Pequenas Empresas & Grandes Negócios: contatos

Boom time for Scottish shipbuilding - thanks to Putin

This is conta bloqueada sportingbeta good time to be in the business of defence – so much so that Donald Trump is reported to be rebranding the US Department of Defence as the Department of War.

After more than three decades of the peace dividend that came from the end of the Cold War with the Soviet Union, government spending on weapons and platforms to deliver them is rising sharply again.

There are three big reasons from three big powers.

Under President Putin, Russia's aggression in Ukraine has persuaded the rest of Europe that Moscow's nationalism is a wider threat, including to Nato alliance members that used to be within the Soviet Union.

Under President Trump, the American pillar of Nato is fundamentally weakened. He might come to the aid of Europe if Russia expanded the Ukrainian war, but one never knows. The US can no longer be trusted to do so.

Even before he returned to the White House, the US was putting pressure on European allies to step up defence spending.

China is less of an issue in Europe, but the recent display of military hardware, for the benefit of President Xi's allies, is a threat to his neighbours.

So in Europe and Asia, countries are re-arming for new geopolitics featuring strongmen leaders of regional and super-powers who have less concern for the established rules of engagement than they have for their nations' perceived destinies.

The UK government's step up in spending, at the expense of other public services, includes some catch-up with under-funded projects.

The readiness of the British Army and of the Royal Navy for a quick deployment and even more so for a sustained war, such as we're seeing in Ukraine, was already very much in doubt.

Even retaining levels of battle-ready troops and sailors was being undermined by the poor quality of their home accommodation.

Weapons have been given to Ukraine, and stockpiles are low. The UK government is committed to building up the factory capacity for weapon stocks to be backfilled and supply lines to be ready for a hot war in Europe.

That could bring a munitions factory to Scotland, as one of six to be built. But the big boost so far for the Scottish economy is in shipbuilding.

Through the peace dividend years, with the Ministry of Defence budget squeezed, there were times when it looked unlikely that the Clyde could maintain its final naval shipyards at Scotstoun and Govan.

The idea was that the UK government would sustain a "drumbeat" of ships being launched at a rate of around one a year. But there have been very few launched since the two aircraft carriers entered service.

That is now changing. By the end of this decade, the Royal Navy may have taken delivery of as many as seven more ships - five Type 31 frigates from Rosyth and at least two Type 26 frigates from the BAE Systems' yards in Glasgow.

Those Type 26 frigates are the first vessels in an eight ship UK order.

Work is also, at last, beginning on the large support ships required to sustain the Royal Navy with fuel and supplies, being assembled in Belfast with some work possibly going to the sister yards, now owned by Spain's Navantia, at Methil in Fife and Arnish near Stornoway.

By committing to more ships on the Clyde and the Forth, the government has given a signal to the private owners to invest with confidence that the projects won't slip into future years, or be cancelled.

The result is ships being built faster and much more efficiently. There is automated welding of steel at Rosyth on an assembly line that takes a fraction of the time taken by skilled welders, producing around a third of the problems that need to be rectified.

Welders are still needed for internal work where robots cannot reach. But painters and scaffolders are being replaced by a trial of robots that is sharply reducing the time it takes for painting hulls and allows other work to continue over that time.

With more automation and efficiency, costs can now compete in the export market, which has not been the case in British naval shipbuilding for many years. It has tended to build high-spec at high cost, which few countries want or can afford.

It can now also build faster than others, and offers, in the jargon, "inter-operability" of ships, where one design is used across several allied navies.

Norway has now confirmed it plans to buy at least five Scottish-built Type 26 ships- worth ￡10bn - while new orders for the Type 31s are a real possibility from Denmark and Sweden.

Further dividends from the increase in defence spending can be expected in Scottish plants that make radar, parts for submarines and high-tech missiles.

The successful cluster of firms in space technology, building small satellites in Glasgow and with rocket launch capability nearly ready in Shetland, could also benefit.

Meanwhile, war in Ukraine is showing that modern defence requires many civilian skills in designing and making drones as well as counter-drone measures.

For that, military planners are looking to those with offshore energy expertise that is adaptable for anti-submarine surveillance, as well as companies where young employees are well placed to adapt gaming technology and artificial intelligence.

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