Examination of Witnesses (Quesitons 80-99)
MR DAVID LOCKWOOD, MR KEN MUNRO AND MR NIGEL STEWART
29 JANUARY 2008
Q80 Mr Wallace: One of Scotland's best exports has always been the Scottish engineer. We have talked about jobs remaining in Govan, but how many of your skilled workforces who have learned a trade on perhaps an MoD contract have been able to capitalise or go abroad as BAE to win contracts in other yards or in other defence industries so that you are giving job opportunities to lots of UK citizens who are based on current projects? There must be a sizeable workforce of BAE British people being ambassadors to Scottish engineering or whatever. Is that the case, do you find?
Mr Lockwood: In the case of Thales there is a fair smattering of Glaswegian accents throughout the global corporation, including the head of North America, a very interesting combination of Glaswegian and New York. The skills are highly recognised.
Q81 Mr Wallace: Your UK chief executive is Scottish?
Mr Lockwood: Yes, he is definitely Scottish. The UK is heavily represented. The operations director in London is ex-Thales Optronics in Glasgow so we are heavily represented. I think the other thing—it applies to BAE Systems as well—is that we hold a lot of Thales global conventions in our modern facilities so it acts as a showcase for Scotland. People come in, they meet others in our supply chain so the fact that we are networked is important for showcasing Scottish engineering.
Q82 Mr Wallace: Is that the same?
Mr Stewart: Absolutely. We hold similar things. We also do a lot of exchange visits with other global ship builders as well. We had a big delegation over from the US just before Christmas, from one of the major yards there, and they were impressed with the work that we were conducting in Scotland. In terms of the Type 45 destroyers when they go into service they will be the most advanced destroyer in the world. It is far more than just ship building we do; it is very complex, technical project integration.
Q83 Mr Wallace: Effectively Scotland benefits at home as well as abroad.
Mr Stewart: Yes.
Q84 Mr MacNeil: The Royal Academy of Engineers have suggested that one way to capitalise on the investment that the industry will see as part of the CVF project is to re-enter the market for commercial vessels. Given what you have said, do you think they are serious? Are you capable of doing that?
Mr Stewart: Naval ships and commercial ships are very different. They need different skills, they are different technologies. Currently we are not looking at diversifying our business into the commercial ship building arena.
Q85 Chairman: Is there the opportunity for workers to acquire transferable skills during the construction phase which will allow them to work in other fields if there is a contraction of the aerospace defence and naval industry once the construction of the carriers is complete? I am talking about transferable skills; would there be opportunity for workers when the aircraft carriers are complete, can they move their skills to something else?
Mr Munro: From a Babcock viewpoint, my view of the education system certainly in our local area is that it produces a very good skill basis which is entirely transferable and then we take that sound basis and put them into specific roles within the organisation itself. I think the transferability of the skills is obvious from our current capability that we have built up in the last four years in terms of diversifying into the modular build market. I think that shows the transferability specifically of those skills. A little unfortunately I suppose but nonetheless having downsized considerably over the past five or six years—which we have thankfully brought an end to now—certainly none of our engineers have had a great deal of difficulty in looking for engineering work outwith Rosyth. That would quite clearly point to the transferability of the skills. Last year, as I say, we went through quite an extensive programme of transferring skills across to the Clyde in assisting BAE Systems in the assembly of one of the Type 45 destroyers.
Mr Lockwood: I informally advised a small—less than 20 person—SME who needed a CAD designer and the outstanding candidate that they took came from Rosyth at a level which, as an SME, they would never have hoped to train, so that is a real example of feeding into the SME market.
Q86 Mr Davidson: Can I just seek clarification from all of you about the level of support you are getting from colleges and finance for training, whether or not that is entirely adequate or whether or not there are deficiencies both at the moment and going forward in terms of the range of abilities that Scottish colleges and universities have to meet your needs and the funding for the appropriate courses both for recruiting new people and upskilling your existing workforce?
Mr Stewart: We have an excellent relationship with Anniesland College and Clydebank College. That is a very positive relationship. We would always like more funding if it is available.
Q87 Mr Davidson: I know you have an excellent relationship but what I am unclear about is whether or not they are at the moment capable of dealing with all your requirements or whether or not there are some deficiencies, particularly going forward that you have identified that have not so far been picked up.
Mr Stewart: It is not just the colleges, we are working with the four Glasgow universities and a whole host of organisations. Part of our obligation for that is to make sure that we are working with the colleges to help develop the courses and over the last two years we are working with the colleges to help develop the courses that we need and not just asking what courses do they have to offer us. It is a very pro-active approach that we are taking.
Q88 Mr Davidson: You mentioned you would like more money for training and I understand that.
Mr Stewart: We would always like more money.
Q89 Mr Davidson: What is there that you would like to fund in training terms that you are not able to have funded at the moment?
Mr Stewart: I do not have any specific issues. In terms of engineering skills and in terms of some of the system integration skills we are always limited for each year the same as in balancing any budget.
Q90 Mr Davidson: Maybe we could just have a note from you about that when you have had the time to reflect. Ken, the same set of questions to you.
Mr Munro: I would echo Nigel's words. Babcock and BAE Systems are collaborating with the universities in terms of an engineering skill uplift from designers into high end engineering skills. All the colleges and universities are coming to the party; they do not sit down and keep providing the same old stuff. They do come and they work with us to develop these programmes. Specifically of course, when we spoke about transferable skills, the skills we give our apprentices are of the highest order and those apprentice training costs—as well as paying wages when they are training—are not fully covered by the grants that the company receives. It would not just be a matter of taking money in to put into the coffers; it would be extended assistance with the apprentice training costs. Also of course anyone over the age of 20 currently only receives half of that amount for their training; we are trying very hard to develop a fast-track programme for adults so we can get a return but at the minute we have certainly taken a risk on the additional costs in terms of what it costs to train them. Also we would be looking at support for other programmes such as the newly formed HNC and HND in ship building. There are always additional funding costs which the industry takes and ultimately it reflects on the price to the customer anyway. By and large we work very well with them and if we are short of money it is meeting the training costs I would suggest.
Q91 Mr Davidson: I think it would be helpful if we had a note from yourselves on that as well.
Mr Munro: I would add as well that a specific project, the SMTTP, which is being run out of Scottish Enterprise Glasgow, is looking at additional areas where it might assist with those costs—we have not developed the specifics of that yet—but also recognises the potential for re-training if there are surpluses after we conclude the CVF programme, they will look to assist with re-training of those into other industry fields as part of that programme.
Q92 Mr Davidson: David, the same point.
Mr Lockwood: I guess we are in a slightly different situation in that we have a more engineering bias and we also have within the group a thing called Thales University which, although it has its headquarters in France, has a UK operation which over the years is very much geared up to support the development needs of the group. Everything we look to locally is to support local gaps, if you will, in that which is provided by the organisation which is very effective. We have worked in the East Kilbride initiative with our apprenticeship scheme, as you are aware, and that has gone well. We have also been doing some work led aggressively and well by Scottish Enterprise, part-funded, on looking at driving our export activities. I think the support we have had has been very good. Where we are at the moment is mapping out life after completing apprenticeship for our mid-twenties people, but that is more of a question of us setting the demand on the network rather than it not responding. We are still working through as we go back into the expansion phrase what we want from them.
Q93 Mr Davidson: Again it would be helpful if you reflected and came back to us with any identified training needs that you have and where additional money could be spent. To continue just on that theme of training, I am aware that Thales certainly in Govan have recruited 25% of their apprentices this year from the local area, which is certainly a higher percentage than BAE.
Mr Lockwood: Although a smaller number.
Q94 Mr Davidson: Yes, a smaller number. I was not necessarily going to make that point but you have made it. In terms of the ability of youngsters coming out of the school system to access opportunities available with yourselves, are the school leavers at a level that is acceptable to you to be able to take them in or are you having to spend money as it were on remedial work to overcome the deficiencies of the school system?
Mr Lockwood: I had a session just before Christmas with all the current apprentices and all the current graduates, to get them together to look at those issues. I think the most important thing is the enthusiasm. If they have enthusiasm for engineering and that kind of work, any remedial work is simple. If they do not come with that enthusiasm then the remedial work is impossible, no matter how big or small the gap. I think that what we have been trying to do with schools is to raise the profile and the enthusiasm for engineering and as long as they have the enthusiasm we have not found any difficulty. If anything I would say the difficulty is keeping up with their demands and their desire to push on. I have not found any particular gaps as long as you find the enthusiastic ones.
Mr Munro: There are issues in terms of numeracy and literacy; there are occasions of that. However, we work very closely with the college to keep an eye on that. We have a programme which identifies who might go on to be craftsmen and who might settle for semi-skilled work, but additionally I think I would agree with David, it is very much about maintaining enthusiasm. When they spend the first year at the college we are very active in sponsoring the programme and sending mentors and visitors to engage with our apprentices, we bring them on the site, we show them what goes on and continue to maintain that enthusiasm. Only last week I spoke to three or four of our guys and they are very enthused about coming back out into the yard full time.
Q95 Mr Davidson: I understand there will be some people who come through and who are enthusiastic; what I am not clear about is whether or not there are a substantial numbers of youngsters who would wish to come to work for you but you do not take on because they are not of a requisite standard. You mentioned some difficulties about literacy and numeracy and I am just trying to clarify whether or not you feel, as a major employer, that the products of the school system are adequate for you or whether or not there are basic skill deficiencies which have not been adequately addressed?
Mr Munro: I do think that the education system is capable if people apply themselves; people who do apply themselves come through it very well. I do think there will be people who come through the education system who perhaps do not apply themselves and are difficult to work with. We do try to inject some view of what the world might be; we work with our local secondary schools and we take some of what might be classed as some of the more difficult pupils and show them engineering working and I believe that that does tend to change their view a little. Unfortunately of course our programme currently is about employing apprentices specifically and it takes a certain capability to achieve that standard. We are looking at programmes which take on board some of the youngsters who might be less capable for some of the support roles but that is less of a long lead item. We need apprentices now going into the CVF but we do look at the other programmes that are run certainly by the Scottish Government, LOAN (I cannot remember what it stands for at the moment) and also Training for Work. We work with those two programmes also, one is for the construction industry employing local people who are assisted through their training and come on and work with the constructors as we carry through the civil works programme for the CVF and also other programmes that support less capable youngsters to come in perhaps at a lower level in the future.
Q96 Mr Davidson: So you are completely happy?
Mr Munro: It would be better if everybody was educated to the same standard but we cannot have all chiefs and no Indians.
Q97 Mr Davidson: Nigel, could you comment on this point, please?
Mr Stewart: I think I concur with a lot of the issues that Ken and David have said. I suppose we are very fortunate as an employer in that our apprenticeship scheme tends to be significantly oversubscribed each year so as an employer we have choice over that. If you look at the statistics, our retention and completion rate is over 90%; the national average is in the 60s. The people on the course, the apprentices, are getting a lot of value for it and want to stay with the company after and also for us, an employer, we get a good quality skill.
Q98 Mr Davidson: I was able to access some of the figures about the applicants to yourselves and I think, if I remember correctly, quite a lot of them had to be rejected on the basis that they were not reaching the minimum standards that you required which is understandable from your perspective. Why is it, do you think, that these youngsters who obviously wanted to get a job with yourselves were being rejected because they did not reach the minimum standards? Were the schools unaware of what the minimum standards were? Where the youngsters badly advised? Had they not prepared themselves adequately? How do we overcome that?
Mr Stewart: I am not sure. I do not think it is particularly for me to comment on the education system. I think our job is looking through to make sure we try and take the people with the right skills and qualifications to do that. As I say, if you look at the retention rate we have been able to do that, but unfortunately not everybody makes the grade.
Q99 Mr Davidson: It is your aspiration, I understand, to reach the same levels of recruitment from the local area that Thales have already achieved.
Mr Stewart: I did not say that.
| 
