On 29th November Sir John Parker’s report to inform the UK National Shipbuilding Strategy (NSS) was published. Commissioned by the Treasury, exasperated with decades of continual delays and cost increases to warship construction, the report is concise and written in clear layman’s language. The 34 recommendations are eminently sensible and the report has generated at least temporarily, a warm and fuzzy feeling of consensus and optimism. Both the Defence Secretary and the First Sea Lord have welcomed the findings. The actual NSS, due to be announced by government in Spring 2017, and its implementation will of course, define whether this has been a worthwhile exercise.
Sir John politely points out the greatest reforms are needed at the MoD, although he recognises there are some talented individuals within what must be a difficult workplace. The structural failings in strategy, management, financing and accountability within defence procurement have been apparent to even a casual observer for many years. Before UK warship construction woes can be dealt with, a ruthless restructuring of project management practice in the MoD and navy is required. The report also urges that Civil Service and industry expertise within project teams is retained by long-term planning and a regular ‘drumbeat’ of orders.
“I’m pleased with the report, I share the ambition for the shipbuilding industry… as it says, we need to inject grip and pace into the way we build warships” Admiral Philip Jones, First Sea Lord.
Whitehall reform
The Treasury may take some satisfaction showing MoD failings rather than lack of funds is often the root of problems. It is much less likely to welcome Sir John’s proposal for a transparent 30-year shipbuilding plan. They are also likely to reject a proposal for project finance to be ring-fenced in advance and not subject to the MoD’s annual cash limits. This would require far better forecasting and contingency funding set aside. The RN is also likely to be wary of Sir John recommending they avoid costly mid-programme design changes. Typically an officer appointed to the MoD for a two year involvement in a project that may run for over a decade makes a change to the design, perhaps motivated by a desire to be seen to be making their mark. Sometimes there may be very valid reasons for amending a design late in the program, over 10 years technology and tactics can change dramatically. A balance must be struck between getting the ship to sea on time and budget while avoiding obsolescence. Pointedly Admiral Jones has rejected the suggestion the RN had been “too picky and demanding” in the past.
Unfortunately the Civil Service is not known for its agility and enthusiasm to implement radical internal structural changes. However there are precedents for efficiently delivering large UK naval programmes. The Polaris and Trident submarine projects (and soon the Dreadnought class) have all been managed using non-traditional structures. Oversight from a special projects office, staffed by skilled and incentivised project managers with experience in the commercial world has been successful. This system would need refinements to work more broadly but it does demonstrate when there is enough urgency, commitment and political will, complex naval projects can be completed on time and budget.
Type 31e – pathfinder to a new way of procurement
Sir John is clearly an enthusiast for the Type 31 frigate which he says should be used as a ‘pathfinder’ project to implement the new methods of management and industrial practices. He clearly likes the BMT Venator-110 design and its modular concept that can offer a menu of configurations for the RN and most importantly, export customers. He suggests the frigate project be renamed Type 31e to highlight its purpose in driving exports. Sir John advocates further automation, fuel efficiency, use of off-the-shelf technology and open architecture in combat systems for warships. This approach would certainly reduce initial and through-life costs but may not produce the most capable fighting ship. There is a fine line between a cheap, flexible design that is a great job creation scheme, and a credible warship design that can hold its own against evolving threats in the 2030s and 2040s.
As we predicted, the Type 31 is likely to be block-built using multiple yards around the UK. He considers it too risky for BAES Glasgow to be the lead-yard for both the Type 26 and Type 31 simultaneously. Whether there is sufficient technical expertise available at other UK shipbuilders to co-ordinate and integrate a complex warship project remains to be seen. The potential economic benefits of export success with the Type 31 are so attractive that sir John argues the project should get additional extra funding direct from the Treasury to get it started with some urgency. This is certainly good news for the RN and industry, if the Treasury proves capable of taking the long-term view.
Harnessing the revival in commercial shipbuilding
One of the really encouraging features of the report is the revival of some commercial shipbuilding and repair in the UK. Cammel Laird (Birkenhead), Babcock (Appledore) and Ferguson (Glasgow) have been able to win new-build contracts in open competition and have ‘no single customer dependency culture’ (are you listening BAES?) In contrast to the childish unions, silly demarcation practices and moribund management that helped destroy the industry in the 1970s, these yards have an entrepreneurial spirit with flexible skilled labour methods and the ability to manage fluctuating workloads. With a weak pound there is further opportunity for these yards to really expand and start winning foreign orders again. In addition A&P (Falmouth, Tyne/Tees) Babcock (Devonport & Rosyth) and Harland & Wolff (Belfast) also have much potential that could be harnessed for future naval shipbuilding.
The report recognises the national engineering skills shortage with an average age in the shipbuilding workforce around the mid-40s. More young people must be attracted into the job with more opportunities for training and apprenticeships. The harsh reality is that without a new wave of young engineering talent both the RN and the defence industries face a bleak future.
Sir John is keen to see shipbuilding follow the lead of other successful UK manufacturers by further embracing digital engineering technology and robotics. These techniques deliver spectacular efficiencies when constructing multiple identical units. Larger numbers of warship orders for the RN and for export would therefore make even greater savings. BAES Maritime division receives a polite rebuke from Sir John who says the Type 26 program should be used by the company to considerably improve its efficiency. It must become globally competitive, instead of being subsidised up by the British taxpayer.
The report endorses the establishment of a ‘Centre of naval excellence’ to share best practice and standards across the warship construction industry. It would also act as a single point of contact between government and industry instead of the multiple forums that exist currently. Sir John is also keen that emerging UK commercial shipbuilding capability is used to build RFA vessels. The controversial project to build four RFA tankers abroad looks unlikely to be repeated. The DSME ship yard in South Korea incorrectly installed electrical cabling which has seriously delayed delivery of the first vessel, not helping the cause of those advocating cheaper overseas construction. It seems likely the three solid stores support ships planned for the RFA will be constructed in the UK.
Done in the right way, merchant ship conversions can offer great value for money to the navy. The report is critical of recent reluctance to consider this option. RFA Argus and RFA Diligence are good examples of this practice, both dating back to 1982 and which could be replaced in a similar manner. It would be helpful to see more willingness to adapt merchant ships that could act as force multipliers. As long range, off-board unmanned systems develop there is the another opportunity to use simple merchant conversions as motherships.
Conclusion
Amongst independent observers there is cynicism about whether any of the recommendations of the report will be implemented at all. Most of the issues highlighted have long been known but nothing has been done for years. By commissioning the report, the Treasury has at least created a roadmap to escape the current shipbuilding malaise which will be difficult to ignore. It is now up to government to properly fund, endorse and enforce the recommendations when it formulates and implements the actual shipbuilding strategy next year. Should those in power be bold enough to do so, it would go a long way to reviving the RN and have great benefits to UK industry.
Related articles
- UK National Shipbuilding Strategy: an independent report (Gov.uk)
- Type 31 Frigate – unwanted child of austerity or bright hope for a larger fleet? (Save the Royal Navy)
- Olympics-style experts may oversee building of Trident successor (Telegraph)
- New shipbuilding plan will keep Royal Navy in the global elite, says First Sea Lord (Portsmouth News)
Let’s be pro active with Brexit and look at joint production with our former commonwealth allies.
Lol
So Sir John Parker’s report attaches a lot of importance to the export of naval ships built in the UK, with the Type 31 held-up as an example of this revised approach to paying our way in this world.
What indeed is inhibiting UK-based defence equipment manufacturers from exporting their products to other countries? Well, one of the reasons is Government procurement policy itself – specifically, the business processes it uses to acquire military equipment.
Since the start of the banking and financial crisis in 2008, it has been Government policy to implement measures which will rebalance the economy away from financial services, towards the manufacturing & export-orientated sector which is seen as a driver of economic growth and wealth creation. This massive change in direction applies equally to the Defence Industry as it does to the rest of the UK’s industrial base.
Indeed, such is their determination to bring about this rebalancing, that senior members of the Government have staked a considerable amount of political capital and personal reputation in promoting the sale of military equipment to countries in the Arabian Gulf region, the wider Middle East, North Africa, Latin America and emerging nations in the Asia-Pacific region.
Notwithstanding the unprecedented marketing and credit/loan guarantee facilities provided at taxpayers’ expense to UK-based military equipment manufacturers, they remain seriously handicapped in export markets because they are unable to satisfy the fundamental demands of foreign Governments to provide, at the outset, a firm Selling Price on a whole-life sustainment basis for both, the prime equipment and its associated Support Assets – because their national Treasuries insist on it, in a way the Chancellor of the Exchequer has not done. After all, the cost of acquiring and re-provisioning Support Assets for the full in-service period can be in the order of, four to five times the prime equipment costs.
This shortfall in Defence Contractors’ capability has come about because their primary customer, the UK MoD (for whom the equipment is specifically designed and then rebranded for export as an off-the-shelf offering) has always had a preference for buying Support Assets for its military equipment separately, on a piece-meal basis via a steady stream of Post Design Services (PDS) Contracts let during the in-service phase, as and when the need arises rather than upfront, at the time of acquiring the prime equipment – despite the spin to the contrary from MoD.
The simple fact of the matter is that the ability to identify, quantify and then confidently price Support Assets can only be accumulated progressively as the Technical Solution is being advanced during the design, development, systems integration and prototyping phases of each equipment acquisition programme – it cannot be gained overnight! Central to the quantification of Whole Life Cost is the systematic determination of the inherent reliability of the prime equipment, bottom-up, starting with each individual Maintenance Significant Item. A methodology that has not been applied by Defence Contractors because they have not been specifically directed to do so by MoD.
So as a direct result of this tried-and-failed policy applied by MoD over the last several decades, UK-based Defence Contractors looking to export their existing, off-the-shelf products are seriously handicapped because none of the potential export Customers are buying Support Assets using PDS Contracts. It would also explain why Contractors are having such a hard time closing out those huge foreign military sales. The more MoD persists with continuing to buy Support Assets using PDS Contracts, the longer UK-based Defence Contractors will remain handicapped in export markets, and the longer the UK economy will remain grossly unbalanced.
If one is looking for a firm link between ill-conceived policy and the poor state of the UK’s defence manufacturing sector, then this is it!
Given this disastrous situation, one would have expected the Defence Industry to speak out and lobby Ministers vigorously, to abandon this policy of buying Support Assets separately, using PDS Contracts. Not a bit of it – indeed the silence from Industry, most notably the Select Few, is deafening. This only serves to prove the point that the Defence Industry cannot be relied upon to help formulate policy which is in the best interests of the State – only its own.
To add insult to injury, the lack of confidence in the robustness of any Whole Life Cost pricing data that may have been cobbled together hurriedly (using the thoroughly unprofessional wet-finger-in-the-air technique) and submitted by UK-based Defence Contractors, has given export Customers the leverage to extract significant concessions, such as, real transfer of technology and licensed production of lower-level Maintenance Significant Items through off-sets, to boost growth of their own industries, at the expense of business for small and medium-sized enterprises back in the UK – in the, not unrealistic belief that, these indigenous businesses are likely to deliver manufactured components much more cheaply than corresponding companies in the UK, burdened with higher overhead labour costs.
So much for MoD’s policy of making sure that the needs of export Customers are taken into account at the outset of new equipment acquisition programmes, to build-in exportability considerations!
@Jag Patel on twitter
Thanks Jag. Interesting and insightful comments from someone who obviously has deep understanding of defence procurement issues. It would seem Sir John has only scratched the surface of more fundamental problems.
From my own 20 years working in the industry of education, employment and training, I have said repeatedly, given the current funding regime in higher education, that certain ‘strategic’ degrees should receive a major subsidy from government and engineering degrees are top of the list …
“Exasperated by decades of delays and cost increases” these eight words are at the heart of the argument and STILL we entrust the procurement and construction of these vessels to the same people and same yards. Wake up!
No. MOD and BAE. We never had a problem like this one before. Don’t blame the Yards and shipbuilders themselves.
Hence Cammell Laird, Babcock, A&P (Cammell laird owned), Ferguson (using Inchgreen with Cammell Laird), also Able UK (Graythorp), and the intacted Pallion yard in Sunderland. Non are BAE owned. But it’s not the fualt of the builders themselves. I wish BAE had let go of Govan for Fergusion to take over. But BAE want to wipe out all competition in Britain. That’s one reason they held on to this facility.
Consolidation just about finished, now let’s diversify again.It was obvious at the time that Labour had been suckered into a major blunder by Bae systems.lts now too late to avoid the inevitable, we are going to have to form joint ventures with other nations
To be fair to Labour, they would have handed over the MOD and armed forces (except the Paras and Marines who would be split off and rebranded as the Pres.. Ministerial Guard) to BAE if they could. Thankfully they were stuck in that weird situation where actually looking after defence was too hard and giving it up to someone else was even more like hard work. Those two governments weren’t about that kind of thing.
Has there been a true joint venture (one where two or more states work together not just happen to buy the same kit from a multinational) since Tornado where the UK hasn’t had to cover a partners costs (after giving away a lot of work-share) or put down a lot of seed money before eventual collapse?
Who would we partner with?
FREMM means the two most likely partners (the ones we have actually had some success working with) are covered for this generation.
Norway and Holland seem to do just fine without partners.
The much celebrated and often touted South Korea cant seem to deliver what should be one of if not the most simple class of ships in the Naval service.
The US don’t seem to want to partner for these kind of things.
Canada and Australia are looking for a design and advanced equipment providers who’ll also let them build under contract. Not really wanting to partner as much as be a customer.
Everyone else I can think of either doesn’t have the capability, capacity, current need or shouldn’t under any circumstances be privy to anything beyond a promotional slide.
I’d rather follow Parkers suggestions and give it one last try before we completely lose all our core indigenous defence manufacturing capability.
Planes, tanks, rifles, handguns, helicopters, utility vehicles are already gone I’d like us to be able to build, man and sustain enough ships to actually allow us to take delivers of all those essential things if the time ever comes (and our suppliers are on our side and don’t have more important orders).
The consolidation hasn’t exactly produced a efficient yards that builds to time though has it? SJP’s findings appeared to be the opposite, that the other yards which had to compete to win orders were significantly more efficient, if you read between the lines about charging out rates.
How many of the delays where the results of the yards vs constant MOD mismanagement, cabinet interference, funding delays and VSO playing “I want new shiny, shiny”? It all needs fixed and 20 years of committee meetings alone wont do it. Implementing Parkers plan would start us down that road in a major way.
The consolidation was a string of bad decisions. As much as I can hate on BAE, I can’t blame a company with shareholders trying to corner their markets. That’s the way the system is set up. I blame the governments who have allowed it to happen by rubber stamping every merger and build plan that left them as the only game in town. Time to reverse it, invest in manufacturing, invest in the RN, invest across the UK and aim to be world leaders again.
I am tired of hearing people talk about the need to compromise, whilst simultaneously refusing to compromise an inch themselves.
If everyone was really serious about reform and compromise and willing to admit there are too few hulls, too few ASW frigates, too few engineers and too little money; then T26 would be cancelled. In its place an ASW T31 would be built in much larger numbers, far more quickly and at a much lower cost per ship. It would be a near like-for-like replacement of the existing T23. The T45 destroyers would be upgraded with strike-length VLS.
This is what compromise looks like – making do with something that is not perfect but good enough to do the job. If you despise this idea ask yourself how YOU are willing to compromise, rather than passing the buck like everyone else, because…
…you will not achieve economies of scale by building 8x T26 and 5x T31;
…you will not find the money to fund simultaneous build projects from the MoD’s annual budget without cutting capabilities elsewhere;
…you will not address the shortage of engineers by operating 3 types of RN frigate all at the same time (T23, T26, T31);
…you will not secure export orders if you are not even willing to place a double-digit order for your own design of ship;
…you will not reform procurement unless you are able to show coherent leadership and concentrate on providing a frigate fleet that is not fragmented into different types.
If YOU are not willing to compromise, no-one else will either.
There’s also the Canadian frigates, 15 of them, which Type 26 is in the running for. 23 sets of eq rather than 8 might bring the cost down nicely..
It would seem the RN also needs to add personnel to its rosters and implement incentives to keep qualified staff, especially engineers and other technical positions. It does little good to have more ships if the RN doesn’t have sufficient men and women to man them.
The Engineering skills shortage for some reason seems to be most acute in the UK. Why is this? It used to be our strength and surely needs to be again. If my 1960’s education is anything to go by it is because of the failure of schools to teach the subject in any meaningful way.
I’d say it has a lot to do with the those who could become engineering types, an intelligent lot, see the decline coupled with lack of confidence and investment and decide on another career path (or country). After all you have to pay to take on that risk now, no more “free rides”, no matter how vitally important your skills may be.
Then you have the “career advice” in schools that can be summed up with “You can be anything snowflake, why not spend 40k to become a hairdresser instead?”.
and could someone refute my latest suggestion…
if they are to spend £11m on a new building for the Royal Navy Reserve in Cardiff, which I don’t begrude them, but why couldn’t HMS Ocean be used instead as a floating HQ for the same purpose?
It was good to see the word urgent used repeatedly. As too to have some rational explanation for why all of our naval procurement goes so badly.
I believe it was the treasury who asked for it and thus far it has been warmly received by the RN and the smaller yards. That of course leaves the MoD.
Unfortunately it’s going to be the mod squad that write the actual strategy in the spring. Clearly they are blameless for all the previous fiascos otherwise they’d all have been sacked so I rather suspect they aren’t going to take kindly to it’s conclusions.
Still if the treasury accepts the arguments and allocates an extra £200m a year it could become an interesting race in the early 2020s. Likely the first contract for the Type 26’s will be for three. If the usual delays and mod cockups happen, and the independent yards get their act together it might make for some interesting choices.
If it’s Urgent the order should be for 4. That said Sir John Parker raises another interesting possibility, the setting up of in house RN design capability. To have an in house Warship build capability is another. In the 1900’s this is precisely what happened to break the Monopoly of Armstrong’s and build for the coming challenge from Germany.
BAE should surrender Portsmouth yard to an RN/ Quinitec JV so they can start to design, test and build top secret drones and other stealth craft.
All those who don’t want to blame the yards and workers -have you ever worked in these places? It’s un******g believable!
8 ships is insufficient volume to get the price down. I don’t think that we’re fight much further away than the Falklands and much less than 7000nm range seemed adequate. Seemed to cope without chinook capable flightless.
Would it not make sense to just scrap the T31 & build a type 26E instead?
The T26E could be built the way SJP said by non BAESys yards without having to spend millions more on new designs/tooling machinery. The T26E would share the same hull & setup as the T26R (R stands for rip off) but maybe setup for AA or to export customers requirements? An AA version would help out with the lack of T45 for carrier escorts. Any surpluss or backlog work from export orders could be floated up to BAE and finished in Scotland which might stop the SNP moaning. (Unlikely)
T26 is going to be a big, blue water beastie.
There isn’t much of a market for them worldwide, frankly other than Canada and Australia not many other nations are looking for it.
If as most of us probably think BAE is doing a s**t job in Maritime defence and supporting the RN; then the most cost effective way to correct this is by organising some sort of board room coup to correct the situation; and set this division to work in the UK’s maritime interest; probably in some sort of new partnership. This would relieve BAE of the lead decision making and responsibility. They obviously aren’t comfortable in Maritime. The only problem is that they have many of the top scientific brains in the related fields. It just we need to have a handle on how these are put to best use without decoupling the skills entirely.
Their joke offerings for the type 31 are a disgrace.
It’s actually hard to see what the board think their long term aim is. Having given away the UK’s wing making and other commercial airplane building operations and got into bed with the US defence establishment as a glorified subcontractor and despite their privileged position in UK defence one wonders if they have a vision or purpose as an independant company at all.
I don’t see many River Class patrol vessels flying off the shelves to other Navies so I don’t see how using an existing design and stretching them by 20/30 metres is going to suddenly make them attractive and in demand for exporting in future.
We need to create a new ship (E.g. BMT’s Venator design) for the Type 31 from scratch which is attractive for export use, stealthy, will be built quickly under distributed ‘block construction’ methods in multiple shipyards and which will in turn create jobs throughout the country. We would then use this new Type 31 vessel as a marketing tool to showcase the ship and it’s weapons (E.g. CAMM, Brimstone Sea Spear, Spear 3 etc.) for export globally. Ideally we need to build 8 to 12 of these new Type 31 ships for the Royal Navy.
We, as a nation, cannot afford to buy ships from one supplier who writes out blank cheques to themselves to the tune of £1 Billion a warship.
Not many navies will buy the 150m long Type 26 from us nor will they have the cash to spend £1 Billion on it either.
We need competition to drive down costs, increase innovation and create jobs throughout the country.
We urgently need more ships.
Building a new vessel is a fantastic opportunity to create jobs, increase exports, create new and support existing supply chains and help our industries.
Buying ships only from BAE at £1 Billion each and having them made in only one ship yard is not the solution and this is clearly not working.
We should also scrap our Type 23 ships in the UK and recycle the steel so it can be used in future ships. This would create further jobs, savings and help protect industries.
The clue is in rapid build with separate facilites concentrating on the same multiple hull sections blocks, or upper works fully fitted and assembled rapidly at an integration facility like Rosyth, Pallion, A&P, or Belfast Cammell Laird Birkenhead or Inchgreen) on the West coast, for Solid Support Ships and Type 31e’s. I guess the next step is how the consortiums tender/bid and what parts of the build suite which ever facility more so for maximum effeciency in those consortia’a.
It is inefficient and un-competitive to have only tiny shipyards, each incapable of building a decent sized ship by themselves, hundreds of miles apart, with the cost associated with transporting the blocks. This is not the way forward.
We have to have at least 1 large shipyard capable of building large ships at 1 site. Either enlarge an existing one or build a new one with modern state of the art equipment.
https://hansard.parliament.uk/commons/2017-02-08/debates/A4147D78-2199-4441-A45B-03C3359DD27D/NationalShipbuildingStrategy
“I read an interesting report—Members have referred to it—on a website called Save the Royal Navy. Its opinion on the Parker report states….:”
Nice one my son….
Thanks for the heads-up. Nice to be quoted in Parliament – let’s hope the message is getting through!
A long term plan for improving the Armed Forces is an excellent idea. Unfortunately our MP’s are rather dim and only capable of reviewing their automatic annual pay and benefits package and their pension rights. The UK armed forces are a mere shadow of their former selves, thanks to the ongoing incompetence of the MOD and the corruption of BAE, and with the current senior officers I see it getting worse. We will soon be a stong as Belgium!
Tiny little Belgium produces more steel per year than us, all a part of the deliberate and organized war against British heavy industry which has been waged for decades, and is still being waged to this day.
please go to EUtruth.org.uk & Britishconstitutiongroup.com