There’s a lot of misunderstanding and myth circulating about how many ships the shipyards on the Clyde are expecting to build, but what’s the truth?
So, what does the prospective order-book actually look like for the next few decades?
Ordering in batches is common for projects of this size around the world and was last seen with the Royal Navy for the Type 45 Destroyers and recent Offshore Patrol Vessels. The Type 45s first batch order was for three vessels. Ordering this way allows for changes to specifications and allows for refinements to contracts as working practices evolve and efficiencies are learned.
Eight Type 26 Frigates are to be built in total by their designers BAE, the contract for the second batch will be negotiated in the early 2020s. Why have we included it despite this?
There are no other yards in the UK to build the Type 26, it’s a BAE product and their only surface shipyards are in Glasgow. The ships are not going anywhere unless the Royal Navy take the incredibly unlikely decision not to replace their frigate fleet.
Do the 5 Offshore Patrol vessels make up for the lost Type 26 Frigates?
The five Offshore Patrol Vessels were ordered to fill the gap created by the Type 26 delay. The Type 26 Frigate fleet had been delayed due to cash flow problems, with the MoD lacking the funds to start production and instead opting to build smaller and cheaper Offshore Patrol Vessels in the meantime to retain the workforce.
It is understood that the Ministry of Defence paid an extra £100 million for new Offshore Patrol vessels in order to satisfy a requirement to pay BAE a minimum of £230 million per year.
A house of Commons Briefing Paper explains the agreement:
“In 2009 the Government signed a 15 year Terms of Business Agreement (TOBA) with BAE Systems and Babcock. The TOBA guaranteed BAE Systems a minimum level of surface ship build and support activity of £230 million a year.
This was judged as the minimum level of work possible to sustain a credible warship-building industry in the UK and thus avoid the delays encountered during the Astute class submarine build caused in part by the loss of skilled staff following the gap between Astute and the Vanguard class submarine build.
If cancelled the MoD would be liable for industry closure costs and compensation to BAE Systems.”
Regarding the cost of the new Offshore Patrol vessels:
“The provisional cost of the new vessels was given as £348 million but because the TOBA required a £230 million a year spend with BAE, the Defence Secretary estimated the additional cost to the MoD of the ships, over and above the payments the MoD would have had to have made to BAE, is less than £100 million.”
The ordering (and inflated cost) of these vessels allowed for the workforce to be retained.
Why has BAE decided not to build the Type 31e Frigate on the Clyde?
Recent news that BAE have decided not to bid to assemble the Type 31e Frigate on the Clyde due to an apparent lack of interest has created a stir in Scotland after earlier expectations that the light frigates would be built there.
BAE themselves say that shipbuilding capacity on the Clyde will be maxed out until the mid 2030s while the Ministry of Defence want the first of the new Type 31 Frigates in service by 2023, one of the primary reasons they have decided not to bid as prime contractor for the project, there’s no space at the BAE yards on the Clyde to do so if they are to meet the deadline for the first Type 31e to hit the water.
BAE say the move will allow them to ‘appropriately support the National Shipbuilding Strategy’ whilst ensuring the delivery of the five Offshore Patrol Vessels and the City class Type 26 frigates currently on contract, ‘to time, budget and to the highest quality standards.’
In a press release BAE say:
“BAE Systems is focused on the manufacture and delivery of the two QE Class carriers, the five River Class Offshore Patrol Vessels (OPV) and the first three City class Type 26 warships, as well as continuing to develop and upgrade combat management systems on all Royal Navy ships. Taking account our current and future workload, including Type 26, our shipbuilding capacity on the Clyde will be full until the mid 2030s.”
Could the Type 31 still come to the Clyde?
Babcock recently announced it will lead a team of industry partners in a bid for the new £1.25 billion Type 31e Frigate with work to be undertaken in Scotland, England and Northern Ireland. Babcock say work would be shared across the UK its facilities in Fife and Devon being among the prime locations for building. Ferguson Marine on the Clyde will also be in line for the work.
The build plan for the Type 31 Frigates is expected to follow a similar pattern to that of the Queen Elizabeth carriers and early Type 45 Destroyers in that blocks will be built in yards around the UK and assembled at one main location.
Modern shipbuilding makes considerable use of prefabricated sections. Entire multi-deck segments of the hull may be built elsewhere around the UK, transported to the building dock or slipway, then lifted into place and assembled into one ship. This is known as block construction and is far more cost effective. Yards pre-install equipment, pipes, electrical cables and any other components within the blocks, to minimise the effort needed to assemble or install components deep within the hull once it is welded together.
Babcock will act as the overall programme lead, whilst Thales will have overall responsibility for the development of the Mission System solution. The make-up of the team, the company say, will ensure that the economic benefits of the programme are shared across the UK. Ferguson Marine on the Clyde, Harland & Wolff in Belfast and the Babcock facilities in Fife and Devon will all have ‘key roles to play’, while much of the equipment provided by Thales and others will support jobs across the UK.
Babcock CEO Archie Bethel said:
“Team 31 will allow Babcock and Thales to take forward the key lessons from the Aircraft Carrier Alliance and apply them in a new and highly capable team with Harland & Wolff, BMT and Ferguson Marine. We firmly believe that our combined skills can deliver an affordable and effective Type31e Frigate programme for the Royal Navy and offer something new and exciting in the export market. With a high degree of UK content and the use of innovative technologies, we believe that our approach will deliver real benefits to UK plc.”
Victor Chavez, CEO of Thales UK said:
“Thales UK is delighted to be working with Babcock and our partners as part of Team 31. We recognise the diversity of roles anticipated for Type31e and, together, we will create and exciting, innovative and flexible capability for the Royal Navy based on the best of UK and international technologies in an open-system architecture that will ensure long term value for money.”
Sarah Kenny, BMT CEO said:
“BMT has supported the UK and global maritime sector for decades. As a proud member of Team 31, we are delighted to be shaping the Type 31e programme, and we welcome the opportunity to bring our substantial global engineering experience to bear on this vital UK defence programme. We are confident that the combined Team 31 offering will meet the exacting requirements of the UK MOD whilst creating UK shipbuilding industry momentum and a competitive offering for wider export opportunities.”
The companies say that new arrangement draws on combined strengths and will deliver ‘innovative, capable, affordable and flexible customer solutions, within a fast changing and increasingly demanding environment’.
Why has the plan changed?
The MoD is hoping to reduce its reliance on BAE and cut the costs of procurement by spreading shipbuilding work across civil and naval yards around the UK. To this end, the government are implementing the results of an independent report into the National Shipbuilding Strategy by Sir John Parker which recommended that the Type 31 Frigate build be spread across the UK, with blocks and components being constructed in yards in both Scotland and England.
The National Shipbuilding Strategy was intended to be a “radical, fundamental re-appraisal of how we undertake the shipbuilding enterprise in the UK, intending to place UK naval shipbuilding on a sustainable long term footing”.
BAE themselves signalled their own reluctance to bid for the Type 31 Frigate as prime contractor due to concerns of a “race to the bottom” on price. Speaking to The Herald here, BAE managing director Iain Stevenson signalled the defence firms lack of interest on building the vessel:
“We do want to be involved in Type 31. But we have questions. Does it have a budget? What are the timescales. We have not got solid facts. Type 31 could be a race to the bottom. If it is a front price contract people might bid for it to win and it and it might put them out of business. We would not, because we are BAE Systems.”
The landscape of UK shipbuilding has been shaken up with BAE on the Clyde building the OPV, Type 26 Frigate fleets and the Type 31 Frigate fleet work to be spread around the UK. One of the primary contenders is the Babcock-lead alliance which should see the vessel built around the UK (Including the Clyde and Rosyth) if their bid wins.
Does the UK have complex warships built in other countries?
Recent claims that Scotland would be eligible to compete for Royal Navy warship contracts if the country left the UK have been rejected by the Ministry of Defence and Parliamentary Under-Secretary of State for Defence, Guto Bebb.
Guto Bebb, Parliamentary Under-Secretary of State for Defence, recently confirmed this policy in response to a written parliamentary question:
“The National Shipbuilding Strategy (paragraph 92) was clear that for reasons of national security, the UK prioritises the need to retain the ability to design, build and integrate warships.”
According to the ‘National Shipbuilding Strategy’ document, there are three tenets regarding UK shipbuilding policy that impact on the build location of contracts:
- For reasons of national security, all Royal Navy warships (destroyers, frigates and aircraft carriers) will continue to have a UK-owned design, and, will be built and integrated in the UK. Warship build will be via competition between UK shipyards. But international partners will be encouraged to work with UK shipyards and other providers to produce the best possible commercial solution.
- All other naval ships should be subject to open competition (provided that there are no compelling national security reasons to constrain a particular procurement to national providers). Integration of sensitive UK-specific systems will be done in the UK, where possible after competition between UK providers.
- Defence will take account of wider factors (including the impact on UK prosperity) when making these procurement decisions.
Many politicians in Scotland had been criticised on social media for suggesting that Britain’s new Type 31e frigates would be built in Scotland if the campaign for independence was successful.
First Minister of Scotland Nicola Sturgeon had claimed at the time of the referendum that the only option for BAE on the event of independence was to continue to build the ships in Glasgow, this however was denied by a GMB convener at the Scotstoun yard in Glasgow:
“She was saying that the Clyde is the only game in town. I’m afraid it is not. There’s shipbuilders in Cammell Laird in Liverpool. You have got the A&P Group on the Tyne, who are shipbuilders, and you have got Barrow in Furness. So to say if Scotland goes independent we will still be building frigates… listen, I assure you that if we go for independence we will not be building. We have been told quite clearly by the UK government and I have been told quite clearly that will not happen.”
The issue of UK naval contracts on the Clyde had become controversial after the 2014 Independence Referendum and even more so recently when several groups indicated that the work would not go to an independent Scotland. Shipbuilding trade union leaders had previously told Ms Sturgeon to stop “using” them by claiming that British warships would continue to be built on the Clyde in the event of independence as they know that not to be the case.
Nicola Sturgeon had earlier insisted that it would be a “betrayal” to go back on its promise to build the frigate fleet on the Clyde. Sturgeon said:
“Promises were made about orders to these yards and promises were made about jobs at these yards, and I think it is absolutely vital now these contracts are delivered. These yards have been through some really difficult times with a reduction in the workforce, and they thought that that was all part of the process of getting themselves into shape for the Type 26 and securing a level of employment here.
This is about jobs and securing jobs in an industry. It would be a complete betrayal of these yards if there was any U-turn or going back on on promises made.”
Doesn’t the UK build ships overseas anyway?
Many have misconstrued the building of a naval tanker in South Korea for the RFA as a break in this policy, that is not the case. Support vessels like this are eligible to be constructed outside the UK as only ‘complex warship’ construction (such as destroyers and frigates as outlined above) must stay within UK borders. Besides, no UK yard bid for the work.
Other than procurement activity undertaken during the World Wars, the UK has not had a complex warship built outside of the UK since the start of the 20th century at least. All of the Royal Navy’s new complex warships are being built in UK shipyards and the UK Government says it remains committed to utilising the strengths of UK industry in this specialist and complex area.
There is the matter that companies based in an independent Scottish state would no longer be eligible for contracts that the UK chose to place or compete domestically for national security reasons as this would be protected under Article 346 of the treaty on the functioning of the European Union which allows states to declare contracts related to defence or national security exempt from external tendering. Where they could continue to compete, they would be pitching for business in an international market dominated by major economic powers.
There’s also the matter of contracts using US technology, defence contractors that work with items or technology of US origin are also covered by undertakings given in accordance with the US International Traffic in Arms Regulations (ITAR), under which any change to an existing US export licence requires US State Department approval. An independent Scottish state would be a third-party country, not covered by existing UK-US ITAR agreements.
UK companies would not have authority to transfer items and information that is subject to ITAR licence to their subsidiaries or other companies in an independent Scottish state or to a Scottish national, without US approval, anymore than it could transfer such material to organisations or individuals in other foreign states. Every licence held by companies in Scotland working on ITAR-controlled items would have to be re-approved if Scotland became independent.
Isn’t Scotland the only location in the UK capable of building warships?
Claims at the time of the referendum that the only option for BAE on the event of independence was to continue to build the ships in Glasgow were refuted at the time by John Dolan, GMB convener at the Scotstoun yard in Glasgow:
“She was saying that the Clyde is the only game in town. I’m afraid it is not. There’s shipbuilders in Cammell Laird in Liverpool. You have got the A&P Group on the Tyne, who are shipbuilders, and you have got Barrow in Furness. So to say if Scotland goes independent we will still be building Type 26 frigates… listen, I assure you that if we go for independence we will not be building.
We have been told quite clearly by the UK government and I have been told quite clearly that will not happen.”
Modern shipbuilding makes considerable use of prefabricated sections. Entire multi-deck segments of the hull may be built elsewhere around the UK, transported to the building dock or slipway, then lifted into place and assembled into one ship. This is known as block construction and is far more cost effective.
The Clyde was promised 13 Type 26 Frigates, it’s now in the process of building 8 Type 26 Frigates and 5 River class Offshore Patrol Vessels. The five Offshore Patrol Vessels were ordered to fill the gap created by the Type 26 delay and keep the work force employed. There’s been no negative impact as a result of this.