Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 1-19)

MR MURRAY EASTON, MR STEVE LUDLAM AND MR PETER WHITEHOUSE

7 NOVEMBER 2006

  Q1 Chairman: Good morning to everybody and welcome to our three witnesses for the first part of this morning's session. I wonder if you might like to introduce yourselves, first of all starting, Murray, with you, and then moving along the line, to tell us who you are, what you do and why you do it.

  Mr Easton: Chairman, why I do it? Good morning, Chairman, ladies and gentlemen. My name is Murray Easton, I am the Managing Director of BAE Systems Submarines, the main part of which is based in Barrow-in-Furness. Our responsibility is the design and construction of the Astute-class submarines currently.

  Mr Ludlam: Good morning. My name is Steve Ludlam, I am the Managing Director of the Rolls-Royce Submarines business and our responsibility is to design, manufacture and support in service all the Nuclear Steam Raising Plant.

  Mr Whitehouse: Good morning. I am Peter Whitehouse, I am DML Devonport's Development Director, and we are the site that refuels and refits the SSBNs and SSNs.

  Q2 Chairman: Thank you very much. I will start with a question which seems as though it covers the whole of this inquiry, which is about the skills base that is needed for the strategic nuclear deterrent, but in fact it is quite limited. I wonder if I could start with you, Murray Easton, and possibly Peter Whitehouse, to ask: what are the specialist skills that are required to maintain a minimum submarine design, construction and refitting capability in the United Kingdom, please. Specialist skills.

  Mr Easton: First of all, Chairman, if I could talk to the design and construction end, and I will let Peter, if you do not mind, speak to the refitting and support end of life. As far as the submarine is concerned, a nuclear submarine is without doubt, as yourself and the Committee, Chairman, saw very recently when you visited Barrow, an exceptionally complex product, both in its design and construction to, really, the highest standards of manufacture. As a result, there are very specialist skills required. If you look at the design end of life, both the computer graphic skills that we need in our professional engineers, our designers and in our draughtsmen, are key. We design to very tight tolerances and very complex systems, and in systems engineering there is the integration of, for example, structural hydrodynamics, noise and vibration, life support, safety—both boat safety and nuclear safety—and a number of other key skills. If we then move on to the construction, both in terms of the staff—which I think is often understated, that being the planners, the safety technicians, the quality control people and the supervision of a very skilled workforce in terms of manual skills, both at the structural end through electrical, mechanical and the integration of those systems—and then the commissioning of them in this very complex task means that when you look at the minimum number that we would require, I think that was your question, back in the early-90s we had some 14,000 people at Barrow-in-Furness, supplemented by some 2,000 subcontractors and we now have 3,450 plus 200 contractors. A lot more is required of our people now, such are the issues of affordability and our response to that challenge, and I feel very much that we are at the critical mass just now in the design, build and commissioning end of the enterprise that we actually need. So below this I think we would be in a very perilous state.

  Q3  Chairman: Bear in mind it is the skills I am talking about rather than the number of people.

  Mr Easton: Yes. The skills themselves are very submarine-specific skills. It is often said that submarine designers can design surface ships but surface ship people cannot design submarines, and that is not a reflection on either, simply to say that one is much more complex. So the skills are very specific; the standards that are required for the design and ultimate operation of the submarine are such that they do not exist anywhere else, and in order even to supplement the nuclear skills we do transfer small numbers of people between our colleagues in Rolls-Royce, in DML and Barrow. So you will find that there are already some shortages, and we cover them by that level of co-operation.

  Mr Whitehouse: I could repeat a lot of what Murray has said in terms of the specialist skills in the nuclear area, systems integration, commissioning skills and things like that. In addition, so far as Devonport is concerned, we work on the submarine in configurations that are totally different from when it is operating. Refitting and refuelling the submarine means that we have to address things like safety case issues that are very specific to the things that we do and the configuration of the submarine when the reactor is opened up and we are refuelling, for instance. So there is a very big emphasis, in our business, on an additional area which is on the facilities, their safety justification and the safety justification of the boat as part of a system that comprises the dock and all of the support infrastructure. That is probably the biggest area that is additional to what Murray describes. We are probably slightly lighter in the front end detailed design area because we are actually working on a product that exists and is there in our facility, but I think the additional areas I would highlight are things like the environmental discharge consents, the environmental assessments—all those additional adjuncts that actually come into play because of what we do to the submarine during the refuelling operation, in particular.

  Q4  Chairman: Would you agree with Murray Easton's suggestion that a surface ship designer would be less able to design a submarine? Would you put that into the refitting context as well?

  Mr Whitehouse: So far as the nuclear specialisms, some of the system specialisms, are concerned, I would agree with that. When we look at the industrial labour force in Devonport, we have had to, and we are continuing to, move large numbers of people between the two types of work stream. So, so far as the industrial labour force is concerned, we do actually have quite a bit of mobility between the nuclear and non-nuclear work streams.

  Q5  Chairman: What about the design and construction of a Nuclear Steam Raising Plant? What specialist skills are needed for that?

  Mr Ludlam: If I take the two different sets of skills, one on the design side, the design-specific skills there are ones of nuclear engineering which is essentially a multidisciplinary engineering approach, and it is a very vital skill to bring all the disciplines of engineering together and make sure that we design and develop a very safe plant operation. I would endorse what Peter said about the safety justification skills that are absolutely vital to be sure that we are safe at all points in time with the operation of the plant. So they are the essential skills in the design side of Nuclear Steam Raising Plant. The essential skills on the manufacturing side are particular to core manufacture, which is very unique to what we do here in the UK, and are also particular to heavy pressure vessel manufacture since we now have only one pressure vessel manufacturing capability in the UK to undertake this size of pressure vessel for nuclear submarines, and they are very specialist manufacturing skills, not ones which are easily acquired or easily trained.

  Q6  Chairman: Of these skills that you have talked about, which are the most vulnerable to loss and which would be the hardest to replace?

  Mr Easton: That is an exceptionally difficult question to answer because we, quite frankly, do not value one more than the other. The interaction of all the skills on the site, whichever of the three sites we were looking at, would be crucial. To have, on the one hand, world-class welders (and I mean absolutely world-class structural welders or pipe welders), I could not compare them as more or less critical to the designers, for example, or the commissioning engineers. If they move away you are vulnerable to any of those parts of your business being reduced.

  Mr Ludlam: I would endorse what Murray is saying; it is that multidisciplinary nature that is necessary to bring the total submarine together and keeping those specific skills within that multidisciplinary area that is absolutely vital.

  Mr Easton: If I may, Chairman, often in the public domain there is a view that a welder is a welder is a welder, as an electrician, but it is so specialist in this particular product that it is not just a matter of their training it is a matter of their experience as well, and it is vast, quite frankly, in any of the three facets of the business that you are interviewing today.

  Q7  Mr Jenkins: If I could ask questions on the Nuclear Steam Raising Plant, what is the difference between the commercial nuclear power station and their steam raising plant with all their engineering skills to the submarine environment? Why are they not interchangeable and why are you still going back through the record of how much skill and experience we need? We need that across the commercial world as well as in the military world. What is so different? What is this specialist skill? What is unique about building a Nuclear Steam Raising Plant for a submarine?

  Mr Ludlam: At a basic level the skills are the same; the uniqueness of a Nuclear Steam Raising Plant for a submarine is its size—its compactness. That is the first point I would make. We need to fit a very powerful reactor into a very small space, which is quite different to the civil world, and the materials therefore are likely to be different on a submarine reactor; the size and shape of things are quite different and the tolerances we are working to as a consequence are quite different, in that respect. If we look more specifically at some of the more detailed parts of the reactor—let us take the reactor core—that is quite different, out of necessity, for the way that we operate a submarine plant compared to the way that we would operate a civil nuclear plant. A submarine plant is moving up and down in speed all the time and the reactor, essentially, follows that movement up and down in speed and therefore has to be controlled in a particular way. A civil reactor sits at power, at a constant power, and the control systems are quite different as a consequence of that. I think there are some quite marked differences, but at the basic level there are some similarities too.

  Q8  Mr Crausby: I would like to ask some questions specifically on the submarine design base, and these questions are aimed at all three witnesses. I have heard a great deal over the years, really, particularly about the loss of the design base for the production of submarines at Barrow. The question I would like to ask is: what do we do about it, then? We go on and on and talk at great length about what a great problem it is, so how could a minimum design base be sustained and what kind of work would it need to be involved in?

  Mr Easton: May I start? If you look over time, over certainly the last 20, 25 years, it is quite apparent, although I am relatively new to Barrow-in-Furness—only three-and-a-half years there—that the design and build of nuclear submarines has been supplemented by the design and build of very large first-of-class surface warships, and some of them very complex surface warships. That rather builds on the response I made earlier about the capability of designers but it has also assisted in smoothing the peaks and troughs, if you like, of the design demand, resource demand, over time. So what can we do to retain them? We routinely recruit significant numbers of apprentices. We are now up over, at the last count, 114 apprentices this year, and that is excluding 12 accelerated and four adult apprentices with a further 28 graduates. So we are trying to bring new blood in, and they love coming to us because it is a very challenging work environment; it is on the leading edge of technology. So we are supplementing and we have a lot of people who stay with us a long time because they are skilled. How do we retain them? I have to say by ensuring that there is continuity of work in a place, clearly.

  Q9  Mr Crausby: Lots of people would say that there is no future in this business. I was brought up in Lancashire and that is what people said about cotton when I was very young, and they were right, were they not? Is that an issue—where people say: "There is no long-term future in submarine design, so I ought to do something else"?

  Mr Easton: If I were to make the analogy you just have, there are other places in the world to get cotton but as far as nuclear submarines are concerned, first of all there are very few places that build them and build them to the cost that we do. I think we have a very favourable comparison to at least two other builders, being France and America, so whilst they are expensive products, they appear comparatively to be good value for money. What else can we do? Where can we get them? The policy is that we cannot export our nuclear submarines currently, and for understandable and obvious reasons, so we have the home market and that we must satisfy.

  Mr Ludlam: If I can just add to Murray's point, I think all of us find when we bring either youngsters in or somebody in their first or second change of career they are very excited by the work that they are given. It is a challenge for engineers, they thoroughly enjoy it and I think they would then welcome the future of a long-term programme and the future of a long-term programme actually would then spur on that innovation that they bring. Engineers do enjoy the challenge, and submarines certainly give that challenge.

  Mr Whitehouse: One of the key issues going forward is that to actually be able to attract young people into this particular industrial segment it is going to be very important that, as the civil programme potentially starts up again, they can see and believe that there is a vibrant and relatively sustainable and stable programme going forward, whatever its size, rather than one that, if you like, is turned on and off depending on the exact circumstances of the day. I think this tension that will probably start to arise with the NDA (Nuclear Decommissioning Authority) work with the civil programme and the military nuclear sector is actually going to make that aspect of being able to look forward and see a forward submarine programme much more important perhaps than heretofore.

  Q10  Mr Crausby: Murray's point that you can still get cotton in other parts of the world is the core of it, really, is it not? We cannot leave this to market forces. We can still get cotton but if we let this go then we will not be able to buy nuclear submarines. So does the Government have a role in ensuring that this is in some way supported, to ensure that we maintain a minimum base? The question I would like to ask is about what that cost would be and the size of that. In personnel terms, for instance, how large would a minimum design base need to be and to what extent should the Government prop that up and pay for it?

  Mr Easton: I never believe that the Government alone has the responsibility; industry also has and we have our part to play. Affordability is a huge issue that is very prominent just now, and I like to think that within industry we are making a very serious and significant response to that. If you look at what should the Government do, as has been mentioned by Peter Whitehouse, continuity of work is all for not only us as the designers and builders but, also, for the entire supply chain who depend on us. If we do have fluctuations people will leave us for very challenging work elsewhere. They want to work in the submarine business and we have to ensure that even if there is a further delay, or any delay, in the submarine ordering programme it will have a significant and, I think, very catastrophic impact on our ability to design and build and, therefore, for this country to have its own nuclear submarine design and construction.

  Q11  Mr Crausby: I know it is a difficult question but I am asking the question how many and how much, really, as to what the size of the design base should be; what are the minimum numbers of people and how much would that cost the industry without the support of orders?

  Mr Ludlam: I do not think it is easy to give a size but some of the points that we each consider as we look to invest in each of our businesses—and I will separate manufacturing again from design—on the design side, to preserve the level of skill that we need we think a eight-year design refresh is quite important; so every eight years it would be quite interesting to retain the skills to do a new design. Certainly when we have looked forward in Rolls-Royce, we have anticipated that a two-year, 22-month, or something of that order, manufacturing drumbeat would be the sort of size that we could work to. So if the Government were to help, a long-term programme based around those sorts of parameters would be quite useful to us, to allow us then to take our part in industry and say: "With that as a horizon we can now size (?) the businesses accordingly", and at that point I think we could give a much more reliable estimate of what would be necessary to keep the skill base and actually keep quality manufacture, because quality manufacture is the important thing,

  Q12  Mr Crausby: We went 16 years between Vanguard and Astute. Are you saying that is too long? Is that really what caused the problems of Astute?

  Mr Easton: We have undoubtedly haemorrhaged skills and experience during that gap that you are talking about. We currently stand at 150 designers or professional engineers, the design end, and some 300 draughtsmen in support of them taking that three-dimensional information and making two-dimensional information for production. They are absolutely critical to us, and that is the core that certainly in Barrow we must maintain. We can supplement that; we can with computer graphics out-source, but it has to be very selective because of the skills and the understanding of the people that you require. So I completely agree with you, it is fundamental that we sustain it. We have fluctuations in the programme and these fluctuations naturally, were there any delay, will be very significant to us.

  Q13  John Smith: You referred to retaining these skills and the role of Government almost exclusively in terms of continuity of work and making sure the work is there. Do you believe the Government could go any further? Currently, we have the Defence Training Review; there is going to be a major announcement shortly and if it goes according to plan there is going to be the creation of a huge Tri-Service military school of engineering. Could you envisage a role that Government, or the MoD, could play in supplementing or assisting you in retaining skills or providing skills for the future?

  Mr Easton: I think you make an exceptionally good point, and in fact we have been in dialogue recently with the customer, the Ministry of Defence, because it is imperative that we actually bring operating experience into the design in order that the design is most cost effective, it suits what the operator needs and, also, for through-life maintenance because they maintain it through life at sea before it goes to a place like DML for maintenance. We need that experience to be integrated. For any future boat I consider it very, very important that there is integration, and yes, they could supplement some of the resources. The core resources that we have with the understanding on what build techniques there are and what design capabilities are needed is fundamental. However, you are quite right; it can be supplemented.

  Q14  Mr Borrow: Mr Murray, you mentioned the use of surface ship work to help with the peaks and troughs of submarine work. I got the impression that you are working on the basis that the surface ship work would supplement existing submarine work. Would it be possible to retain and maintain the skill base if there was a clear gap in submarine work and substitute for that surface ship work, or would that not be possible?

  Mr Easton: If I gave the impression that surface ship work would supplement our current requirement for submarines then that was erroneous, and I apologise. What I meant to say was, effectively, where there are also gaps in the programme. For example, the design of Astute is not complete but, as your Committee saw when you visited, it patently exists and we are in the final stages of commissioning a complex first-of-class. Therefore, we have designers that will increasingly throughout 2007 finally become available. What do we do with them? If we are to retain them there must be work. There is the possibility naturally of surface ship work satisfying that what will be a surplus at that time—it is not yet but it will be at that time. Yes, it very definitely can compensate in those areas. The only problem I foresee is that although that satisfies the demand in engineering and the design and drawing end (if you, for example, talk about the aircraft carrier that would satisfy that and we have plans to become actively involved in that), in fact, though, in production we are out of sync and the carrier does not fill the hole that any delay in any of the submarine orders would generate. In fact, it makes it worse because it supplements our demand for submarines—the point you made—and then the trough is even deeper. So we really cannot, as an integrated business, cope with a delay to the submarine programme.

  Mr Ludlam: If I can make a slightly separate point against the question (I think it probably applies to each of us, but I will be very specific), let me take the pressure vessel area. In Rolls-Royce we make pressure vessels; we made them in the commercial business, then we made them in the nuclear business for the civil plants and then we went back to the commercial business. As the commercial business was getting more and more competitive and we came back into the nuclear side, what we found was that we had lost some of the skill necessary to build nuclear plants, and we went through a fairly tough period of producing lower quality than one would expect to see on Royal Navy submarines, and it took us a long while before we got that right and then could send things out of the factory. If we are not using the skills in the right environment and in the right domain I think they do erode; you have got to keep practising. It is a slightly separate view, and we have probably all got specific areas like that in each of our businesses that would see that same effect.

  Q15  Mr Borrow: So the existence of a short gap may not have a significant effect on skill levels, but the longer the gap the greater the loss of skill—

  Mr Ludlam: The level of skill begins to reduce.

  Q16  Mr Borrow: Also, the greater the likelihood that people with those skills would go elsewhere because they wanted to build submarines rather than do something else.

  Mr Easton: Or they wanted a high technology challenge. Good engineers go for good engineering challenges. Job progression.

  Mr Whitehouse: It is also a very important part of the affordability equation. Our business is integrated, we have a nuclear and a non-nuclear maintenance workload and an industrial workforce of 2,200-2,300 that we move between the two. If we look at the submarine population going forward, we are talking about 7 SSNs and 4 SSBNs. Statistically, that is a very small number. So we will see going forward, on a three-year rolling basis, an enormous variability in our nuclear load: peak load to minimum load a factor of 4:1 on a three-year cycle. It is essential to help with the affordability equation in the support area; at the end of the day, 70% of the cost of one of these things is in service and when it is being supported, not in build. It is essential that we will have access to non-nuclear workload to help cope with that extreme variability in the nuclear throughput, otherwise the unit costs are extreme and the affordability problem becomes perhaps unmanageable.

  Q17  Mr Borrow: Can I pursue the issue around the numbers involved in each of the specialist skill areas. I think, Mr Murray, you mentioned that your existing staffing level is about as low as you could see as being sustainable, but you were not in a position to identify one particular area of skill as more important than another. Would it be possible to give details of the minimum numbers in each specialist area that would be needed to sustain that skill base? Even if you have not got it now, would it be possible to make those figures available?

  Mr Easton: Indeed, I am perfectly happy to support that and I commit to do that after the hearing.[1] We can be talking about single numbers of people with the skills: four radiation physicists or half-a-dozen people with the structural design capability—it is down at those levels, it is not big numbers at all. We co-operate, obviously, and make proposals to the Ministry of Defence, our customer, to try to modify what can be a disadvantageous situation to them or to us. As an example, we were talking about is there a delay, is there a gap? The gap between the first and second, second and third Astute submarines was 18 months each, thereafter 24 months. That is the way they were originally contracted. We have modified that in a proposal to the Ministry to 22 months and 22 months, as Steve Ludlam mentioned. The reason for doing that was to optimise the resource profile so that we did not create big demands and then we had surpluses. So we have proactively looked at this ourselves and made a proposal. It actually reduces the number of people slightly that are employed in Barrow but it was better for the whole programme.

  Q18 Chairman: Peter Whitehouse, could you provide the same sort of information in relation to Devonport, please?

  Mr Whitehouse: Yes.[2]

  Chairman: Moving on to decommissioning, David Hamilton.

  Q19  Mr Hamilton: You will be aware that in July the Prime Minister agreed that a decision will be taken at some point whether we continue with the nuclear deterrent or not. I do not know whether that will be a free vote or whether there will be a whip—I am not too sure but I can have a good guess! Everybody will be watching to see how that goes. My question is really about decommissioning and the maintenance skills required, because it is not something you just close off, you would have a long-term feed-out if that were to be the case—it is important to understand that. If a decision was taken to abandon the construction of nuclear submarines what skills and infrastructure would have to be kept for the maintenance work? Peter, I think you are probably the best person for that.

  Mr Whitehouse: If the submarines continue to operate until a date when they begin to phase out, essentially, the profile of our workforce and the infrastructure—the physical facilities that we need—would be not too dissimilar from where we are today if there were to be further refits during a phased run-out, perhaps during a transition to perhaps even a different type of delivery system. Thereafter, if a programme were stopped then the key thing is that our facility at the moment has the unique capability to actually move the irradiated fuel out of the NSRP and package it ready for transportation to Sellafield. That would be, obviously, a markedly different workforce size and skill mix compared to where we are today because we are refitting at the moment. We would need to keep the site licensed with the NII and, therefore, a lot of the infrastructure teams would not look markedly different from what they do today. So infrastructure, probably, very similar in terms of maintaining the site licence and keeping the facilities capable of doing the work they do. In terms of workforce, it would move progressively towards focusing on all of the things that are needed to actually safety-justify the de-fuelling operation, keep all the environmental consents and other authorisations in place to allow the de-fuelling operations to happen, and thereafter to actually then begin to address the issue of disposal of the actual hulks.


1   See Ev 114 Back

2   See Ev 113 Back


 
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