A decade after emerging from bankruptcy, one of oldest names in UK shipbuilding is making its mark on the small, complex vessel sector
There is an unusual ship model at Cammell Laird’s office, of a vessel it has never worked on. In 2001, having taken out a £50M (US$65M) loan to build a mid-section block to lengthen cruise ship Costa Classica, the shipowner suddenly cancelled the work. The overstretched Merseyside shipbuilder was plunged into bankruptcy.
Today, 10 years after the yard was revived, the model serves as a reminder of two important business principles, says Cammell Laird chief operating officer Tony Graham: “Never take loans from banks and never enter high-risk contacts.”
Mr Graham, a former director of ships for the UK ministry of defence, joined Cammell Laird in 2017 to lead a military shipbuilding bid. Now, having been appointed managing director in November last year and chief operating officer in February, he is ultimately responsible for rebuilding the yard’s business and making sure it never again finds itself in such a parlous situation.
Tony Graham (Cammell Laird): Recent work is an advert that UK shipbuilding can build complex ships
Progress since Cammell Laird’s revival has been solid. In 2008 the company won the contract to build flight-deck blocks for the Royal Navy’s new aircraft carriers. At the same time, it re-entered small shipbuilding and has built nine ships in as many years, the latest of which joined Solent ferry operator Red Funnel’s fleet in April. The most high-profile newbuild, the UK’s £200M (US$258M) polar research vessel Sir David Attenborough, is due to leave the yard at the end of the year.
The company also docks around 60 ships a year for repairs and maintenance – a business that was boosted in October when the Royal Navy awarded Cammell Laird 10-year service contracts worth around £619M (US$799M) for four Royal Fleet Auxiliary tankers and five more vessels which the yard has serviced since 2008.
“Markets tend to boom and bust... Our business strategy is to stay diversified, not relying on one market”
Then there is the UK Advanced Nuclear Manufacturing Research Centre, hosted at Cammell Laird and currently exploring the use of electron beam welding technology in the ship building, offshore and nuclear sectors, part of a £1.5M (US$1.9M) contract awarded by funding agency Innovate UK.
“Markets tend to boom and bust,” says Mr Graham. “Our business strategy is to stay diversified, not relying on one market.”
The contract which Mr Graham was brought in to win, to build the navy’s new Type 31e frigate, will be awarded late this year. Then in March 2020 a ‘fleet solid support’ project, to build 40,000-gt ammunition ships for the new aircraft carriers, is expected to be awarded. Cammell Laird is part of consortia in both bids: as a sub-contractor with BAE Systems for the Type 31e vessels and as part of ‘Team UK’ – consisting of Cammell Laird, Babcock and BAE Systems – for the ammunition ships.
But the company is not only interested in military orders. “We are very keen to remain commercial shipbuilding,” says Mr Graham. “[Red Funnel roro freight vessel] Red Kestrel and Sir David Attenborough are important demonstrations of that. We have gone out and won those in international competition, demonstrating that a shipbuilder in the UK can be competitive.”
It is Sir David that marked the highest profile victory for Cammell Laird in the non-military sector. In late 2015 the UK’s government-funded Natural Environment Research Council (NERC) announced that the yard had beaten competition from yards in Europe, Korea and Singapore to build the vessel. The Rolls-Royce design has challenged Cammell Laird and enabled it to develop new skills. There are multiple business opportunities in the same sector, says Mr Graham.
“We would love to have another Sir David Attenborough to build – it’s a four-year programme, it is quite a complex vessel and we have had to learn a lot”
“There are three countries that continue to express an interest in this type of requirement,” he says. “We would love to have another Sir David Attenborough to build. It’s a four-year programme, it is quite a complex vessel and we have had to learn a lot.”
The contract to build Red Funnel’s first dedicated freight vessel, Red Kestrel, was important for similar reasons. But this time the shipyard designed the 74-m long, double-ended vessel itself, based on a similar vessel it designed and built for the Northern Ireland executive in mid-2016, the ferry Strangford.
Red Funnel's Red Kestrel represents a complex ship design developed in-house at Cammell Laird
Mr Graham reveals that Red Kestrel was designed and construction managed by a relatively junior team – a great opportunity to develop Cammell Laird’s employees and capabilities on a project with a rapid turnover, taking just nine months to build from when the yard received the contract in May last year.
Although the ship type is relatively simple, there is more to the design than meets the eye. Fuel efficiency was an important requirement as was high manoeuvrability to navigate the congested waters in which Red Kestrel will operate, both in Southampton and Cowes. That demand meant the ship needed to create a low wash, which required thought both about hull form – especially given the width requirements for loading lorries – and propulsion.
The edge of balance
“Everything is on the edge of balance; speed, efficiency, structure and weight,” says Mr Graham. “If something goes wrong everything else is affected – more weight means less propulsive efficiency, and so on. That’s the real challenge for that junior team, to find the balance and maintain it during whatever issues they face through production.”
The team’s learnings will be redeployed almost instantly if Cammell Laird is successful in another bid, to build two vessels for Mersey Ferries. That contract is expected to be awarded in August. But there is also a longer-term plan to attract Red Funnel back to the yard. The company’s three Raptor-class ropax will need to be replaced relatively soon.
“We hope that when those vessels come to be renewed, one of the places Red Funnel will think about coming to is Cammell Laird,” says Mr Graham.
The company is also taking steps to identify further opportunities. It has commissioned a ropax vessel design from an external naval architect in a sector – much bigger than Red Kestrel and its class, says Mr Graham – which has several vessels reaching replacement age. Further details will be revealed when the design is launched at the Nor-Shipping exhibition in June.
“Never take loans from banks and never enter high-risk contacts”
“There is a generation of that type of ships that are now 30 years old and will need replacement,” explains Mr Graham. “Many of the European shipyards are full, with orders for the next two to three years, so we believe we’ve got an opportunity to come to market with a design at a time when there is very little supply. And having proved ourselves with Sir David Attenborough and Red Kestrel we hope that commercial operators will trust us with those projects.”
There is a lot of potential business in the pipeline, and the company needs to look at its capabilities in some areas. Mr Graham highlights thick-plate fabrication and the high-density outfitting needed for warships. But the company will not be rushed into over-ambitious expansion.
“We believe in organic investment. We win work, we gain profit and we recycle the profits back into the yard,” says Mr Graham.
“Many of the European shipyards are full, so we believe we have got an opportunity to come to market with a design at a time when there is very little supply”
The progression of teams from Red Kestrel to the Mersey Ferries bid, the new ropax design and the bid to build the initial five Type 31e frigates, highlights another part of Cammell Laird’s strategy, notes Mr Graham. The company aims to win series builds that allow the yard to generate cost efficiencies by applying learnings to subsequent vessels.
One hot topic for shipbuilders across the world is autonomous vessels, and Cammell Laird is working with several partners in this area. The logic is straightforward for a builder of small ships: “Shortsea ships tend to be small,” says Mr Graham. “There has been a tendency for ships to get bigger, but if you can make the logistics chain more efficient there might be a new demand for smaller ships that can operate more like freighters.”
Mr Graham is delighted that the UK government has recognised the capability for shipbuilding within the country and is aiming to encourage a renaissance in the British industry. This culminated with the launch of the national shipbuilding strategy in September 2017. Despite some disappointment over the direction of the strategy – there are more government ships that could be included, giving UK shipyards more shipbuilding opportunities – he supports the steps suggested.
But as illustrated by the new ropax design and the continued search for wider work, Cammell Laird will not wait for handouts. Turning once more to the recent completion of Red Kestrel, Mr Graham concludes: “It has helped train apprentices and junior naval architects. Now as a product, it is effectively an advert for us. It’s an advert that UK shipbuilding can build complex ships and work in open, collaborative ways with customers.”
Just over a decade after its revival, Cammell Laird now has some landmark vessels under its belt, a brace of new potential projects due to be awarded and an eye for further opportunities. If even some of those come to fruition, perhaps the company can find a dark cupboard in which the Costa Classica model, and the bitter memories associated with it, can be left to gather dust.