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Top Industrialist to Steer UK Shipbuilding Strategy

March 18, 2016 (Photo Credit: Anglo American)

LONDON — One of Britain’s senior industrialists has been put in charge of a government drive to deliver a national shipbuilding strategy for the naval sector here.

Sir John Parker’s appointment as the chairman of the National Shipbuilding Strategy was part of the UK Treasury’s budget day announcements on Mar 16.

A Treasury-led effort to develop a surface warship building strategy has been underway since at least January, 2015, when the initiative was announced by Chancellor of the Exchequer George Osborne during a visit to the Portsmouth naval base on England’s south coast.

The  businessman’s credentials include stints as chairman of Babcock International and BVT Surface Fleet. He is chairman of mining giant Anglo American. He’s a naval architect, a non-executive director of the Airbus Group and a former president of the Royal Academy of Engineering.

One industry executive said he understood Parker’s name wasn’t the first one out of the hat when it came to selecting an independent chairman for the role as other people had previously turned down the role.

But, they said, he was probably the best person the government could have found to do the job.

“He’s very shrewd, trusted by government and seen as impartial. He’s an elder statesman and I would struggle to find someone better,” said a second industry executive.

That view was endorsed by another leading executive, who said, "Sir John is a superb choice - someone who knows the industry and has seen it from the 1980's when we were building warships in many yards across the country, right up to the present day and the merger of BAE Systems with Vosper Thornycroft. He will know how to ask the right questions and develop a path that will benefit all the industry and its suppliers."

A Defence Ministry spokeswoman said Parker will report on the strategy to government ministers by the Autumn Statement 2016.

No date has been announced for the chancellor’s Autumn Statement. Osborne has previously delivered his financial update to Parliament in late November or early December.

“His report will include recommendations on the management and governance arrangements for implementing the strategy in the longer term, including arrangements for any external oversight,” she said.

 “He will lead the high level engagement with key senior defense, government departments and industry stakeholders. He will provide strategic direction and guidance to a cross Whitehall teams and report to ministers,” said the spokeswomen.

The strategy will cover “all aspects of warship building  and integration as well as the contribution that all suppliers make,” she said.

BAE Systems and Babcock International are Britain’s two major shipbuilders and naval support providers but other companies like Cammell Laird and A&P, both of whom have beeninvolved building sections of the Royal Navy’s two 65,000-ton carriers, are expected to be part of the strategy.

Key to the strategy is the build program for eight Type 26 anti-submarine warfare frigates and five, possibly more, Type 31 general purpose frigates.

The government axed five of the planned fleet of 13 Type 26’s in November’s strategic defense and security review, replacing them with lighter, cheaper and, hopefully, more exportable Type 31’s.

Work on selecting a design for the Type 31 and figuring out how it will fit into the production schedule is now underway.

At the same time discussions are underway between the Government and BAE on a revised production schedule for the Type 26 and the award of a contract for the next tranche of work to be allocated to take forward development of the Type 26.

First metal on the Type 26 was originally scheduled to be cut later this year but that looks like being delayed.   

A third industry executive said that production revision was as much to do with MoD budgets as design maturity.

Parker will report  to the Treasury and the Defence Ministry but it’s the chancellor and his officials who are driving the agenda in much the same way as they are in making changes to how government and industry will deliver Britain’s new £31 billion nuclear missile submarine program  now awaiting a parliamentary go ahead. 

Industry executives here, who asked not to be named, said Treasury interest in the high value surface and submarine building strategies suggests the chancellor still doesn’t wholly trust the MoD to deliver on big procurement programseven though it has sharpened its management of its financial affairs.

The National Shipbuilding Strategy could unfold just as  MoD financial affairs come under heavy pressure again in the next couple of years.

A number of senior officers have been warning industry of hard times to come over the couple of years , particularly fiscall year 2017-2018.

The strategy Parker has been given charge of is looking to put Britain’s naval shipbuilding industry on a more sustainable long-term basis with a mix of Royal Navy and export orders .

“It will look at the potential to build a new complex warship on a regular schedule and maximize export opportunities in order to deliver capable ships and value for money, as well as maintaining jobs and skills,” said the MoD spokeswoman.

At the time of Osborne’s visit to Portsmouth the chancellor said one of the things he had asked officials to look at was the potential to build a new complex warship every two years.

Nothing has been heard of that since Osborne took industry executives by surprise with the statement in 2015.


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