BAE Systems Surface Ships

BAE Systems Surface Ships Limited

Type	Private
Industry	Defence Shipbuilding Marine engineering
Predecessor(s)	VT Shipbuilding BAE Systems Surface Fleet Solutions
Founded	1 July 2008 (as BVT Surface Fleet)
Headquarters	Portsmouth, England, UK
Key people	Sir John Parker - Chairman (2008-2009) Alan Johnston CBE - CEO (2008-2011) Michael Ord - Managing Director (2011-Present)
Products	Naval vessels
Services	Ship design Ship support
Revenue	£1.12 Billion (FY 2008/09)
Operating income	£45 Million
Total assets	£352 Million
Employees	Approximately 7,000
Parent	BAE Systems
Subsidiaries	BAE Systems Surface Ships Support
Website	www.baesystems.com

BAE Systems Surface Ships is a wholly owned subsidiary company of BAE Systems plc, specialising in naval surface shipbuilding, systems integration and through-life support. It is the largest shipbuilding company in the United Kingdom, one of the largest shipbuilders in Europe, and one of world's largest builders of complex warships.

It was formed as a joint stock subsidiary on 1 July 2008, with the merger of BAE Systems Surface Fleet Solutions and VT Shipbuilding, creating a new firm named BVT Surface Fleet. The new firm incorporated the BAE Systems Surface Fleet Solutions operated shipyards at Scotstoun and Govan on the River Clyde in Glasgow and the VT Shipbuilding facilities within the Naval Base at Portsmouth.

BAE Systems subsequently acquired VT Group's share of the joint venture on 30 October 2009 and renamed the business BAE Systems Surface Ships.

History

Defence Industrial Strategy

The Ministry of Defence's (MOD) 2005 Defence Industrial Strategy encouraged BAE and VT Group to form a naval shipbuilding joint venture with the aim of maintaining the UK's naval shipbuilding capability in the long-term. In return, during 2008, the MOD signed a Terms of Business Agreement which pledged that the vast majority of its future naval orders will be placed with the new company for 15 years.

Explaining the rationale for the joint venture from VT Group's perspective, its CEO Paul Lester described shipbuilding as a "lumpy" business, dependent on large contracts placed at irregular intervals. Another issue was the competition between VT and BAE: "We don't want to get into a dogfight with BAE over who would be the survivor... That's what you'd be talking about at some stage."

BAE and VT concluded the merger discussions in early 2008, however creation of BVT Surface Fleet was conditional on the signing of contracts for the Queen Elizabeth class aircraft carriers. Following the Ministry of Defence's announcement on 20 May 2008 that it intended to proceed with the manufacturing stage of the project, BAE announced its intention to finalise the joint venture arrangements with VT Group. This was completed on 11 June 2008 and, following VT Group shareholder approval on 30 June, the joint venture became operational on 1 July.

The logo of the former BVT joint venture from July 2008 to September 2009, when BAE Systems bought VT Group's share of the joint venture.

Launch of a Nakhoda Ragam class corvette from the covered berths at BAE's Scotstoun Shipyard in Glasgow.

BAE Systems and VT Group owned 55% and 45% of the company respectively, however they had equal board representation and voting rights.

In return, VT Group acquired BAE System's 50% share in their other joint venture company Flagship Training, now known as VT Flagship. BVT Surface Fleet subsumed another BAE/VT joint venture, Fleet Support Limited, a ship repair, maintenance and marine engineering company, based within HMNB Portsmouth.

The new 15-year Terms of Business Agreement with the Ministry of Defence did result in some controversy however. On 30 June 2009, a BVT memo was leaked which suggested that two of the company's three shipyards could be closed following completion of Queen Elizabeth class carrier construction. In response to the leak, BVT said the memo was "worst case scenario planning" and that it continues to invest in the future of all its yards. However a MOD spokesman said "[the MOD] had to look at the consequences of reduced demand for navy shipbuilding."

Locations

BAE Systems Surface Fleet Solutions owned two shipyards on the River Clyde in Glasgow: Scotstoun (formerly Yarrow Shipbuilders Ltd) and Govan (formerly Kvaerner Govan, Govan Shipbuilders, Upper Clyde Shipbuilders and Fairfields), shipyards that have a corporate heritage extending back as far as 1834. VT Shipbuilding (formerly Vosper Thornycroft) owned shipbuilding facilities completed in 2003 within HMNB Portsmouth and a boatyard, VT Halmatic, in Portchester. These facilities were transferred to BVT Surface Fleet, although the VT Halmatic yard was subsequently sold to Trafalgar Wharf, with the Halmatic Small Boats Centre of Excellence moving to a new facility in Portsmouth Naval Base.

BAE Systems Surface Fleet Solutions also operated an additional project management centre at Filton,Bristol, situated close to key stakeholders at MoD Abbey Wood, which was transferred to BVT. The BAE Systems Submarine Solutions Shipyard at Barrow-in-Furness was not included in the joint venture, although since January 2011 Submarines and Surface Ships have been operationally integrated under BAE Systems Maritime.

Exit by VT Group

At the time of BVT's creation, VT Group was expected to eventually sell its minority share to BAE Systems through a put option, but not within three years. However on 28 January 2009 VT Group announced its intention to sell its share. VT Group's put option valued its share at a minimum of £380 million subject to conditions; however it received £346 million after various payments to BAE. In addition, VT Group agreed to pay £43 million compensation to BVT for cost overruns on contracts with Trinidad & Tobago and Oman that BVT had inherited from VT Shipbuilding. VT Group's net proceeds from the sale of its share in BVT to BAE Systems were therefore £303 million.

Products and Services

Construction of prefabricated module blocks of Type 45 destroyer, HMS Dauntless, at BAE's Portsmouth Shipyard.

A Type 45 Destroyer hull under final assembly prior to launch at the BAE Shipyard in Govan, Glasgow.

BAE and VT collaborated on the Type 45 class prior to the creation of the BVT Surface Fleet joint venture in 2008.

Aircraft carriers and Amphibious assault ships

BAE Systems Surface Ships is undertaking a majority of the workload for the Queen Elizabeth class aircraft carriers. As part of the Aircraft Carrier Alliance, Thales and Babcock are also involved in the project, as well as BAE Systems Insyte. The company's shipyards have previously had experience of constructing large Amphibious assault ships, including the Ocean class LPH, the Albion class LPD and the Bay class LSD(A)s.

Destroyers

BAE's three shipyards all build sections of the Type 45 destroyer, which was previously built as a collaboration between BAE and VT Group. As of October 2010 Daring, Dauntless, Diamond, Dragon, Defender and Duncan have all been launched. The first of class entered service in May 2009.

BAE is studying the UXV Combatant concept based on a destroyer hull for the operation of unmanned land, air and sea systems.

Frigates and Corvettes

BAE Systems Surface Ships inherited the £400 million Khareef class Corvette project from VT Group, which will see three 99m ships delivered to the Royal Navy of Oman by 2012.

BAE Systems Surface Ships' yards have also delivered the following in the recent past:

• Nakhoda Ragam class Corvette to the Royal Brunei Navy
• Qahir class Corvettes to the Royal Navy of Oman
• Lekiu class frigate for the Royal Malaysian Navy

Design work is currently underway on the Type 26 frigate project for the Royal Navy, as part of the wider Global Combat Ship programme, which will eventually replace the Type 23 frigates currently in service.

Offshore Patrol Vessels and Fast Attack Craft

The company completed three Port of Spain class OPVs for the Trinidad and Tobago Defence Force in 2010. After the contract was cancelled by the Trinidad & Tobago government in September 2010, these vessels were subsequently contracted for delivery to the Brazilian Navy in January 2012. A technology transfer agreement with Bangkok Dock to build a similar 90m OPV, HTMS Krabi, for the Royal Thai Navy was agreed in June 2009.

BAE Systems Surface Ships also has a technology transfer agreement in place with Elefsis Shipyards for the construction of the Roussen class Fast Attack Craft for the Hellenic Navy, which are based on the Barzan (Vita) class FACs currently in service with the Qatar Armed Forces; itself based upon Vosper Thornycroft's 56m patrol craft built for the Royal Navy of Oman and the Kenya Navy.

VT Shipbuilding was previously responsible for the construction of the River class patrol vessel for the Royal Navy, with through-life maintenance the ongoing responsibility of BAE Systems Surface Ships; the result of an innovative contractual arrangement in which the company continues to own the four vessels of the class and leases them to the UK Ministry of Defence.

Auxiliaries

BAE has bid for the Military Afloat Reach and Sustainability (MARS) programme, which will see up to 6 Replenishment at Sea tankers built for the Royal Fleet Auxiliary. BAE is partnered with BMT Defence Services and Daewoo Shipbuilding & Marine Engineering for the project.

BAE Systems has also previously been involved in the Wave class tankers for the Royal Fleet Auxiliary.

Halmatic Small Boats

BAE Systems Surface Ships Support operates ship repair and refit facilities within Portsmouth Naval Base.

BAE Systems Surface Ships' capabilities also extend to Mine countermeasures vessels (The Sandown class in service with the Royal Navy, Royal Saudi Navy and Estonian Navy), prime contracting on Hydrographic survey vessels such as the Echo class, Scott class and the design and production of the smaller Halmatic range of boats such as Landing Craft, Rigid-hulled inflatable boats and Rigid buoyant boats. These products include the Lifespan Patrol Vessel, Rigid Raider, Mk 6 Assault Boat and Combat Support Boat types currently in service with the British Armed Forces and other Navies, such as the Jordanian Royal Naval Force and the Republic of Singapore Navy.

Support Services

BAE Systems Surface Ships Support services include Supply chain management and Logistics support. The BAE subsidiary BAE Systems Surface Ships Support provides through life maintenance, ship repair and drydock refit services for naval and merchant vessels.

Past projects have included the reactivation of the Upholder class, now reactivated as the Victoria Class submarines for the Canadian Forces Maritime Command. It has also refitted two ex-Royal Navy Type 22 (Batch 2) frigates for the Romanian Naval Forces and a similar programme for the Chilean Navy involving the refurbishment of three ex-Royal Navy Type 23 frigates.

In July 2009, BVT Surface Fleet established the Gulf Logistics and Naval Support joint venture with Abu Dhabi Shipbuilding, in order to provide in-region maritime support services for CCASG member states.

Panoramic view of BAE Systems Scotstoun in December 2010, with HMS Dragon on the left during sea trials.

See also

• BAE Systems
• BAE Systems Marine (1999–2003)
• BAE Systems Naval Ships (2003–2006)
• BAE Systems Surface Fleet Solutions (2006–2008)
• VT Group
• BAE Systems Submarine Solutions
• BAE Systems Ship Repair (United States)
• BAE Systems Australia (Naval)

External links

• BAE Systems Surface Ships website

Shipyards of the Clyde

Ferguson Lithgows Scott Stephen Fairfield H&W Yarrow Connell Barclay Curle Henderson Inglis Denny John Brown Lobnitz Beardmore

Modern timeline of British shipbuilding companies, 1960-present