(Bloomberg) -- Britain will go ahead with the construction of a new generation of cut-price, multipurpose warships as it seeks to spur naval exports.
The Type 31e frigate has a price capped at 250 million pounds ($325 million) for the first five vessels to be produced for the Royal Navy. That compares with a bill of up to 1 billion pounds apiece, including some dockyard-related costs, for the state-of-the-art Type 26 model that began production in July.
The first of the Type 31 craft should enter service in 2023, with the workload likely to be shared among U.K. shipyards and assembly focused on a central hub, in line with recommendations from a report into future naval programs, the Ministry of Defence said in a statement Wednesday.
The new approach is “designed to maximize exports and be attractive to navies around the world,” Defence Secretary Michael Fallon said in the release, adding that while the Type 31e will be designed to meet British needs, it will have the export market “in mind from the beginning.”
Britain initially placed an order for 13 Type 26 vessels, to be built at BAE Systems Plc's Glasgow yards. Former Prime Minister David Cameron announced in late 2015 that the commitment would be cut to eight ships, with the balance of the requirement to be filled by a less capable but cheaper model with enhanced export prospects, campaigns to sell the Type 26 design to Australia, Canada and Germany having failed to bear fruit.
DSEI Push
The commitment to build the Type 31e comes ahead of next week's Defence and Security Equipment International exhibition in London, which will see a “real push” for maritime sales, according to Stephen Phipson, outgoing head of arms exports at Britain's International Trade Department. The U.K. is working on several “very, very large” naval opportunities, he said Monday, telling Bloomberg that a number of allied nations are interested in new offerings.
The switch to modular construction for the frigate follows a report last year into U.K. naval programs led by John Parker, chairman of miner Anglo American Plc, which said BAE's Scottish dockyards should be excluded from the lead role on the new vessel to encourage competition and pare costs. He also recommended the “e” designation to emphasize the export focus.
Fallon told Parliament that the strategic switch signals the end of a monopoly enjoyed by the Glasgow yards, while adding that they'll still be able to compete for contracts. BAE will evaluate the change with its partners, suppliers and staff, according to an emailed statement. Shares of Europe's biggest defense contractor traded 2.5 percent lower at 595.50 pence as of 3:54 p.m. in London.
Britain's 6.2 billion-pound aircraft-carrier program pioneered the devolved-construction approach, with blocks for the HMS Queen Elizabeth and HMS Prince of Wales built at six U.K. locations before being assembled at Babcock International Group Plc's main yard at Rosyth, near Edinburgh.
To contact the reporters on this story: Thomas Seal in London at tseal@bloomberg.net, Benjamin Katz in London at bkatz38@bloomberg.net.
To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Christopher Jasper
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