Examination of Witnesses (Questions 20
THURSDAY 25 APRIL 2002
20. If you are prepared to order the six you
do not foresee a problem. Why not go the whole hog for the 12?
(Sir Robert Walmsley) It is a balance. I feel very
comfortable with six. I feel very comfortable with the productivity
that we will get on ship seven onwards. I feel very comfortable
that the economies of scale that we have on the equipment production
by going for six are very sensibly close to those we would get
for 12, but it is not as good. I accept that, but we now have
the flexibility. We will decide when we order the second six.
We will decide what the modification state of the radars etc.,
is for the equipment and whether we want a different sonar or
not. If we had gone for all 12, all that wold be locked up now.
I think the last ship comes off in 2014. That is a long time ahead.
I do not like predicting the future with that much certainty.
21. It is 12 years to cut from 12 to 10 to 9
to 8. I have been in this Parliament when we had 75 frigates and
destroyers. Then we had Mr Mottram's famous "about 50"
which was 43. Then 35; now 32. Are you confident that you have
been given instructions by the Treasury or Mr Hoon that we are
not going to go down below 32? My concern is, by only going for
six, you are giving the government the flexibility for saying,
"We are not going for another six. We are perfectly happy
with the wonderful six that we have constructed."
(Sir Robert Walmsley) Of course that is a theoretical
possibility. The truth is that we do have a budget for all 12
ships. There is a very sound operational case for all 12 ships.
I know you are speaking to Air Marshal Sir Jock Stirrup in a week's
time and I am coming back with the Minister on 8 May when you
will wish to go into the operational factors which have conditioned
our confidence in the justification for 12 ships. The requirement
is there. All we see in operations tells me that powerful escorts
capable of protecting lightly armed or unarmed ships are absolutely
relevant to what the Royal Navy does today. That is other people's
business now, more's the pity.
22. You will have retired by the time that crisis
comes along. You can see my cynicism. You say the requirement
is certainly there and the budget is there to sustain a further
(Sir Robert Walmsley) The budget is there now. Nothing
I have said should suggest that the Ministry of Defence has not
set aside in the budget the funds for 12 ships, but it is still
looking a mighty long way ahead.
23. What is the RAND study's longer term prognosis
for the UK warship building industry?
(Sir Robert Walmsley) It will be related to the demand
for warships. I come back to my export point. If we are successful
in the export field, we can have a terrific warship building industry,
including submarines. That requires having designs that are attractive.
It is not just about whether we have workmen and facilities and
management capable of crashing out a ship at an economic price.
It has to be a design that people want to buy and that is as true
about merchant ships as it is about warships. The first factor
is that exports will condition it but RAND were particularly looking
at our own warship demand. They saw the over-capacity we have
talked about. Beyond about 2009, as the carrier construction starts
to increase and probably a new class of escorts called future
surface combatants starts to get underway, we do see a definite
rise in the requirement for labour in the shipyards. None of these
predictions is ever quite as accurate as the lines drawn on pieces
of paper would indicate, but by 2007 or 2008. Then it builds up
as Type 45 continues. RAND's prognosis of all that is, Ministry
of Defence, you had better be very careful to understand how you
generate innovation in an industry if you do not have competition.
That is what we are turning our minds to.
24. Currently, it seems that there is over-capacity
in the shipyards and that by the end of the decade there is going
to be under-capacity. Can you give a little more detail about
that and talk about the depth and the breadth of the lean times?
(Sir Robert Walmsley) In terms of capacity, it is
very strictly a labour issue. I absolutely guarantee there will
be some cranage associated with putting things on the top of the
island of an aircraft carrier and, with a bit of luck, we will
hire those cranes in, so it will not be a question of building
some huge crane in some lonely drydock somewhere. There are very
few issues relating to facilities other than modernising. You
can always do welding quicker and we should be ready to sustain
shipyards, to put in more modern welding equipment. Competition
stimulates that. That is the sort of innovation you get from competition.
We should be ready to let that be reflected in the price of anything
we buy as a single source contract. Particularly after the Type
45 investment in Portsmouth, facilities I sort of set to one side
on capacity. The question then is can the shipyards provide the
skilled labour. You cannot just recruit anybody. They have to
be people who know how to do this stuff. We have learned that
recently, when people just assume they are numbers. They are not
numbers; they are skilled workers.
25. We were in Faslane recently and this very
point came across to a lubber like me.
(Sir Robert Walmsley) I do not think I quite understood
it as well five years ago as I do now. For as long as I can remember,
we have been dealing with over-capacity in shipyards. The problem
has not been shortage of labour; the problem has been shortage
of orders to sustain the shipyards. As we look ahead towards the
end of the decade, I have been hugely encouraged. Mr Kroese has
already had this morning a bouquet from two of us. He has apprentices
working at Swan Hunter now. People in the shipyards are laying
down the foundations, I believe, to sustain and expand a skilled
workforce towards the end of the decade. I will be very surprised
indeed if that is not going to be possible.
26. On Tyneside, the average age of welders
is in the early forties and that is because of the gap in the
eighties when people left the industry. The other problem the
north east has is if you get on a plane on Monday morning to Amsterdam
or Brussels you will find quite a lot of welders travelling to
Europe. There is competition for their skills now from across
Europe, which creates problems in terms of recruitment of skilled
welders, for example, and platers in Swan Hunter and other places.
The same would apply in Scotland as well. I accept what has happened
in terms of apprentices but do you not accept that part of the
government's thinking is to put some thinking into how we generate
these skills, not just in the north east but in other areas as
well like Barrow, because a lot of companies have not been taking
on apprentices or training people for a long time.
(Sir Robert Walmsley) Most people in this room are
probably parents of one sort or another and they know, when advising
people to go into careers or not, they look to see if it is a
long term career with real prospects. The long term orders for
the Type 45 must encourage people to join the companies, because
I absolutely agree with the thesis that we need young people coming
in. From what I read in the newspapers, nobody can be unaware
of this: the government has undertaken an enormous effort on improving
the skill base of British youth. I am quite confident that the
government understands the issue. If the work is there we will
get the people. That is why these long term contracts are such
a help because they give people the idea that this is an industry
that is going somewhere. If we do not use as a nation the opportunity
presented by our warship building programme over the next ten
years in order to present designs that are attractive to other
countries, we will only have ourselves to blame for what happens
to the warship building industry in the next decade after that.
It is a great opportunity we have.
27. You emphasise this idea of skills to companies
(Sir Robert Walmsley) I do. I know Barrow quite well.
I will not say I have a soft spot for it because I was born in
Scotland. When you go round a shipyard like that, you are meeting
people building parts of a submarine and they have done it six
times over. They know what the difficulties are. It is not always
about the drawings and you cannot just tell people to go and do
it. They have to know. That is why looking after the skill base
28. Following the RAND study, will there be
a warship building/ship repairing strategy or is the RAND study
the basis for a document which at least people can read to see
what may be in store for them; that there is going to be a degree
of rationalisation and unless they get their acts together there
is little prospect of competing successfully? Can we expect such
(Sir Robert Walmsley) I would be getting a bit ahead
of myself if I said you could expect such a document. The RAND
report provides a very good compendium of the issues that condition
such decisions. There is a sense in which the strategy absolutely
depends on the programmes to work on. We have a very clear one
on the Type 45 which I feel very comfortable with and the CVF
strategy reinforces what we are saying about the Type 45. We know
we cannot build the whole of the CVF at one location. We know
that shipyards have to cooperate therefore to build modules in
different locations and assemble them together into a single ship
at some location. All of that groundwork is underpinned by what
we are doing with the simpler ship such as the ALSL where Swan
Hunter are the lead. Ships are being constructed on the Clyde
now to a Swan Hunter design. That requires cooperation between
two yards who do not instinctively cooperate. This is practising
at it. We also have Vospers and BAE SYSTEMS practising so we are
now beginning to see a network of shipyards who can cooperate
to build a ship. I think that is a strategy. If you were to say,
"Are you ruling out competition for ever?" I think that
is the road to ruin. You have to keep that in reserve because
if this is not working we will go head to head.
29. If you are getting them to work together,
maybe in your retirement you might be invited to go to Afghanistan
and move all the elements together.
(Sir Robert Walmsley) I am getting uncomfortable about
how often you mention my retirement.
Chairman: You have survived and had so
many comebacks. I am delighted that you are here; otherwise, we
would be deprived of our bout once a year.
30. Can I ask about the future carrier orders?
What does the study say about the future carrier orders in terms
of their procurement?
(Sir Robert Walmsley) You mean the connection with
the Type 45?
(Sir Robert Walmsley) It warned us about modules.
I am making it all sound too easy and I apologise for those who
know more about shipbuilding than I do but building modules in
two different places and joining them togetherhook-up is
a good word because hook-up reminds us it is not just welding
round the edge; it is all the pipes, electrical systems and weapons
systems that have to be hooked up between the two modules. The
beam of the Type 45 is about 20 metres. The flight deck beam of
a carrier is probably nearer 80 metres so it is a much more complex
set of things that have to be spatially in the right places. The
first thing RAND pointed out is do not assume that modules can
be hooked up without any problem whatsoever. It has to be thought
about. These are practical people. They said, "When you transport
these modules, you have to make sure they are rigid enough to
withstand transport on a barge and they have to be weather proof.
You have to close the ends to make sure they do not get sea spray."
32. It is quite common in the south east Asian
(Sir Robert Walmsley) All well established procedures.
It just is extra work compared with doing it in one shipyard.
They said, "Just think about the carrier. You are practising
on the Type 45. On the carrier, it is going to be more difficult.
Do not assume that it is not an issue that has to be managed."
33. If you say module design for carriers is
not an option, can you tell me which shipyard is big enough to?
(Sir Robert Walmsley) I made a mistake if I said that.
I tried to say that the carriers will have to be constructed by
distributing the modules around the country. What RAND are pointing
out is that, because the modules are bigger, the issue of hooking
them up takes a lot more management in the design process and
control of the construction process, just because it is a bigger
piece of material. It is a much more complex task. It is not just
twice as difficult; it is probably ten times as difficult.
34. It is going to be modular build and hook-up?
(Sir Robert Walmsley) Yes, and a big hole in the ground.
Lots of people are saying, "Let me dig the hole and you give
me all the ship." We are not going to do that.
35. Can I go on to the joint strike fighter?
What are likely to be the relative costs of a STOVL and a Carrier
Variant JSF? What is the current leaning? Is it September?
(Sir Robert Walmsley) Yes.
36. Can you tell us what the current thinking
(Sir Robert Walmsley) I have to be a bit careful.
We have a competition going on between two consortia, each of
whom will have their own view of the relative costs of the CV
and the STOVL version but you can see straight away that there
will be a capital issue of providing catapults and arresting gear.
Probably with a couple of ships that might be 100 million. I quote
numbers far too readily in these committees and then people say,
"That is not right." It might be 75 and it might be
150. That is dwarfed by the through life costs of the people who
have to be trained and who have to man those systems. It is not
really the issue of the cost of the ships that will dominate that
part of the decision. It will be the through life cost which is
how we are trying to do everything nowadays.
37. It does have an impact on the size and shape
of the design.
(Sir Robert Walmsley) Not much. Surprisingly little,
38. That is very strange because that is not
what the two bidders are saying. They emphasise that this is crucial.
(Sir Robert Walmsley) I wonder why they do that. I
can only guess. There is not much difference between the overall
dimensions of a ship for STOVL and CV. I absolutely agree that
if I was a ship builder or a consortium I would want to know whether
it was to be a CV or a STOVL aircraft because I have to put in
arresting gear. I have to purchase the arresting gear; I have
to fit it in the ship; I have to find somewhere to generate the
water to make the steam and launch the catapults. They are all
irritating problems. Everybody who is designing anything wants
everybody else to settle all the details. The overall dimensions
will be remarkably similar because it is conditioned by the fact
that we have a sortie generation rate which generates the number
of aircraft. The aircraft have to go in a hangar. When the aircraft
are all in the hangar, they have to be sufficiently still far
apart for fire crews to walk between them without getting tangled
up in the wings.
39. I thought that was a crucial point.
(Sir Robert Walmsley) I do not want to sound too dismissive,
but I do steamroller a consortium when they start saying, "Our
lives are impossible because you have not made this decision."
I say, "Rubbish."