MoD outsourcing could sink the shipbuilding industry

 

All those with an interest in Italy’s Fincantieri, Spain’s Navantia, Japan Marine United Corporation, and Daewoo Shipbuilding and Marine Engineering of South Korea – and their British shareholders – will rejoice as the Ministry of Defence decided to put the £1bn contract for the building of fleet solid support ships out to international tender in February.

France and Italy build their own solid support ships, ensuring that the work remains within national borders. Rodney Reid (Financial Times) responds to the news by describing Britain’s approach as ‘muddled’. He recommends that vessels required for use by the Royal Navy should be built in Britain, preserving jobs and skills in this country. A month later Mr Reid reported that Fincantieri and Daewoo Shipbuilding and Marine Engineering had withdrawn due to the ‘significant’ advance funding required.

Unions and shipbuilders have urged that the vessels to be built under this contract with flight decks, advanced weapons systems and extensive dry storage, to carry supplies needed by the carrier fleet when on mission, should – as in France and Italy – be classed as complex warships. This would enable them to be built in the UK, exempted from EU laws preventing protectionism.

Reid asks: “With the Appledore shipyard in Devon, which has built ships for the Royal Navy for well over a century, likely to close at the end of March without any new orders, is it too much to expect joined-up thinking at the MoD to keep valued jobs in the UK and save a valuable shipbuilding asset?”

Admiral Lord West of Spithead points out a few of the advantages of building these ships in Britain:

  • the benefits to the exchequer of tax receipts from the firms involved and their workers,
  • the lack of exchange rate problems,
  • maintenance of highly skilled workers
  • versus redundancy and retraining to be shelf-stackers or something similar.

A false economy?

In an earlier FT article, co-authors David Bond, Henry Mance and Peggy Hollinger assert that the MoD wants to cut costs by using the subsidised shipyards of other countries but defence experts say that might be a false economy. Francis Tusa of Defence Analysis said a report commissioned by the unions will show next week that 25% of the spending on the vessels would return to the government in direct taxes.

Admiral West agrees: “The Treasury is deluding itself if it thinks it is cheaper building them abroad. The fleet solid support ships should be built in the UK.”

 

 

 

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Posted on August 6, 2019, in Defence, EU, Finance, Government, Manufacturing, Outsourcing and tagged , . Bookmark the permalink. Leave a comment.

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