Babcock wins frigate deal as UK bids to restore shipbuilding industry

By Alistair Smout
FILE PHOTO: Britain's Prime Minister Boris Johnson visits in Scotland

By Alistair Smout

LONDON (Reuters) - Babcock International <BAB.L> won a contract to design new Type 31 frigates on Thursday as Britain seeks to revive its once-mighty shipbuilding industry.

The frigates will be assembled at Babcock's facility in Rosyth, Scotland, and the programme will support over 2,500 jobs across the Britain, including its supply chain.

The deal will boost Babcock's efforts to repair ties with investors after a period when the engineering group's management and stock price came under fire. Its shares are more than 35% below their mid-2018 level.

Babcock's Arrowhead 140 design beat rival bids from BAE Systems <BAES.L> and Atlas Elektronik UK, and a formal contract award is expected later this year, Babcock said.

"Arrowhead 140 is a modern warship that will meet the maritime threats of today and tomorrow," Babcock Chief Executive Archie Bethel said.

"It provides a flexible, adaptable platform that delivers value for money and supports the UK's National Shipbuilding Strategy."

The government will buy at least five of the frigates and has said the first ship is set to be in the water by 2023.

Babcock said detailed design work would start immediately, with manufacturing beginning in 2021 and finishing in 2027. The ships will have an average production cost of 250 million pounds a ship.

The government has committed to keeping up a fleet of at least 19 frigates and destroyers with the aim of growing the fleet in the 2030s. Type 31 frigates will replace Type 23 ships.

"(The) UK is an outward-looking island nation, and we need a shipbuilding industry and Royal Navy that reflect the importance of the seas to our security and prosperity," Prime Minister Boris Johnson said in a statement.

"I am convinced that by working together we will see a renaissance in this industry which is so much part of our island story – so let's bring shipbuilding home."

Britain is building patrol vessels and new Type 26 frigates at BAE Systems' Govan shipyard on the Clyde river in Glasgow.

But the country's shipbuilding industry has suffered a catastrophic decline in the last 40 years, with shipyards in places from Sunderland to Portsmouth closing.

Belfast's Harland and Wolff shipyard, where the Titanic was built, went into administration last month.




(Reporting by Alistair Smout; editing by Stephen Addison and Sonya Hepinstall)