Select Committee on Defence First Special Report


APPENDIX 16

Memorandum from the Transport and General Workers Union concerning the future of Royal Ordnance Bishopton (14 June 2000)

  I am writing to you on behalf of the Royal Ordnance Trade Unions of the future of Royal Ordnance Bishopton.

  First, I would like to place on record our deep appreciation of the Inquiry conducted last year by the Defence Committee, an Inquiry conducted with the traditional thoroughness and forensic skills that have characterised the work of the Committee. The response to your call for a new and sensible long-term relationship between the Ministry of Defence and BAE Systems was a positive one, leading, as you will know, to the conclusion in December of a partnering agreement that will without doubt, be in the best strategic interests of Britain and our Armed Forces. We have no doubt but that, had it not been for the excellent work of the Defence Committee, then such progress would not have been made.

  Second, however, I regret to inform you that it remains the case that the wish of the Defence Committee that Bishopton might be reprieved has yet to be fulfilled. The planning assumption of the company remains that it will cease the manufacturing of propellant at Bishopton by the end of next year. It is becoming increasingly clear, however, that the company is facing mounting difficulties in finding safe, secure and cost-effective alternative sources of supply to replicate the range of propellants currently produced at Bishopton, vital to the effectiveness of our Armed Forces. It is for that reason, therefore, that the Royal Ordnance Trade Unions have prepared a further Memorandum to the Defence Committee. Please find enclosed a copy of that Memorandum.[5]

  Third, you will know that assurances were given to the Defence Committee by both the Ministry of Defence and Royal Ordnance. Given the disturbing evidence relating to the situation as it currently stands, we very much hope that the Committee will call to account both the MoD and the company. We believe that it is right that there should be Parliamentary scrutiny of whether or not the assurances that have been given can with confidence be met.

  Finally, we stand ready to co-operate with the Committee in whatever way you consider appropriate.


INTRODUCTION

  It is now nearly 18 months since the Royal Ordnance Trade Unions first approached the House of Commons Select Committee on Defence, following the announcement of the proposed closure of the Bishopton factory in Scotland, the remaining manufacturer of propellants in the United Kingdom. The Defence Committee then conducted an outstanding inquiry, as a consequence of which the Ministry of Defence acted upon the unanimous recommendations of the Select Committee, concluding in December 1999 a new and welcome Partnering Agreement with British Aerospace, covering the Royal Ordnance factories. The strong wish of the Defence Committee that the Bishopton factory might be reprieved from closure has yet, however, to be met.

  The purpose of our second approach to the Defence Committee is because subsequent developments have demonstrated that the justification for closure is now suspect in the extreme. Indeed, it is now clear beyond any doubt that the proposed closure is neither in the public interest nor makes any commercial sense. The time has come for there to be once again effective Parliamentary scrutiny, not least because we hope that your intervention will lead to Ministers and Managers seeing sense.

  The Defence Committee will be surprised to hear that it is still the case that suitable alternative sources of supply, able to replicate the vital defence products manufactured at Bishopton, have yet finally to be identified and agreed. Further, in the process of trying to identify suitable alternative sources of supply, the hopes that there might be cost savings have evaporated. Indeed, it is increasingly clear that there will be significant increases in cost associated with sourcing propellants from overseas. And, to add insult to injury for the Bishopton workforce, taxpayers' money will have to be spent on first the closure of Bishopton, and then the development of alternative sources of supply in competitor companies and countries.

  Perhaps of most concern to the Defence Committee is the fact that there are serious question marks over the safety and stability of some of the proposed alternative propellants. It would now appear from the initial trial quantities of propellant procured that some of the products in question are showing classic indications that, in service, in particular, in low temperature conditions, they could lead to the lives of the crews of vehicles being placed at unacceptable risk.

PROPELLANT SOURCES

  Propellant natures divide into three broad categories:

    —  Gun Propellants—those used in large calibre guns, that is artillery pieces and tanks.

    —  Rocket Propellants—those used in missile systems and ejection seats for aircraft.

    —  Single Base Propellants—those used in small arms and medium calibre ammunitions.

  Royal Ordnance Bishopton is either directly or indirectly responsible for all the natures that are presently in service with all of the UK Armed Forces. BAE Systems has now embarked on three different strategies for the future supply of the various UK propellant requirements. If Bishopton closes, a common indigenous supplier of propellants will no longer be available to the UK Armed Forces. In discussions with the company, BAE Systems has now confirmed that the following preferred options are the ones which are at present being considered:

Gun Propellants

  From the original "world market" options claimed to be available, the only supplier which is actively currently being considered is the German/Swiss Government controlled company, Nitrochemie. The South African Government controlled company, Sonchem remains an option but one that would only become viable if there was no risk that potential political instability might put at risk that option.

Rocket Propellants

  Two companies are being considered as possible suppliers for propellant for missile systems, principally for the Sea Wolf missile. The companies in question are Celerg from France and Bayern Chemie from Germany. No clear alternative source of supply has been identified for the propellants used in aircraft ejection seats and for cartridge ejector release units, which allow the safe firing of missiles from aircraft.

Small Arms Propellants

  At present, Bishopton supplies nitrocelluloses used to manufacture the various small arms and medium calibre ammunititions in service with the Armed Forces. The company is now contemplating in future procuring all its small arms nitrocelluloses from the Czech Republic.

  The Committee will note from the above that the closure of Bishopton will lead to a bewildering range of alternative sources of supply, with in future the UK Armed Forces no longer being confident of all its requirements being met, in particular, at a time of crisis.

SAFETY, PERFORMANCE AND RELIABILITY

  The Defence Committee will remember that one of the major concerns expressed by our members was the doubts that they had from their own experience over the capacity of alternative foreign suppliers being able to provide the natures of propellant which are presently in service with our Armed Forces and new variations which are in the final phases of development, all to the necessary same standard as those manufactured at Bishopton. You will understand the dismay being expressed, therefore, by those that we represent over results from trials being carried out at the Royal Ordnance Ridsdale Test Range on test quantities of propellants from the preferred German supplier, trials that are indicating that serious difficulties have been experienced with the safety and performance of the alternative propellants. In service, such suspect propellants would without doubt present an unacceptable hazard to service personnel. We believe that such information should be made available to both the Ordnance Board and to the Defence Committee.

SUPPLIER AVAILABILITY AND STRATEGIC ASSESSMENT

  The suggestion was made in evidence to the Defence Committee from both Ministers and Managers that a number, possibly five, different suppliers had been identified, each capable of supplying the complete range of Bishopton products The bewildering array of alternative suppliers being canvassed is proof positive that that is clearly not now the case. After an initial fact-finding study, all except one have been discounted on technical grounds. A second company is to be considered as a possible future supplier on the grounds that, at a later date, it may be able to supply because it might offer lower costs. The supplier in question does not presently have any experience, however, of manufacturing the full range of the natures of propellant currently required by the MoD.

  It has become evident that the only source of propellant being considered as the possible sole alternative to Bishopton is the German company, Nitrochemie. However, as outlined above, there are significant safety and reliability concerns associated with this source. We have to say that, as the Trade Unions always predicted, there are no proven, competent suppliers for the full range of Bishopton products.

COSTS

  The Defence Committee will remember that BAE Systems had wanted to retain Bishopton but had reluctantly concluded that, on cost grounds, it could no longer keep the factory open. The suggestion was then that closure would lead to substantial savings, with the Ministry of Defence benefiting as a consequence. It is now apparent that the proposed savings have evaporated. Indeed, the prices being quoted by Nitrochemie exceed those of Bishopton.

  Turning then to the manufacture of the second set of products currently produced at Bishopton, propellants for rocket motors, it would appear that an increase in price of some 12.5% has been agreed between the company and the MoD to offset the requalification costs associated with the Blackcap and Redstart motor propellants for the Sea Wolf and Sea Skua missile systems. We should add that, even now, no alternative propellant suppliers for these systems have been identified although the MoD has indirectly agreed to offset the requalification costs through the increases in contractual costs that have been agreed.

  The latest bizarre turn of events is that it would appear that the MoD is effectively prepared to invest £7.9 million in either France or Germany to ensure that the contract for Sea Wolf can be fulfilled. We believe that both Ministers and Managers should be called to account for whether or not this is in the best interests of both our Armed Forces and the tax payer.

SUMMARY

  In summary, we would make the following points:

    —  no competent alternative source of supply for the full range of Bishopton products has yet been confirmed;

    —  the predicted cost savings arising out of using alternative propellants have simply evaporated;

    —  no alternative supplier has been identified for the propellants used in the Martin Baker ejector aircraft seat;

    —  no alternative propellant has yet been identified for use in missile ejector cartridges;

    —  nitrocelluloses for small arms ammunition may now be sourced from the Czech Republic, with the requalification costs borne by the MoD;

    —  no alternative supplier of rocket propellant for the Sea Wolf missile system has been agreed. The MoD has, nevertheless, agreed to artificial rises in missile costs to cover propellant requalification costs;

    —  the MoD is preparing to invest nearly £8 million in equipment, which already exists at Bishopton, to ensure a single overseas source of propellant for Sea Wolf; and

    —  requalification costs continue to rise as the latest systems come into service use containing Bishopton propellant.

  This is a dangerous and costly nonsense. The time has come for Ministers and Managers to assume a joint responsibility for finding a sensible solution, reprieving Bishopton from closure. Ministers have a clear obligation to defend the national interest and not to put at risk our Armed Forces. BAE Systems Managers now have the advantage of the Partnering Agreement. There is a new and changed situation which demands that both Ministers and Managers rise to the challenge of the Defence Committee, securing the future of the remaining producer of propellant in the UK.


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