11 May 2010 | Ref. 004
Introduction
Thanks to Cdre Rob Thompson
Your Royal Highness, ladies, gentlemen
I'm extremely pleased to be here today representing BAE Systems as the principal sponsor for this prestigious event and I am delighted to see so many like-minded naval engineering experts from across the world
As the Cdre mentioned, Portsmouth Naval Base is home of the Royal Navy's surface fleet
What you may not realise is that it is also home to over 3,000 BAE Systems employees all working to design, build integrate and support complex warships for both our UK customer and other navies around the world
As such, we are all too aware that operating an 'affordable fleet' is top of the agenda both here and overseas as together we face an ever more challenging environment, with ever shrinking budgets
Context
Political and economic
It's worth taking a moment to consider the challenging political and economic environment that we face before I go on to share my thoughts on how industry, working inseparably with end users and procurers, must step up to facilitate and deliver an affordable fleet.
In the UK, following one of the most exciting election campaigns in modern history, we await the eventual outcome of the unseemly political wrangling currently taking place. Whatever minority or coalition does form the next Government, we are now facing the reality of a hung parliament - the first since 1974 - with all the uncertainty that it entails
- Whatever happens, the one thing we do know is that a Strategic Defence Review is imminent
- This is expected to - indeed must - go hand in hand with a thorough examination of the UK's foreign policy and its ambition about the role it wants to play in world affairs
- As in many countries, the current UK defence budget is unaffordable, with a projected deficit in the order of £36 billion
- So, whilst the previous Labour Government stressed its own commitment to key naval programmes and David Cameron has given assurances that "we must keep our defences strong" as he engages in discussions to form a coalition government, the minority party influences will undoubtedly make an impact and we must be prepared for radical outcomes to the forthcoming review
There is no doubt that the economic climate is tougher than at any time in living memory
- Whilst on the surface many countries are showing signs of a recovery, the road is long and by no means certain
- The crisis unfolding in Greece continues to have ramifications across the globe, even with the positive market reactions to the IMF and EU's 750bn loan-guarantee deal; the Dow Jones plummeted 9% at one point last week and Asian stock markets fell sharply as a result of investor fears that Greece's debt crisis could halt the path to global economic recovery; jittery markets do not make for stable economic or political conditions.
- And Greece is not alone in its predicament. There are fears that the problem could spread to Spain and Portugal; and here in the UK, the budget deficit is now set to hit 12% by the end of 2010
- You do not need me to tell you that this all amounts to extraordinary pressure on defence budgets across the world, with an inherent impact on operational and industrial capability
Defence
This pressure comes at a time when the face of defence is changing and our navies are increasingly in demand to address challenging and diverse issues on a global scale:
- Supporting current conflicts in areas such as Afghanistan
- Providing maritime security amid international concern about the growing threat of piracy and the need to tackle illicit trade in people, drugs and contraband
- Just last week Russian forces were reported to have captured 10 Somali pirates who hijacked a Russian tanker off the Gulf of Aden
- Delivering humanitarian relief in the aftermath of disasters such as the Haiti earthquake, where the US Navy deployed its hospital ship Comfort to provide emergency medical facilities
- And, not forgetting their primary function of war fighting and delivering sub surface, surface and air defence
Industry
However, it's not all doom and gloom. While it may seem foolhardy to be upbeat in the current climate - I do offer a glimmer of optimism
- The shipbuilding programme in the UK at the moment is unprecedented in a generation or more
- The first of the Type 45 destroyers is preparing to enter service later this year and together with the Ministry of Defence, Royal Navy and our partners in industry, we have pioneered a new in-service support solution designed to maximise availability of the fleet to the Royal Navy
- The UK maritime enterprise has broken free of the traditional mould, working in partnership through a new and innovative alliancing structure to deliver the largest naval warships ever constructed in the UK
- The Queen Elizabeth Class Aircraft Carriers will each weigh 65,000 tonnes - over three times the size of the Royal Navy's current Invincible Class Aircraft Carriers - and between them provide four acres of sovereign territory to represent and protect UK interests across the world
- Quite simply, the scale of this naval engineering challenge is immense and we are proud to be a member of the Aircraft Carrier Alliance that was created to harness the skills, knowledge and manufacturing capacity across industry, whilst spreading the workload, risks and rewards involved in the programme throughout the UK
- In Barrow, our colleagues have delivered the first of class Astute submarine to the Royal Navy, and she is currently undergoing sea trials from her home port of Clyde Naval Base
- And as well as being responsible for the design, build and initial in-service support of the six Astute submarines under contract today, Submarine Solutions is also home to the Future Submarine Programme office, where a collaboration made up of BAE Systems, MOD, Rolls Royce and Babcock Marine personnel are working on a concept design for a successor to the nuclear deterrent carrying Vanguard class
You can see from this brief glimpse that change is afoot and I firmly believe that the current environment, whilst undeniably challenging, has created a unique opportunity to forge new, better and more affordable ways of delivering naval capability to our armed forces.
Collectively we have a responsibility to respond and if we fail to seize the moment, the ultimate cost will be far greater to us all.
Industrial response
BAE Systems is the UK's leading through-life maritime company and as such we take our responsibilities seriously
UK market
It is our goal, not only to transform our own company, but to play a leadership role in the transformation of the maritime sector to ensure that through the long-term sustainability of the UK industrial base, we continue to deliver affordable, sovereign naval capability long into the future
- In 2008 we combined our shipbuilding and support operations with those of VT Group to create the BVT joint venture in direct response to the Defence Industrial Strategy to consolidate the UK maritime sector
- In July 2009 we signed a 15 year partnering agreement with the UK MOD to drive greater efficiency in defence procurement, with clear incentives to deliver better value to the UK MOD and taxpayers
- Then in October 2009 BAE Systems acquired VT Group's stake in BVT, bringing the Surface Ships' business into full BAE Systems ownership
- We are now in the process of bringing together all of BAE Systems naval capabilities in the UK into a single maritime business, made up of strong individual business streams, but driven by a single overarching strategy for the maritime sector and international markets, and providing a unified interface with our senior customers
Overseas
Our partnering ethos in the UK transcends to our operations in overseas markets
- We work closely with our international industrial partners to develop mutually beneficial relationships so that together we can enhance indigenous capacity to deliver quality, affordable naval capability to our customers
- In the Middle East for example, we have created a successful joint venture with our partner Abu Dhabi Shipbuilding. The new company, named Gulf Logistics and Naval Support (GLNS), combines in-depth local knowledge with extensive international experience to offer a complete range of affordable integrated logistics support and training services to customers in the region
- Elsewhere, in Thailand, we are working closely with Bangkok Dock. We have supplied our partner with the design for a 90 metre Offshore Patrol Vessel and will share our technology and shipbuilding skills with Bangkok Dock's engineers to support the construction of the vessel in Thailand, helping to ensure that the Royal Thai Navy can secure the right capability at the right price to meet its future needs
Our strategy is to develop Type 26 and MHCP for the international market and in line with BAE Systems' home market approach, we will form relationships with partners in countries requiring similar capabilities in complementary time frames.
Such organisational changes are essential to make significant inroads to deliver 'the affordable fleet', but they are only part of the story...
We must also recognise and harness the engineering expertise at the heart of our industry that is critical to create new ways to design, build, integrate and support naval ships
The warship industry is delivering highly sophisticated complex vessels and it is an expensive business
However, the cost of design, build and integration of a warship, combined with putting it in the water accounts for just 20-30% of its through-life cost
With up to 80% of costs incurred through upgrade, repair and maintenance of ships and manpower, it is evident that major advances in delivering the affordable fleet of the future must come from increasing the cost-effectiveness of its in-service support
But, we cannot look at support in isolation
Research & development
By its very nature, this means that as an industry, we must maintain our commitment to research and development to drive the cutting-edge innovation that will deliver improved ship capability and reduced through life costs. Key areas include:
Afloat capability
- Designing novel hull forms able to adapt to evolving naval requirements to operate fewer classes of flexible ships that can undertake a wide range of tasks
- Lean manning to ensure that these new generation vessels can operate with smaller crew sizes
- Integration of unmanned surface, air and underwater vehicles into the host platform
- Greater energy efficiency of ships
Readiness and sustainment
- Enterprise architectures to develop new business models for ship support such as partnering for maritime capability maintenance and contracting for availability
- Systems and technologies to reduce through life operating costs such as integrated vessel health diagnostics and utilisation monitoring
- Using these technologies to bring afloat and ashore engineers closer together using to increase our understanding of what is happening with a ship whilst in service, so we can intervene before it breaks down
Industrial engineering
- Manufacturing methods and tools, such as ceramic liquid insulation; use of adhesives in ship building, fatigue crack resistant steel
- Lean and agile manufacturing technologies
Type 26
In March this year, we began the assessment phase of the Type 26 combat ship programme for the UK Royal Navy. This is the first major shipbuilding programme in the UK in which we have been able to fully incorporate the type of bold, innovative principles and technology I have just described.
Recognising that front end design concept expertise is a scarce resource, we have worked in partnership with the UK MOD and our industry partners from the outset of this programme as part of a group known as the Naval Design Partnership (NDP)
The NDP brings together the very best engineering expertise in all aspects of warship engineering to work towards a common goal
We have now taken this a stage further, breaking down traditional organisational barriers and have established a joint MOD and industry team, which is collocated in a single building, to work together throughout the design phase
This approach not only delivers greater transparency among those involved, but it also strips out unnecessary costs that can be incurred in a lengthy design process, and drives greater innovation ensuring that all our efforts are 100% focused on developing the very best capability for our customer
The new Type 26 combat warship will replace the existing Type 22 and Type 23 class frigates and needs to be the most versatile vessel of the Royal Navy's fleet to date
So, innovation is critical and our teams really are pushing the boundaries of warship design, with a whole host of options being assessed, including:
- A mission bay, which can embark a wide range of boats, unmanned vehicles and stores for use in disaster relief operations, or to provide additional accommodation
- A stern ramp, so the ship can recover larger vessels than a traditional davit and can operate in rougher seas
- Vertical launch silos, capable of carrying a wide range of weapons
- A flight deck of equivalent size to the Type 45 so it can accommodate a Chinook
- The parties involved in the design of the ship will also have responsibility for the build and support of those ships throughout their service lives. This means that during the current assessment phase, we can have sensible conversations about implications of how the specification we develop now will impact on our ability to repair and upgrade the ship in later life and weigh up the costs and benefits from a whole life perspective
- In a step change for the UK maritime industry, Type 26 will be the first ship designed for the Royal Navy with export opportunities in mind from the outset
- As aging fleets around the world need replacing, more and more naval forces are looking for highly capable, affordable supportable ships
- With this in mind, we are developing a core platform, which is sufficiently open to allow tailored equipment and systems to be integrated to meet each individual customer requirements
- In doing so, our aim is that the economies of scale created by spreading non-recurring costs will reduce the cost per ship, helping to deliver better value to our customers
Support Engineering
The Type 26 combat warship will open up new and exciting opportunities for the support of the next generation of warships, but equally we continue to create new and better ways of supporting existing vessels.
River Class
- We have a proven track record in delivering Contractor Logistic Support solutions based on the principles of Contracting for Availability
- Since 2003 we have partnered with the UK Royal Navy to deliver 24/7 dedicated support to the UK's River Class Warships, Survey Vessels and HMS Clyde
- This innovative approach has delivered unprecedented vessel availability of over 98% whilst reducing the number of ships needed from 10 to 6
Type 45
- In December 2009, we assumed responsibility for the Class Output Management of the Type 45 destroyers, taking the successful approach adopted to support the River Class vessels to the next level and applying it to a highly capable, complex class of warships
- The move simplifies the provision of support to the MOD, with BAE Systems acting as a single point of contact, coordinating all aspects of support to the ship, including maintenance, supply chain and design management
- However, the collaborative working doesn't end there - it extends into the supply chain with key industry partners such as Converteam, Thales and Rolls Royce all signing up to a single support charter to provide a truly innovative support agreement
- These sub-contracts are arranged on a Contracting for Availability basis, with payment determined by the performance and usage of equipment, providing the MOD with a 'volume control' to forecast and control costs based on ship usage
Hunt Class
- The UK MOD, BAE Systems and Babcock Marine have also established the Surface Ship Support Alliance in order to expand collaborative support agreements across the Royal Navy's fleet in a bid to reduce cost and improve availability
- Under this agreement, we have now established a Class Output Management team to take responsibility for all engineering and support activity for the Royal Navy's Hunt Class mine countermeasures ships here in Portsmouth
- Meanwhile our partner Babcock will take responsibility for the support of the Type 22 frigates in Devonport and we'll be working closely together to share best practice across the teams
Skills
This gives you a flavour for the innovation that our engineers are driving in the constant quest to deliver enhanced capability for our customers.
However, all of our ability to deliver an affordable fleet for navies around the world requires not only continued investment in infrastructure and technology, but also in the skills of our people and our engineers of the future in order to sustain this high level of industrial capability that can continue to find new and better ways of tackling the challenges that we face.
- This investment in skills must start from a very early age.
- I'm sure that all of you, as I do, get excited about engineering and the opportunity in our sector to constantly tackle new and bigger challenges than the previous, day, month or year
- But all too often, it seems that this enthusiasm is passing our young people by
- A silver lining in the current economic downturn is the opportunity provides to put manufacturing and engineering back on the map as an exciting and rewarding career choice
- As a company, we work with schools in our local areas, taking engineering theatre roadshows out to school children and we bring those studying the engineering diploma into our facilities so that they can experience engineering in the real world
- We're also strengthening our relationships with universities - and are expecting to sign our first Memorandum of Understanding with Heriott Watt University in Edinburgh next month as a mark of our long-term commitment to work better together and to provide a richer research and learning experience for its engineering students. Further MOUs are also planned with Southampton, Newcastle and Glasgow Universities
- I myself, started out as an engineering apprentice and BAE Systems is committed to this ongoing investment in young talent, taking on around 300 apprentices and 250 graduates each year -for many, that is only the start of their training with the company
- We constantly invest in our people, who after all are the future of our industry
Your Royal Highness, ladies and gentlemen, I will leave you on this positive tone for the future. I am sure that the next three days will provide insightful and fruitful discussions from which we will all benefit.
Thank you
