Select Committee on Defence Written Evidence

Memorandum from the Keep Our Future Afloat Campaign

  1.  The "Keep Our Future Afloat Campaign", (or KOFAC as it is known in the north west of England), is a trade union-led lobby Campaign. The CSEU, Amicus and GMB are the lead unions in the campaign. The Campaign was launched in April 2004 in response to a further round of large scale job losses at the BAE SYSTEMS owned Barrow shipyard in north west England. The lobby also has the support of Barrow Borough and Cumbria County Councils and Northwest Development Agency. In September 2004 the then Secretary of State for Defence The Rt. Hon. Geoff Hoon MP described the lobby as "one of the most effective defence lobbies he had come across."[17]

  2.  Our Memorandum to the Defence Select Committee outlines:

    —  KOFAC's aims.

    —  How use of Barrow shipyard capacity and capability in the build of the future aircraft carriers can help reduce risk to the programme by making use of the shipyard's embedded domain know-how in building large warships.

    —  How workload gaps result in loss of skills. Level loading of work is therefore needed to sustain capability to deliver the equipment the armed forces require

    —  The importance of ordering a batch of new submarines now so they are in service to protect the carriers when operational.


  3.  KOFAC aims to:

    —  secure full utilization of the unique assets found in the Northwest region's naval shipbuilding industrial base—the shipyard at Barrow, a regional supply chain of 1,700 companies, and thousands of highly skilled people.

    —  sustain and grow jobs in naval shipbuilding in north west England.

    —  sustain design capability, located, in Barrow which accounts for 60% of the total UK naval ship/submarine design resource.

  4.  KOFAC supports introduction of a strong Defence Industrial Policy and Strategy to sustain key skills, tacit knowledge and jobs in the UK naval shipbuilding industrial base and as a foundation for SMART defence procurement, affordable equipment delivery and effective through life support of naval vessels.

  5.  We endorse the MoD Defence Industrial Strategy objective of "maximizing the battle winning capability and security of this country" through the Defence Industrial Policy.[18] KOFAC however believes it is also about sustaining jobs and skills in the naval shipbuilding industrial base in order to enable, what Lord Drayson recently described as the, "armed forces to receive the equipment they require, on time, and at best value for money for the taxpayer".[19]

  6.  The future aircraft carriers project represents a significant potential opportunity for the naval shipbuilding industrial base of North West England and the UK.

  The Government's planned naval shipbuilding programme, capacity and capability at Barrow, how it benefits and has potential to reduce risk for the forthcoming aircraft carrier programme.

  "There is to be one of the largest procurement programmes of new ships for the Royal Navy in many years, including . . . six Type 45 destroyers, three astute class submarines . . . future plans include purchase of two new aircraft carriers, further orders for destroyers, astute class submarines and progressive replacement of existing fleet replenishment ships".[20]

  7.  The planned two aircraft carriers will operate as part of a fleet task force comprising guardships and submarines. Existing RFA replenishment at sea vessels, which may be too old and too small to replenish the two aircraft carriers, will need replacing by the time the aircraft carriers are operational. A new fleet of ships, classed as warlike vessels (the MARS programme) will cater for this need.

  8.  The two future aircraft carriers are to be two of the largest ships built for the Royal Navy. They will be constructed as a series of mega-blocks, probably at several suitable shipyards. These mega-blocks will then be joined together at a single location. KOFAC considers some of the mega-blocks should be built at Barrow for the reasons described below.

  9.  60% of the UK's naval ship design capability is located at Barrow. Since 1945 almost every "first of class" large warship for the Royal Navy has been designed and built at Barrow. The build and operation of the two new aircraft carriers will need to use the knowledge gained and practices developed in the recent build of large warships for the Royal Navy. Much of that expertise, or domain know-how, is located at Barrow and in the north west of England. The most recently delivered large warships, HMS Albion and HMS Bulwark (18,500 tonnes each) and RFA Wave Knight are the nearest in size and complexity to the proposed carriers. The "Albion" class was built and fitted out at Barrow to operate as sophisticated command and control centres coordinating air, land, sea and amphibious landing operations. Admiral Sir Alan West, First Sea Lord, described this capability, delivered through Barrow, as follows:

  "The two landing platform docks: Albion and Bulwark, Albion now fully at R2: she has, . . . an amazing command and control capability; her ISTAR set up there, her intelligence officers, they have really set up a network enabling capability for running major operations. . . . at the end of the day, for the amount we paid for it, it is amazing. It is an amazing ship. We should be very proud that was knocked up and Britain built and is there. The same sort of platform, the LPD17 in America, I think is almost twice as much, to give the flavour".[21]

  The command, control and at sea replenishment technologies that were devised for "Albion" class ships will be essential components for the two carriers design. Through building these ships Barrow has considerable embedded learning, design and integration knowledge and expertise. All is relevant, and able to be applied, to the future aircraft carrier programme. It therefore makes sense to utilize this expertise to help reduce the risk to the carrier programme.

  10.  Barrow has in the last 3 years delivered considerable acquisition cost savings through adoption of new techniques on the "Astute" programme. Barrow is a shipyard which leads in cost efficiency drives and one that has spare capacity. Our submission to the Select Committee is that the UK needs to make maximum use of Barrow shipyard in building the future aircraft carriers in order to capitalize on available expertise and help reduce risk to the project. Our view is supported by independent advice given to UK MoD by consultants Rand Europe. Rand says: " . . . Barrow is an untapped source of production capability and could likely play a significant role in the coming shipbuilding programme . . . " where, " . . . the demand for final assembly facilities will be particularly high between 2006 and 2010 . . . "[22]

  11.  Barrow shipyard has a range of facilities that would enable it to function as a "mixed capability" naval shipyard able to build naval ships, including warlike fleet replenishment ships, and submarines simultaneously. Barrow could be used to construct, integrate and test and commission large mega-blocks of each of the two aircraft carriers. The facilities available include:

    —  The largest single concentration of naval design expertise in UK.

    —  Large covered shipbuilding hall.

    —  New Assembly Shop NAS assembly facility.

    —  Heavy lift transporters.

    —  Superberth slipway of 260m by 100m size, able to accommodate with its own support facilities for 1,500 people working on the berth.

    —  Submarine Marine Installation Test Establishment (SMITE).

    —  Skilled workforce of 3,200 and a pool of former shipyard workers and a pool of new apprentice and graduate recruits flowing into the industry.

  This resource base is unique in that it embraces probably the largest UK reservoir of recently domain knowledge gained in delivering large warships. KOFAC considers this unique resource base can help ensure the demonstration and manufacture phase of the carrier build remains on track for the ships to be delivered as planned in 2012 and 2015.

  12.  If Barrow features in the carrier build a mega-block would be assembled integrated on the superberth then launched and transported for final integration at the carrier integration location elsewhere in the UK.

  13.  In 2002-03 BAE SYSTEMS decided, with Government support, that Barrow should become a submarine build only yard in order to deal with the backlog of "Astute" submarine work. KOFAC has helped BAE SYSTEMS Barrow based management lobby since then for the shipyard to be considered for surface shipbuilding opportunities. The extensive progress made on the "Astute" programme since 2003, and the availability of embedded expertise has helped turn around the fortunes of the shipyard. The owners, BAE SYSTEMS now see Barrow as having a wider role in the forthcoming naval shipbuilding programme.

  14.  Steve Mogford the Chief Operating Officer at BAE SYSTEMS informed the trade unions in April 2005 at the BAE April 2005 TU Conference that "Barrow will be involved in the Design and Manufacture of CVF". This came after BAE made a policy change in October 2004 to the effect that "BAE Systems Barrow will be actively considered for Design or Design and Build of Future Surface Ships for the Royal Navy"[23]

  15.  Both Rand and BAE SYSTEMS recognize Barrow is a versatile shipyard. KOFAC envisages it building a series of additional "Astute" submarines, whilst at least one mega-block for each carrier is built here too. Level loading of the surface ship build operation into the future could be achieved by build of modules for (a) MARS support ship(s). A policy to support using Barrow shipyard for building parts of the carriers will also contribute to wider Government and Defence Industrial Strategy objectives such as assisting regeneration of the economy of Barrow Travel to Work Area, a large part of which is ranked 33 on the Office of the Deputy Prime Minister's Index of Deprivation for England. Barrow is also recognised as a "location far from the engines of growth in the North West". The mega block could therefore act as an engine of economic growth for the area. The Select Committee are recommended to support the use of Barrow shipyard to help de-risk the carrier build programme.

  Transforming Procurement Policy, the Importance of sustaining the skills base in naval shipbuilding, and level loading of workloads.

  16.  The Ministry of Defence's SMART procurement practice mainly awards contracts based on competition and contract by contract value for money criteria. It has short term time horizons and is largely about getting the best price for a particular piece of equipment.

  17.  Past procurement has been characterized by a lack of visibility of forward orders, long gaps in between orders, and a private sector response which has seen each contract end marked with a major programme of redundancies. Many skilled people have been lost from the shipbuilding resource base. A recent example was the 700 redundancies at BAE SYSTEMS, Barrow, announced in 2004, on sail out of HMS Bulwark.

  18.  "Continuity in the industrial base is an important factor. Key skills were lost in the gap before Astute commenced production". Long workload gaps between warship, including submarine, orders, job losses, and the resulting loss of know-how and skills, has required relearning, redesign overcoming of design difficulties and has driven up the cost of some key naval equipment programmes in the past. KOFAC siders the practice of allowing workload gaps to appear and the lack of a policy to "level load" work in key shipyards are a threat to the UK's ability to design and deliver sophisticated warships. Appendix A, and 3 quotes below, gives the Select Committee an example from the industrial, MoD and Royal Navy perspectives of what can go wrong when skills are lost at the end of a ship construction programme:

    —  The workforce at the Barrow shipyard had been downsized so there were fewer skills and experienced staff to cope with the complex task of designing a submarine".[24]

    —  At the time we did not realize there had been such a great loss of skills".[25]

    —  We had stopped building ballistic missile submarines, I believe, we had finished with our Vanguards and there was then a gap, and, as you rightly say, all the skilled workers, all the skilled designers, everybody disappeared. There was then a gap and then we had to build this up again, and that is not a clever way of doing things. You need a drum beat of these things to get the best answer out of it, and therefore to fall off the precipice and not do anything for a while and then suddenly order them to do something is not a clever way of doing it. Doing that within the constraints of our funding and treasury rules and everything else is difficult".[26]

  19.  On 15 September 2005, in a speech to the Defence Manufacturers Association, on the forthcoming Defence Industrial Strategy, Lord Drayson the Defence Procurement Minister said: "First let me be clear: This is about maximising the military capability and security of the country. It's not about jobs". KOFAC considers the two issues are interconnected and inseparable because of the need to avoid problems of the past described in paragraph 18 above and because of the recognized national need to increase the naval shipbuilding labour force beyond 2006.

  20.  Rand Europe, independent advisors to the UK Ministry of Defence, identify:

    " . . . a projected need to increase the national supply of naval shipbuilding skills by 2009-10 by 50% more than is available today . . . ",[27]

  This is largely to accommodate the aircraft carrier build programme. Rand go on to clearly spell out the risk of order and workload gaps between 2005-07 that could cause skilled people, especially naval designers, to leave the industry and the importance of finding alternative work for these people to prevent them being lost to the industry. They conclude:

    " . . . there could be a sharp drop-off in demand for the technical workforce (naval designers) in the next two to three years but CVF, MARS, and JCTS will increase the demand for technical workers (to) nearly double from its low . . . ," adding that, " . . . these workers (need to be) retained through the near term down turn."[28]

  We endorse Rand's recommendation.

  21.  Lord Drayson in September 2005 said:

      " . . . where we can sensibly smooth out the peaks and troughs, we should do so. Nevertheless, there will be areas where, following the end of one project, business activity may risk falling to unsustainable levels. We need to ensure this does not lead to the loss of vital long-term knowledge, whose re-creation may be prohibitively expensive to recreate. In order to achieve such sustainability we will require a very open approach between the MoD and Industry and I hope that the Defence Industrial Strategy will allow us the opportunity to set the conditions for improving further our relationships . . . ".

  It is essential to bridge the projected naval shipbuilding 2005-07 workload gap and retain skills and capacity if the capability to deliver the two future carriers is to be available in the UK. Advancing carrier design work or multi-ship orders could help address this imminent workload gap. The Select Committee is invited to consider asking MoD witnesses how the gap will be addressed and what resources will be used to do so.

  22.  It is also crucial that industry and MoD show people that shipbuilding offers a long term career future so they can be attracted into the industry to service the carriers programme. This is because evidence shows that once people leave shipbuilding they are hard to replace. Britain risks losing its ability to design and build sophisticated ships and submarines if a level loading of shipbuilding activity is not an integral part of ship procurement.

  23.  The lessons from the recent past must be learned, and the importance of maintaining short and medium term ship building skills for the future planned naval programme. The core expertise and skills available in the naval shipbuilding industrial base of North West England is an essential part of this skills resource required for the aircraft carrier programme. The new Defence Industrial Policy and Strategy must have retention and development of this industrial capability, key skills and technologies and hence jobs at its core.

  24.  Without such an approach the industry could go the same way as UK commercial shipbuilding and virtually disappear.

  25.  KOFAC believes the new Defence Industrial Strategy, to be adopted early in 2006 as a framework for investment in defence capability, must be accompanied by a Naval Shipbuilding and Submarine Industrial Base Strategy which should be based on a form of procurement which delivers a regular drumbeat of orders designed to sustain skills over the longer term. This means planning for a regular drumbeat of orders, and a closer partnership with industry to identify and manage risk and reduce costs.

  26.  On 12 September Lord Drayson said:

    "The emphasis will be on through life capability; developing open architectures that facilitate this; and maintaining—and enhancing—the systems integration know how that underpin it. The attractions for industry should include longer, more assured revenue streams based on long-term support and continuing development. Not a series of big `must win' procurements".

  27.  KOFAC believes that MoD and the Treasury need to consider potential for through life procurement contracts more effectively. MoD at the BAE Barrow Supplier Conference on 6 September 2005 indicated that it had not yet decided whether through life contracting should be platform, system or individual equipment based. The Mod said the challenge would be to decide how much through life support could be defined at the start of a build programme. Several suppliers suggested that the ability to tender for supply of original equipment and its through life support could dramatically reduce cost to MoD, improve reliability and thereby help minimize annual support costs for the future carriers.

"Sustaining the UK's Submarines Centre of Excellence at Barrow" helps the future aircraft carrier industrial base and programme

  28.  Attack submarines continue to play a strategically important role in defending the UK and play a vital role in protecting the future carrier force. Our existing 11 attack submarines are getting old and costly to maintain. Whilst three new boats are building and there is currently a debate underway as to how many more submarines need to be ordered, when and in what quantity.

  29.  KOFAC considers that ordering a batch of four more attack submarines (boats) will enable the MoD to deliver the UK's required capability whilst replacing ageing vessels. It will also enable the Royal Navy to have a fleet of modern submarines available to secure the sea space around the operational carriers. Ordering a batch of four boats will also be more cost effective to MoD and offer greater savings over a piecemeal approach.

Conclusions: Make use of Barrow and our versatility

  30.  KOFAC has concluded.

    —  Retention of key skills in naval shipbuilding is the key to ensuring delivery of sophisticated warships such as the future aircraft carriers and achieving the objective of maximizing battle winning capability.

    —  Barrow is one of the few UK shipyards with the versatility and the physical capacity available for building carrier mega-blocks. It has the added benefit of a large project management and design resource on site. It is a national asset base uniquely placed to build large warships and submarines.

    —  Level loading of work programmes and encouraging new entrants to the industry is essential if the skills required for the carrier programme are to be available.

    —  Long term industrial planning creating a regular flow of orders, preferably multi-ship, and submarine orders will encourage industry to invest, retain skills and enhance physical build capability. This will avoid workload gaps and job losses.

    —  Government and industry should market the opportunities the naval shipbuilding industry in general and the carriers in particular offers to skilled people in the long term, and they should market the opportunity to attract new people back into the industry at apprentice, skilled crafts, and graduate levels.

    —  Judicious use of available financial resources such as Treasury `year end flexibility' should be used to consider making of incremental design improvements, thereby sustaining workloads, particularly for designers.

17   Speech to Amicus fringe meeting "The future of the UK's defence sector", 29 September 2004. Back

18   Lord Drayson, 21 September. Back

19   Lord Drayson, address to Royal United Services Institute, 12 September 2005. Back

20   Mr Adam Ingram MP, Minister for the Armed forces, Hansard, 15 June 2004. Back

21   24 November 2004, Defence Select Committee, Admiral Sir Alan West. Back

22   The UK's naval shipbuilding industrial base-the next 15 years. Rand Europe. Back

23   Mike Turner-October 2004. Back

24   Mike Turner, BAE SYSTEMS. Back

25   Sir Kevin Tebbit, Ministry of Defence. Back

26   Admiral Sir Alan West. Back

27   The UK's naval shipbuilding industrial base-the next 15 years-Rand Europe. Back

28   The UK's naval shipbuilding industrial base-the next 15 years-Rand Europe. Back

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Prepared 21 December 2005