Unable to follow up their success building OPVs for export, and with no other orders forthcoming, last week Babcock made the sad announcement that the Appledore shipyard will close in March 2019. Here we examine the background and potential impacts of this decision.
A history of boom and bust
The Appledore yard has been building ships since 1855 under a variety of owners and has faced closure on at least 3 occasions, only to be saved by new buyers. In addition to naval vessels, historically the yard built commercial coasters, tugs, dredgers, ferries and large yachts. Since the 1990s the majority of the work has been naval, securing the contract to build three fine vessels for the RN, survey ships HMS Scott (1997), HMS Echo and HMS Enterprise (2002). The yard constructed blocks for the QEC aircraft carriers and delivered the first section of HMS Queen Elizabeth for assembly in Rosyth in 2010. Babcock scored a rare victory for UK warship exports in July 2010 when they won the contract to build three 90m OPVs for the Irish Naval Service (Average price £55M). The customer was very pleased with the ships and placed an order for a fourth and final vessel, the Lé George Bernard Shaw, delivered to Cobh on 11 October 2018.
The main construction dry dock on the site was covered in 1970 and is 3,958m2, served by two 60-tonne overhead cranes which together can move fully outfitted blocks up to 100 tonnes for assembly. In addition, there is a 26m x 30m covered facility used to fabricate further units or build small craft. The outfitting and commissioning quay can accommodate vessels up to 200m in length.

A community pays the price
As work on the Irish OPVs has tailed off, for the past few months, 140 workers from the 199-strong Appledore workforce have been making a tiring 4-hour daily commute to and from Plymouth to work in Devonport Dockyard. Appledore’s workforce has been declining in size for some time but Babcock will not make anyone forcibly redundant, promising it will offer jobs at its other sites to the remaining 199 workers. This will probably entail the majority relocating permanently to Plymouth, Rosyth or Faslane. This will be an unwelcome upheaval but a less bleak future than for many shipyard workers who have faced redundancy elsewhere. The greatest impact will be felt by businesses in Appledore, Bideford and in the wider North Devon economy which has little manufacturing and is heavily reliant on farming and tourism.
Reasons for closure
The ideal work for Appledore would be small-medium size commercial vessels, OPVs, minehunters or hydrographic ships for which there is no immediate UK demand and stiff foreign competition for overseas orders. Babcock has strengths in many areas but their history as an engineering service company does not equip them well to compete for new commercial ships in a very tough market. A strategy that relies almost entirely on naval work is high risk, especially after the work on the QE carriers was complete and in view of BAE System’s domination of the market. The revival of Cammell Laird and Ferguson creates further pressure on Appledore by adding capacity to UK shipbuilding.
Steve Turner of the Unite union suggested that “At a stroke, ministers could secure the future of Appledore by lifting the delay to contract the Type 31e frigate programme and guaranteeing that the Royal Navy’s new fleet solid support vessels are designed and block built in yards across the UK”. This is a rather confused view of the situation. The Type 31e tendering process is already underway again and the brief pause and restart will have only a minimal delaying effect. Babcock is in a tough competition with BAE Systems and Cammell Laird and the odds of them winning are about even. Type 31e is scheduled to be a very rapidly implemented program by historical standards, even if Babcock win the contract, first steel would not be cut until the second quarter of 2020.
Although the yard could potentially construct parts of the ships, in truth Babcock is not dependent on Appledore to in order to construct Type 31e. They have considerable capacity at Rosyth for both construction and assembly where £100 million was invested in infrastructure to support the build of the QE carriers. Number 1 dock is of sufficient size for two Arrowhead 140 frigates to be constructed simultaneously. (Although this raises interesting questions about alternative options for dry-docking for the aircraft carriers) There is speculation Babcock is negotiating to purchase the Goliath crane from the Aircraft Carrier Alliance so it could be used to assemble frigates or potentially, the FSS.
The Babcock-led ‘Team 31’ consortium also includes partnerships with other shipbuilders, Ferguson (Glasgow) and Harland & Wolff (Belfast). At a media briefing as recently as May 2018, Babcock stated their plan was Appledore would build midships superstructure sections of Arrowhead, while the bow would be built by Ferguson and hull blocks by H&W. The closure of Appledore will see this plan revised, probably with more blocks fabricated at Rosyth or in Belfast.
The FSS design is at a very early stage, even if a UK based consortium were to win the construction contract (far from certain), steel for FSS would not be cut until late 2020. In other words, even if Babcock are involved in Type 31 and/or FSS, there would be a gap of at least 18 months before any work begins and the capacity exists in other yards British anyway.
Appledore represents spare naval construction capacity right the moment when there is a lull in new ship construction happening in the UK. Only the BAE Systems yards on the Clyde with their Type 26 frigate order book can look forward to the next decade with absolute certainty. Even Cammell Laird, flush with recent successes in winning ship repair contracts and the construction of RSS Sir David Attenborough, is contemplating making 290 workers redundant in March 2019, mainly due to a lack of steel fabrication work.

Who dropped the ball?
It is certainly fair to blame governments going back several decades for lack of coherent defence industrial strategy. Most seriously, they are also culpable for the dangerous long-term decline in size of the Royal Navy that has inevitably led to many shipyard closures. Whether blame should fall on the current administration for the end of Appledore is less clear-cut. The National Shipbuilding Strategy is an attempt to address some of the problems and there is a significant long-term naval shipbuilding plan in place. Committing to building the FSS in the UK might help British shipbuilding as a whole but would not guarantee Appledore a future. There are many vessels of all kinds that might be desirable for the RN which Appledore could theoretically construct. Unfortunately, there are not the funds, designs or plans in place to rapidly order new vessels to sustain the yard. The last hope to keep the yard open was a contract to build an OPV for the Armed Forces of Malta but an Italian yard won that competition.
The Defence Secretary visited the yard in January 2018 and was clearly trying to do what he could to help. In a letter he sent to the local MP dated 31st October, it was revealed that the MoD had offered to bring forward a £60 million package of work allocated to Devonport to provide work for Appledore. Neither the MoD or Babcock are willing to comment on the nature of the work or why Babcock did not feel it was a viable solution.
An explosive report on the performance Babcock was published in early October by little-known stock market analysts Boatman Capital Research who made serious criticisms of the company, enough to reduce its share price. Subsequently, other well-respected stock market analysts have rebutted most of the allegations in the report. Among the unsubstantiated claims, Boatman claims Babcock have “a terrible relationship with the MoD” and have been taking cash out of the Appledore shipyard subsidiary company, knowing its closure was inevitable. Whatever there veracity of these claims, Boatman clearly does not properly understand the shipbuilding landscape and make misleading assertions that “The Royal Navy’s MARS Fleet Tanker support vessels are to be built in South Korea and Appledore is slated to do the fit-out work” and “if [Babcock] shut Appledore it will struggle to win future Naval construction work, particularly the Type 31e frigate”. In 2017-18 Appledore generated just £24 million of Babcock Group’s total revenue of £5.4 Billion. The public relations dimension to the closure may be of more concern to the company than the financial impact.
Campaigns, petitions and marches urging Government to “Save Appledore Shipyard [or insert industrial concern of your choice here]” are almost always doomed to failure without a viable commercial plan in place. The yard has some future strategic value and there is much sympathy for the workforce but is the MoD expected to suddenly order new vessels that are outside the equipment plan agreed in the 2015 SDSR, just to support a single commercial entity? The MoD points out the South West already benefits from its largest spend per-head of any region in the UK, totalling £4.4bn in 2017. It would be interesting to hear what the Labour Party, who naturally supported the Union-sponsored campaign propose as the solution. A subsidy to keep the yard in mothballs for a couple of years, while the workforce continues to be temporarily deployed elsewhere might be a partial answer, but one a cash-strapped MoD is unlikely to consider a priority.
What future?
From the Navy’s perspective, any closure of its supporting industries that reduce future options must be seen as bad news. The BAES Portsmouth facility was closed at the end of 2015 and after the brief ‘aircraft carrier boom’, just three years later another English facility is to be lost. Closing another shipyards is hardly sensible in broad strategic terms for an island nation and the threat of Scottish independence has not fully receded. There may also come a time when a significant expansion of the Royal Navy is imperative and every shipyard would be needed.
Although Babcock will end their interest in the yard, the site remains owned by Langham Industries and business leaders in Devon are holding out hopes the yard might be sold as a going concern to a new buyer. Appledore has a history of coming back from the brink, having been on the verge of closure several times before. Perhaps a buyer with a new vision could still harness the considerable potential that remains. In common with the fate of so much of Britain’s maritime infrastructure, redevelopment into a marina with expensive riverside apartments is probably the depressing future alternative for the site.

In many ways I agree with the article and yet I do wonder if the ship build cycle of the RN is causing more problems than is noticed.
We no longer build ships over a time period or rolling programs but in batch.
What I mean with this is 50 years ago we would have a large ship program such as a carrier or assault ship being built in one yard, another yard would be building destroyers whilst a third frigates possibly a fourth building patrol boats. Now we build a batch of destroyers, then a batch of frigates, then we wait until they are almost at the end of there life then we start again. In the mean time some yards have had to close or cut their skilled work force meaning that when we do need them again they are not there.
BAE on the Clyde is a perfect example, with the delay of the Type 26 the government had to or at least it was a strategic move to extend the order of Batch 2 OPVs from three to five to keep the work force available for the start of the Type 26 construction program. Not only that but it appears that the cost of these vessels is way above what it should be if compared to the Khareef class.
Could Appledore build the OPVs that went to Glasgow yes would they have got the contract that I don’t know. However until the British Government and the MoD stop this build and stop principle then the ship yards will never have a solid base to plan investment and expansion. Not only that but the build cost will become more expensive and take longer as shipyards would need to retool and retrain.
An example of what I mean is the Type 45, well they were built in a batch, now that they are built the destroyer tooling is gone, if we need a new destroyer we need to start again. What in my opinion should have happened is once the first batch was built the MoD should have looked at them in operations and then incorporated either new ideas or improvements and then build say two every five years possibly selling of the first vessels once the new one come on line. This would give a rolling program. By the time the Batch 3 vessels were coming on line Batch 1 would have been sold and the designs for the Type 46 would be completed. Not only would the design have been completed but it would be an increamntale step rather than a block step in the design as the designers would take all of the batch three concepts and use that as the base template.
This gives a steady drumbeat of work meaning that ship yards can plan. It also means that the RN would not face block obsolescence such as it did with the Type 42 destroyer and as it is now with the Type 23 frigate. Yes we have spent a lot in the stealth capability of the QE carrier and the Type 45, but with an escort of Type 23 unstealthy frigates what was the point, we will only have a stealth battlegroup in 2028-2030. By then the Type 45 will be 21 years old and ready for replacement, all six within four years of each other. However will we be able to replace them. I don’t think so as the Type 26 will still be in production and BAE Glasgow seems to be at the moment the only yard able to build complex warships. So it will mean block obsolescence
Something tells me that we possibly need to return to the Royal Dockyard idea where the government owns ship yards to build the ships that the RN need and the private yards to build the one off vessel such as a carrier or increase the capacity of the Royal Dockyards.
We also need to sort out the issue once and for all with Scotland as we cannot have the situation where the RN is being held hostage. Possibly for the next generation of ships it should be suggested that they are built in the other home countries until Scotland makes up its mind what it is going to do.
So what the yard really needed was for Babcock’s sales department to find some/any work in the years from the last Irish order until today. One or two more jobs would have got the yard though to the possibility of U.K. military work.
You do wonder if the yard “was not a priority” of a sales team focused primarily on military support work rather than civil or Mil new small/ medium sized new build ships.
Tim H,
It was a priority. But there are many competitors who fabricate more cheaply by outsourcing to places like Romania. It is very difficult to be competitive when set against much cheaper labour rates and steel prices.
Then is the unfortunate but real situation that the U.K. has to much shipbuilding capacity for the government controlled work.
May be the die was cast when Appledore didn’t win the Polar Research Ship that went to CL? That ship delayed by 18 months would have filled the Gap.
And check this out. The price of a smaller Chilen built Polar ship than the new UK one. http://www.noticiasmagazine.sener/55/up-to-date/marine/foran-selected-for-the-asmar-antarctica-i-project/#0
The order went to an Italian Yard. labour rates are higher there and steel prices are steel prices.
Given the willingness for Babcock to do the Shaw at virtually the same price as the contracted 3 P60’s I’d say the sales team was willing and ready to try and get other work (remember without the unplanned Shaw the yard would have been out of work 2 years ago), they were looking at the Maltese OPV order but missed, maybe they were hoping that the Irish EPV would go out to tender?
Your comment is correct the unions thought that the sales team weren’t looking hard enough
For strategic reasons, ie the Chinese and Russians, I would say mothballing the yard would cost very little in the scheme of things. We should have already embarked on a major shipbuilding plan, but we will most definitely need to soon.
The cost of keeping the yard in mothballs won’t be small. The company that owns the land will want compensation for not being able to redevelop the site. A housing/marina in North Devon is potentially a very profitable project.
You are right in terms of a peace time economy but unless, primarily Chinese and to a lesser extent Russian aggression are not dealt with now it will be a small price to pay for the precious ship building capacity which we will need.
They, government, never learn it was the same with the railways close many miles down in the 60s now they suddenly find they need to reopen them, what a waste of material and manpower you can’t keep playing around with national assets opening and closing.
The real issue is the loss of people skills. You can lay concrete and but up sheds quickly. What you cannot recreate in a hurry are people skills
It’s a shame, hopefully a new buyer will be found. The only light at the end of the tunnel is I think the Type 31 will be built in Cammell Laird and it will be nice to see an English yard building ships for the Royal Navy again. I also think the solid support ships will be built in the U.K., I think the government will want to be seen to support British industry for once, they will be assembled at Rosyth with blocks built around the U.K.
An informative, well balanced article as ever, thank you.
just an observation or two…
the timing of this action could not have endeared Babcock to HM Government, surely, with the Type 31 decision pending.
could something creative have been done with the contingency funding for BREXIT, to bring back/adapt the batch 1 rivers for border patrol, to keep the yard ticking over (could this be the £60m work proposed?)
Perhaps all is not lost, if the yard is indeed owned by a separate business who might look to sell/lease to another ship builder
The success of the design, build of RSS David Attenborough suggests to me a sister ship would be a way forward,
anyway…
I’m not sure these ideas would fly. The work needed to adapt the B1 Rivers would be negligible and wouldn’t involve much if any steel fabrication. The is no budget for another big RSS.
Another problem is that without a controversial change in policy Appledore would not be sure to get any work created. Currently new government shipbuilding contracts would need to go out to tender. The government could restrict the tender to U.K. yards but not direct the work to Appledore without a change in the procurement rules.
I would like to see the proposed MCM vessels (steel hulled with remote operated vehicles) piloted with an initial vessel, this type of vessel would seem ideal for Appledore. However I don’t see any enthusiasm in the MOD for MCM replacement atm.
See final section here: https://www.navylookout.com/the-future-of-royal-navy-minehunting/
The next generation of minehunters is a decade away and could well be simple merchant conversions – ‘motherships’ for unmanned systems
I feel three questions come up for me on this matter:
1) Considering the yard has already gone bust then bailed out more than once and its core business was the shrinking offshore industry and not defence was it really a long term viable business?
2) Babcock is not traditionally a ship building company and with Appledore being a less than ideal facility is it more sensible to invest in Rosyth and Devonport in the longterm?
3) People talk about the National Ship Building strategy and Appledore alongside possible defence orders but is a less than viable yard that has failed more than once really the best place to lay long term investment via the public purse?
In a country with no industrial strategy let alone one for building ships, something you might have thought was important for an island the demise of Appledore is just symptomatic of HMG.
I can foresee some of you saying but we do have a NSS. Do we ? How many ships have been ordered? Where is 10-15 year plan signed off by Parliament committing to
a steady drumbeat of orders over that timescale. Crucially, all signed off by both main parties and not subject to drastic Treasury hatchet jobs.
We of course do have a 5 year spending review but this is too short a timescale for business to commit to upgrade their facilities in the knowledge that this will be rewarded in the long term. Indeed the current approach makes them less efficient, competitive and viable in the long term. The NSS does not address the fundamental problem of too much political interference that focuses on short term issues. The NSS is just warm words.
If we had had a long term plan Appledore would be just about to start building OPVs for the RN for next 3 to 5 years whilst BAE would have launched the first Type 26 from their Frigate factory on the Clyde about 3 years ago.
Finally, unfortunately for the workers of Appledore it is in Devon with no great sway over political issues across the UK. Just imagine if it was in Scotland or even in the North of England! This would be all over the media and the SNP and Labour would be lining up to call it a betrayal of the people of Scotland, nobody cares because we live up North etc etc.
Yes, Devonport is in Devon but it is has several marginal seats surrounding it so both Labour and Tory tend to tread carefully around this one.
As a Devonian and supporter of the RN all very sad but predictable.
And yet all we hear about is how the Clyde is “betrayed.”
High time we stop pandering to the ungrateful scots and protect English yards as Well!
Oh,so that’s your sophisticated political ,industrial and military strategy.
Still waiting for something from you beyond negative griping and “I don’t know
Oh wait well never get that because you’re a moron.
Yet more thoughtful comment
If there is any substance to the third bidder for the Type 31e, there now is a yard available as Babcock are announced they are not renewing the lease in March.
The UK naval shipbuilding industry is currently in encountering what the Americans call an acquisition death spiral.This where the equipment price increases so much that numbers have to be reduced causing the unit price to shoot up because of the need to absorb development and learning curve costs. The type 45 has expensive new bespoke systems that hadn’t been developed for 30years and the tech hasn’t been used other than in 6 ships.Whatever your veiw about the carriers,they made the situation much worse by sucking up all the cash and filling the void with something that we only made 2 off and apparently are supposed to last 50years.Building the fleet support ships will involve setting up a whole new industry for a few ships.Another problem is that the programmes are so long that obsolescence is becoming an issue.
We need to produce at least 1 ship a year,and ideally more in order to support systems development, spread risk, keep the various specialities intact and busy and aviod an absolute monopoly. As the most optimistic projection for fleet is 13 escorts we can’t do it alone and are going to have to cooperate with other nations with the same problem.Bae have an unassailable political position which can only be broken up by building more ships and not handing them all the crucial systems.
This discussion needs to focus more on the systems, as that’s where most of the value and important tech is.
The type 31e is a crash programme that isn’t really going to help most of these issues, isn’t going to be very good and won’t be exportable.
Yes, and I would bet that would be the much talked about protected UK content? Regarding the Carriers. It did sseem that when Shipyards were awarded the actual shipbuild bits, they were normally in the 10s of millions, not 100s. I wonder if an actual “shipbuild” excluding systems etc, is known.
This is just one problem we face. Just look at these European company’s websites and see how slick they are compared to any UK shipyard website. The first one is the firm who won the order for the Maltese OPV and don’t forget Malta enjoys eu funding for defence. https://www.fincantieri.com/en/ https://www.damen.com/ https://www.meyerwerft.de/en/meyerwerft_de/index.jsp The shipyard becoming a marina is such a pre 2007 thing and a nightmare we cannot return too. But it is clear that there is not Shipbuilding Strategy. One. it is only for warships and came from the MOD and Two. you cannot have one when you abide by eu laws but use an excuse that is is for value for money.
I don’t think Appledore fails, it is used then disposed of with. Appledore needs a dedicated proper dynamic shipbuilder of small-medium ships, that can also build sections for bigger projects, MOD and Commercial. Babcock, as I say, is similar to BAE, but will not asset strip this one as BAE did with Portsmouth and it’s steel production facilities to make sure there was no future competitor there. The future is not a marina for this still modern all covered ship factory. Lose this yard and lose an economy.
Also. It could well be an excuse too in the sick future of the MOD government to use the excuse and engineer (ironic) that due to lack of capacity (Appledore may not be able to build full FSSS ships, but help in the builds as with the Carrier Bow sections as an example) and timing of these contract to coincide with a little blimp in increased UK shipbuilding activity, that the FSSS will be lost to a foreign bidder, even though more is lost than gained. You do the hokey kokey, then you turn around and that’s what Political BS and undermining UK industry is all about! I will repeat too, Malta gets many funds from eu (which mean the UK as eu has no money itself) for defence. When news papers say the contract was lost due to BREXIT, who is at fault or being the bad guy? Not Britain!
Appledore is big enough to assemble the Type-26 Frigate in a covered yard. So why not ship out sections made at Govan for Final Assembly at Appledore and to be fitted out there?? Type 26 Frigates are to be assembled uncovered at Govan. Of cause, Govan maybe the ideal place to manufacture sections of warships! Maybe assembly at Appledore wiil allow other work to take place at Govan unhindered?