Warning that Scottish shipyards at ‘risk of decline’

“The concentration of ship design expertise in Scotland is absolutely crucial to European and NATO defence capability. Between the shipyards in Glasgow and Rosyth, it probably comprises the biggest centre of excellence for naval architecture in Europe, along with Strathclyde University, which is a world-leader in the field.”

Recent upgrades at major shipyards, including the Clyde and Rosyth facilities, were praised as a step in the right direction:

“With the progression to fully covered indoor ship assembly at both sites, that introduces a major opportunity to improve productivity even further.”

However, Sweeney pointed out that systemic inefficiencies remain, particularly in procurement processes:

“The main thing that’s holding the industry back at the moment, is the flawed procurement processes that the Ministry of Defence and the UK Government continue to persist with, which artificially constrain the efficiency of the shipbuilding operation.”

Reforming Procurement for Long-Term Stability

When asked how UK procurement policies could be improved to support Scottish shipyards, Sweeney called for a shift towards longer-term planning and funding:

“We need to break out of annualised funding constraints, and we need to look towards long-term shipbuilding programmes. The replacement rate for each type of vessel should be known and should be financed on a permanent, rolling basis, and that would provide a much greater level of production stability for the industry to invest for the long term.”

Reflecting on the abrupt end of the Type 45 destroyer programme, he highlighted the consequences of short-term thinking:

“To curtail the programme at six ships was a disaster for sustaining skills. We ended up with a very ragged end to that programme in 2013 that culminated in significant redundancies in Glasgow and the closure of the relatively modern former Vosper Thornycroft shipbuilding operation in Portsmouth.”

Sweeney also noted the importance of consistent demand for maintaining skills and improving industrial processes:

“Short-term procurement decisions made over a decade ago continue to haunt the industry. Much like when I first started working in the shipbuilding industry around 2010–11,  decisions in the mid-1990s to curtail apprentice recruitment due to uncertainty over where batches of the Type 23 Frigate would be built meant that what was then Yarrow Shipbuilders in Scotstoun ended up with a very lopsided demographic in its workforce by the time I started. We had lots of people in their 50s and lots of people in their 20s, but not many people in between.”

Leveraging Defence Demand Signals

One of the most promising strategies Sweeney highlighted was the potential for leveraging defence demand to drive commercial opportunities. He proposed a UK shipbuilding model inspired by the Italian Fincantieri group, which integrates multiple shipyards and the wider supply chain to achieve national competitiveness:

“We should collaborate across the shipbuilding industry so that we develop more of an Airbus model, where each [shipyard] has a specialism, and they contribute to achieving a collective competitive advantage as a country and as a total shipbuilding enterprise… much like the Italians do with the Fincantieri group.”

“It was a huge strategic mistake for the British Government to break up and sell the British Shipbuilders group in the late 1980s. It was a classic case of British inability to persevere to achieve long-term industrial success, despite initial difficulties in restructuring the industrial base. Indeed as a former director of British Shipbuilders, Bill Scott said in the early 1990s, ‘At the point British Shipbuilders was starting to become effective, it was terminated.’ We’ve seen a similar story play out more recently, with the collapse of the fledgling Harland & Wolff group due to a lack of UK Government support meaning that it has now, rather ironically, come under the control of Spain’s state-owned national shipbuilding champion, Navantia. Rather humiliatingly, we will now need to rely on the Spanish to teach us how to do commercial shipbuilding effectively, given that the UK squandered its long-established advantage around 40 years ago.”

A revived British model that emulates the Italian or Spanish shipbuilding industrial base would not only create a more coherent, unified national shipbuilding strategy but also enable Scotland and the UK to capitalise on the existing defence order pipeline. Sweeney explained that a stable demand signal from defence is essential for enabling long-term investment:

“The replacement rate for each type of vessel should be known, financed permanently, and linked to a coherent shipbuilding strategy across all British shipyards. This kind of stability would create a strong incentive to optimise design and production processes, drive down unit cost, and allow us to fully leverage the defence demand signal.”

Sweeney emphasised that this approach could avoid many of the inefficiencies currently plaguing the industry, such as fragmented programmes and stop-start production cycles. Reflecting on past lessons, he remarked:

“We shouldn’t continue down the path of introducing inefficient artificial competition to what is most efficiently managed as a natural monopoly at a national level. Generating sufficient, sustainable volume through our core shipbuilding sites with a single, repeatable design platform is key to achieving stability, efficiency, and global competitiveness.”

He also addressed the broader challenges posed by past decisions, such as the failure to properly integrate commercial shipbuilding opportunities with defence demand:

“We need to use the whole cross-government shipbuilding pipeline—including projects like lifeline ferry procurement—to optimise capacity across the Scottish shipbuilding supply chain. That kind of synergy would provide a much-needed boost to our ability to compete in the commercial sector. Some projects have shown its potential, such as the partnership between naval shipbuilder VSEL at Barrow and commercial shipbuilder Kvaerner Govan to build HMS Ocean in the 1990s, and more recently with the Aircraft Carrier Alliance to build the Queen Elizabeth Class, but it has never been fully exploited.”

Scottish independence

Paul warned that Scottish independence could severely impact the shipbuilding industry, as a separate Scottish navy would generate only a fraction of the demand provided by UK defence contracts, particularly the Type 26 and Type 31 frigate programmes, which have driven the recent modernisation of shipyards in Govan, Scotstoun, and Rosyth.

Without these large-scale defence projects, the shipyards would lack the critical mass needed to sustain production, forcing them to rely on commercial diversification—a transition that Sweeney argues would be challenging without proper government support.

“As much as it is now a distant prospect, when I worked at BAE Systems during the 2014 referendum, we had a live contingency plan to eventually move operations to the sites at Barrow and Portsmouth in the event independence were to happen, after the Queen Elizabeth aircraft carrier programme wound down. The simple fact is that the recent modernisation of the shipyards at Govan, Scotstoun and Rosyth has been stimulated by the demand signal created by the Type 26 and Type 31 frigate programmes for the UK Royal Navy. A separate Scottish navy would have a small fraction of that demand signal, which in isolation would be an insufficient critical mass to sustain production without commercial diversification.

Ferguson Marine shipyard in talks for major subcontract

To test this hypothetical scenario further, you only have to look at the debacle with the MV Glen Sannox and MV Glen Rosa at Ferguson Marine, which originated in the Scottish Government’s deal with Jim McColl’s Clyde Blowers Capital to rescue the shipyard from administration in August 2014, a month before the independence referendum.

That ferry programme has become a case study in how not to manage a commercial shipbuilding project, and despite operating the second largest public sector fleet after the Royal Navy, with 36 vessels, most of the new Caledonian MacBrayne fleet is now being built by Cemre Shipyard in Turkey due to the scandalous failure of the Scottish Government to make the most of that opportunity of reviving Ferguson Marine a decade ago to transform the shipyard into a competitive ‘ferry factory’ by leveraging the procurement of the CalMac fleet effectively.

So whilst those recent CalMac ferry orders flow overseas, it is only subcontract work from BAE Systems for the Type 26 programme that is keeping the Scottish Government-owned Ferguson Marine going at present, with its future hinging on winning CalMac’s Small Vessel Replacement Programme later this year. I have offered plenty of constructive ideas to the Scottish Government about how to improve our public procurement and using the state investment bank to provide ship finance products so as to support the development of commercial shipbuilding in Scotland like competitor nations do, but so far my suggestions have been ignored by Scottish Ministers.”

The Importance of Long-Term Planning

Sweeney repeatedly returned to the theme of long-term planning, arguing that the shipbuilding industry cannot thrive without a stable and predictable pipeline of work. He highlighted the risks of short-termism in government policy, particularly regarding Treasury constraints on multi-year capital financing:

“The Treasury’s accountancy-driven focus on yearly cost control militates against long-term economic value creation. This undermines the performance of major industrial programmes in naval shipbuilding, where stability and forward planning are essential to maintaining production efficiency.”

He also underscored the potential cost savings of a stable demand signal:

“When production is consistent, we see learning curves that significantly reduce costs over time. Longer UK production runs, like the Type 45 and Type 26 programmes, allow for efficiencies that are impossible in stop-start scenarios. If the UK were to consolidate its frigate and destroyer requirement into one integrated and virtually permanent production programme, like the Americans have done with the Arleigh Burke-class destroyer, in almost constant production across four variants since the late 1980s, Britain’s shipbuilding enterprise would realise immense improvements in productivity and value for defence.”

A Vision for Collaboration and Integration

Sweeney’s proposed vision for the future involves a fully integrated, national shipbuilding champion—akin to Airbus or Boeing in their respective industries. Such an enterprise, he argued, would be better equipped to handle both defence and commercial shipbuilding demands:

“If we want to compete internationally, we need a national enterprise that operates as a single industrial champion. The idea of competing between British shipyards is nonsense. Real efficiency comes from understanding this is a national endeavour.”

This unified model would also facilitate the development of complementary commercial shipbuilding opportunities, ensuring that Scotland remains competitive in global markets.

Modernising Infrastructure for Future Demands

Sweeney highlighted the importance of modernising shipyard infrastructure to meet the demands of future shipbuilding projects. While praising recent investments on the Clyde and at Rosyth, he noted that further improvements could enhance productivity:

“If we could build a ‘Kompakt-Werft’ style shipyard like Meyer Werft in Germany and create a larger-scale indoor ship assembly facility for large commercial and naval vessel construction, at a site like Inchgreen where you already have the largest mainland dry dock in Britain to build over, that would be gamechanger for the industry in Scotland.”

He added that legacy infrastructure constraints remain a challenge, particularly at older sites like Govan:

“The shipyard at Govan was the world’s first integrated shipbuilding and marine engine works, so it is constrained by the legacy of 160-odd years of constant production. It’s not how you would design a shipyard today if you were starting with a greenfield site. While the processes have certainly improved considerably and will be further enhanced with the completion of the new Ship Assembly Hall on top of the filled in fitting-out basin in a few weeks, further improvements could still be made to optimise production.”

A Personal Connection to Shipbuilding

Reflecting on his upbringing, Sweeney shared his personal connection to the industry:

“I was brought up in the shadow of the stop-start, feast-and-famine cycles of shipbuilding production in the 1990s when my dad was made redundant from Yarrows. Growing up with the industry instilled a great sense of pride in building these great ships in Glasgow, but it was tempered with a sense of unease about its future. The spectre of decline was never far away.”

This early exposure to the challenges of the industry has fuelled his commitment to advocating for its growth:

“I’ve always had a real conviction that more should be done to build industries that we’re very proud of in Glasgow. An island nation like ours should unashamedly develop this specialism.”

The Way Forward

Sweeney concluded with a vision for the future of Scotland’s shipbuilding industry, calling for ambition, collaboration, and strategic investment:

“We’re an island. It’s remarkable that we don’t have a dedicated investment fund for the development of our shipbuilding and maritime industries. Our governments are way too risk averse when it comes to state aid. Take the Spanish Tax Lease system for example, which is applied to finance agreements for the purchase of ships, making it possible for shipping companies to purchase ships built by Spanish shipyards at a 20% to 30% discount. We need to get our act together, understand what competitor nations are achieving, and have the gumption to compete and win again.”

His message is clear: with the right policies, funding, and collaborative strategies, Scotland’s shipbuilding industry can not only thrive but lead on the global stage once again.