BAE SYSTEMS is one of Europe's largest shipbuilding Prime Contractors and Barrow is one of Europe's largest most comprehensively equipped naval shipyard and warship design facilities.
In Europe "the shipbuilding industry(*) is generally structured around national leaders that dominate their domestic markets" (BAE SYSTEMS in the UK, DCN in France, Izar in Spain, Kockums in Sweden). Smaller shipbuilders specializing in niche markets. BAE SYSTEMS sees its ability to offer customers an integrated approach "system of systems" as a key competitive advantage.
At the European level, one can distinguish two leagues of players. In the first group belong the British and French players: BAE SYSTEMS, DCN. These companies offer a full range of products from surface combatants to nuclear submarines and from aircraft carriers to patrol boats. (*)
State owned French shipbuilder DCN dominates its domestic market. DCN is the prime contractor for all major national naval programmes. Recently DCN and Thales agreed on a joint venture owned 50:50 by the French State and Thales, in which DCN and Thales will co-operate in the area of naval shipbuilding and combat systems, as SSDN and SSDN could also manage export endeavours like the UK's new generation aircraft carrier. (*)
Thales, have a multi-domestic business model that is growth outside France by acquiring medium sized companies abroad, producing with those companies locally, and building up a domestic identity, for itself in the process. The idea is to keep the core Thales and expand it by obtaining controlling shares of companies that have a large client base in their own countries.(*)
Demand for warships (in Europe) is structured around national markets for two types of navies:
- Blue water with a complete range of ships (UK/France)
- Navies with more modest ambitions (Germany, Italy, Spain)
The shipbuilding industry is characterized by heavy protection of domestic producers, and Governments desire to maintain domestic capability. A crucial competitive issue for players in (European) shipbuilding is their ability to provide Prime Contractor and systems integration capabilities, buyers increasingly expect systems integrators to provide complete systems, to control key subcontracts and to assume the entire risk of a programme. Particularly in military shipbuilding, system integrators prevail over traditional shipbuilders.(*)
In this context there is so much protectionism, that it is hard for UK shipyards to secure European export business, there is no reciprocal arrangements allowing UK shipbuilders to say bid for French naval contracts.
(Source: (*) Rand Europe: from National Champions to European Heavyweights ¡V The Development of European Defence Industrial Capabilities Across Market Segments ISB No.-8330-3175-9).