Examination of Witnesses (Questions 120-139)
MR BERNIE
HAMILTON, MR
KEITH HAZLEWOOD,
MR BOB
KING AND
MR TERRY
WAITING
21 NOVEMBER 2006
Q120 Linda Gilroy: A question
specifically to Mr Hazlewood—because I can get my head around
how design teams and design drafts people take quite a long time
and you need to keep them together—can you just explain
in a bit more detail as far as electricians, fabricators and trades
people are concerned, those that work on the submarine, and we
have talked about the high level of skills, in terms of the time
taken to acquire those skills and experience, how would that compare
with probably pretty skilled people who work on ships and so on?
What is the extra? Is it years?
Mr Hazlewood: To be proficient
in the submarine industry you are looking in terms of years at
nine years whereas within a normal shipbuilding yard you are looking
at three, four, five years, a normal apprenticeship.
Q121 Linda Gilroy: So if a gap
develops that is—
Mr Hazlewood: That is right, yes.
Q122 Willie Rennie: I am a bit
confused by some of the comments. You say retention is good at
Barrow but then you say there are adverts from Australia seeking
staff there. Then you say if Barrow were to go you would not get
the skills back, but obviously it is a good enough place to work
so why would they not come back? I was a bit confused about all
that kind of thing.
Mr Waiting: I think there have
been surveys done and I think the most recent perhaps was for
the Rover plant when people left that industry, and 70% of them
would not return to it. That was a similar experience as we had
in Barrow-in-Furness with the redundancies in the 1990s. Once
we had lost the workforce they would not come back into the yard,
voluntarily or otherwise. If they could find any sort of job they
went into different jobs and they would not come back again. A
lot of the younger people left the area for good and did not return,
so we lost those skills. Quite a number of other people went on
long-term incapacity benefit. I think if you look at the North
West Development Agency's documents they say Barrow is perhaps
one of the largest pockets of worklessness in the North West because
the men and women did have industrial injuries and once they were
out of work they capitalised on them, for want of a better word,
but that is what happens, that is really what happens in a working
town. It happened in the coal-mining communities as well. The
whole community goes down. It is not easy to get back into work
and it is easy to get back into ordinary jobs. It is the same
when you live in places that are remote like a coal-mining area
or like Barrow-in-Furness, it is not easy to get into other work.
If you lose the skills of drafts people and the designers, they
go away and they do not return because they have got well paid
jobs out of the place. The people who are coming from Australia
and other places and advertising in the local paper in Barrow
want people who are already in work. They are not looking at the
ones who are unemployed really. They want the people who are in
work.
Q123 Willie Rennie: But you did
reconstitute them for Astute. How did you manage to do that?
Mr Waiting: First of all, we sought
assistance from Electric Boat. One of the things the managing
director did was to seek the assistance of Electric Boat, the
American company, and they did assist us greatly. I have got to
say it was a two-way street because we helped them in some techniques
on welding as well, so it was not a one-way street. That was one
of the things that we had to do. Then we trained our own people
to the standard required. We have going through the Barrow yard
now a number of graduates and we have a very successful graduate
training programme. We make sure that we do; it is an active thing,
it is not an accident. We go to the universities and attract people
to our industry. Through the graduate training programme in Barrow-in-Furness
we are getting the right sort of people and training them through.
If there is a gap now in the submarine build or a gap now where
we do not order the future Tridents, there will be an excess of
design engineers and everything else in Barrow, as I think was
said at the meeting on 7 November, in the middle of next year.
Those people will go and they will not come back to Barrow, they
will go somewhere else.
Q124 Willie Rennie: You did reconstitute
it for Astute so why can it not be done again?
Mr Hamilton: That is where the
strategic capability and the Defence Industrial Strategy has to
make the change. You have seen the evidence from Murray Easton.
A lot of the cost overruns were because of that. The delay in
terms of getting Astute out was because of the learning curve
that had to be relearned. Murray Easton in his evidence gave you
the fit-for-purpose workforce and it is the same across the whole
spectrum, whether it is design, build or maintenance of that capability
and that workforce. As other colleagues have said, people who
work in the shipbuilding industry and refit ships, on the face
of it the skills set may look the same but it is completely different
when it is applied to submarines because the standards that are
required to work on board nuclear submarines and the capability
of the nuclear submarines requires that learning curve to be relearned
and yes, it was reconstituted fortunately in the Barrow area to
build the Astute, but if another delay were to take place as was
done between Vanguard and Astute then that capability will be
lost in the UK forever. You need only look in your own backyard,
Willie, in terms of the effect that that has. Yes, thousands of
skilled people left Rosyth Naval Base but when Babcock went back
at certain peaks and troughs within the refit cycle to bring skills
back in again, they were not there and, equally, they were not
fit for purpose because they had left that continuity of training
and education which is done on the job, and therefore there is
a cost and there will be a very high cost to the public purse
if that delay takes place.
Mr Hazlewood: If I could just
come back to what we mentioned earlier, you mentioned retention
and peaks and troughs within the industry, and hopefully this
will be addressed by the Government's White Paper, but while you
have got peaks and troughs you are going to lose people and in
a lot of cases you are not going to get these people back, the
reason being they are going to find continuity of work elsewhere
and you will never get them back. That is the biggest fear that
we have within the industry. That is why we need this continuity
across the piece.
Mr Holloway: I do think that people sometimes
think in these procurement programmes there is a confusion and
a gigantic grey area between jobs and having the right equipment—helicopters
and fast jets come to mind here—but leaving aside the important
issue of keeping jobs and communities like Barrow alive, do you
guys not think that there is a global market for skills as well
as equipment and therefore that the situation might not be as
critical as you paint it?
Q125 Chairman: Who would like
to start on that? Mr Waiting?
Mr Waiting: In what respect? If
you want to build atomic submarines and if there is a requirement
for atomic submarines and for a nuclear defence of the realm,
then you want atomic submarines and the capability is in Barrow-in-Furness.
If you are talking about aeroplanes you can build aeroplanes almost
anywhere—America, France, wherever. You do not need any
extra special facility. If you are going to build an atomic submarine
you need an extra special facility. If you are going to maintain
an atomic submarine you are going to need an extra special facility.
DML is one of those facilities. Faslane is another one of those
facilities. You could not say, for instance, we will do it in
Liverpool because they have not got the expertise and the licences
and everything else, and all of the work that went on for many
years before that; you cannot do that. It is not something where
you can just say, "We will not do it this week, we will do
it over here, we will do it there"; you cannot do it. It
is not exactly the same as fast jets and helicopters. As I have
said, the capability for the defence of the realm, if it is going
to be submarine-based Trident missiles, has got to be done in
places like Barrow-in-Furness and serviced in places like DML
and Faslane.
Q126 Mr Jones: If a decision were
taken to abandon Trident, which is obviously an option which certain
people are arguing for, that is clearly going to have a massive
impact on places like Barrow. What would it mean in terms of jobs?
You have already touched on skills but also the argument—and
this is not one I am putting forward I hasten to add—that
it would be easy to find alternative employment there. Can you
just talk us through first what the effect of it would be and
then what the alternatives would be?
Mr Waiting: If we are not going
to continue with the Trident replacement, then the future for
Barrow is non-existent really. In 1991-92 when we lost the major
part of our workforce (9,500 jobs) overnight we set up an organisation
called Furness Enterprise and its remit was to build a local economy
so we would no longer be dependent on a single employer so that
we could diversify our economy. In that regard Furness Enterprise
has failed. In lots and lots of other ways it has been tremendously
successful but Barrow-in-Furness is still dependent on BAE Systems
and our shipyard for the major part of its employment. Barrow-in-Furness
takes £73 million in wages from BAE Systems every year. That
cannot be replaced. There is nobody going to relocate to Barrow-in-Furness
to give us jobs, believe me.
Q127 Mr Jones: I am a very sad
individual and on Saturday night I was reading the RAND report
on the future of shipbuilding. I am very sad! One of the recommendations
in the RAND report is that shipbuilding should be considered for
Barrow, particularly in the next few years when you have got this
bow wave of procurement, MARS and the carriers and everything
else. What is your response to that? Playing devil's advocate,
we could say there is enough procurement coming from surface ships
to put capacity into Barrow.
Mr Waiting: In fact, it could
create more problems than it will ever solve. For the carrier
for instance we are down, I understand, if it ever is built, to
build one block of that. The MARS programme I guess is what the
RAND report is talking about—I know it is—but that
is some years away yet. What are we going to do? There is going
to be a big trough in the meantime because you are not going to
build a future Trident so what happens then, how do we maintain
that workforce, because it is unsustainable? I know that BAE Systems
are not going to have 3,500 people walking round with their hands
in their pockets, they are not going to do it. I understand their
profit was two per cent but they are allowed up to six or eight
per cent to take the profit from any MoD order. If you were a
shareholder right now with the way that the interest rates are
going, if that is all of the return you could get for your money
I think you might be interested in putting your money into a building
society rather than in BAE Systems. I do not say that lightly
because that was put to me by a former managing director of the
yard.
Q128 Mr Jones: The point being
the point you are making about the continuation of employment
but are you actually then saying that what the conclusion of RAND
comes to in terms of return of surface shipbuilding to Barrow
is a non-starter?
Mr Hamilton: It is not a non-starter
but the point that is being made is that submarine capability
is unique and it cannot be sustained with a surface ship. Surface
ship design is different from submarine design. Surface ship capability
to build and maintain is completely different.
Q129 Mr Hancock: There is going
to be a gap.
Mr Hamilton: If there is a gap
then you are going to lose the sovereign capability. The practical
point of all this, in my own backyard and Willie Rennie's constituency,
when you took the maintenance of the submarine fleet away from
Rosyth, it destroyed the infrastructure, the community and the
educational processes to be able to have that highly skilled workforce
in place. There is no requirement to maintain the level of employment
in a yard that does not have submarine capability because the
infrastructure and the overheads that are required because of
the very nature of the work that is undertaken is not replicated
and not replaced by surface ship work, and therefore the argument
which says that these people can go and do other jobs in the community
is a non-starter and a nonsense argument.
Q130 Mr Hamilton: I will not ask
the question I was going to ask. I am going to follow the theme
that you moved on to. The real answer to Bernie's point is what
are the unemployment levels in Dunfermline at the present time?
They are pretty low. Can I ask the question to Terry because Terry
is the one who indicated 3,500 jobs from a 70,000 population.
Can I give you my background: 20 years in the pits, 80,000 of
a population, 4,000 jobs, 2.5% unemployment now. That is the difference.
The question I am putting is if Vanguard does not go ahead at
all, forget the peaks and troughs, if a decision is taken not
to proceed, how many jobs would be retained in there for decommissioning
and what would be the position—and it has to come off and
the question that Kevan asked has to come up—and are there
alternatives? Rather than talking down the area, are there alternatives
that you can move on to? The bleak position that you paint I painted
20 years ago as a Labour Group Secretary and junior official in
my area.
Mr Hamilton: As you would expect
from a trade union, the answer that we would give on this is that
these jobs are highly skilled and well-paid. Replacement jobs
that have taken place within the UK economy—and this is
the Amicus point in terms of retaining manufacturing within the
UK—are not like-for-like jobs. They are replaced with poorer
paid service economy jobs and yes, there will be regeneration,
as there is taking place within Dunfermline High Street and within
the West Fife area but it has taken ten years for that process
to take place and the investment and money that is going to be
required to put that back in place to take place. Yes, there is
relatively low unemployment but it is not the same substantive
jobs that are being replaced and they were never replaced in the
mining communities either.
Q131 Chairman: We are falling
behind a bit but, Mr Waiting, do you want to add to that?
Mr Waiting: I have fully taken
on board what you have said but right now in Barrow-in-Furness
there are 5,700 people on incapacity benefit. We have quite high
unemployment for the area considering what we had throughout the
1980s when we were building the Trident, when it was actually
going against the national trend and we had nearly full employment
and the national trend was high employment. I do not know exactly
where your coal mining community is—
Q132 Mr Hamilton: Mid-Lothian.
Mr Waiting: We have nowhere to
go. As I said earlier, the nearest we can go for a job in manufacturing
is about 100 miles away, and that is a 200-mile round trip for
your maths. There really is nothing else to do. You mention decommissioning.
We do not do de-commissioning in Barrow-in-Furness, we do not
do scrapyard technology, we are not into that either, so there
is nothing. I am not saying this to tug at your heart strings.
It would be virtually the end of the road for Barrow-in-Furness.
Chairman: Mr Waiting, you are now in
deep difficulty because I think Linda Gilroy wants to ask a question
about scrapyard technology.
Q133 Linda Gilroy: We do not do
scrapyard technology in Devonport! The Defence Industrial Strategy
identified affordability as a key consideration in the decision
on any future potential Vanguard and Trident successor. Can you
tell us how your unions and members are helping to reduce cost
and assisting in improving the productivity of the workforce?
I think if I start with Mr Hamilton and we will go the other way
round.
Mr Hamilton: There is the evidence
that Murray Easton gave which showed you the efforts that have
been made since he was made the managing director at Barrow in
terms of reducing the costs, of more efficiency, of greater capability
and better use of public expenditure. That is where we have jointly
worked together with that employer to do that and I think there
is recognition in terms of the shipbuilding and ship repair industry—and
I include submarines in that term—since that industry has
gone through 25 years of severe pain, that we have to work together
with the employer to make the yards as efficient and productive
as we possibly can because that is the only way that these key
capability skills are retained. Efforts have been made generally
across the whole of the industry and I would want to point to
the fact that as unions we advocated support, where there are
peaks and troughs of work, and we went down and argued with our
members that they should transfer to other yards to take those
key skills. Therefore the learning curve that is required for
a brand new worker or an electrician who has worked on houses
and is put into a shipyard is taken away in terms of expenditure
on shipyard electricians moving through from Rosyth through to
Govan or through to Scotstoun. We recognise as trade unions that
we have a role to play in that. However, the captains of industry
have a bigger and greater role to play in terms of their interaction
with yourself and driving down those costs. I think the Astute
programme has showed that where they have continually put in place
a programme to have year-on-year, end-on-end, project-after-project
cost reductions. There will come a point in time when that will
plateau and it will not be able to be sustained beyond that. After
the first of class, as everybody knows, there is a huge learning
curve up to first of class and then after that there are the efficiency
and productivity gains, and I think the Defence Industrial Strategy
drives you towards that.
Mr Hazlewood: On the issue of
affordability, the GMB believes that maintaining and improving
the skills and qualifications of the workforce will improve productivity
and also investment in new technology and new methods of working
to help improve productivity will be an asset, so will incentive
reward schemes. The GMB through the CSEU and a company called
SEMTA has worked to establish a skills data base within the shipbuilding
industry. They have done a trawl regarding the demands and the
capabilities for the forthcoming CVF programme. The GMB also believe
more co-operation between the shipyards, as my colleague has already
mentioned, would help, and we are watching with interest the formulation
of the new co-alliance and the sub co-alliance. That is to say
the way forward and the way things pan out there.
Chairman: I think I would like to move
on to John Smith to talk about collaboration.
Q134 John Smith: Part of this
has already been covered, Chairman, but another thrust of the
Defence Industrial Strategic is strategic collaboration—and
you referred to it. How do you feel about that—companies
working more closely together, the possibility of mergers? What
is the unions' position on that?
Mr Hazlewood: From a GMB point
of view obviously we would welcome more co-operation between the
shipyards on design and production methods. Once again I am referring
back to the new co and the sub-co and we will see what comes out
of that. We think that is going to be a way forward and it could
only benefit the industry.
Mr Hamilton: We are in favour
of it. These projects are massive in terms of skills, investment,
research and development, design, and therefore you have to have
a substantive company. I think the Government was right in terms
of their concerns about the flotation of KBR and the financial
capability of that company in terms of support for the Devonport
dockyard and the maintenance of a deterrent/the whole nuclear
submarine fleet. There has to be a substantive size of industry
to be able to support that kind of capital expenditure and to
get the best value for the taxpayer on that capital expenditure.
So we are fairly relaxed in terms of the Maritime Strategy, the
Defence Industrial Strategy (which started that) and also the
infrastructure review because there is a requirement for that
to take place. Obviously we would have concerns in terms of impacts
and in terms of areas and jobs, but at this point in time the
lack of skills within the industry and the need for people to
be employed outweighs that.
Q135 John Smith: What about international
co-operation? You referred to the Electric Boat role on the Astute.
Could you see greater international co-operation between the UK
and the US in submarines?
Mr Waiting: We still continue
to work with Electric Boat on various issues for Astute and, again,
it is a two-way street. There is an exchange of ideas with the
Americans. When the Committee was visiting the yard, I am sure
that you were told that we are working very closely with our supply
chain to make sure that affordability is there as well. Obviously
there has got to be great care taken there because you can put
people out of business if you put the squeeze on them too much.
So the management team within the shipyard in Barrow-in-Furness
is working with other suppliers to make sure that we are all singing
off the same hymn sheet, so to speak, so we can get the price
right so that everybody has got the employment that is required
and we have got the capability for future ships and submarines
in the industry. So there is a lot of time invested in this by
senior management within BAE Systems and by other people.
Q136 Linda Gilroy: The Minister
for Defence Procurement has written to MPs with an interest in
these matters in recent days expressing his concerns about how
slow the consolidation is to come about. Mr Hamilton mentioned
the KBR flotation. I just wondered if you would like to say a
bit more from the unions' point of view about how that looks.
I was going to ask a question about whether the companies and
the shareholders are doing enough to make this happen.
Mr Hamilton: Obviously we have
meetings with government ministers as well and we understand the
Minister for Procurement's strategy. Both myself and Keith have
attended meetings with the Minister and we understand the vision
that he has. On the view that says that we should not be using
public procurement contracts to allow people to exit an industry
and therefore for them to walk away with a bag of gold, I agree
fundamentally with the Minister on that in terms of the proposed
purchase by BAE Systems and BG of Fabric International. I think
he was absolutely right that that was not the correct way. I think
hopefully in the discussions that are taking place between BAE
and BG, the Minister was painting a picture—and if I have
got this wrong I have got it wrong—I think the picture he
was trying to paint was of a substantive company in its own right
being brought together in a joint venture if possible and, if
not, working in collaboration, then this would be the next step
in terms of having a joint venture. I think the concerns that
were being expressed about the flotation of KPR were about the
financial capability of that stand-alone company to continue to
fund the infrastructure, the investment and the requirements that
are needed to maintain that capability within the Devonport area.
I think that is a concern and indeed I did not have the assurances
from Halliburton in terms of KPR that that was going to take place.
I have to say in our own practical experience there are a number
of contracts out in the system just now that if that company had
stepped up to the plate with financial assurances on, then Appledore
shipyard would still be open, but that company has failed to step
up to the plate and so therefore I think the Government do have
a concern that if that is what has happened would that be replicated
within Devonport.
Q137 Linda Gilroy: Appledore is
still open at the moment.
Mr Hamilton: I understand that.
Linda Gilroy: I just wanted to set that
straight.
Chairman: I am sorry, Mr King, we have
let you off too lightly, David Crausby is just about to start
on Aldermaston.
Q138 Mr Crausby: I have some questions
about Aldermaston. I guess Aldermaston is in a different situation
in some respects from Barrow in that it is in a different part
of the country and no doubt the alternative job prospects are
better in that part of the world. What I am concerned about is
specialist skills from the point of view of not just the employees
but from the point of view of their retention in the interests
of the whole of the country and in the interests of our deterrent.
So what kind of work do Prospect members at AWE need to be involved
in to sustain those specialist skills at the required level? To
what extent could the skills of scientists and engineers at Aldermaston
be utilised in the civil nuclear sector? Does the possibility
of the new civil nuclear programme create any difficulties for
us in the transfer and opportunities for skills?
Mr King: I did say to Dr Stephen
Jones when I was going to give evidence that I am not a scientist
by any stretch of the imagination but I will do my best. Part
of my role is I deal with the UKAEA, AEAT, and some of the regional
authorities as well and also the JET project, which has got some
publicity this morning. I think the skills are different because
they are honed at AWE with a specific purpose. I noticed the question
earlier about a global market for these skills—and I sincerely
hope there is not a global market for nuclear warhead construction,
and I would like to think that we do everything we can to make
sure there is not! As I say, I am not a scientist but they are
particular in the way that these issues are constructed and I
was allowed to give evidence today because I do not know any secrets
so I cannot give any away and it was the safest way of doing it!
Apparently the difference in technology is very much to do with
the delivery vehicle, which is obviously launched from the submarines
and how it is designed to fit within the Trident missile itself
is the clever bit, apparently, which is about as far as my science
goes, so it is a particular skill. There are also elements about
the life cycle of the products which are being used which are
different. I will not go into detail about that because I do not
know. They are very, very different skills from the skills of
the majority of the members we have got who work, for instance,
within nuclear power generation or in relation to the Fusion project
because they are developing new technology, whereas the job within
AWE is very much maintaining the current technology, it is very
much a maintenance element. You mentioned about the area, the
direct difficulty we have with the area is the fact that the scientific
skills required and the salaries paid—and you probably knew
that I was going to bring this in somewhere along the line—are
not relative to the market rate. However, the majority of people
do not come to work at AWE because they want to work in the commercial
sector; they want to work in the public sector and maintain those
terms and conditions, so the salaries are not at a high level.
What is a high level, which reflects two things, is the wish of
the scientists and engineers to develop a long term career and
also to have security in employment, which is obviously something
that is rare these days. The current problem that we face is that
when we deal with the employer—with whom we do have a very
good relationship and I know my colleagues' toes will curl when
I say that—is that we are dealing fourth hand. We are dealing
with the management group that is designated by AWEML, which then
reports to the IPT which then reports to the MoD. For instance,
with regard to the current problem that we have with the possibilities
of an increase in contributions to the pension scheme, we have
got no direct route in and that is definitely causing us a problem.
On the longevity maintenance, the apprenticeship scheme that is
AWE's is extremely good and, as I mentioned earlier about Reading
University, does attract a lot of students across from physics
and chemistry and other related sciences, so as far as maintaining
it within the company is concerned we are doing very well but
I do not think the skills are directly related, although I suppose
the only one that would be is the safety element.
Q139 Mr Crausby: Can I just ask
you to say something about the impact of the Government's investment
programme at Aldermaston? What impact has that had? Have you got
any concerns about it? Has it had any effect on the skills base?
Mr King: As far as I am aware
from what I have seen, and I do not actually work there although
I do visit a great deal, the majority of the investment programme
has been on refurbishing the buildings which basically were constructed
in the 1950s. I always make the joke that there are 4,000 people
that work at AWE. Two of them design things and the other 3,998
are involved in safety, which I think is very good, but the site
obviously has to be secure, it has to be safe, and that is the
one key element. I think a lot of the investment has gone into
refurbishing buildings. I do not mean putting nice chairs in.
I mean ensuring that they are safe to contain the elements they
have to contain, so I think the investment programme has been
working well. We have had some development in relation to terms
and conditions but obviously the latest issue around the pensions
is of grave concern to us. If you look on the AWE website under
the elements that they attract people to the company with, there
are two things on the page and the first one is pensions, so it
is a key element that we are currently having issues with.
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