Scotland which makes up one third of the UK shipbuilding market caters primarily to the UK defence sector. The major areas of operation include shipbuilding, ship-repair and ship management services. The focus is mainly on the design, manufacture and support of complex warships and specialist ships. Scottish ship designers and shipyards also undertake the design and production of complex vessels for niche markets. With more than 450 companies involved in the Scottish marine industry and an annual turnover in excess of £2 billion, this industry is optimistic about continued growth. The rate of exports from the industry is also significant with more than 85% of the companies exporting their goods and services.
Scotland has three major ship building yards: BAE Systems Surface Ships (Scotstoun/Govan), Babcock Marine Warships (Rosyth), Babcock Marine Clyde (Helensburgh) and a range of smaller yards. Scottish ports also handle about 17% of UK trade by volume. As the levels of coastwise freight see an upsurge to the tune of 30 million tons, the ship building industry in Scotland is picking up momentum.
A major part of Scottish shipbuilding focused on warship and fleet support vessels is now dominated by BAE Systems. The industry is based on steel with a limited expertise in glass fibre and aluminum technologies. Ship repair work is largely for locally based and small North Sea based vessels. There is a range of supporting and related industries including manufacture of marine equipment and marine design services. Given a long history in marine industries, Scotland has favorable conditions of labor, management experience and research and development support.
The future for the Scotland shipping industry holds a huge promise and this was reflected in the Scotland Ministry of Defense contracts in 2012 which was worth billions of pounds to build the next generation of Royal Navy frigates, however these contract would be awarded to Scotland only after it votes in the referendum of independence with the UK, this is expected to happen by 2014. Ship building activity has been going on steadily at various sites around Scotland and many constructed ships have departed from construction sites to assembly sites. An example of this is BAE Systems, which owns the Govan and Scotstoun shipyards, being awarded a four-year, £127million contract to design and plan new Type 26 combat ships. BAE Systems and the British government are negotiating to adjust warship manufacturing to avoid disruptions from reducing levels of work, Scotland is set to benefit from orders, including the building of Type 26 frigates.
The market potential for the Scotland shipping industry lays in the defence sector and in the construction and assembly of both warship and support vessels, also construction of specialist vessels such as gas and chemical carriers is significant. Export orientation is getting increasing focus and the south coast boat building industry is getting more and more prominence. The ship repair industry also is shaped to grow going forward and its potential cannot be undermined. With Scotland shipping behind the Dutch, and the fact that it has seen turbulent times with the downswing of the industry opens the door for the Scotts to acquire the top slot in the industry. However the movement for independence by Scotland is threatening inflow of UK business, jeopardizing growth and therefore a market changer to look out for. There is competition for the Scott shipping industry by countries from the Far East such as South Korea which is now rapidly moving into this space. Despite the emerging competition there is potential for the Scotts to expand the industry to include production of small leisure craft such as fast ferries, fast freight, luxury yachts and ship conversion. This is a niche area with lot of potential and Scotts can test the waters before others.
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Do you think Scotland shipping industry plays a vital role in the UK defense sector?