In this November 5th article from Save the Royal Navy, the fate of the old Appledore shipyard is examined. Why did it get to the point where a modern facility located on the north coast of Devon, in an area of relatively high un-employment, has been allowed to go-under, when the MOD is placing orders for frigates and other vessels. With the imminent departure of the UK from the EU, there are some who argue that it is increasinlgy important that the UK retains capable yards in England.
Unable to follow up their success building OPVs for export, and with no other orders forthcoming, last week Babcock made the sad announcement that the Appledore shipyard will close in March 2019. Here we examine the background and potential impacts of this decision.
A history of boom and bust
The Appledore yard has been building ships since 1855 under a variety of owners and has faced closure on at least 3 occasions, only to be saved by new buyers. In addition to naval vessels, historically the yard built commercial coasters, tugs, dredgers, ferries and large yachts. Since the 1990s the majority of the work has been naval, securing the contract to build three fine vessels for the RN, survey ships HMS Scott (1997), HMS Echo and HMS Enterprise (2002). The yard constructed blocks for the QEC aircraft carriers and delivered the first section of HMS Queen Elizabeth for assembly in Rosyth in 2010. Babcock scored a rare victory for UK warship exports in July 2010 when they won the contract to build three 90m OPVs for the Irish Naval Service (Average price £55M). The customer was very pleased with the ships and placed an order for a fourth and final vessel, the Lé George Bernard Shaw, delivered to Cobh on 11 October 2018.
The main construction dry dock on the site was covered in 1970 and is 3,958m2, served by two 60-tonne overhead cranes which together can move fully outfitted blocks up to 100 tonnes for assembly. In addition, there is a 26m x 30m covered facility used to fabricate further units or build small craft. The outfitting and commissioning quay can accommodate vessels up to 200m in length.
A community pays the price
As work on the Irish OPVs has tailed off, for the past few months, 140 workers from the 199-strong Appledore workforce have been making a tiring 4-hour daily commute to and from Plymouth to work in Devonport Dockyard. Appledore’s workforce has been declining in size for some time but Babcock will not make anyone forcibly redundant, promising it will offer jobs at its other sites to the remaining 199 workers. This will probably entail the majority relocating permanently to Plymouth, Rosyth or Faslane. This will be an unwelcome upheaval but a less bleak future than for many shipyard workers who have faced redundancy elsewhere. The greatest impact will be felt by businesses in Appledore, Bideford and in the wider North Devon economy which has little manufacturing and is heavily reliant on farming and tourism.
Reasons for closure
The ideal work for Appledore would be small-medium size commercial vessels, OPVs, minehunters or hydrographic ships for which there is no immediate UK demand and stiff foreign competition for overseas orders. Babcock has strengths in many areas but their history as an engineering service company does not equip them well to compete for new commercial ships in a very tough market. A strategy that relies almost entirely on naval work is high risk, especially after the work on the QE carriers was complete and in view of BAE System’s domination of the market. The revival of Cammell Laird and Ferguson creates further pressure on Appledore by adding capacity to UK shipbuilding.
Steve Turner of the Unite union suggested that “At a stroke, ministers could secure the future of Appledore by lifting the delay to contract the Type 31e frigate programme and guaranteeing that the Royal Navy’s new fleet solid support vessels are designed and block built in yards across the UK”. This is a rather confused view of the situation. The Type 31e tendering process is already underway again and the brief pause and restart will have only a minimal delaying effect. Babcock is in a tough competition with BAE Systems and Cammell Laird and the odds of them winning are about even. Type 31e is scheduled to be a very rapidly implemented program by historical standards, even if Babcock win the contract, first steel would not be cut until the second quarter of 2020.
Although the yard could potentially construct parts of the ships, in truth Babcock is not dependent on Appledore to in order to construct Type 31e. They have considerable capacity at Rosyth for both construction and assembly where £100 million was invested in infrastructure to support the build of the QE carriers. Number 1 dock is of sufficient size for two Arrowhead 140 frigates to be constructed simultaneously. (Although this raises interesting questions about alternative options for dry-docking for the aircraft carriers) There is speculation Babcock is negotiating to purchase the Goliath crane from the Aircraft Carrier Alliance so it could be used to assemble frigates or potentially, the FSS.
The Babcock-led ‘Team 31’ consortium also includes partnerships with other shipbuilders, Ferguson (Glasgow) and Harland & Wolff (Belfast). At a media briefing as recently as May 2018, Babcock stated their plan was Appledore would build midships superstructure sections of Arrowhead, while the bow would be built by Ferguson and hull blocks by H&W. The closure of Appledore will see this plan revised, probably with more blocks fabricated at Rosyth or in Belfast.
The FSS design is at a very early stage, even if a UK based consortium were to win the construction contract (far from certain), steel for FSS would not be cut until late 2020. In other words, even if Babcock are involved in Type 31 and/or FSS, there would be a gap of at least 18 months before any work begins and the capacity exists in other yards British anyway.
Appledore represents spare naval construction capacity right the moment when there is a lull in new ship construction happening in the UK. Only the BAE Systems yards on the Clyde with their Type 26 frigate order book can look forward to the next decade with absolute certainty. Even Cammell Laird, flush with recent successes in winning ship repair contracts and the construction of RSS Sir David Attenborough, is contemplating making 290 workers redundant in March 2019, mainly due to a lack of steel fabrication work.
Who dropped the ball?
It is certainly fair to blame governments going back several decades for lack of coherent defence industrial strategy. Most seriously, they are also culpable for the dangerous long-term decline in size of the Royal Navy that has inevitably led to many shipyard closures. Whether blame should fall on the current administration for the end of Appledore is less clear-cut. The National Shipbuilding Strategy is an attempt to address some of the problems and there is a significant long-term naval shipbuilding plan in place. Committing to building the FSS in the UK might help British shipbuilding as a whole but would not guarantee Appledore a future. There are many vessels of all kinds that might be desirable for the RN which Appledore could theoretically construct. Unfortunately, there are not the funds, designs or plans in place to rapidly order new vessels to sustain the yard. The last hope to keep the yard open was a contract to build an OPV for the Armed Forces of Malta but an Italian yard won that competition.
The Defence Secretary visited the yard in January 2018 and was clearly trying to do what he could to help. In a letter he sent to the local MP dated 31st October, it was revealed that the MoD had offered to bring forward a £60 million package of work allocated to Devonport to provide work for Appledore. Neither the MoD or Babcock are willing to comment on the nature of the work or why Babcock did not feel it was a viable solution.
An explosive report on the performance Babcock was published in early October by little-known stock market analysts Boatman Capital Research who made serious criticisms of the company, enough to reduce its share price. Subsequently, other well-respected stock market analysts have rebutted most of the allegations in the report. Among the unsubstantiated claims, Boatman claims Babcock have “a terrible relationship with the MoD” and have been taking cash out of the Appledore shipyard subsidiary company, knowing its closure was inevitable. Whatever there veracity of these claims, Boatman clearly does not properly understand the shipbuilding landscape and make misleading assertions that “The Royal Navy’s MARS Fleet Tanker support vessels are to be built in South Korea and Appledore is slated to do the fit-out work” and “if [Babcock] shut Appledore it will struggle to win future Naval construction work, particularly the Type 31e frigate”. In 2017-18 Appledore generated just £24 million of Babcock Group’s total revenue of £5.4 Billion. The public relations dimension to the closure may be of more concern to the company than the financial impact.
Campaigns, petitions and marches urging Government to “Save Appledore Shipyard [or insert industrial concern of your choice here]” are almost always doomed to failure without a viable commercial plan in place. The yard has some future strategic value and there is much sympathy for the workforce but is the MoD expected to suddenly order new vessels that are outside the equipment plan agreed in the 2015 SDSR, just to support a single commercial entity? The MoD points out the South West already benefits from its largest spend per-head of any region in the UK, totalling £4.4bn in 2017. It would be interesting to hear what the Labour Party, who naturally supported the Union-sponsored campaign propose as the solution. A subsidy to keep the yard in mothballs for a couple of years, while the workforce continues to be temporarily deployed elsewhere might be a partial answer, but one a cash-strapped MoD is unlikely to consider a priority.
From the Navy’s perspective, any closure of its supporting industries that reduce future options must be seen as bad news. The BAES Portsmouth facility was closed at the end of 2015 and after the brief ‘aircraft carrier boom’, just three years later another English facility is to be lost. Closing another shipyards is hardly sensible in broad strategic terms for an island nation and the threat of Scottish independence has not fully receded. There may also come a time when a significant expansion of the Royal Navy is imperative and every shipyard would be needed.
Although Babcock will end their interest in the yard, the site remains owned by Langham Industries and business leaders in Devon are holding out hopes the yard might be sold as a going concern to a new buyer. Appledore has a history of coming back from the brink, having been on the verge of closure several times before. Perhaps a buyer with a new vision could still harness the considerable potential that remains. In common with the fate of so much of Britain’s maritime infrastructure, redevelopment into a marina with expensive riverside apartments is probably the depressing future alternative for the site.
Article and images courtesy of https://www.savetheroyalnavy.org