Ambitions and realities in UK shipbuilding

The technical project has had the benefit of £20m($25.5m) in UK government funding, awarded to a Bibby-led research consortium by the Department for Transport under the Zero Emission Vessel & Infrastructure(ZEVI) scheme. The design of the newbuild, which will feature a hybrid, 20MWh battery system complemented by methanol dual-fuel genset engines, is a UK endeavour, realised by the shipowner in cooperation with Longitude Engineering.

After a tendering process that involved a number of yards in the UK and overseas, construction of the ship has been awarded to Astilleros Gondan, on the strength of cost and delivery competitiveness, along with the builder’s proven quality and a track record in bespoke, specialised vessel production, including CSOVs.

Notwithstanding the UK input and the contribution that the nascent, UK-registered asset will make over potentially many years to the country’s maritime industry, the fact that yet another high added-value vessel project for British account is to be fulfilled abroad constitutes something of a reality check for those seeking and advocating the revival of the commercial shipbuilding sector in the UK.

The direction of the work is a measure of the expertise available at affordable or acceptable cost and terms elsewhere, in this instance northern Spain’s dynamic shipbuilding and maritime industrial cluster. Bibby’s affirmation that “This project will demonstrate that clean ships can be built at the same total cost of ownership as a conventional, fossil fuel-burning vessel, coupled with significantly reduced operating costs,” is indicative of the competitiveness of the Spanish yard’s contractual offering.

The fact that no compulsion to UK production is appended to multifarious R&D projects sponsored by public money under the ZEVI initiative is in line with the country’s free-market, laissez-faire approach, and at variance with policies practised by other economies.

British made?

A hoped-for revitalisation of the industry had been signalled by the UK Government’s publication in March 2022 of the ‘refreshed’ National Shipbuilding Strategy(NSbS). While retaining the earlier(2017) policy’s central focus on naval shipbuilding, the revised plan as a whole gave much closer attention than before to commercial construction and the supply chain. A key element was the delineation of a £4bn($5bn) public procurement programme over the next 30 years, the so-called “shipbuilding pipeline” embracing not only naval ships but also other state-owned and agency vessels, including ferries and specialised work vessels.

The objective of the listing, covering more than 150 vessels and craft, was to outline long-term requirements, so as to instil confidence among shipbuilders that there would be continuity in demand. By providing greater certainty of government investment in the 30-year shipbuilding pipeline, it was considered that shipyards would better be able to continue to invest, maintain a skilled and adaptable workforce, and raise productivity, and thereby also improve competitiveness for commercial vessel contracts. All orders, though, would have to be secured on a fully competitive basis.

A solid move to help support endeavours to replenish UK orderbooks was implemented last July in the shape of the Shipbuilding Credit Guarantee Scheme(SCGS). This had been originally proposed within the context of the original NSbS as the Home Shipbuilding Credit Guarantee Scheme, aimed at assisting shipowners and operators to access finance for newbuild contracts and vessel upgrade projects assigned to UK yards.

By providing government guarantees of up to 80% on commercial loans over a maximum period of 12 years, it was anticipated that the facility would give lenders an added level of protection and encourage backing for placing orders with UK yards. Although the mitigation of risk is lower than the 90-95% government export credit said to be available from China and South Korea, the SCGS was a welcome development.

Of course, the recent Bibby contract, being in the private domain, is outside the terms of reference of the pipeline of work identified under the NSbS. However, a number of the public sector projects in the list figure among the stream of newbuild orders that have been placed abroad by UK interests since the document’s publication.

In fact, one such newbuild, the multi-function lighthouse/buoy tender for Edinburgh-based Northern Lighthouse Board(NLB), represented Astilleros Gondan’s preceding success in the UK market before the Bibby contract. The specification for the £51.8m($66m) NLB vessel features a hybrid power system to minimise environmental impact in sensitive Scottish and Manx waters, in keeping with ambitious environmental targets set out in the government’s Clean Maritime Plan.

International cooperation

Although sourcing of such tonnage abroad runs counter to the industrial aspirations expressed in the NSbS, the deal with the family-owned Spanish builder called for a minimum £2m($2.5m)-worth of work to be placed with UK suppliers. It also required Gondan to create a special internship programme for up to 15 UK-based students to gain experience through placements at the yard during the vessel’s construction. Trinity House, NLB’s counterpart for work around England, Wales, the Channel Islands and Gibraltar, is also planning a multi-function tender. Its previous fleet additions have come from Poland.

Elsewhere within the public domain, Scottish Government-owned Caledonian Maritime Assets(CMAL) endorsed foreign construction hard on the heels of the release of the refreshed NSbS by entrusting Cemre Marin Endustri of Turkey with a £105m($133.7m) order for two 95m ro-pax ferries, to be assigned to the Caledonian MacBrayne(CalMac) service network. A subsequent repeat order extended the series at the Yalova yard to four ships.

CMAL had invited four overseas builders to bid for the initial pair, the Scottish nationalised yard of Ferguson Marine having been excluded from the shortlist. The Turkish builder’s contractual performance to date, with two ships now fitting out and on schedule, contrasts with the situation at the Ferguson yard, where two 102m dual-fuel ro-pax newbuilds are already six years late and three times over-budget.

Also listed under the NSbS shipbuilding pipeline, a 72m passenger ferry and 45m cargo vessel to maintain lifeline services between the Isles of Scilly and English mainland were ordered in January this year from French shipbuilder Piriou. Penzance-based Isles of Scilly Steamship Group secured private financing through Lombard rather than seek UK Government Levelling Up Funding(LUF), which it regards as imposing too many restrictions and uncertainties.

UK maritime plc still open for business

Although merchant shipbuilding has virtually disappeared from the UK, the country’s activities in naval shipbuilding, commercial small vessels and craft and lightweight ferry construction, yacht and boat building, ship repair and marine equipment production, collectively continue to form an important and high value part of the economy. The sector employs around 42,000 people and contributes over £2bn($2.5bn) annually to the UK economy. The creation of new shipbuilding halls at the Rosyth and Govan premises of, respectively, Babcock and BAE Systems, to boost productivity in frigate and potentially other warship production are current examples of UK capability and renewal.

The overall package that constitutes the revised NSbS, instigated under former Prime Minister Boris Johnson’s watch, denoted the most significant, positive intervention in the UK’s maritime industries since the 1970s.

Over the decades in between, UK governments of both main colours have been either negative, indifferent or inconsistent in their approach to shipbuilding. Whether or not the objectives of the strategy will be achieved over time hinges on cooperation, consistency and industrial will being maintained through future years, irrespective of changes in the Westminster administration. Addressing the skills gap and attracting young people into the industry is of paramount importance, and is a sphere wherein government must give succour to companies which are putting extra resources into training and recruitment.

Seen by some as a bad omen, an important modification to the pipeline of work took place only eight months on from the release of the revised Strategy whereby the much-vaunted, £250m($318.3m) national flagship scheme was abruptly cancelled. The vessel was to have been primarily a UK trade and technology promotion platform, and could have put the shipbuilding sector back on the path to passengership construction. The project was pulled in favour of expenditure on two specialist vessels to protect underwater infrastructure, one a newbuild in the UK and one a converted acquisition. A contract for a newbuild is still awaited.

On the plus side, the commitment to naval programmes has so far been carried through, with further investment most recently signalled by confirmation that the Ministry of Defence had entered the design concept phase for a new generation of Royal Navy multi-role amphibious support ships. In the meantime, Harland & Wolff’s subcontract on the three 216m Royal Fleet Auxiliary(RFA) newbuilds presages a return to large-ship production at Belfast.