Doubts over Type 31 frigate work for struggling yards
H&W and Ferguson can bid on new contracts but without guarantees, warns Babcock
Babcock International has warned there is no guarantee that the two struggling shipyards in Northern Ireland and Scotland that were part of the winning team to build warships for the Royal Navy will secure any work.
The warning by the defence contractor, named preferred bidder for the £1.25bn Type 31 frigate contract on Thursday, will come as a blow to the 473 workers at Belfast’s Harland & Wolff and Scotland’s Ferguson Marine Engineering on the Clyde that both collapsed into administration in August.
Archie Bethel, chief executive of Babcock, which led the bid team, told the FT both yards would “get a chance to bid” but the company “would not risk the programme”.
“We never guaranteed they would get any work, they are not expecting that,” he said.
Both yards, Mr Bethel added, would have to “pass the same hurdles that any suppliers have to pass in terms of financial security and security of supply. Assuming that [any] new owners can do that, they will be included in the process”.
Workers at the two yards are hoping the contract will throw them a lifeline, especially the 123 employed at H&W, which has no work. Administrators to the yard remain in talks with two potential buyers but declined to comment on Thursday.
Denise Walker, senior organiser for the GMB, one of H&W’s two unions, said the contract to build five frigates offered the prospect of new work for the yard but conceded its future remained in doubt until a new owner was found.
H&W has not built a ship since 2003 but Ms Walker insisted it had the right skills to complete steel fabrication, adding that the workforce was still employed and “good to go”.
The 350 workers at Ferguson Marine, which was rescued by the Scottish government last month are still completing a ferry contract but were also expecting a boost from the award of the Type 31 build programme.
Derek Mackay, the Scottish government’s economy secretary, said Babcock had the “full support” of Holyrood, and would be pushing for work for Ferguson Marine.
“Once the final details of the contract are announced, we look forward to discussions on the role that Ferguson Marine could play alongside other suppliers in Scotland,” he said.
But Mr Bethel insisted Babcock had won the bid on the basis of the work being done “100 per cent at Rosyth”, adding that with the exception of France’s Thales, “none of our members were risk-sharing” and the competition for work was open all UK yards.
Mr Bethel said he would not rule out Cammell Laird securing a role on the programme — the shipyard in Birkenhead was part of the one of the two losing bids.
The five frigates will be assembled at Babcock’s Rosyth yard in Fife and the company will subcontract the fabrication of parts of the hulls. The aim is to mirror the approach taken for the navy’s two new aircraft carriers which were built in blocks at different yards and then assembled at Rosyth, where the second ship is nearing completion.
The contract will secure some 450 jobs at Rosyth as the work on the carrier programme tails off, according to unions. First steel is expected to be cut in the middle of 2021, with the aim of getting the first frigate into the water in 2023.
The Type 31 programme is a key element of a national naval shipbuilding strategy launched in 2017, itself a response to an independent review in 2016 by industrialist John Parker.
It recommended that future warships should be designed to increase the prospect of exports and to increase collaboration between shipbuilders by using the broader supply chain, reversing a previous policy that had left BAE Systems, one of the losing bidders on Type 31, as the main supplier of naval vessels.
Ministers have sought to cast the award as part of a wider push to reinvigorate shipbuilding in the UK — which has suffered a sharp decline in recent years — as well as the Royal Navy’s capabilities, which have come under scrutiny in recent weeks after the seizure of a UK-flagged tanker by Iran.
But Francis Tusa, editor of Defence Analysis, is a vocal critic of the strategy and said the UK simply did not have the money to sustain more than one naval shipyard capable of building complex warships.
Richard Scott, naval consultant at Jane’s Defence, said the shipbuilding strategy was “more about sustaining a level of capacity and capability than to drive an expansion”, noting that the Type 31 frigates were designed to replace some of the ageing Type 23s. After sustained cuts to the number of ships over recent decades, the navy has just 13 frigates and six destroyers.
Unions on Thursday stepped up pressure on the government to back the prime minister’s pledge to “bring shipbuilding home” by ensuring a contract to build three support ships for the navy did not go abroad.
The government was required to put it out to international tender, under EU law, because it did not designate them warships, which are exempted. It has stoked fears that government-backed foreign bidders will be able to undercut UK yards. One UK consortium, comprising BAE, Babcock, Cammell Laird and Rolls-Royce, is bidding to win the work.
Mike Clancy, general secretary at Prospect, said: “These [Type 31] frigates were always going to be built in the UK, but workers need a cast-iron guarantee from the prime minister that new naval support ships will also be built in our yards and UK workers will not be left high and dry while vital work and taxpayers’ money is sent abroad