Shipbuilding boom risks another bust, Sweeney warns

The flurry of new shipbuilding announcements risks introducing overcapacity and a return to boom and bust unless the government matches them with a coherent industrial capacity plan, the Scottish Labour MSP and former shipbuilder Paul Sweeney has told the UK Defence Journal.

Speaking after the UK-Netherlands amphibious ship agreement added another programme to a growing order book, Sweeney said the sector is “getting into a position where we potentially introduce an overcapacity,” and that balancing capacity against the demand signal is “the key challenge we’re really facing, and that’s what the National Shipbuilding Strategy was trying to address, and we seem to be drifting from that coherent approach with a series of disruptive decisions around shipbuilding programmes.”

The government, he argued, is announcing faster than it is planning, because “I think the government needs to step up and be clear about where the build locations for these programmes are going to be and how it plans to maximise all shipbuilding procurement through the Defence Investment Plan into British shipyards.”

‘We don’t have enough demand’ for more surface shipyards

His prescription begins with formally designating the core surface naval shipbuilding sites, which he identifies as Govan, Scotstoun and Rosyth, on the grounds that “we don’t have enough demand for any additional shipyards for naval construction in the UK without risking a boom and bust cycle, like we saw in the past with Portsmouth when the aircraft carrier programme ended. I think what we need to be doing is keeping this focused on core naval surface shipbuilding yards which have a clear demand signal for a sustained long-term drumbeat of ship design and construction.”

Drawing on his years in the industry, Sweeney walked through how a genuine capacity plan is assembled, from ordering shot-blasted steel plate and bar through the panel lines at Govan and Rosyth, into unit fabrication, block assembly and the final assembly halls, asking of each stage “what’s your monthly, annual capacity,” before working out “what’s the overspill, so what are you then going to subcontract out to your secondary yards,” since establishing what the core facilities can deliver and how they are sustained long term must, in his account, come before anything else, “because they’re your core naval shipbuilding sites.”

Sustaining those yards is a matter of tonnage and time, in his telling, because “ultimately, these yards need x thousand tonnes of steel going through them a year to sustain them, and they also need a major design interval as well, of one every ten years or so, and we’re approaching that focal point with the design cycle at BAE Systems, and we’re risking a falling off in steelwork demand through Rosyth as well, particularly dependent on this Danish contract award for Type 31.”

His answer is direct government action, since ministers “should be directly awarding this to sites as appropriate to smooth demand signal and to sustain capacity at its core naval shipyards that are required to sustain the baseline sovereign capability to build surface ships, which are Glasgow and Rosyth,” with spillover “marginal, but a bonus” for other sites whose challenge should be winning commercial contracts, an objective on which he said the national strategy is “really weak, and we need much more work on.”

Call for an ‘Airbus for shipbuilding’ in the UK

Sweeney also raised questions about the long-term intentions of overseas owners in British shipbuilding, cautioning that companies with commercial shipbuilding experience abroad have yet to make clear whether they intend to bring that work to the UK or to focus on naval orders alone, and suggesting the test will be whether they seriously try to pivot UK shipbuilding into the commercial market and invest in the yards for the long term.

Diversification of that kind is, he said, “very difficult to do in the UK without a coherent national plan, particularly around state financing for commercial shipbuilding contracts,” and he argued that supporting yards to win commercial work should be a central objective of the national strategy.

Fragmentation, on his analysis, is the structural fault beneath all of it, and consolidation the answer, because “what I’ve called for is an Airbus for shipbuilding in the UK, we basically need the British equivalent of a Navantia or Fincantieri, and this fragmentation actually is problematic for the precise reason I’ve just set out,” with capabilities such as pipe manufacturing, electrical and sheet metal work shared and integrated across sites rather than duplicated.

He noted that the incoming Prime Minister has set the direction himself, with Andy Burnham having indicated his goal of maximising shipbuilding procurement through the Defence Investment Plan into British yards, down to the tugboats, work boats and floating docks being delivered for the Royal Navy.