far greater just from those 3 ships too. If those RFA warship like armed that sail into dangerous places in which a sovereign capability is needed in supply otherwise you cannot operate is given abroad, we will know this is no Nation Shipbuilding Strategy but just a idea for building a few frigates with hope of some foreign orders because we have something they want or need. It should be just called a national warship (frigates and submarines) building strategy.
Several reports have identified markets and types of ship the UK can be viable in, these run into many 10s of billions of pounds worth, but we have only penetrated a tiny amount into it. We see those FSSS go abroad and I think this would be the biggest rejection in UK ship building and no realisation into our new future shipbuilding potential.
I can add. If you care about the future of a new viable UK shipbuilding industry which is potentially very good and bigger, write to people in government and others who have a bigger voice than us, but the same ambition.
Having read the article and comments, the realisation of a squeezed MOD budget drives the need for a competitive market to deliver an affordable project.
Limiting the scope of the Competition to only UK-only yards will increase costs and inhibit innovation as yards will seek to transfer most/all risk to the MOD.
Having a wider but level competition will encourage UK yards to work together to truly compete against the European and S.Korean yards. I’m interested to see if they can make this happen.
FSS appears to be more complicated than MARS Tanker and so presumably yards with greater military build capabilities will fair better technically in the competition as it’s not just about the price (or is it??!).
I think the risk transfer is mentioned in the Sir John Parker report. UK yards would be shooting themselves in the foot if they do that. I am confident when our yards do invest, we can whip European yards and compete with South Korea, but, the tax side has to be taken into account, energy costs and other disadvantages we face that need to be factored in. The FSSS cannot be a gift and one big p8ss take as that is counterproductive. I think as the boss of Cammell Laird says with the Polar ship: we need to do this well and get it right. That also includes not allowing industrial disputes ruin this. The other thing is, France, Germany, Italy, Netherlands etc have been pretty closed off for our access to their contracts. I really do believe we could build those Berlins cheaper than the Germans could have. I think we will be surprised in what we can achieve. But if South Korea put a bid in for the FSSS (a 1 billion pounds contract) at 600 million I would smell a very big rat. It would still make them more expensive than them being built in the UK for 1 billion pounds though.
I am now having a conversation with myself. But to expand on we could build ships cheaper for the Germans (and others) version of the RFA but are kept out. As an example, I feel the Germans would say for this to be value for their taxpayers, the price would have to be far far lower than a German bid, probably more than net cost after German taxes and money circulated around that Country and all other benefits of keeping the contract in Germany, and they probably have a point as a advanced capable economy that can build ships (albeit, far more expensive than us!) such as Germany or Netherlands or Canada or USA etc.
Also expanding on the South Korean bid (as they will bid and could not care less, as they are not shy babies). Would it be fair for them to put a bid in at 800 million pounds knowing if tax and other factors are taken into account, it is more than 1 billion pounds. Would it be fair if they put a bid in of say 950 million pounds and win against a UK consortia bid of 1 billion when the fact is the cost is really over 1.5 billion because the treasury has not had the benefit of the returned tax from UK firms and workers? So, should the South Korean bid be after 1 billion pounds bid by the UK consortia who pays lets say 40% tax in all clawback forms, 600 million? But to be 50% cheaper than that, surely a figure of 300 million pounds and less is closer. But any figure by South Korea (or any foreign firm) needs to have 38-40% and more added as a fair bid by a UK consortia, an example is 100 million pounds bid given by a UK firm means it has to be 60 million or less by a foreign firm unless that Country has no ability in building their respective national taxpayer funded projects, or South Korea bids 99 million pounds, a figure of 165 million pounds is fair and value for the tax payer by a UK consortia. We are not even including this dubious so-called UK content bit. To me there is no issue about whether these ships should be built here or abroad. Building abroad is totally wrong from every angle, and may serve certain UK vested interests who have investments in these foreign yards or are prepared to join up with them to get their little assured wares guaranteed of being bought by the UK taxpayer who has no say in this (just their intellegence insulted), what becomes a sordid UK industry undermining matter.
Who voted me down and give the reason. Only kidding. But you can if you want.
Thanks Darren for your long and detailed comments, from someone knowledgeable on the subject. Much appreciated.
Thanks. If the unthinkable happened, should the UK industrial Strategies, especially shipbuilding strategy as the MOD for National Shipbuilding Strategy is so involved, be renamed the UK “International” Industrial Strategy (Wasp, trains, nuclear and anything else industrial and manufacturing in contracts given abroad etc) and UK International Shipbuilding Strategy?
I like your detailed answers and general thinking. Personally I’ve never really bought the “we get it back in taxes” argument – that presupposes that the economy has spare capacity. I think FX hedging is something that could be done though – force them to bid in GBP and take the xrate risk.
But I agree there’s no reason Say Cammells/BAE or BMT/Babcock should not be able to put in a competitive bid for FSS. A quick google shows the pound down from 1750 won to 1500. I don’t see a need to restrict anyone from tendering. Having a foreign bid or two keeps people on their toes. It should be pretty obvious if they’re doing a loss lead.
In terms of strategy I think the best thing the government can do is invest in technical training and get apprenticeships flowing. We have a shortage of skills, as evidenced by the fact that Cammells are using alot of Romanians on the Polar Ship.
I have mentioned it before but probably given links so it will not be posted, but this time I will say find and read Civitas Catch 22 which at the bottom leads to Ideas for growth5.pdf.
There is the mearest glimmer of shipbuilding recovery. These tankers may help, but only if it makes shipbuilding more competitive, and they can deliver a competing quote. Having shipyards only able to produce to overpriced Govt. contract will not get UK shipbuilding anywhere. Cammel laird are building the Sir David Attenborough, what can they propose for the tankers?
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