Perched on platforms 20 metres above a dry dock on the banks of the River Mersey in north-west England, teams of workers are wielding giant brushes. The bright red ship’s hull they are painting stands out against the blue sky.
Britain’s new polar research vessel, the RRS Sir David Attenborough, is nearing completion. It has done much to keep Cammell Laird’s sprawling Birkenhead shipyard busy. But after building seven ships in seven years the glut is coming to an end. While the yard has won long-term maintenance contracts, 2019 is shaping up to be a critical period as management seeks new construction orders.
It is bidding to build new Mersey ferries but the company is eyeing a more lucrative prize: five Type 31e frigates for the Royal Navy. The competition, along with a second to build three support ships, is at the heart of a government national shipbuilding strategy launched in September 2017.
Its aim was to end the industry’s decades-old boom-and-bust nature, kick-start a renaissance of naval engineering expertise, sustain thousands of jobs and boost regional economies.
Shipbuilding and ship repair is a £2bn industry that directly employs nearly 32,000 people and supports a further 20,000 jobs, including in the wider supply chain, according to official data.
But it is in long-term decline. Commercial and military orders to UK yards fell by 80 per cent from 1975 to 1999 compared with the previous 25 years. By 2016 the UK’s global market share for commercial orders had fallen to 0.4 per cent, compared with about 50 per cent 70 years ago, Dutch researchers reported in 2017.
Eighteen months after the strategy was launched no new construction orders have been placed. With the impending completion of two aircraft carriers, anxiety in the industry is rising as yards struggle to stay busy. Babcock International, the defence group, said last month that 150 jobs would go at Rosyth. Appledore, its yard in Devon, is due to close this month after failing to secure further orders.
“There are concerns about the next programmes,” said Christopher McHugh, director at the Society of Maritime Industries. Steve Turner, assistant general secretary of Unite the Union, is more critical: “If only there was a strategy. It seems to be to offer work to yards outside of the country.”
The strategy was a response to an independent review in 2016 by industrialist John Parker. It recommended that ships be designed in a way that would make them attractive to foreign buyers to increase exports and collaboration between shipbuilders, reversing a policy that had left BAE Systems the main supplier of naval vessels.
Yet industry executives and unions say there is a gap between the strategy’s ambition and reality. While BAE’s yards on the River Clyde in Scotland have been busy for the past 18 months on eight Type 26 frigates, the broader outlook is less certain.
The different procurement approaches adopted for the Type 31e frigates and the support ships is a case in point. The contract to build the frigates is being offereddomestically, while the second has been put out to international tender.
Tony Graham, Cammell Laird’s chief operating officer, said the review’s advocacy of collaboration was “quite difficult to detect in the national shipbuilding strategy”. “It is quite hard for the industry to judge whether the government are trying to achieve collaboration across the enterprise or to drive efficiency through competition.”
Three teams led by BAE, Babcock and Atlas Elektronik UK have been shortlisted for the Type 31e competition — seen as a test bed for the strategy — but there are concerns about the cut price budget of £250m per warship.
“If you want a ship that can be deployed in areas where people shoot at you, you cannot get one for that price,” said Francis Tusa of Defence Analysis, a newsletter.
There are other concerns about the support ship competition. The decision to put it out to international tender has stoked fears of an uneven playing field with foreign yards that are backed by their governments. A UK consortium, comprising BAE, Babcock, Cammell Laird and Rolls-Royce, has been shortlisted alongside four overseas yards.
The Commons defence select committee has repeatedly questioned why the Ministry of Defence has not classified the three vessels as warships, which would exempt them from EU laws preventing protectionism.
John Spellar, a Labour MP on the committee, said the department’s “stubbornness” over the support ships tender was “incomprehensible”.
“It’s short-term thinking . . . They should not let themselves be ripped off but they should recognise the impact on shipbuilding as well as on the wider supply chain if this contract goes abroad.”
John Murray, chief executive of the Society of Maritime Industries, said that some 70 per cent of a ship was its systems. “It’s really not about just banging bits of steel together.”
The MoD said the Type 31e competition showed it continued “to invest in British shipbuilding”. “Our £3.7bn Type 26 programme has secured 20 years of work on the Clyde and more than 4,000 jobs across the nation,” it said.
Some experts believe an entirely new approach is needed because the industry’s volatility is one of its features.
“For 100 years now we’ve been talking about when is the market going to return to normal,” said Paul Stott, of Newcastle University. “The market is normal. Shipbuilding demand very significantly rises and falls.”
The government and industry needed to manage the volatility, he said, adding that one way would be through greater automation.
Others, such as Mr Tusa, point out that France and Italy have successfully consolidated their warship building. “The rose-tinted spectacles view of having a shipyard on every estuary in Britain is simply not realistic,” he said. “There is a reason why the naval shipbuilding industry was reduced to the Clyde. Britain plc simply does not order enough naval ships.”
Get alerts on UK business & economy when a new story is published