Engineering: turning ideas into reality - Innovation, Universities, Science and Skills Committee Contents

Memorandum 105

Submission from BAE Systems


  1.1  This paper has been produced in response to the Innovation, Universities and Skills Committee major inquiry into engineering. The Select Committee has agreed that one of the case studies will be Nuclear Engineering; the study's terms of reference encompass issues which are relevant to BAE Systems Submarine Solutions ongoing operations.


  2.1  BAE Systems Submarines Solutions has a proud history of nuclear engineering in support of the submarine programme. Barrow is the UK's only site integrating the detailed design and commissioning of nuclear reactors since 1995. A considerable effort has been required to rebuild and retain the nuclear engineering skill base at Barrow and its supply chain since the start of the Astute project.

  2.2  The international civil nuclear industry is undergoing a renaissance and this will have an impact on the defence programme through increased demand for nuclear engineering skills and key components in the supply chain.

  2.3  The Nuclear Industry is facing skill shortages which are rooted in the long decline of the industry over more than two decades, public perception and the post cold war reduction in the nuclear navy.

  2.4  Since 2003 the UK Government's commitment to the submarine programme has enabled a vibrant investment in nuclear capability at Barrow. There are similar opportunities in the decommissioning market which could help UK engineering industry build the capacity to meet the civil new build programme.

  2.5  Help is required to ensure UK industry investment is coordinated, with key elements of the supply chain cooperating in a more strategic way. A programme to place high calibre individuals in new build projects around the world will help the UK gain the necessary experience and capture lessons for the imminent UK build programme.


3.1  50 years experience of new nuclear submarine programme management

  3.1.1  BAE Systems Submarines Solutions' Barrow Shipyard has been managing the design, construction and commissioning of Nuclear Submarines since 1958 (50 years). Astute, the first of a new class of submarine will contain the 26th nuclear power plant to be constructed and commissioned at Barrow.

3.2  Significant nuclear engineering programme over next 20 years

  3.2.1  Four Astute submarines have been ordered of an anticipated seven. This construction programme will continue until 2019.

  3.2.2  The concept phase for the Vanguard successor submarines commenced in 2007; detailed design work will commence in 2009 in preparation for construction in parallel with the last Astute class submarine.

3.3  Centre of nuclear engineering, construction and commissioning excellence

  3.3.1  Barrow, since the mid nineties, is the only site engineering, constructing, fuelling and commissioning nuclear reactors in the UK (Sizewell B achieved its rating certificate in September 1995); at least three new naval reactors will commission before the first UK civil nuclear power construction starts. These activities require the Barrow site to maintain a nuclear safety case and site licence in accordance with the Nuclear Installation Act.


4.1  The end of the previous Civil Nuclear Build Programme and Cold War produced a nuclear resource glut

  4.1.1  The end of the Cold War in the early 1990's gave opportunities for a reduction in the submarine flotilla. Old submarines were retired early and new orders deferred releasing a significant number of nuclear qualified naval personnel. This resource was eagerly recruited by industry. The need to train and develop new people was further reduced by the imminent completion of Sizewell B (1995) and the Vanguard Programme (1999). The deferral of orders forced Barrow into redundancies and surface ship work to survive. The Barrow workforce was reduced from 13,000 to 2,900 between 1992 and 2002.

4.2  The Astute construction programme suffered key skill and knowledge shortfalls

  4.2.1  The nuclear reactor construction for Astute began to highlight problems with the skill and knowledge levels in the Barrow Shipyard and key suppliers in 2002. It became increasingly apparent that a lot of intrinsic knowledge resided in experienced staff and could not be easily documented in procedures and training packages.

  4.2.2  The skill and knowledge shortfall was also prevalent in the Ministry of Defence (BAE Systems' customer) and the Regulators (Nuclear Installation Inspectorate and Defence Nuclear Safety Regulator).

4.3  A negative public perception of the nuclear industry further skewed the age profile

  4.3.1  The UK public's perception of the Nuclear Industry, post Three Mile Island and Chernobyl, reduced the number of young engineers willing to train in nuclear engineering. In addition, the workforce in Barrow had aged, with little new recruitment during the 1990's. The nature of the submarine technology restricts recruitment to UK nationals, further exacerbating the problem of attracting new blood.

4.4  A reduced Nuclear Navy trains fewer engineers

  4.4.1  Ex-navy nuclear personnel have always been valued by the Barrow shipyard in engineering, safety engineering and commissioning roles. Many have second careers in engineering consultancies supporting the civil and defence programmes. This valuable resource has been reduced in line with the nuclear fleet.

4.5  Nuclear Decommissioning and Atomic Weapons Establishment projects are already driving new thinking in recruitment and retention strategy

  4.5.1  The new projects in progress at Sellafield and AWE have increased the competition for nuclear engineering resource. Attracting and retaining resource has required a combination of structured development, flexible and home working, increased remuneration and targeting retired engineers back into the workplace.


5.1  Civil Nuclear economics will drive Nuclear Engineering remuneration

  5.1.1  The skills being maintained and developed in the defence industry are highly valued in the civil nuclear industry; demand will increase in the run up to the start of new build in 2012.

  5.1.2  The economics of civil nuclear power, with its high capital costs, make schedule adherence and quality (reliability and safety) the dominant measures of a project's success. These projects can afford to ring-fence pools of the best nuclear resource as a contingency against problems on the programme critical path. The submarine programme does not have the same economic drivers and needs other strategies to retain resource.

5.2  Key skills were in short supply during the last Civil Nuclear Construction Programme

  5.2.1  The Sizewell B nuclear commissioning team comprised 50% foreign nationals (American, Spanish, South African and Slovakian). American engineers (the majority) came from the completed nuclear build programme in the USA.

  5.2.2  The USA had not ordered a new reactor since 1979; in 2007 the USA nuclear utilities announced a new build programme and are projected to need more than 30 new reactors before 2020. The UK new build programme will need to compete internationally for key skills; the remuneration for nuclear engineers will reflect this competition.

5.3  Demand for nuclear manufacturing will stress the submarines supply chain

  5.3.1  The international demand for components to support civil nuclear build will overwhelm key areas of the supply chain which support submarines. For example:

    -  There is a worldwide shortage of nuclear capable forging capacity (75% shortfall against projected civil nuclear demand alone). Submarines require the same capabilities for their nuclear plants.

    -  Heavy machining capability in the UK is based on old infrastructure and this capacity is running at a high utilisation in support of, amongst other projects, the Chinese market for conventional power plants. The projected UK civil nuclear build will further stress machining capability in the UK.


6.1  A stable Submarine Programme

  6.1.1  The UK Government has shown a clear commitment to maintaining the current nuclear submarine fleet strength. This stable, long term workload, with one submarine build every 22 months and design work already starting on the successor submarines to Vanguard, is enabling BAE Systems to make significant investments in people, facilities and processes.

  6.1.2  Barrow has now entered a sustained recruiting period in 2007 59 graduates and 97 apprentices were recruited. During 2008 the Barrow shipyard plans to recruit 85 new graduates, 50-100 experienced engineers, 134 apprentices and 300 tradesmen.

  6.1.3  The nature of submarine work restricts recruitment to UK nationals only. The security requirements take over three months to achieve clearance of personnel. As BAE Systems Submarines is currently focused on the defence programme, it cannot make firm offers for employment until security clearance is received. Many staff are lost in this period to competitors with business which has less onerous security restrictions.

6.2  The Decommissioning Programme's Reliance on Agency staff

  6.2.1  The headline figure for the Nuclear Decommissioning Authority's (NDA) budget of £2.5 billion/annum appears attractive, but the underlying cost of ongoing operations reduces the new money for decommissioning operations to less than £500 million per annum.

  6.2.2  Many companies attracted by the headline figures, are finding the decommissioning market highly competitive. To reduce risk regarding the delays to Project approvals that continue to be experienced, companies engaged on these projects use flexible (agency) resource. Agency staff do not receive the same investment in professional development and, typically, do not gain man management experience. The headline rates paid to agency staff make it difficult for them to transition back to the core workforce where they would need greater management experience to justify their salary. Over-reliance on agency staff is undermining an opportunity to develop valuable nuclear engineering resource.

  6.2.3  The Barrow Shipyard has lost nuclear qualified personnel to projects at Sellafield. Individuals are attracted by the headline rates paid for agency personnel. A number of these staff have recently returned to BAE Systems when the uncertainties of agency engineering in decommissioning have materialised but the turbulence is disruptive to production and personnel development.

6.3  New Civil Nuclear New Build is an Opportunity for Regeneration of Nuclear Engineering Capacity and a Springboard to the International Market

  6.3.1  The Government's commitment to enable the replacement and increase in civil nuclear generating capacity offers a challenge to the UK nuclear engineering industry. After such a long period of inactivity, the UK nuclear engineering base has contracted. There is an opportunity for companies to enter the UK market to fill the gap. If UK companies do not step up to this challenge, foreign competition will. UK engineering companies need to co-operate, playing to their strengths, to develop the new engineers and integrated capabilities required.

  6.3.2  If this UK integrated capability can be achieved it will be well positioned to exploit international opportunities.


7.1  Newer Modularised Reactors-offers project and UK industry advantage

  7.1.1  The more advanced reactors offered for the UK market (Westinghouse's AP1000 and GE's ESBWR) both feature a high degree of modularisation. This modularisation maximises the work at factory locations; reducing the work content at the power station construction sites, cutting programme time and risk.

  7.1.2  Reducing the work content at site will reduce the number of engineers who are required "on the road". This will ease the problem of retention for companies in this market and help ensure valuable experience is transferred from project-to-project.

  7.1.3  BAE Systems has gained significant experience in design for modularisation in the submarine programme. The level of module outfit routinely used at Barrow is higher than the aspirations of the reactor vendors. Extensive experience has shown that this allows significant pre-commissioning; the risk reduction to the programme is significant. Increased focus on higher levels of outfit and pre-commissioning by the reactor vendors would further reduce the number of engineers required "on the road".

  7.1.4  Increased complexity in modules and their pre-commissioning requires a more highly skilled workforce for their design, construction and commission. A reinvigorated UK industry supporting modular designed reactors will have competitive advantage in future international projects.

7.2  An integrated Supply Chain approach is required

  7.2.1  Internationally the demand for new nuclear reactors outstrips the available supply chain capacity; a major opportunity for UK Engineering industries exists. Significant areas of the UK engineering supply chain have been run down or lost since Sizewell B was constructed. With the exception of the defence industry, very few UK companies have recently managed major projects with such a large high quality engineering content since.

  7.2.2  The UK nuclear engineering manufacturing base needs to work co-operatively to maximise the value it delivers. Key capabilities such as forgings, machining, manufacturing engineering and commissioning already exist in the UK, but they have limited capacity. The timescales before the new power stations are required do not allow free competition and market forces alone to generate this capacity. There is a need for an integrated UK approach to development of facilities and people to establish a world class UK nuclear engineering supply chain.

7.3  Ensure the UK becomes an attractive location for nuclear reactors

  7.3.1  The UK Government's intention to streamline planning and licensing for nuclear reactors will help establish the certainty required for these large projects.

  7.3.2  The UK will have to attract nuclear skilled people into its workforce. Hopefully many of them will be home grown, but it is likely that some will need to come from abroad. Enabling this mobility will be essential to feed these projects and prevent delays.

7.4  Develop Engineers and Technicians on existing nuclear projects

  7.4.1  During the preparation for Sizewell B, the CEGB seconded many engineers onto the international nuclear construction and commissioning teams. Engineers were seconded for the duration of construction and commissioning (2-3 years). This was an expensive investment but it repaid many times during Sizewell B's progress.

  7.4.2  Government assistance in placing UK engineers at current projects such as Flammaville (France), the Watts Bar Completion (USA) or the AP1000 build in China would greatly increase the UK knowledge and skill bank.

  7.4.3  Another option would be to use the existing UK nuclear projects (eg. the submarines and decommissioning programmes) to develop resource; possibly by increasing the scale of the current NDA graduate development programme.

  7.4.4  Barrow, as the only UK licensed site integrating, constructing and commissioning nuclear reactors, is uniquely placed to train and develop the nuclear design, manufacturing, construction and commissioning engineers and programme management capability to meet the UK new build market need. This strategic resource will become increasingly valuable over the next four years.

7.5  Stabilise and accelerate decommissioning activity

  7.5.1  The decommissioning programme could be used to produce a ramp-up in nuclear engineering activity. Decommissioning could then be curtailed to release resource to meet the demands of the new build programme.

  7.5.2  By accelerating the early spend, and providing certainty to the decommissioning projects, UK engineering industry would be motivated to invest in core staff and facilities. This would help UK industry to ramp up to the levels of activity required to support a new build programme.

7.6  Learn lessons from the programmes which are restarting

  7.6.1  The hiatus in the nuclear submarine build programme resulted in a huge loss of intrinsic knowledge in BAE Systems and its Supply Chain; this hurt the programme schedule and increased costs. A significant programme of investment and development has been required to recover competence and capability.

  7.6.2  The supply chain supporting the first EPR reactor construction in Finland has suffered similar problems with major nuclear related components.

  7.6.3  As the USA restarts the Watts Bar project and moves into new construction, there will be many more lessons to learn. Placing UK project managers, quality professionals and engineers in these projects, would help de-risk the UK new build programme.


  8.1  The nuclear engineering skill set to support the nuclear renaissance still exists in the UK, mostly preserved in the defence programme. There is a need to increase the number people to meet the requirements of the new civil nuclear build programme.

  8.2  Education alone will not produce individuals of the requisite calibre, but the experience element can be achieved by placing high calibre individuals into existing nuclear projects in the UK defence industry or international civil nuclear build programmes.

  8.3  The UK engineering industry has an opportunity to build an internationally competitive nuclear engineering capability on the back of the UK new build programme. But this requires a coordinated approach to investment and the development of skills.

March 2008

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