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Shipbuilder benefiting from new technologies

Defence giant BAE Systems says solid order book bodes well for long term

BAE SystemsBAE Systems has reported “solid overall performance” with £10 billion of new orders for third successive year and a large order backlog of £40.5 bn providing good long term prospects.

The defence giant, which has hired a record number of apprentices at its shipyards on the Clyde, said it is benefiting from long-term contracts in the UK, notwithstanding continued pressure on public spending, believes US budgets are now relatively stable, with some early indications of a modest improvement in 2016.

Chief executive Ian King said: “These are competitive times and we will continue to invest in and develop the technology, skills and market positions needed to drive the business forward. The group is well positioned to continue to deliver shareholder value.”

Turnover fell from £18.2 billion to £16.64 bn, largely as a result of exchange rate translation, but also because of a one-off deal last year. Operating profit doubled from £806 million to £1.7 billion.

The company employs more than 3,000 people in Scotland across the Naval Ships business in Glasgow, the manufacturing facility at Hillend and Regional Aircraft operations at Prestwick.  The company lists the following highlights:

  • Secured a £348M contract with the Ministry of Defence for three new River Class Offshore Patrol Vessels for the Royal Navy, with construction starting at its Govan facility in October.
  • HMS Queen Elizabeth, the first of the Queen Elizabeth Class aircraft carriers officially named by Her Majesty The Queen in July, prior to the vessels successful float out of the dock in Rosyth.
  • Delivered the first sections of HMS Prince of Wales to Rosyth, including an 8,000 tonne section from Glasgow ahead of the start of the assembly phase in September.
  • Completed a significant phase of restructuring in its complex warships business in Glasgow.
  • Design contracts awarded to suppliers on the Type 26 Global Combat Ship programme for key equipment such as propulsion, ventilation and electrical equipment and combat and navigation systems.
  • Implementation of virtual reality technology, which is transforming the design of complex warships, enabling engineers to virtually test the design of vessels in advance of the first steel being cut.
  • Secured £9M contract to provide electronic assemblies for Captor radar to be fitted to Typhoon aircraft.
  • Secured European Aviation Safety Agency approval for two new products developed for commercial airlines: its upgraded traffic avoidance system has won orders from several European airlines, while a 3D printed part that prevents mist on cabin windows is now in regular use.
  • Signed a support contract with Summit Air of Canada for its Avro RJ85 fleet.by Her Majesty the Queen was an incredibly proud occasion for everyone involved in the aircraft carrier programme. It highlights the incredible skills within our industry and underlines the importance of our restructuring programme to secure the long-term future of our complex warship business in the UK.

Mick Ord, Managing Director of BAE Systems Naval Ships, said: “The naming of HMS Queen Elizabeth in 2014 by Her Majesty the Queen was an incredibly proud occasion for everyone involved in the aircraft carrier programme. It highlights the incredible skills within our industry and underlines the importance of our restructuring programme to secure the long-term future of our complex warship business in the UK.

“We are transforming our approach to the engineering, design and manufacture of warships, with new technologies and ways of working providing a step change in efficiency, quality and safety. This is already delivering benefits to our new River Class Offshore Patrol Vessel programme, helping to attract and retain the best talent and pave the way for the Type 26 Global Combat Ship programme which continues to mature as our engineers and supply chain partners work together to further develop the detailed design of the ship’s systems and equipment.

“We’re also recruiting more apprentices and graduates in Scotland than ever before, helping to ensure that we have the right skills for our future as a world-class naval engineering business.”

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