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As attention turns to the impending release of the National Shipbuilding Strategy, the term “virtual shipbuilding strategy” has gained traction after the Parker Report, but what exactly does it mean for industry and the navy?

The government is committed under the 2015 SDSR to publish a National Shipbuilding Strategy in 2017. Its aim is “to place UK naval shipbuilding on a sustainable long-term footing”. Initially scheduled for release with the 2016 Autumn statement, the strategy has now been rescheduled for Spring 2017. In its place, Sir John Parker, the independent chair of the strategy, released an intermit report of thirty-four recommendations that will inform the strategy in late 2016.

Parker is a naval architect by training and has previously served as the chairman of Babcock International and BVT Surface Fleet. He presently serves as the chairman of the mining firm Anglo American. He was knighted in 2001 for services to defence and shipbuilding and awarded the Grand Cross of the Most Excellent Order of the British Empire (GBE) in 2012 for services to the voluntary sector and industry.

The Virtual Shipbuilding Strategy (or VSb) is an industry model that captures the skills and talents of the number of regional shipyards across the UK. These shipyards have seen a resurgence of late and have demonstrated clear cost competitiveness and the capability to build fully outfitted “blocks” though the aircraft carrier alliance and their other orders. It therefore represents a shift away from the current BAE monopoly.

Shipyards highlighted in the report include; Cammell Laird Merseyside – currently holder of several long-term RFA refit contracts, Babcok Marine Appledore – currently working on OPVs for the Irish Navy, Babcock Marine Rosyth, Harland and Wolff Belfast, A&P Tyneside and Ferguson Marine Clyde. All have demonstrated clear capacity over recent years to win contracts against international competition by promoting innovation and cost effectiveness.

The basic core of VSb is the use of block based construction for the Type 31 frigates. Each shipyard would be allocated a share of the vessels, producing sections (or blocks) which are then transported to a central location and assembled into the final vessel. This style of construction was used internationally for the ten Anzac Class frigates in the 1990s, allowing New Zealand’s small shipbuilding industry to contribute to the overall class. In Britain, it was most notably used for the Queen Elizabeth class aircraft carriers.

By building blocks in series and in parallel the shipyards would be able to capture the learning curve productivity benefits. This benefit was less evident in the aircraft carrier project as only two vessels were constructed. Improvements in block construction would reduce construction time and cost. This would increase the possibility of the government exercising the additional vessels options to increase fleet size. It would also make the class more competitive on the international export market.

Contracts for the shipyards would be carefully crafted under VSb. They must be taut, and properly incentivise delivery through profit incentives that will enable future investment. Management would be incentivised to avoid cost growth, rather than simply passing it on to the customer.

The shipyards would also be required to develop “global competitiveness plans”. This allows for targeted investments in emerging technologies to modernise processes. The use of global competitiveness plans has already been successfully with Jaguar Land rover and Meyer Werft in Germany. It also serves to encourage and enable shipyards to generate additional revenue streams and not solely rely on MOD contracts.

While proposed initially for implementation with the Type 31 programme, the Parker report highlights how the benefits of VSb could improve long term shipbuilding options. For example, this could allow UK shipyards to become a competitive option for support ships, such as RFA stores vessels, to prevent those contracts continuing to go overseas.

The importance of this proposal is clear. There is no precedent for building two ‘first of class’ frigates in a single shipyard in the UK. Both vessels are critical assets with a time crucial delivery for both the navy and nation. Parallel construction on the same site risks potential complications and delays compromising construction of both vessels. By have a separate lead shipyard and/or alliance build the Type 31 the risks to the programme from the Type 26 build are reduced. This allows frigate numbers to be maintained and an exportable light frigate model to be established.

The political implications of this plan are significant. Up until the 2015 SDSR the BAE shipyards on the Clyde has been expected to build the then planned thirteen Type 26 Frigates. The introduction of the Type 31 concept, and particularly the VSb model, would see their workload reduced from building five full vessels to either the construction of blocks or the final assembly stage only. The resulting reduction in workload and likely jobs could further impact the already highly politicised Scottish shipbuilding industry. It could however have positive political implications across the country as regional shipyards would be able to sustain their size and potentially expand.

21 COMMENTS

  1. Is it me or has the much anticipated National Ship building strategy paper been quietly shelved and ignored- there is no new knews from the government or the MOD on how they are going to comply with the logical and sensible recommendations from the report.
    Seems HMG are going to just ignore it and continue with the perilous state of the RN (just 19 surface warships)
    What the RN needs asap is clear to everyone and anyone, who has even a slight interest in UK national defence:
    Replacement for HMS Ocean (or at least retain her until 2023 to buy the RN time to get a replacement planned and built)
    An anti-ship surface strike missile fit- Norway and Sweden both have suitable weapons as do the Japanese- all of whom are allies and would no doubt be delighted to supply the RN a much needed replacement for the soon to be decommissioned Harpoon- an interim off the shelf more advanced weapon could be fitted rapidly whilst we wait for MDMA to deliver into service the new Perseus ant ship missile in the future (anticipated in service in 5-15 years).
    Mk 41 VL strike cells for type 45’s- fitted when the ships are in dry dock having their power supply problems fixed.
    8 type 26 frigates with a plan for perhaps another 4 as a batch 2 order in the future- why can we not keep this as an option- the UK GDP is forecast to grow by 2% per annum under current forecasts for foreseeable future- with the UK anticipated to grow faster than any other Western developed nation- including German and US
    Type 31 frigate needs to be ordered in adequate numbers to actually get the RN out of its current warship malaise and dangerously weak state. I would think 10 hulls needed with a cost of £250-300 million per hull. the type 31 must however have comparable weapons or better weaponry fit than the type 23’s they will be helping to replace.- so Sea Ceptor, a CIWS- possibly RAM, laser point defence weapons mount? torpedoes, hull mounted sonar, helicopter hangar for lynx sized aircraft but flight deck for Merlin, 5 inch gun and some 30mm weapons mounts. The type 31 needs to be a credible and capable frigate not a glorified OPV.
    At a time when Australia, Canada, German and the US are looking for a future frigate by ordering sufficient numbers of type 31’s (10 at least) will help to provide a shot int he arm for UK plc and shipbuilding as a whole and give confidence to our allies to order the design themselves- with potential large export orders for UK industry.

  2. At the risk of sounding like a broken record, no national shipbuilding strategy can survive without a 50 year timescale and a good plan of volume. Why 50 years? Well that is due to the lifecycle of the carriers and also constitutes 2 nuclear reactor lifecycles for the Subs, it also gives industry time to plan and invest. Lastly it gives everyone time to even out the build into a manageable yearly cost.

    I am also a big fan of splitting the strategy into 4 components

    Major surface combatants
    Surface Support
    Submarines
    Small vessels (less than 30m)

    My proposed 50 year build cycle would be for the following (with the exception of the carriers all other volumes represent 2 build cycles – half for actual fleet numbers).

    2 Carriers – Cost £8bn. (2)
    80 Escorts – Cost £64bn (32 T26, 48 T31)
    40 Support – Cost £16bn (9FFT, 9JSS, 2 Fwd Repair)
    8 SSBN – Cost £40bn (Successor)
    20 SSN. – Cost £25bn (Astute)
    12 Survey – Cost £2bn (Survey)
    120 Patrol Boats. – Cost £1bn (Safe boats Mk6)
    360 Attack Boats. – Cost £1bn. (CB90’s for RM and SFG)
    360 MHVC UV – Cost £1bn. (Remote Atlas Arcims MHVC systems)

    Total cost of building this volume of assets over 50 years at today’s prices is circa £150bn or £3bn p.a. So the question is can the UK afford £3bn p.a from it £40bn p.a defence budget to build a modern and highly capable fleet of ships that provides both volume and cutting edge over the next 50 years or are we going to keep on cutting whilst spending more money on life extension programmes that give us second rate assets and poor morale.

    The above is the cost of building the vessels to its operational standard and does not include lifetime support. By ensuring we build and renew these vessels at 25 year periods with a single major refit at year 13 of their lives we should be able to significantly reduce the support costs of these assets over their lifespan. I would set a target for the through life support to be no more than the value of the ship with a further allocation assigned to resource, therefore the RN smoothed annual budget should look something like

    Ship build £3bn p.a.
    Infra & Support £3bn p.a.
    Personnel & Welfare £3bn p.a.
    Weapons £1bn p.a.

    So a more navy supporting the UK’s interests would cost circa £10bn p.a. – good value in my opinion.

    Poblem is too much money is being wasted and not enough being allocated to the front line, this is the responsibility of the senior brass to resolve as their credibility is disappearing fast with the political class.

    these will provide the bulk of the fleet and I would like to see 16 T26 (with Sampson Radar and full spectrum capability – our A.Burke class if you like and 24 T31 with Artisan Radar and full fit.

      • Note that there are no OPV’s, No Minesweepers and no dedicated Amphibious craft in this proposal.

        OPV’s are not value for money (IMO), especially when we are short of fighting craft.
        The Karel Doorman class of JSS used by the Dutch can easily take 6 Merlins or 2 chinook as well as acting as a solid stores supply ship – a bit of work on 4 to bring in docks and you have a multi purpose asset that can conduct a large number of roles (inc. hospital)

        Mine hunters will be replaced by Type31’s with Arcims, thats the future its just a matter of scheduling.

        Type 26 with Sampson and a full weapons fit can replace all Type 45 and T23 assets.

        We also need Ospreys on the carriers – sooner we make this decision the better , both for refuelling and for EWACS.

        The small ships are probably even more important as we need an assymetric combat threat that would allow us to swarm attack if necessary. The Safeboats and CB90’s are just amazing value for money and the ability to land 800 marines in 40 boats under fire is something this gives us

    • Although I like your posts they depress me a bit because I keep thinking “if only”. A properly funded, well thought out long term plan such as your suggestion that allowed a proper drumbeat for construction, without all these slowdowns and delays in builds that add so much wasted cost (e.g. the > £1bn added to carrier costs because of the slowing of the build schedule), could get us so much more than we have now.

      In fact I think your figures might under-estimate the benefits to be had from a proper drumbeat being maintained. £25bn for 20 SSN over 50 years is one every 2.5 years at £1.25bn each. Even at the end of the bumpy 7 boat build program I think final Astute units will be under £1bn and rumour was that BAE offered to add an 8th at a really affordable price (£0.5bn?). Similar comment on 80 escorts over 50 years for £64bn. That’s an average £800bn each for a mix where 60% are the lower priced T31 or a future replacement class. With a proper drumbeat it’s conceivable that the full-fat T26 could end up in that £800m range so if anything more might be achievable from your properly planned £3bn per year shipbuilding spend. If so then personally I would use the unallocated budget to add at least 4 Astutes to the 50 year program to give 12 in service at any given time and even more if possible.

      • Julian

        It is depressing unfortunately we have got into the habit of costly life extension programmes that seem good value but really are not.

        Some of these ships are getting £100m refits every 10 years which is just wasteful. Build them and run them into the ground – the last 5 years of an escorts life should be spent on anti drugs or constabularly duties and the latest ship should be put into the front line defensive/offensive roles. With 40 escorts you will have the ability to build consistently and cycle them through to less demanding roles as they get older, but not spend millions updating and just accept their fate.

        Eddie Stobarts manages its fleet of vehicles through a managed lifecycle that optimises through life costs – the MOD seems unable to do so across all its forces.

        As for top brass – I think they should resign in shame – instead of moaning about mismanaging the 5th largest defence budget in their memoirs….shocking

  3. So this Treasury (not MoD, not MoBusiness) strategy boils down to laying off the only workers in the UK skilled enough to build complex warships like frigates & destroyers, and giving their work to a bunch of box builders so they can learn how to build frigates in bits and pieces? Then expensively transport the bits to an assembly site where hopefully they all fit.

    Got winner written all over it. NOT.

    Parker worked at Appledore and BVT, his report recommends giving them work at the expense of Bae. What a surprise.

    British stupidity at it’s finest.

    Take a look how other countries do it. They invest all their efforts into one or two national champions. Concentrate the investment, skills and efficiencies in one or two places. That’s how you do it.

  4. Virtual Ship Building is what we have now. There really is a complete lack of imagination and drive here. I believe we are at a crucial moment in defence with the revolution in electronics and AI making this era as significant as the advent of gunpowder. It really pains me to read that the Admiralty has been mulling over a new frigate design of what, eighteen years? If this is anywhere near true then it is a complete disgrace. I really do question the quality of our national leadership and those in uniform seemingly more intent on advancement than the security of this maritime, repeat maritime, nation. An old saying is “A fish rots from the head”.

    • Hi Barry

      18 Years is optimistic – probably longer and yes it is a disgrace. It gets worse the more you know about it actually, the carriers is just laughable but will turn out to be groundbreaking I believe, Astutes are world class after we got a set of Americans in to tell us how to build them efficiently. Where we are really lacking is in escorts as the French and Germans are light years ahead of us. Take a look at FREMM or the MEKO class – never mind the new French FTI/Belharra.

      The key here is lack of vision, strategy and commitment that means a budget is prepared every 5 years and is cut within those five years, when the industry investment horizon is measured in decades. It is time we committed funding to capital assets separately from the Armed Forces operational budget. I also think perhaps a parliamentary committee should have oversight of funding for this. We have to get away from the short sightedness of British Politics and our rubbish generals.

      Take a look at the USMC and the IDF both very efficient militaries doing innovative things on limited budgets. It can be done.

      • Thank you pacers. The late Professor Anthony King, who has just passed away, cited the U.S.M.C. as a possible model for Britain’s armed forces two or three elections back (King was a politics prof.) and I believe he was correct. More shocking news today regarding our now somewhat defunct submarine ‘fleet’. I believe the Astute business was down to not having built any nuclear submarines in something like twenty years! Armchair critic or not, I think even I could do better than this present mob in Whitehall and I willingly forgo the usual gong for failure!

      • I agree that it’s tragic how many expensive twists and turns and periods of completely standing still we seem to have on the way to an end result, e.g. carriers and Astutes as you mention.

        Even though the end result is often very, very good, again e.g. carriers (probably) & Astute, they end up costing us way more than they should have and arriving years later than they could have.

        I think T26 (if it ever arrives) will be another to add to the examples just listed. I have reasonably high hopes that it will be significantly better and more capable than both MEKO and FREMM but yet again more expensive than it should have been and later in service than it could have been.

        Can T31 break the pattern and deliver a world-beating product within reasonable cost and timescale? Let’s hope so but I confess that on past record I’m not optimistic.

  5. In truth I think the National Shipbuilding report misses an opportunity.

    As stated above I think we could have enough work to sustain 4 yards with proper fleet management and scheduling:

    Complex Warships To be built in Scotland (subject to assurance on staying within the union) – otherwise Camel Laird (8 per 5 years)

    All Support and small ships fleet to be built at Camel Laird (4 support and 85 small craft per 5 years)

    Subs at Barrow (3 per 5 years)

    Surface fleet maintenance should be conducted out of Devonport.

    This places all of our shipbuilding on the west coast – Given the constant threats from Scotland it should be considered whether to place the complex warship builds (Frigate Factory) at Camel Laird and provide scotland with the support contract. But that is another discussion entirely.

    We don’t want to spread these contracts too thin – to ensure we are efficient and cost effective but spread the risk.

  6. If I was Defence Minister I would implement a ship building strategy that would be very difficult for my successors to cut away at in the future. Sir John’s suggestion of having several yards all capable of building ship blocks means that someone can cut ship numbers and close a yard.

    I would ships built in a configurable way in a yard for building big hulls or a different yard for building small ones. Then Devonport and Portsmouth would fit out each hull with sensors and weapons in which ever configuration is needed. They would also do the mid-life re-fits by easily removing the weapons they fitted 15 years earlier and replacing them with new versions.

    Imagine the Type 45 hull used as a blue water escort with 2087 and Sampson, or used as a mother-ship for CB90’s with CAMMS and a 127 gun, or used as a research / survey /support ship like HMS Scott or RFA Diligence. We could easily have 30 hulls of this type and keep a permanent production line open. If we recycled them in the same yard they got built in then that would be even more work for British workers and if anyone tried to cut ship numbers or close our specialised yards that would be difficult.

    I would also not move all our submarine facilities to Scotland. I predict that IndyRef2 will happen and that we will want to have submarines for longer than we will have access to Faslane.

    • Couldnt agree more Tim,

      We closed Devonport dock (frigate factory) after a major upgrade – your idea of weapons fit out at Portsmouth is fantastic and very logical, and on T45 if we have fixed the propulsion issues we should then put this into the T26 class as my understanding is that it is 30% more fuel efficient than normal propulsion systems.

      What is the point in building somehting cutting edge if we dont then learn from it and move it into other classes when it is mature and all the problems are resolved.

      I think we have to spread the surface fleet build work across 2 yards just in case Scotland does leave the union.

  7. Bit late to be leaving a comment on this but nevermind. The 2009 TOBA has to be looked at both ways. It creates a monopoly, but at the same time offers some protection to retaining and apprenticing shipbuilding skills – and facilities. It runs out in 2024, so any new strategy can’t be fully implemented much before then, but some detailed planning can be done. And I agree with the last comment, the strategy does provide flexibility in case we (Scotland) leave the union.

    I think that for longevity in keeping shipbuilding in the UK / rUK, the design cycle has to be cut drastically, reuse made more in terms of shared design and system architecture, less critical criteria for the final design, and hence a cut in cost enough to make it competitive for export orders. There is indeed too much money spent on longevity refits.

    It’s a case of philosophy and getting rid of entrenched attitudes that the UK has to be the best in the world. No it doesn’t, it has to be able to afford an adequate navy to do the jobs required. The argument of quality over quantity only goes so far. As Stanhope put it (and the other services): “We’re running hot”. You can only do that for so long.

    Interestingly it might actually be a good idea for UKDJ to look at Independent Scotland, and how we might do things …

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