As a result of financial turmoil surrounding the company, on 16th September administrators were appointed to take over Harland and Wolff plc. Here we attempt to summarise the complex current situation and the potential impacts for a key future supplier to the Royal Navy.
Hanging on
Although the H&W Group Plc is being wound up, the 4 yards it owns (Belfast, Appledore, Methil and Arnish) are separate commercial entities. 1,200 workers are still employed at these sites, although about 50 of the plc staff based in London were laid off last week. The future of the company needs to be resolved quickly as it is expected to run out of cash to pay salaries at the end of September.
Work on the FPSO SeaRose at Belfast is only able to continue because the ship’s owners are paying for the materials themselves. Conversion of the former HMS Quorn to M55 for the Lithuanian Navy at Appledore is being funded directly by the MoD’s Defence Equipment Sales Authority (DESA). Delivery of the vessel is behind schedule and the Lithuanians are not impressed by the situation.
The turmoil has seen the Falklands government terminate negotiations with H&W for the port replacement project. H&W has also withdrawn from the Scilly Isles ferry project as ‘non-core business’, despite the forecast that it would make £1-2M profit for the company within two years.
There are plenty of naysayers lining up to write H&W off as a basket case that can be left to fold or asset stripped. However, in the long-term H&W is a viable business, especially if the 4 yards are kept together, offering a unique shipbuilding and engineering capability that is greater than the sum of its parts. This is the view of many independent analysts including the newly-appointed interim executive chairman, Russell Downs. Progress to grow the company and become profitable was being made, revenues more than tripled to £87m in 2023 compared with the previous year and operating losses more than halved to £24.7M Profits grew by 100% annually over the last three years and had been forecast to rise by 50-100% in 2025 with the commencement of FSS and the recently awarded Falklands contract.
Debts
In simple terms, H&W is failing because of the burden of debt. When the project to revive the company began in 2019 borrowing costs were much lower with no one forecasting a sudden spike. Interest rates rose to 14% whilst steel prices jumped 50%, creating huge pressure on the company. The Tory government jointly agreed an official statement to the market in December 2023 that ministers approved in principle to a UKEF guarantee for a £200m loan from British banks at a more competitive rate. This guarantee was subsequently turned down by the new Labour administration triggering the crisis.
The majority of H&W’s borrowing has come from Riverstone Credit Partners. This is a US-based company who are concerned about the bottom line and has little interest in the wider implications. The £120M debt is due to be paid by the end of the year at which point they would take the assets, although the H&W will likely be sold before then.
A buyer of the plc would probably have to pay around £17M (10p per share) to gain control. They would be required to repay some, if not all of the Riverstone debt but the accumulated legacy losses of the company would be an asset that could be offset against corporation tax on any future profits. Essentially a buyer with deep pockets able to take the long-term view could get a very good deal on a company with a strong order book.
The shareholders group which owns 30% of H&W are in dispute with the administrators as they stand to lose their investment entirely. Approximately £150M was put into the company by these shareholders and used to redevelop facilities at Appledore and Belfast which were left in a poor state prior to being bought out. (Around 3-400 H&W employees are shareholders). Representatives of this group have now engaged the services of a KC to explore if a class action suit can be brought against either the government or administrators. If government had made genuine assurances the UKEF guarantee would be provided but then backtracked, there could be a legal case to answer.
Buyers
It is believed there are up to 21 separate entities with an interest in buying parts of H&W or the whole enterprise. As the holder of a £7-800M sub-contract for FSS, this alone makes it an attractive proposition although there are already rumours Navantia could terminate this contract.
Babcock is perhaps the leading contender, thought to have backing in Whitehall and a strong interest in acquiring the Belfast yard at least. Navantia is the other big player, assuming that retaining the FSS contract requires they carry out at least a part of the work in the UK. It would also give them a bridgehead to compete for other UK naval contracts but a foreign ‘parent company’ might be controversial, especially as they are owned by the Spanish government.
Australian billionaire, Clive Palmer has shown interest in acquiring H&W and has developed a plan to build ‘Titanic II’ – a modern replica of the infamous liner built in Belfast. It is reported that administrators have refused to speak to him for reasons that are unclear. The former Chief Executive of H&W, John Wood is also seeking investors to form a consortium to buy back the plc. Scottish businessman, Ross McGregor has reportedly expressed interest in buying the Arnish yard.
Politics
There is a view that the UK shipbuilding should essentially be consolidated around BAE Systems and Babcock, and there is not enough work to sustain a third player. However, there is a need for a yard with the capacity to build or consolidate blocks for big ships. There are 3 naval projects in the shipbuilding pipeline that will need a large facility, including three FSS, three (or more) MRSS and the replacements for the four Point-class strategic sealift vessels. While both companies are interested in some form of participation in these projects, BAES does not have the space on the Clyde for this kind of work and is focused on complex warships. Babcock’s large dry dock in Rosyth is earmarked for aircraft carrier maintenance.
The new government has inherited several difficult industrial problems and this is a particularly thorny one. Even with a large part of the FSS work certain to be done in Belfast, Labour politicians made a great fuss about Navanvia’s involvement as a ‘betrayal of British workers’. Although it might expedite delivery to construct the ships entirely in Spain, that outcome would be very politically awkward for the current government and unlikely. It is also unclear exactly what the contract the MoD awarded to ‘Navantia UK’ stipulates about social value and how much of the project must be carried out in the UK.
This commentary has just some of the pieces of the jigsaw which make up the H&W story of conflicting corporate interests, regional and national politics and the future of the navy. Manoeuvres and negotiations are going on behind the scenes, some of which will doubtless play out and become more public in the coming weeks.
The total failure of industrial policy by successive governments over the last 40 years is estimated to have cost the UK about 5 million manufacturing jobs. This has a particular impact on defence where lack of industrial capacity is increasingly limiting procurement options. Although admirable, it must be recognised that attempts to reverse this decline through shipbuilding policy will inevitably add cost, complication and delay at a time when ships are desperately needed.
The Government could buy Belfast and lease it back to Navantia.
Totally. Nationalise it in the interim.
Totally isn’t necessary. Buying 60% of the company would be more in line with other European shipbuilders, it would inject enough finance into the company to keep it going for a few months and enough stability to get a consolidation loan at a reasonable rate and would still leave current shareholders with something to help stave off the law suit.
One option is to reimburse salary costs for six months, give the administrators time to do a deal to sell the yards. Something I would have thought everybody would like to see.
Any cash goes straight to the Vulture Capital lenders first before the workforce
If the government where to purchase the yards in whole or in part that would be true. Purchasing a small shareholding would have the effect of putting the government on the hook for long term funding for the yards.
If the government provided funding for a particular purpose, the Administrators would be required by law to spend it that way.
Its a private business, the Administrators have to look after the debtors and shareholders first.
The government would have to buy out any ‘purpose’ before they could fund it.
Place is finished let’s be honest quit flogging a dead horse. The old boys club of useless deadbeats are actually going to have to really work for their money now boo hoo.
Thanks for those kind words, there are a lot of passionate, hard working individuals in those yards that care very deeply about their futures.
Government priorities. Can find money to give train drivers a back-dated pay rise but refuse to underwrite a loan to a strategic asset in the form of a defence contractor.
A would be defence contractor that has a long history of loss making and disastrously bad management. Without a new owner with both deep pockets and strong management why would any sane organisation give the group work?
Having already given the group work, hundreds of millions of pounds worth of work, the government needed to follow through. The lack of joined up thinking is only matched by the lack of understanding of the government’s top priority, that of growth. Growth is limited by the cost of cash and in the case of H&W, a smaller shipbuilder trying to grow, cashflow would give even the best managed shipyard issues. The US is currently trying to figure how to reduce that cost. France, Italy and Spain did it through shipyard nationalisation. We just didn’t bother.
There are certainly questions for the previous administration as to why the FSS contract was awarded without a firm financed plan in place to both put H&W in a material state to fulfil its part of the contract and sustain the company until FSS revenues covered the companies costs.
There was. Or at least appeared to be…..
Where did the money go is likely to be a recurring theme here…..
If the “Boys in Blue” need to get involved it’ll turn into an even more complex mess.
N-a-B and ATH
I must admit that was wondering what the “Hot Fuzz” car was doing – speeding from left to right – across this photo (above)
Mind you, as the Police “Service” only ever turn up after all the action has ceased, it can’t possibly be heading towards a “crime in progress”
regards Peter (Irate Taxpayer)
I don’t think it is that hard to see what happened.
H&W had a runway to get a deal done and building and that was missed.
The debt cost ate too big a % of their cash flow.
It was an undercapitalised business.
The only way fowards to get some big cash flow going which would hopefully generate the Gross Margins to cover the debt and return a real profit.
Once you are off the rails of the debt curve it is hard to get back.
I’m afraid the £200m will look cheap compared to the costs of the mess.
The cost to country of the train strike greatly outweighed the cost of the pay rise.
Back dated because they hadnt a pay rise, despite the inflation meaning their pay had been reduced
It is only fair to say that not only did the current government turn down the loan guarantee but the previous government didn’t move forward with the guarantee between December 23 and its defeat in early July.
I suspect when HMT got into the details of the companies real financial situation alarm bell’s went off.
The finances of a rapidly growing company differ from that of a stable company. If the financial picture didn’t match the Treasury’s expectations, that might have been enough to set off their alarm bells. It doesn’t necessarily mean malfeasance or even bad management. Just high-risk, high-gain management. Not a profile the Treasury would feel comfortable with. There’s a reason this country has been in ultra low growth since 2008.
The question is if this shipbuilder is such a wonderful opportunity why can’t they find a commercial Leander or equity investor? I would suggest the history of losses and poor management decisions is what at the bottom of things.
Since the Labour Party ruined the pension industry in 1997, their investment in UK companies has fallen from above 50% of assets under management, to 3% today. Small and medium Companies in this country are starved of equity investment and have to turn to vipers like Riverstone. How could HW survive paying 14% interest on the huge investments they were forced to make to comply with the requirements of the FSS contract.
They did find a commercial lender, willing to hit them with 14% interest rates. What company is ever going to be able to recapitalise with interest rates that high.
I don’t think H&W would have survived with the £200m loan guarantee from the government which is why the government would not give it. If Navantia has the pockets to recapitalise the Belfast yard and Appledore and continue to invest to win the MRSS order hopefully there is a good 20-30 years ahead for the yard.
I don’t think the government wants to be seen doing an SNP and BAE and Babcock will challenge any future contracts award to H&W even though they have a full order book building frigates and destroyers post 2030.
Given the T32 looks likely to go on the back burner at best Babcock is probably on the lookout for post T31 work.
The ships are needed now
The key here is a national industrial strategy. Look at Tata steel! Knee jerk bail outs because the government has no idea if it really wants the capability. No push to win them additional work or assist in changing businesses in the national interest. If it cost money they had no interest.
Individual plans for each sector is not good enough the different sectors can help influence each other,share costs, and drive investment.
The last government was absolutely awful and developing the economy in a joined up way. Labour before were a little better. Let’s wait and see if the new government have a real plan or if it’s more of the same!
The government not having an idea whether it wants the capability is one thing.
The same government enacting polices that directly militate against that business is another. Three’s a reason UK steel plants are struggling compared to the rest of Europe – and its not BREXIT, its the lunatic energy prices we pay, courtesy of the Blair government and its successors.
Exactly, which company wants to invest in greater production capacity in their steelworks when they pay the same unit rate in electricity to melt steel (lots of units) as I do to boil my kettle (quite a lot less units). These small changes would make investment in our industries more attractive to private finance, reducing the reliance on government investing (which itself is deeply conservative in its treatment of risk), but is apparently unthinkable in government.
Lunatic energy prices ?…must be a Blair problem from 20 years ago
Is that the Windfall tax on privatised ( by Tories) utilities- where the government under priced them to make money for The city
Boris – remember him- proposed a windfall profits tax in 2022 on energy companies – which I assume helped in his removal, amoung his other foibles
Er, no. It’s not. It’s the pricing structures imposed to subsidise “green” energy and to also impose carbon offsets. Of course if you were a Brit you’d know this.
You are a Brit but only remember things before 2010
have you forgotten this from 2016
“The UK has also committed to a 68% reduction in emissions by 2030, as part of its Nationally Determined Contribution towards the Paris Agreement “
Cameron and his successors just followed Blairs footsteps from the 1997 Kyoto conference- ratified 2005 as part of EU bloc.
Is there a part of the phrase “Blair Government and its successors” that you didn’t understand?
Best get a better version of google translate old son.
Whatever option is adopted, it will almost certainly involve greater costs than if the Labour government had just honoured the pledge for an UKEF guarantee.
Would that loan guarantee have been sufficient to reequip the yard, build a trained workforce and cover losses for the next few years. I suspect when HMT got a good look at the position they realised vastly more money was going to be needed.
All
First of all, an excellent artcle. It summarises a very messy, and also very fast moving,situation very well.
Not be forgotten here is that the UK government is, in some shape or form, always the key customer here = urgently needed RN FSS; Falklands jetty; Lithuanian minesweeper etc etc
There is a complete lack of joined-up thinking throughout our government
As I posted here on NL a few month ago, this whole situation very strongly reminds me of the Bay class procurement fiasco of twenty five years ago. That was a complete stitch-up by BAe of a key competitor: one who had, quite fairly and squarely, just won a large MOD/RN contract.
If I was going to Betfred, my money would be on this fiasco having been orchestrated – quite deliberately – by a BAe source shamlessly leaking to the press (odds: Dead Cert).
With regards to the possibility of Babs Cock-Up taking the reins over,,,,,,frankly that option would be jumping out of the hot frying pan and, head first, into the raging fire.
Bacock’s senior management can’t cope with what they already have on their plates: let alone take on both a major reorganisation of another big yard and also – simultaneously – also start the FSS build. They can’t even properly organise their own yards! Their priority must now be to focus on the maintainance and refits of the RN submarine fleet = because if Babcock don’t get their act together pretty soon then our submersibles might as well be handed over to the naval museum in Gosport.
Overall, the best bet for UK PLC right now must be for Navantia to take over the H&W yard (s?) and just get on with the job in hand. Overall Navantia have both the right skill sets and also the key leadership team that we now so desperately need.
However, having talked the award of the FSS programme throught with their MD 12 months ago, I would bet that Navantia’s biggest concern right now is that the British Government’s defence procurement and industrial stratagies are all being run like those of a third world banana republic. Thus I would offer “evens” that Navantia simply walks away, probably by Xmas
Then the trade unions will probably claim that the real reason that the deal failed was that Navantia wanted to introduce paella (without chips) into the works canteen at H&W
Overall, when even tiny Lithuania now believes that the UK is crap at shipbuilding, then we must surely admit that we have sunk – pun intended – to a remarkably low point
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Lastly – and not mentioned by anybody here – is the remarkably similar fiasco that is playing out at H&W’s next door neighbour in Belfast
Because of the Boeing / Sprint / Airbus ownership fiasco, those working in the vital “Shorts” missile manfacturing plant are all also wondering what the hell is happening next year – or whether Santa Claus is going to deliver their P45’s down the chimney on Christmas Eve
Thus the UK could quite-easily soon be in the situation that two key suppliers to our armed forces are either bankrupt and/or sacking key people by Xmas.
—————————-
I must go now = I want to see on Sky News whether the Evil Empire has upped its nuclear forces to Defcon 2 and/or whether Israel is getting ready to nuke Iran
The lawyers and bean counters will still be arguing about the interpretation of clause nine and three quarters in the H&W FSS contract long after the first mushoom cloud has dispersed.
This Whitehall farce is definitely not what we need when WW3 is about to start
.
regards Peter (Irate Taxpayer)
PS Nearly forgot – Bloke down the pub is right = whatever happen next …..it will be us hard-pressed taxpayers who will be forking out yet more hard-earned wonga.
You can buy paella in downtown Belfast
Look at it from the Spanish point of view.
If the contract is moved to Spain they know costs accurately. Costs involve timeline as anyone who manages anything knows.
If even some is being fabricated in a yard that doesn’t know how to fabricate then there is a huge risk factor.
If any block are made at H&W I’d bet that the blocks are the easiest and least critical to workflows.
What is the incentive for the Spanish to take a massive risk on an unknown? Do they need the work that badly? Probably not.
Most commercial contracts contain an insolvency clause that enables parties to walk away if any of the main parties become insolvent…which H&W are.
So I suspect the chat about the Civil Service looking at the co tract is more about is there really still any kind of a contract there at all.
MoD know that FSS is more than urgently needed. If they had been ordered years ago from Korea [or Spain] we would have had at least one in service by now! MoD also know that this farce can’t keep running forever.
Hard decisions to be made to ensure RN is recapitalised.
Be careful on your assumptions re Navantia.
Puerto Real is not a naval yard. The last thing they built there were some Suezmax tankers in 2016-2020. So, they do need the work for that yard. Its one of the reasons they – alone – among the foreign primes, stuck with the FSS programme.
The MoD contract is not with H&W, it’s with Navantia UK for whom H&W are a subby – and a significant part of the social value element of the contract.
It was always a risk that something like this could happen – although most thought it was more a risk of getting enough people in Belfast, rather than finding something awry in the parent company, or more precisely, its management – allegedly.
It was still the right choice – a better ship design than the farcical Team UK offer, the build for which would still have had many of the same people and capacity risks.
I always think your posts are eminently sensible and knowledgable. What would you say would be the best way forward for FSS at this point? Build in Spain? Government to take a stake in H&W?
N-a-B
I think that, mostly, you have hit the nail of the head.
However the fact that Navantia’s Puerto Real is not a “real naval yard” is – if you don’t mind me saying so – one hell of a lot of Red Herrings in just three short words.
The FSS ships are auxillaries = for the RFA (not RN)..
Thus, whilst I fully accept that the internal layouts of FSS are more complex than the average “bog standard” oil tanker or bulk carrier – (i.e. of the type the Houthi’s reguarly attack), the FSS is still (overall) much simplier than many other specialist commercial vessels.
Furthermore, as you quite righty, said, the design of the winning FSS bid was far far better than any other possible alternative.
–
——————–
At this point, I will digress…………
I refer you to the disparaging comments made last week on Navy Lookout = about the productivity – or rather the lack of it – of our premier Scottish warship yard.
I especially refer you to the comparision made of the build times of Cunard Lines Queen Mary with Grey Funnel Cruise Lines HMS Cardiff.
I will further observe that you were “unusually silent” on that topic…
—————————
Accordingly, it all now depends of he t+c’s of the contract and – very obviously – who now pays Temple Bar’s Premier League players the most money in “transfer fees”.
Personally, I really do hope that that Spanish working practices are, quite quickly, introduced into this Belfast shipyard..
That is what the RN and UK PLC really really needs right now
Regards Peter (Irate Taxpayer)
PS Otto 456
The point I was making about Puerto Real is that in some ways no different to Belfast in that its not exactly a “hot” (sorry!) yard. It is however part of a much larger parent where they do have plenty of deployable manpower.
We’ll have to agree to differ on the complexity or otherwise of FSS. It’s not as complex as a T45 or T26 for example, but it is in terms of standards and systems significantly more complex than the vast majority of commercial ships.
Must have missed the bit about Queen Mary and HMS Cardiff. THose comparisons are rarely appropriate in any case. Apples and pears in terms of contract framework and customer empowerment.
Thales Air Defence took over the Shorts missiles business in 2000 when Shorts partner Thomson -CSF bought them out. Thomson renamed itself Thales
Its not connected the Spirit Belfast wings and other aviation structures ( Prestwick) business
Duker
First of all, an apology.
You are correct.
I should not have used that one word “missile” in my orginal post.
——————–
However, despite the fact that Thales brought out the main parts of the Belfast missile business a long time ago, the key issue today – over on the other side of the Irish Sea – is that the entire Belfast “cluster” of aerospace companies have always been very interdependent upon each other.
In total, there are over 100 aerospace companies in Northern Ireland, employing about ten thousand people. The former “shorts” aircraft factories (multiple / plural) lie right at the very epicentre of that entire socio-economic / business eco-system.
They all make many vital bits for UK defence. These are often the very-critical single-sourced componants = the ones that become the “vital inards” of any modern weapon system.
This is only happening because the corporate bean counters in both Seattle and Toulouse are now playing “to win” Big Kids Monopoly.
This fiasco is the direct consequence of Boeing having been run by amateur accountants – and not professional engineers – over the past fifteeen years.
Thus, if certain key parts / people / factories are soon to be stripped out of this “Belfast based aerospace network” = then all of the remainder will soon be suffering.
A very big chunk of them now face a very uncertain future….which is not what “Tiggers Like Best” : especially when next door neighbour H&W also needs a bailout
https://www.irishtimes.com/business/2024/07/02/spirits-belfast-unit-in-limbo-after-boeing-announces-47bn-deal/
Therefore except for me mistakenly inserting that one word = my first comment was spot on.
Overall, I was 99% correct first time.
Regards Peter (Irate Taxpayer)#
PS From now on, you can be “Mr 1%”
Boeing has had bad management certainly , but Muellenberg, who led the commercial side then CEO from 2013 for nearly 10 years during Max development and debacle, was an aerospace engineer.
Before he became part of the top management group and then CEO , he was head of Boeings military side ( not the McDonnel Douglas part) and worked on F-22, X-32 and others
Your frets over the A220 wing factory part are misplaced as clearly Airbus will take it over , just as they did at Broughton when BAE exited the commercial airliner structures. Theres another Spirit factory in US making wing parts for the A350 , that cant close either. Spirit Prestwick is heavily involved in A320 series , that cant close as well.
One of Boeings best leaders Bill Allan wasnt an engineer or accountant but a corporate lawyer
“The total failure of industrial policy by successive governments over the last 40 years is estimated to have cost the UK about 5 million manufacturing jobs.”
Amen to that, sadly.
The failure of industrial, policy has been closely related
to a total failure of energy policy in general and lack of support a Civil
Nuclear Policy.
Ultimately a nation’s defence capacity depends upon its commercial success and, in particular, its manufacturing industry.
My view:
1: H&W only got high-interest debts = this means, the market, who can access the H&W financial situation and enterprise plan, judged it is high risk. No one wanted to bet with low interest.
2: Even if the yard has a back order of £700-800M, it does NOT mean it will gain profit.
Babcock, who had only built OPVs and survey ships up to 2019, got a £1.25Bn contract (T31), and just within 4-5 years, they admitted they made a £90M deficit (in addition, they won an additional fund from HMG). No profit. Thanks that Babcock is a big industry, they survived.
Cammel Laird, who had only build some barge and small ferry (after its revamp), made a large deficit with the RN SD Attenborough contract. Big deficit about £100M was payed by the stakesholder.
H&W has not built any ship recently. How on earth can we think their “£700-800M” subcontract for FSSS will make profit? How can you be confident that the new/young H&W did a damping? Note that all the persons who actually signed the contract has left the company.
In short, assessment of the market as “high risk enterprise” looks just logical. And, HMG not supporting the £200M (so huge!!) look just reasonable.
There will surely be a re-negotiation of contract. If UK do not agree to build everything in Spain, I am almost sure that the either the unit number gets down to 2 without any cut on budget, or the budget will see at least 20-30% increase for 3 FSSS.
Just my view.
I think either Babcock or BAE buying (only) Belfast dock is the best way forward.
Surely there is not place for “3rd naval shipbuilder” in UK. See how the “promise” of NSSS has broken easily. There is no “ring-fenced” budget, and with “man-power salary increase” and/or “financial crises”, the promise gets easily forgotten.
“But the is no money?”, they say.
If Babcock or BAE buys the dock, it will enable the CVF maintenance to go to this yard = Belfast, leaving the Rosyth yard to be used for building FSSS and/or MRSS AFTER T31.
The whole list of building ships, 3 FSSS, 3 (to 6) MRSS, 4 Point-replacement is desparately needed for Babcock, because there is zero chance for T32 to be materialized before mid 2040s = replacement for five T31s.
If HMG supports H&W, Babcock will cease shipbuilding. If HMG want to support Babcock, there is no room to support H&W.
This is my view.
“ If Babcock or BAE buys the dock, it will enable the CVF maintenance to go to this yard = Belfast, leaving the Rosyth yard to be used for building FSSS and/or MRSS AFTER T31.”
Which means H&W runs as a maintenance yard. Not a build yard.
This is the most logical outcome.
They could build some blocks too as they have the space but they don’t have the skills.
Because we have had no orders, we now have a glut of orders which needs more capacity which will lead to a trough of orders. We have a similar thing in Rail: record breaking numbers of new trains delivered since 2015, there is four factories in the UK to fulfil it (up from 1 in 2010) and now that’s way too much capacity for going forward – two will have to close. I wouldn’t necessarily advocate industrial strategy, but using a bit of common sense.
That said, can any of the existing sites build ships at this scale – and exporting doesn’t feel such an outlandish prospect with the success of T26.
Yeh.
Neither T26 nor T31 succeeded in “build” export. Just design export. It will be Norway and NZ, respectively, who are the first hope for such cases. However, Rosyth can build a T31 every 1 year, and Clyde can do the same with T26. That is more than enough for RN build and “build” exports. Yes some “gap” may exist, but both T26 and T31 are young for a moment, which means not many needs long refit. Also, RN do not have redundant crew. So, a few “gap” in “must be 19” escorts is acceptable = has almost zero impact to RN.
We need those FSS, so the Government needs to step in (like it did to secure elements of the T26 supply chains, such as the gearboxes)?
The only other option – and it’s controversial, but perhaps this how we need to think – is we get them built in Spain. BUT in return Spain has to buy something from us. Maybe GCAP, helicopters or maybe some weapons (FC/ASW, Brimstone).
We are in no position to make demands of Spain.
Indeed and perhaps I worded that too strongly. For FSS a lot will depend on the contract and the most important thing is getting these ships built. But we have a number of naval auxiliaries which need replacing coming up and we do not have the space to build them. There could be scope for a strategic agreement that is mutually beneficial to both countries.
Grant
You need to get a better grip on how the nitty-gritty of international diplomatic realtionships works out in the real world
Even as we speak……some toffee nosed eton-educated pratt “employed” at the Foreign and Commonwealth Office is offering to exchange Gibraltar for three new FSS ships….
Regards Peter (Irate Taxpayer)
Hahaha! Brilliant
Grant
Unfortunately = I never joke about my work!
Progress of UK-EU Agreement in Respect of Gibraltar: Joint statement – GOV.UK (www.gov.uk)
regards Peter (Irate Taxpayer)
I wonder if BMT might be interested in partnering with Navantia on this.
Partnering in the sense of injecting money? They haven’t got anything like the amount required.
In the sense of ownership and management. The capitalisation of H&W was about £15m: peanuts compared with project costs, and a 10% stake would be of the order of hundreds of thousands post-haircut, if they were asked to pay it at all. What’s needed is trusted management. Refinancing the project can’t come from equity in the company. If it comes at all, that money will have to come from the taxpayer.
That would also require BMT to have management that understand shipbuilding, including supply chain management. All things they don’t do and haven’t got.
And that Navantia do and have. Hence partnership. However, I take ATH’s point that they would probably prefer to stay independent of shipyards.
BMT are as I understand it a design house and not a build yard. It’s not really in their interest to be to closely tied to any one yard.
What a mess! All for the sake of the UK Treasury avoiding a risky but relatively trivial loan guarantee.
Navantia canceling H&W’s subcontract and building the ships primarily in Spain is surely the simplest, cheapest, least risky (although they will be biggest ships the company has ever constructed) and quickest way of getting the ships into service. Maybe with final fit out in the UK by A&P? But this option seems unacceptable to the UK government and unions.
Navantia buying H&W seems to be the option favoured by the government, but Navantia is apparently only interested in the Belfast yard, and even then will probably want a large financial sweetener to justify the substantial investment needed.
Babcock don’t seem to be interested in buying H&W, it would prefer the MOD to cancel the current contract with Navantia (as is probably can do without penalties) and re-start the FSS competition. It would then probably submit a tender as part of the reformed Team UK with BAES. This option would surely mean a 3-4 years delay to the FSS ISD, and a huge increase in costs – probably resulting in just two rather than three ships being affordable within the c.£1.5 bn budget.
Babcock would buy it just to prevent Navantia getting a UK foothold.
That would be their prime motivation.
Would still have to re run the competition though.
Don’t think so. All you’d be doing is replacing the H&W Group subcontractor (who owned the H&W shipyards) to Navantia UK with a Babcock subcontractor (who own the H&W shipyards).
Tech solution remains the same, social value remains largely the same, arguably risk falls a little. Only issue is whether Babcock decide to take a chunk out of Navantias profits / risk bucket.
Hundreds of billions to bail out a failed business model and failed sector, ie finance or and banking sector in 2007/08 that led to even this day much hardship. Billions wasted on computer systems, billions wasted on quangos with even more in which it is clear we have an economy that is not big enough to support all this public sector non production rubbish! Give billion pounds a year in illegal invaders from dingys who produce nothing but only cost and destroy our Country, so why need defence? Yet, when it comes to a few hundred million quid and a contract worth hundreds of millions to the tax payer in claw back………..we need to look at value for the taxpayer when UK has spanked many hundreds of billions of pounds away. Yep, whichcomplete Bullshite. Time to get real the UK is crap, all due to government and certain friends. These topics on Navy Lookout are really waste of time when looked in the real World.
While not a great time to comment and seeing this tyrannical gov for what it was always going to be plus Chagos and a tablet that likes to re-write, not a good time. But my points remain. Hundreds of billions wasted on failed sectors like banking, the covid farce costs along with ppe (value for money anyone), many billion wasted with not a mention of value for money. But this little contract, that can mean so much for a industry and skills etc… Strict adherence to value for money, so break it down for us and the posh tiny 200 million pounds that was art of a four billion pound structure? This is chicken shit money, but can mean so much into a catlylis for the UK shipbuilding industry. Fifty % taxclawback, that fact that some was going to Spain was bad enough, don’t know how much BMT has sucked out of this, but this comedy has been twenty five years in the making. To abroad, then let go of the RN and RFA, it will be over!
Not to mention four billion pounds subsidy to an anti British organisation called bbc.
Hundreds of billions of pounds in subsidising a complete and utterly failed sector and model, the service finance and banking sector (not an industry). Billions wasted on computer systems that failed, hundreds of millions given to a foreign country to aid others and those others costing the UK over five billion pounds a year with only loss to the UK taxpayer and no value ever. Yet, when it comes to this, as never only here value to the UK taxpayer. So they may be built in the UK. If anyone says no, we must cease being involved in any maritime involvement, we have no right. We have become a little Country. But the positive is, total huge build of coal fired power stations!