Thursday 7 November 2013

The Decadence of BAE Systems

1,775 manufacturing jobs go up in smoke and few, if anyone, on the left has anything to say. Mighty organs of the class Socialist Worker and The Socialist don't mention it - despite the abandonment of ship building in Portsmouth and the loss of jobs on the Clyde being announced on Monday. To its credit, the Morning Star does, but our commentariat have been uncharacteristically quiet too. It's almost as if these groups of workers are deemed to be in the wrong jobs.

Whether you're of the "not a penny, not a man for this system" school of revolutionism, or a "be excellent to each other" Bill and Ted lefty, BAE Systems is the kind of company many could never be comfortable with. It churns out weapons of war for fuck's sake, so who would be? But what this affair shows up, again, is the complacency of our decadent ruling class. That is the powerful tendency to put short-term profiteering and the indolent life before doing what it takes to ensure its own long-term survival.

There's been a whiff of anti-Scottish chauvinism about the closures. Tory MP Caroline Dineage said English jobs were being sacrificed for Scottish jobs as a filip to the Better Together campaign ahead of next autumn's independence referendum. A thesis given legs by Alistair Carmichael's admission that the "business case stacks up for as long as the Clyde stays part of the United Kingdom". Well done that man for handing ammunition to the little minds of little England. But from the narrow point of view of the faceless BAE managers who've condemned Portsmouth to an economic shock, the recently upgraded and thoroughly modernised sister yards in Glasgow were always going to win over hundreds of years of shipbuilding traditions on the south coast, despite it recently getting updated too. Capital has little time for sentiment.

Or so the spin put on this story would have you believe. It's the cold hard logic of the market yet again, says BBC military journo Caroline Wyatt. The invisible hand strikes, leaving no one responsible for this week's decision.

Time to look a little deeper. BAE Systems is doing alright. Afterall, where there's blood there's brass. In 2012 it posted pre-tax operating profits of £1.64bn, up £60m on the previous year despite a slide in sales to the tune of £2bn. BAE acquired the Portsmouth facility after buying out the stake owned by shipbuilders the VT Group, who moved to Portsmouth from Southampton in 2003. And since then there has been constant speculation about the future of the yard after the completion of its sections of the HMS Queen Elizabeth and HMS Prince of Wales.

In the Commons yesterday, Jim Sheridan urged BAE Systems to seek more orders on the global market rather than reduce their capacity. Speaking for BAE (or the government, it's hard to tell where big business ends and the Tories begin) Philip Hammond replied "I am afraid I have seen no evidence to suggest that we are able to compete in what is a very aggressive global market for commercial shipping."

Hammond is either lying, doesn't know his brief, or has incompetent spads. Look what we have here. Three Brazilian warships manufactured this year by BAE Systems, two partly and one wholly in Portsmouth. Not bad for a company that cannot compete. But what else do we see in this article? "The contract ... also includes a manufacturing licence to enable further vessels of the same class to be constructed in Brazil, helping to support the country’s naval re-equipment programme and strengthen its maritime industrial capability." In other words, the company have closed themselves out of further manufacturing opportunities in Brazil by flogging it the blueprints. AND ENCOURAGING THE CREATION OF A COMPETITOR. Is this what BAE wants its shipping division to become? A sort of naval Nike that sells designs and slaps its branding on ships made elsewhere?

Secondly, true, there is a massive shift underway in commercial shipbuilding to - you guessed it - China and East Asia. But what has BAE Systems been doing to prepare its shipping division for the new facts of economic life? Has it been doing what German ship builders have been doing? To ask the question is to answer it: of course they haven't. Never mind the opportunities that exist for technologically sophisticated military and civilian ships in which European and North American firms remain the world leaders. Where was the necessary investment? Why has BAE got into such a position where Portsmouth has to be shut down? Hiding behind market necessity is not good enough.

I suppose from BAE's point of view they have no reason to bother. In perpetuity they can look forward to Royal Navy contracts. The German kriegsmarine of course is a distant memory, so its shipping industry has had to go out and seek markets. Here is one story of social security undermining work incentives you'll never hear a Tory MP utter. But also the relationship between state and BAE is extremely unhealthy, from the taxpayer point-of-view. According to the BBC, the government has recently kitted out the Clydeside yards in exchange for BAE Systems agreeing to cover half of the carrier projects' overruns. Excuse me? What idiot negotiated such a contract in the first place? Call me naive, but isn't the logic of contracting out orders to the private sector supposed to protect the taxpayer from risk? You can envisage the scene. The government's confirmation of the aircraft carrier orders land on the Board's desk. But appended to it is a post-it note on which is scribbled, "fill your boots gentlemen".

Oh, and don't forget the closure itself. BAE might have thought twice about shutting Portsmouth if they had to pick up the tab for redundancies, pensions and mothballing. Guess who will be doing instead? Got it in one. The public purse.

There we have it. A firm that not only fails to invest properly in its own future, a firm that fills shareholder pockets with taxpayers' cash, and a firm that actively undermines its own competitive position. It is yet another illustrative example of how decadent British capital and the class that leeches off it has become.


David Lindsay said...

This Government hates the Armed Forces, and it maintains Trident as a cover for the fact that this island nation will soon have almost no navy. The Royal Navy was the mightiest in the world long before nuclear weapons were imagined.

This Government hates Britain, ending 800 years of shipbuilding in England, 500 of them at the oldest dry dock in the world, the one at Portsmouth.

Of course no contracts would go to the Clyde if Scotland became independent. That is a statement of the blatantly obvious. But it ought still to be written into the contracts themselves: that they would be void in that event.

Defence procurement is an integral part of defence. Bring it all in-house or, to a BAE restored as the publicly owned monopoly supplier to our own Armed Forces, accompanied by a total ban on the sale of arms abroad and the use of government action to preserve the skills base while diverting its application to other uses.

Stephen said...

"Tory MP Caroline Dineage said English jobs were being sacrificed for Scottish jobs as a filip to the Better Together campaign ahead of next autumn's independence referendum"

Eh no.Unusually for a statement by a Tory that's very probably true.Pork barrel politics and Defence Procurement are essentially the same thing.

The Govan Yard is only still there because of massive political efforts over the years by succesive politicians - John Reid when he was Scottish Secretary to get them MoD ferry work being the most high profile intervention.

And in this context (that of consigning one lot of workers to the scrapheap because it's politically expedient to save another group) people should remember the early 90's when there were mass redundancies at Rosyth Naval Dockyard in Fife when the Trident Maintenance contract was, with very little commercial or industrial logic, given to Devonport instead.

The then Tory Government had little reason bother with Fife but the SW of England had several Tory/ Lib Dem marginals.

That's also the reason that (again) despite being said by a Lib Dem, Alastair Carmichael is also correct to suggest that if Scots decide to vote for Alex Salmonds low corporation tax wonderland next year... the chances of the rUK Government deciding to send humpty dumty billions of pounds worth of MoD money and thousands of high paying jobs abroad ( ie to Glasgow) will be minimal. What minister would want to announce that?

Ben Norman said...

Interesting article, thanks Phil.

Speaking for Portsmouth Socialist Party Branch, we are supporting the BAE workers. We've not declared that they're in the 'wrong jobs.' Indeed both Socialist Party, Socialist Students and SWP comrades were at the 200 strong rally on saturday and both organisations are supporting GMB/Unite members via the Trades Council.

Naturally, we're calling for the yard to be taken under public ownership, with BAE technology being deployed for socially useful maritime projects. (So, we're not 'Trotskyists for Aircraft Carriers' either!)

There will be a second, and we anticipate larger, demo this saturday (16 Nov 12pm, Trafalgar Gate, Portsmouth Dockyard.)

Phil said...

Jolly good show. A sensible response IMO.

Alex said...

Three Brazilian warships manufactured this year by BAE Systems, two partly and one wholly in Portsmouth. Not bad for a company that cannot compete

You wouldn't want to rely too hard on that - there are another three swinging around a buoy in Belfast for years because the customer refuses to take delivery with a list of engineering change requests as long as your arm, and I've heard bad things about the three Khareef ships for Oman.

Part of the story is that VT used to be rather good at exporting small ships but the (Labour) government allowed BAE to eated them through a long chain of developments I probably need to blog about.

Also, as you probably know, the hundreds of years of tradition ended in about 1966 with the last of the admiralty-built Leanders and resumed as recently as 2002 with the ironically named HMS Clyde.