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Can the United Kingdom Rebuild Its Naval Fleet? Challenges and Opportunities for the UK Shipbuilding Industrial Base, 2005–2020

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Can the United Kingdom Rebuild Its Naval Fleet? Challenges and Opportunities for the UK Shipbuilding Industrial Base, 2005–2020 Can the United Kingdom Rebuild Its Naval Fleet? Challenges and Opportunities for the UK Shipbuilding Industrial Base, 2005–2020 RAND RESEARCH AREAS ver the next 15 years, the United CHILD POLICY Kingdom is planning to replace CIVIL JUSTICE Abstract EDUCATION and scale up its naval fl eet. During ENERGY AND ENVIRONMENT this period, up to six new ship pro- The United Kingdom faces numerous chal- HEALTH AND HEALTH CARE Ogrammes—the Type 45 destroyer, the Future Air- lenges in producing warships from now INTERNATIONAL AFFAIRS through 2020, including developing a suffi - NATIONAL SECURITY craft Carrier (CVF), the Astute-class attack subma- POPULATION AND AGING rine, the Joint Casualty Treatment Ship (JCTS), the ciently sized and skilled workforce, updating PUBLIC SAFETY Military Afl oat Reach and Sustainability (MARS) facilities, and maintaining viable producers. SCIENCE AND TECHNOLOGY To address these challenges, the UK Ministry SUBSTANCE ABUSE ship, and the Future Surface Combatant (FSC)— TERRORISM AND will, at times, be in various stages of design and of Defence (MOD) needs to consider shifting HOMELAND SECURITY production timings to more evenly distribute TRANSPORTATION AND construction. Some of these will be the largest of INFRASTRUCTURE their type built by UK industry in quite some time. future demand, seeking better cooperation Not all these programmes will be in production between the shipyards to share work, coordi- concurrently; but even so, the United Kingdom will nating the MOD shipbuilding project teams’ experience a much busier naval shipbuilding period plans and strategies, exploring alternatives in 2007–2011 than it has in recent years. to competitive procurement, and considering Only a handful of UK shipbuilders can poten- the use of nontraditional suppliers. tially produce these ships. After decades of declin- This product is part of the RAND Corporation research ing orders that have led to consolidations and fore- brief series. RAND research closures, today just three major fi rms build Royal industry’s labour, facilities, and suppliers in light briefs present policy-oriented summaries of individual Navy ships: BAE Systems, Swan Hunter, and VT of the MOD’s 2004 procurement plan and of fi ve published, peer-reviewed documents or of a body of Shipbuilding. Another three fi rms are primarily alternative scenarios: one in which funding and/ published work. involved in warship repair: Babcock Engineering or requirements decrease; one in which funding Corporate Headquarters Services, Devonport Management Limited, and and/or requirements increase; one in which a new, 1776 Main Street Fleet Support Limited. large-sized submarine is designed and built; one in P.O. B ox 2138 Santa Monica, California Th is situation has prompted defence policy- which design and production timings are changed; 90407-2138 makers to consider whether the UK Ministry of and one in which programmes experience delays. TEL 310.393.0411 FAX 310.393.4818 Defence (MOD) shipbuilding plan is feasible given Our analysis was based on information obtained the constraints of the industrial base; whether ship- through a series of interviews and surveys with the RAND Europe—Cambridge Grafton House builders, ship repairers, and industry suppliers are shipyards, suppliers, and MOD offi cials. 64 Maids Causeway robust enough to meet the demand; and whether Cambridge CB5 8DD United Kingdom alternative production strategies might better serve How Will the MOD Programme Affect TEL +44.1223.353.329 the MOD. Shipbuilding Labour? FAX +44.1223.358.845 Evaluating Shipbuilding Supply Labour Demand © RAND 2005 and Demand Th e MOD’s 2004 shipbuilding plan requires RAND Europe explored these issues by evaluating that four large programmes—the Type 45, CVF, the supply and demand of the UK shipbuilding MARS, and Astute—overlap. Th is will likely cause www.rand.org demand for labour at shipyards to rise, peaking around 2009 at a anticipated peak, but only if they retain those workers through the level some 50 percent higher than current demand levels. Once past near-term downturn. the peak, overall workload demand steadily declines for the foresee- able future (see Figure 1). How Will the MOD Programme Affect Shipbuilding Facilities? Figure 1 In addition, the shipbuilding programme will place demands on Future MOD Labour Demands by Naval Warship Programme shipyard facilities. In particular, demand for fi nal assembly and outfi tting facilities (docks, slipways, piers, land-level areas, etc.) will be especially high between 2006 and 2010. Many of these 017 ) -1% facilities have been sized to build the smaller ships that the MOD &YQPSU -4% " 5ZQF +$54 has ordered in the past. Th us, shipyards will have to invest in and upgrade facilities to meet future MOD orders of larger ships, par- 3FmU ticularly the CVF and MARS. Another complicating factor is that any delays in the planned shipbuilding programme could create ."34 %JSFDUIFBEDPVOU $7' facility constraints. '4$ "TUVUF How Will the MOD Programme Affect "TUVUF"TUVUFDMBTTTVCNBSJOF -4% " -BOEJOH4IJQ%PDL "VYJMJBSZ Shipbuilding Suppliers? $7''VUVSF"JSDSBGU$BSSJFS ."34.JMJUBSZ"nPBU3FBDIBOE With non-shipbuilder suppliers providing more than half the value &YQPSU4BMFTUPOPO6,DVTUPNFST 4VTUBJOBCJMJUZ '4$'VUVSF4VSGBDF$PNCBUBOU 017 ) 0GGTIPSF1BUSPM7FTTFM of each naval vessel, their ability to meet the MOD’s anticipated +$54+PJOU$BTVBMUZ5SFBUNFOU4IJQ )FMJDPQUFS -1%-BOEJOHQMBUGPSNEPDL 3FmU4IJQT WBSJPVT SFmUUFE demand is an important industry capacity consideration. Our 5ZQF5ZQF%FTUSPZFS surveys of both shipyards and suppliers indicate that an increased workload should not be problematic for the supplier base. For the most part, suppliers do not rely on MOD business and are less sub- Structural and outfi tting trades will likely receive the most ject to variations in demand than the shipyards. However, suppliers signifi cant increase in demand in absolute terms. Demand for have indicated that the uncertainty in the MOD’s programme hin- technical workers, however, will drop off sharply in the near term ders their ability to plan and invest in a timely way. as a result of the rundown of the design work for the Type 45 and Astute. Th ereafter, the trend reverses dramatically as the CVF, MARS, and JCTS programmes place near-simultaneous demand Issues for MOD Consideration for technical workers. We made a number of observations that might help the MOD Th e MOD could reduce these peak demands by level-loading manage its long-term shipbuilding programme. In the short term, the ship production plan, which would involve starting some pro- the MOD should consider ways to level-load its future labour grammes at diff erent times, extending their build schedules, and/or demand, work with civilian authorities to encourage training in increasing the build intervals. shipbuilding skills that can be transferred outside the industry after the labour demand peak, relax its industrial policy to mitigate Labour Supply problems caused by peak labour demands, and encourage the use of Th e number of shipyard workers could drop from its 2005 level of more outsourcing by shipyards to manage their workloads. more than 12,000 to around 4,600 in 2020 if no steps are taken to In the mid- to long term, the MOD should make long-term replenish the workforce through hiring apprentices, workers from industrial planning a part of its strategic process, defi ne an appro- other industries, or the unemployed. An aging workforce accounts priate role for the off shore industry in meeting the future MOD for this drop, and many shipyards have undertaken recruiting and programme, encourage long-term industrial investment through training schemes to address the issue. However, shipyards will fi nd multi-ship contracts, reconsider the feasibility of its competition it diffi cult to grow to meet peak production labour demands even policy in light of industrial base constraints, and explore the advan- with additional recruiting and rehiring eff orts. Given their recent tages of common or compatible design tools. growth rates, shipyards might not be able to grow quickly enough By taking these recommendations into consideration, the MOD to meet peak production labour demand. For the technical work- will be better able to manage its long-term shipbuilding programme force, shipyards currently have enough workers to grow to meet the and the industrial base that supports it. This research brief describes work done for RAND Europe and the RAND National Security Research Division documented in The United Kingdom’s Naval Shipbuilding Industrial Base: The Next Fifteen Years, by Mark V. Arena, Hans Pung, Cynthia R. Cook, Jefferson P. Marquis, Jessie Riposo, and Gordon T. Lee, MG-294-MOD (available at http://www.rand.org/pub- lications/MG/MG294/), 2005, 216 pp., $30.00, ISBN: 0-8330-3706-4. MG-294 is also available from RAND Distribution Services (phone: 310.451.7002; toll free: 877.584.8642; or email: [email protected]). The RAND Corporation is a nonprofi t research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily refl ect the opinions of its research clients and sponsors. R® is a registered trademark. RAND Offi ces Santa Monica • Washington • Pittsburgh • New York • Doha • Berlin • Cambridge • Leiden RB-9096-MOD (2005) CHILD POLICY This PDF document was made available from www.rand.org as a public CIVIL JUSTICE service of the RAND Corporation. EDUCATION ENERGY
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