Shipbuilding is one of those industries commonly associated with emerging and developing countries. Britain’s own shipbuilding industry grew as Britain’s industrial might and international status grew. But the combination of war, out of date practices, trade unionism and the rise in foreign shipyards all took its toll and the industry slowly died out in one of the darkest times for UK industry.
But now, with many decades having passed since the slipways fell silent and with new technologies, management processes and new markets, could British shipbuilding and ship repair make a return and be the engine that generates wealth for the country once again?
Shipbuilding in the United Kingdom began to decline soon after the Second World War mainly because of :
- The lack of modernisation.
- Trade unionism.
- High level costs (due to trade unionism).
- The growth of new generation shipyards abroad.
As the Second World War had robbed Britain of much of its merchant tonnage, a mass programme of replacement took place. But when this wound down, suddenly the flaws became overly apparent. Despite this, British yards doggedly stuck to decades old work practices and during the 1950’s and 1960’s, they were very quickly being outclassed by the new foreign yards. And by the time the industry here began to wake up to the threat, it was by then simply too late.
Various Government strategies such as subsidising the Clyde based shipyards in 1968 into UCS and then nationalising failing yards into British Shipbuilders in 1977, couldn’t stop the growing decline. In the early 1980’s, half of all yards were closed due to having greater capacity than demand with the remainder being sold off. Eventually, most of these were also wound up and now only a fraction remains such as the old Fairfield shipyard (current owners now BAE Systems). To bring this entire saga to an end, in 2013 the last vestiges of British Shipbuilders (existing as a ‘shell corporation’) was finally abolished under the Conservatives’ 2010 Public Bodies Reform.
The human cost of this rippled outwards from communities and towns, to cities and counties. The majority of shipyard ‘lifers’ had no chance of re-employment and for many, they weren’t going to leave their families in order to find work. This depression created a downward spiral through lower house prices, greater poverty, higher crime rates and a growing dependence on welfare amongst other problems.
What is the Current State of the Global Competition?
The biggest issue facing the UK re-entering the shipbuilding market is competition. The three largest shipbuilding nations are China, South Korea and Japan – in that order.
- China – At the end of 2013, the China Association for National Shipbuilding estimated that there were around 1,650 yards, both state owned and private.
- South Korea – Only recently has South Korea been demoted to second place, but in tonnage only. Their total dollar value is around 70% more than the Chinese output.
- Japan – Once the dominant shipbuilding nation until the 1990’s, Japan has now fallen slightly and in 2012, Japan accounted for 18% of all output.
Europe is a separate case given that shipbuilding nations are controlled by the European Union’s policies. However, outside of the Far Eastern conglomerate and the EU machine, independent countries are growing a solid domestic base. According to the 2013 Edition of the Global Shipbuilding Market Report :
The emerging nations of the world such as India, Vietnam, Brazil, the Philippines and Turkey recorded significant growth in their domestic shipbuilding industry.
What is the Global Shipbuilding/Ship Repair Market Worth?
It is estimated that the global annual market for new build ships (small to medium) is around £250 billion. Whilst the global market value for all new ships was worth around £780 billion in 2012, it is estimated to grow to £1.6 trillion by 2015. The annual market for ship repair is estimated at around £7 billion.
What are the Risks?
Some are global, some are localised and examples of these are given below :
- Trade Cycles – a completely natural industrial process that has gone on since industry began such as that of the 1870’s and in the depression of the 1920’s.
- No Major UK Steel Manufacture – which is the essential material supplied to any shipyard. However, the lack of any real UK based steel production is in turn due to…
- High Energy Costs – according to the International Energy Agency and UK Government report on comparative electricity costs within the EU, for very large scale industry the UK has the 8th largest cost out of the 28 member states.
Until the UK can control energy prices via its own production industry, the cost of creating steel will certainly be prohibitive to the reintroduction of UK based heavy industry. Therefore, it can be seen that everything comes as a ‘joint package’, with each step creating the next one :
Leaving the EU → Create our own Energy Policy → Lower Energy Prices → Restart Steel and Materials Manufacture → Supply Heavy Industry and Global Market
What are the Basic Requirements for New Shipyards?
- The initial costs could come from the £10 billion annual ‘net’ contribution that would be released after the UK’s withdrawal from the EU, or from a reorganisation of the annual £8-9 billion Foreign Aid budget – even from such projects as HS2.
- There still remains a strong shipbuilding workforce, albeit scattered throughout the country and abroad.
- A dedicated onsite and college based apprentice scheme to replenish and evolve the workforce would be instigated, thus also helping the problems of growing youth unemployment around the country.
What Would the Benefits Be?
There are numerous benefits to this and the following are just a few examples :
- Currently, there is no ‘engine’ generating wealth for the country. Heavy industry IS that engine.
- As a result of shipbuilding, many manufacturing businesses would directly benefit from this new market via sub-contracting and parts supply.
- The construction industry would benefit due to the complex infrastructure(s) required.
- A true apprentice scheme with a genuine guaranteed job at the end of training.
- Graduates from the UK’s universities would be able to apply for jobs here as opposed to having to look for work abroad (currently at 70%).
- Lastly the most obvious – pride in one’s work and in one’s country.
A Political Issue
People want real things to incentivise them. Some of the UK’s poorest areas and communities sit in the shadows of former shipyards. It has taken them decades to recover and the ripples still continue to this day. Should it be UKIP policy to reinstate shipbuilding in those still disadvantaged communities amongst other areas, I believe those people would vote UKIP on that policy alone.
This is simply a good thing for the country, its citizens and of course, the economy – but ONLY if thought out properly and with a genuine intention to follow it through. Heavy industry and shipbuilding in particular is still a popular notion in the UK and its demise continues to be seriously lamented. By accepting the past but not building on it, a future UK shipbuilding industry is free to start again from scratch. It appeals to most people and still comes to the forefront when thinking of Great Britain.