British Shipyards Lose $700m Tanker Contract to South Korea

#1
British Shipyards Lose $700m Tanker Contract to South Korea

LONDON — South Korea's Daewoo Shipbuilding and Marine Engineering has won a contract to supply Britain's Royal Navy with four new tankers, the Ministry of Defence said Wednesday.

The deal to supply the 37,000-tonne tankers is worth £452 million ($709 million, 535 million euros), the MoD said.
The Military Afloat Reach and Sustainability (MARS) tankers are due to enter service in 2016 and will replace models that date back to the 1970s.

They can simultaneously refuel an aircraft carrier and a destroyer while undertaking helicopter resupply of other vessels.
"They are designed to allow for upgrades and emerging technologies, meaning that they have been designed with the future in mind," said Commodore Bill Walworth, head of the Royal Fleet Auxiliary......

"This is more bad news for British industry," said Jim Murphy, defence spokesman for the main opposition Labour Party.

"First we lose out to France over fast jets and now we lose out to South Korea over Royal Navy tankers," he said, referring to India's selection this month of the French Rafale fighter jet.

AFP: S. Korea's Daewoo wins British navy tankers deal
It is time for Britain to gird up its loins and get serious about its industries and their capabilities.

At one time, British weapons were masterpieces and world beaters.
 
#3
Navy buys Korean to keep its ships fuelled: £452m contract for four tankers goes to the Far East

By IAN DRURY
Last updated at 9:58 AM on 23rd February 2012


Defence Minister Peter Luff announced yesterday that a £452million contract for the support tankers had been awarded to Daewoo Shipbuilding and Marine Engineering.
Critics said the decision was a blow to Britain’s declining shipbuilding industry and to the proud naval tradition of what was once the world’s greatest seafaring nation.
They also accused the Government of ‘shameless hypocrisy’ after David Cameron criticised India earlier this month for snubbing British industry when it awarded a £13billion deal to supply 126 fighter jets to France.

Navy buys Korean to keep its ships fuelled: £452m contract for four tankers goes to the Far East | Mail Online
 
#6
I know nothing about these processes but I am curious as to whether or not the gov is allowed to take the effects on employment into consideration when making these decisions.
 
#7
Donmac - the poster Bouillibaise has summed it up far better than myself, but in summary, the key UK concern in this is not the actual construction of the hulls, which is relatively simple, but the design skills required. What has happened here is that a UK firm has designed the ship, and specialist changes will be made to the vessels by UK firms, and this protects the critical national skills the Govt thinks is required in the UK.

Also worth noting that BAE were offered the chance to bid, but turned it down - it could have gone to UK builders if they'd wanted to bid for it in the first place.
 
#8
Donmac - the poster Bouillibaise has summed it up far better than myself, but in summary, the key UK concern in this is not the actual construction of the hulls, which is relatively simple, but the design skills required. What has happened here is that a UK firm has designed the ship, and specialist changes will be made to the vessels by UK firms, and this protects the critical national skills the Govt thinks is required in the UK.

Also worth noting that BAE were offered the chance to bid, but turned it down - it could have gone to UK builders if they'd wanted to bid for it in the first place.
Only if the british quote was the best.
 
#10
Ok.Understood. Next stupid question. Why did UK manufacturers not bid? I can't conceive that their order books are that full.
 
#12
Iron Duke said in a thread a while back. "I live in a word I didn't make" or words to that effect. Thats how I feel. I don't mind foreign products I mind wasted lives doing sweet F A.
The economics of building in korea are self evident but the cost is much higher than the price.
 
#14
Ok.Understood. Next stupid question. Why did UK manufacturers not bid? I can't conceive that their order books are that full.
Their order books are full - Astute, QE and Type 45 for starters and Type 26 to come. Don't know about the others but Lairds looked pretty busy last time I drove past it a couple of weeks back.
 
#15
From my experience in Norwegian shipping. Any new build coming out of South Korea or China, that is supposedly fit for purpose. Will then spend the first months of her life being fixed.

SK
 
#16
We will get some of the crumbs.This from Defence Industry site

The Daewoo contract is GBP 452 million (about $711 million), but the overall buy will be around GBP 602 million (about $950 million). That adds around GBP 60 million to British firms for “customisation, trials and specialist engineering support”; and GBP 90 million to the UK’s BMT Defence Services for “key equipment, systems, design and support services.” The UK MoD explains that:

“A number of British companies took part in the competition, but none submitted a final bid for the build contract. In light of this, the best option for Defence, and value for money for taxpayers, is for the tankers to be constructed in South Korea by DSME.”

South Korea’s industrial policy makes shipbuilding a priority, and it has been successful. ROK shipbuilders are currently global leaders in the civil sector, with extremely advanced shipyards. This has translated into a very good record with new ROK Navy vessels as well. UK MoD | BMT Defence.
 
#17
A number of the Norwegian Navies newer frigates\destroyers. Were built in Spain. No complaints so far.
Although a few Skjold class ships are layed up due to technical problems.

SK
 
#18
Ok.Understood. Next stupid question. Why did UK manufacturers not bid? I can't conceive that their order books are that full. "

Simply put, UK military shipbuilding has been consolidated over the last few years to generate sufficient work to keep the strategic building capability in place. Building warships requires a certain amount of skills and experience, which is significantly different from building tankers. BAE has consolidated a lotof the yards, and (long story cut short) got an agreed business arrangement with HM Government that a certain amount of work will go its way in return for those yards remaining open.
At present the RN is building, or preparing to build 4 classes of ship - the T45s, the CVF, Astute SSN and within 3-4 years, we should see first steel cut on the Type 26 as well. In the mid term (2020s onwards) we're going to see the Future SSBN, 3 new stores ships and potentially a couple of other RFAS, and the replacement droggy/OPV/MCMV vessel enter service too. At some point we're also going to see the P2000s need replacing as well. UK military yards are now working at a capacity which reflects the realistic workload going their way for the next 10 years at least.

Within this, there simply isn't the space in the shipyard programme to build 4 new tankers - BAE was offered the contract on a non competitive basis and still chose not to bid for it. The problem is that they can ramp up production for these vessels, causing delays in other military types, or taking on more workers and training them up (at a high cost to the taxpayer reflected in the final bid), and then letting them go again in 2016-18 as the tankers enter service.

The reality of it has always been that this bid would go for an overseas build - there is finite capacity in UK yards now, and that capacity is being used to preserve the skills that really matter (which is warship building and not tanker building). What does matter is that the ships have been designed by a UK consortium and that is far more important than where the steel is eventually cut.
 
#19
Thought we needed a flexable workforce that was essentially mobile and fluid. some arguments here are reasoning away any future capability by ever decreasing capacity. This is a vicious cycle that can only end one way. Imagine if a PROPPER commercial company said our order books are full to a client. Sorry go somewhere else for the product but do come back when we have some spare capacity. gwad help us.
 
#20
Ok.Understood. Next stupid question. Why did UK manufacturers not bid? I can't conceive that their order books are that full. "

Simply put, UK military shipbuilding has been consolidated over the last few years to generate sufficient work to keep the strategic building capability in place. Building warships requires a certain amount of skills and experience, which is significantly different from building tankers. BAE has consolidated a lotof the yards, and (long story cut short) got an agreed business arrangement with HM Government that a certain amount of work will go its way in return for those yards remaining open.
At present the RN is building, or preparing to build 4 classes of ship - the T45s, the CVF, Astute SSN and within 3-4 years, we should see first steel cut on the Type 26 as well. In the mid term (2020s onwards) we're going to see the Future SSBN, 3 new stores ships and potentially a couple of other RFAS, and the replacement droggy/OPV/MCMV vessel enter service too. At some point we're also going to see the P2000s need replacing as well. UK military yards are now working at a capacity which reflects the realistic workload going their way for the next 10 years at least.

Within this, there simply isn't the space in the shipyard programme to build 4 new tankers - BAE was offered the contract on a non competitive basis and still chose not to bid for it. The problem is that they can ramp up production for these vessels, causing delays in other military types, or taking on more workers and training them up (at a high cost to the taxpayer reflected in the final bid), and then letting them go again in 2016-18 as the tankers enter service.

The reality of it has always been that this bid would go for an overseas build - there is finite capacity in UK yards now, and that capacity is being used to preserve the skills that really matter (which is warship building and not tanker building). What does matter is that the ships have been designed by a UK consortium and that is far more important than where the steel is eventually cut.
Thanks for that Jim.
 

Similar threads

New Posts

Latest Threads

Top