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BAE To Close Portsmouth Naval Yard as UK Restructures Shipbuilding

Nov. 6, 2013 - 08:20PM   |  
By ANDREW CHUTER   |   Comments
Aerial photograph of Portsmouth Dockyard taken dur
An aerial photograph of Portsmouth Dockyard from 2,000 feet. (UK defense imagery photo)
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LONDON — BAE Systems is to end naval shipbuilding at its Portsmouth, southern England yard. The closure is part of a restructuring of Britain’s maritime capabilities, which has also seen the government announce it is to buy three offshore patrol boats for the Royal Navy to provide work for the company’s remaining naval facilities in Scotland.

As part of a series of announcements involving the naval shipbuilding program here the government confirmed that the cost of completing the two Queen Elizabeth class aircraft carriers being built by a BAE-led alliance had risen to £6.2 billion from £5.46 billion (US $9.9 billion from $8.7 billion), and the two sides had renegotiated the terms of the deal to ensure industry picks up a greater share of any further cost overruns.

Renegotiation terms include industry absorbing 50 percent of any further cost overruns above the new investment figure. Previously, the government picked up 90 pence of every pound in overspend, Defence Secretary Philip Hammond told Parliament today.

Hammond said the contract terms previously were “lopsided and poorly constructed.”

The program, which Hammond said remains on track for flight tests of the F-35 joint strike fighter in 2018, has risen nearly 50 percent since 2005.

A first squadron of Lockheed Martin F-35’s are expected to be ordered by the British by the end of the year

Closure of the Portsmouth yard next year brings to an end more than 500 years of shipbuilding in a city that also plays host to one of the two remaining surface warship bases operated by the Royal Navy.

BAE will continue to provide maintenance and support facilities at Portsmouth to the Type 45 destroyers and the two 65,000-ton carriers when they enter service by 2020. The Conservative-led coalition government said it was investing £100 million to improve maintenance and support capabilities at the Portsmouth dockyard.

The closure will result in 940 job losses at Portsmouth and a further 835 posts across BAE’s two naval shipyards in Glasgow, the Rosyth site, also in Scotland, and Filton in south west England.

The demise of Portsmouth will leave the company with no naval surface shipbuilding capabilities in England, raising fears a yes vote in the upcoming independence referendum in Scotland next year would see Britain effectively have to purchase complex warships from a foreign nation for the first time.

English naval shipbuilding capabilities will be centered on BAE’s nuclear submarine yard at Barrow and the small Babcock-owned facility at Appledore, which is currently building two 90-meter offshore patrol vessels for the Irish Navy.

Costs of the BAE closures and redundancies are being paid for by the government as a result of a 15-year Terms of Business Agreement (ToBA) signed with BAE by the previous Labour administration in 2009.

That agreement, which guaranteed BAE naval work in exchange for retaining capabilities and cost efficiencies in its operations, is now being “progressively replaced” by the raft of agreements unveiled today, said BAE in a statement.

The ToBA has been hated by the Conservatives ever since the agreement effectively stopped the then-Defence Secretary Liam Fox from canceling the aircraft carriers in 2010 as the costs of ending the program would have outweighed the cost of continuing.

The government would have effectively had to pay BAE for having its shipyards and workers standing idle between the imminent rundown of the aircraft carrier program and the ramp-up of the Royal Navy’s next big building requirement, replacing Type 23 frigates with the new Type 26 starting in 2016 when metal is due to be cut on the first of 13 frigates.

Hammond told Parliament the difference in the cost of the £348 million patrol vessel and paying BAE to do nothing was less than £100 million.

The warships, extended versions of the current River-class offshore patrol vessels, will be able to land a medium sized Merlin helicopter on its flight deck.

The first of the three patrol vessels is due to be delivered in 2017 and the final warship the following year.

Under current plans, the vessels will replace three smaller River-class warships which have patrolled UK waters vessels since 2003.

First Sea Lord Sir George Zambellas said the more capable warships would be “ very welcome” although previously he had advocated a continuing focus on highly capable ships like the Type 26 rather purchase less capable vessels.

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