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:
— 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.
KOFAC AIMS
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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