Defence industrial strategy
Ian Waddell, General Secretary of the CSEU, calls for an integrated and collaborative approach to shipbuilding and defence procurement
Over the past three years the Confederation of Shipbuilding and Engineering Unions (CSEU) has been campaigning for the UK carrier fleet’s three supply ships – the Fleet Solid Support ships (FSS) – to be built in the UK; an order worth £1.6 billion. Our ‘Keep Britain Afloat’ campaign has elevated a niche industrial issue to a matter of national importance, described by the Prime Minister as a fundamental part of a renaissance of UK shipbuilding. Our ongoing battle for the FSS is part of a much longer campaign by the CSEU and our affiliated unions (Unite, GMB, Prospect and Community) for a comprehensive Defence Industrial Strategy, including a long-term plan for shipbuilding and ship repair. Our position is simple: all UK naval ships, submarines and RFA vessels should be designed, built and maintained in the UK.
Procurement policy puzzles
Ben Wallace, the Defence Secretary and Shipbuilding Tsar, has announced that he will shortly publish a 30-year plan for UK shipbuilding which will cover all government-operated vessels. This is ostensibly to provide some certainty for the UK shipbuilding industry and encourage investment. However, the recently published Defence and Security Industrial Strategy (DSIS) sends a contradictory signal, in that it states that future naval ship procurement will be determined by the MoD on a case-by-case basis from a range of options, with single-source provision at one end of the spectrum and full international competition at the other. This could leave UK shipbuilding in a worse situation than before DSIS, as the MoD had previously stated that all Royal Navy ships and submarines would be built in the UK.
For the CSEU and our members in UK shipyards, the twists and turns of naval ship procurement policy are hugely frustrating and potentially represent a missed opportunity. British shipbuilders have just completed two state-of-the-art aircraft carriers: HMS Queen Elizabeth and HMS Prince of Wales – the biggest ships ever constructed by the UK industry, and a massive success story. At £6 billion for the two, the carriers demonstrate great value for money for the UK taxpayer, with costs well below international comparators’. The project engaged yards across the UK to build blocks that were then assembled at Rosyth in Scotland. The project was overseen by the Aircraft Carrier Alliance, a joint venture including major shipbuilding and engineering firms which worked closely with the MoD procurement team to ensure costs were well managed. It was an extremely robust structure that delivered for all concerned.
It was always anticipated that at the end of the project there would be some shrinkage of the UK labour force. However, Type 26 was on the books and Type 31e was anticipated. Along with the three FSS ships, there was more than enough work to go round all the shipyards, and there was a strong belief in the industry that the government would use the Aircraft Carrier Alliance to continue to manage these projects. However, the government chose a UK competition for Type 31e and an international competition for FSS. The results were predictable: goodwill and collaborative working among UK companies in the Aircraft Carrier Alliance were undermined by having to compete domestically on Type 31e, and time was, and is still being, lost in pursuing a twice-failed international competition route for FSS. Meanwhile, the UK yards that had been essential components of the carrier build ran out of work. Appledore and Harland & Wolff closed, and Cammell Laird embarked on a large-scale redundancy process. The fact that InfraStrata bought Harland & Wolff and Appledore subsequently is to be welcomed, but there is little sign that any government policy initiated that investment.
Brexit has given rise to much talk of a renaissance in UK shipbuilding, but at the sharp end there is little sign of any positive policy change or of the government awarding UK work to UK yards. Ironically, it seems that one piece of EU legislation retained in UK law forces the government to accept lowest price without consideration of social value.
The MoD has also set about restructuring support for the Royal Navy, splitting contracts that were working well into ever smaller pieces, forcing competition in areas where we believe it makes no sense. The new Fleet Management Support Programme (FMSP) divides ‘hard facilities’ from ‘soft’ in a way that we believe is artificial and counterproductive. Again, the dogma of more competition makes no sense on the ground; it will simply lead to delays and cost over-runs. In addition, we fear that any savings made for the MoD will be funded not through reduced profits for the successful bidders but by erosion of the hard-won terms and conditions of the sector’s skilled workers. One example of this is an attempt to remove workers’ pension rights as a measure to meet cost-reduction targets in a bid for hard facilities management by a blue-chip defence company.
Returns and investment
There is a blindingly obvious route for UK shipbuilding and ship repair, and publishing a 30-year pipeline of work is an essential first step; but the investment the government hopes for will not happen unless shareholder-owned companies can expect an RoI. That can only be predicated on an expectation of a share of the work, which is undermined by the government keeping its options open on each new procurement – a recipe for uncertainty, the enemy of investment.
Consider instead a scenario where UK shipyards knew what work they would have for the next 30 years and were encouraged to collaborate and share workload to smooth out any peaks and troughs in demand for skills. This could be managed by a joint industry body, with MoD civil servants and trade unions on the Board to ensure value for money, and vessels delivered on time and on cost. Shipyards would be encouraged to develop specialisms, as at Appledore, where the complex bows were built for the carriers, or Barrow-in-Furness, where the UK’s submarines are built. Privately owned companies would have sufficient confidence in a return to make investment in state-of-the-art facilities and techniques. Steady demand signals and a reliable home market would also benefit the UK’s beleaguered steel industry.
The UK industry would thus be strongly placed to win export orders for military vessels and to compete in commercial markets, perhaps starting with specialist vessels, then potentially competing in high-value markets. The prosperity that would flow from this renaissance would benefit supply chains and communities across the UK, multiplying wealth and opportunities in a virtuous circle.
A Maritime Technology Institute
Shipbuilders could collaborate to fund a Maritime Technology Institute, much like the Aerospace Technology Institute which was part-funded by government with matched funding from industry. This institute, drawing on our universities and R&D from industry, would become the hub for innovation and push the cutting edge of maritime technologies forward in a way that would benefit the design of our ships. It could be linked to apprentice and graduate training schemes that would equip new entrants into the industry with world-class skills. At a time when industry is facing transformation as a result, on the one hand of automation, digitalisation and artificial intelligence through Industry 4.0, and, on the other, of the global drive to Net Zero carbon emissions, such an institution could make a huge and lasting impact on a foundation industry for the UK.
Integration and collaboration
This integrated and collaborative approach could be extended into ship support and repair. Vessels have a life cycle, and we need more actively to plan and manage each stage of the cycle, from initial concept, through design and build, and in-service support and upgrade, through to final decommissioning, dismantling and recycling. Our industry currently operates in disconnected silos as a deliberate design by government. However, much greater integration would reap manifold rewards: for instance, a feedback loop from ship repairers to ship engineers and designers, helping them build in easier serviceability and more robust designs for systems vulnerable to failure. A collaborative approach across our naval bases could lead to the sharing of best practice, driving higher standards across the board, reducing downtime and increasing turnaround of essential vessels.
None of this need be a pipe dream. The only obstacle is the UK government. If they continue to pursue competition rather than collaboration, then this vision of a transformed shipbuilding and ship repair industry will never be realised. Instead, we will continue to repeat the cycle of boom and bust that has blighted our industry, undermining investment and closing off a brighter future. However, if the government has the courage and the conviction to drive a renaissance of UK shipbuilding, then we are ready, willing and able to deliver it. The UK has a fantastically skilled and experienced workforce, and a proven record of success. The pipeline of work stretching out before that presents a huge opportunity to create the conditions for massive investment, driving employment and prosperity across the UK. This is a once-in-a-generation choice, and I for one hope the right decisions will be made.