Monday, 23 August 2010

Warship Costs

Whenever the subject of the Type 45 Destroyer is raised it is common for someone to suggest that an American Arleigh Burke class destroyer could have been purchased at half the price.

The idea that buying foreign warships would be cheaper than building ships in Britain is also widespread in the British armed forces.

Some years ago a very senior officer in the Royal Air Force suggested that the Royal Navy should buy it's new aircraft carriers from America.

Such ideas ignore the reality that American warships are almost always far more expensive to buy and operate than British warships.

The crew requirement alone for an American aircraft carrier is four times that of a British carrier.

The following is a comparison of procurement costs for recent British and American warships,based on the current exchange rate of $1.55 to the £ Stirling.

Differences in accounting policies,construction years and other factors often create difficulties in making direct comparisons.

The following comparison uses the nearest available,most reliable and most comparable figures.

For example,production costs have been used to compare the prices of destroyers as the United States Navy does not include the $6,600 Million cost of the Standard SM6 missile system in the price of the Arleigh Burke class destroyers which will carry it,unlike the Royal Navy which does include the cost of the Sea Viper missile system in the programme cost of the Daring class destroyer.

The new British Queen Elizabeth class aircraft carriers cost £5,133 Million ($7,956 Million) for two or an average of £2,566 Million ($3,977 Million) each  according to  page 17 of part 2 of this document.

The new American Gerald R. Ford class aircraft carriers cost $21,944 Million (£14,157 Million) for two or an average of $10,972 Million (£7,079 Million) each according to page 1 of this document.

The new British Astute class submarine costs an average of £1,380 Million ($2,139 Million) each according to page 10 of part 2 of this document.

The new American Virginia class submarine costs $2,856 Million (£1,843 Million) each (FY 2009) according to page 1 of section 3 of this document.

The new British Daring class destroyer has a production cost of £661 Million ($1,025 Million) each according to page 180 of part 3 of this document

The new American Flight IIA Arleigh Burke class destroyer has a production cost of $2,234 Million (£1,441 Million) each (FY2010) according to page 1 section 10 of this document

The new British Albion class Landing Platform Dock cost (estimated 2001) £786 Million for 2 ships or an average of £393 Million ($609 Million) each according to page 92 of this document.

The new American San Antonio class Landing Platform Dock cost $1,849.5 Million (£1,193 Million) each (FY2009) according to page 1 of section 14 of this document

Despite the significant advantage of higher production numbers,American warships are far more expensive than British warships.

An American aircraft carrier costs about 2.7 times more than a British aircraft carrier.

An American submarine costs about 1.3 times more than a British submarine.

An American destroyer costs about 2.2 times more than a British destroyer.

An American Landing Platform Dock costs about 3 times more than a British Landing Platform Dock.

The British tax payer also receives a significant discount on the cost of domestically produced warships by way of "tax clawback".

This might possibly be as much as 40% "cash back" on a warship's cost but it would require some expert economic analysis to determine how much exactly.

It is worth remembering these figures next time someone tries to tell you that the Royal Navy should buy "cheaper" foreign built ships.


Martin said...

Very interesting post and it fits in with allot of what I have said in the past. US equipment is expensive and overly complicated. The Natural Assumption is that as its American its better. However I think the Samsung Radar on the type 45 is superior to the Aegis. Its smaller and lighter and can be mounted hier up. Aster missiles have allot more room for improvement than the SM missiles family. Once the Type 45's receive their full weapons kit they will be at least comparable to a Burke. The Queen Elizabet Carrier is also a good example of this.m Its able to carry 35 strike aircraft. While the ford can carry more it typically only operates around 40. While Nuclear propulsion sounds good allowing the carrier to operate at high speed with out re-fulling the ship is still tied to its battle group which has to refuel. It also need to take on fuel for its aircraft regularly. The RN has been criticised for over runs in the QE's however many have missed the point. The RN has managed to replicate almost entire capability of a Nimitz or Ford at a fraction of the cost. Quite an achievement. Image what the US Navy could do with its massive budget if it bought ships from the UK.

Chuck Hill said...

Excellent post. Do think the Burkes and CVNs (at least those before the Ford) have advantages that justified their cost, but we also need numbers. US and Britain each creating their own systems probably has some advantage, but think there could be greater commonality of sensor/weapons systems, with offsetting tax advantages.

Certainly the US gets their share, but BAE is already a very significant supplier in the US.

tangosix said...

Hello Martin,

The Queen Elizabeths would have been even better value for money if they had not been delayed at a cost of £700 Million.


tangosix said...

Hello Chuck Hill,

I would say the American ships are better equipped and probably more survivable.
The British ships have their advantages too,compare Albion's Integrated Full Electric Propulsion with San Antonio's unreliable diesels for example.

The British ships tend to have capability deleted to cut costs but even if they were "fully loaded" they would still be far cheaper than the American vessels.

The American ships are often more capable and it is worth paying more for extra capability but I am not convinced the extra capability is justified by the magnitude of the extra cost at present.

The British and Americans could both gain from working together.
If the United States would supply the funding and the United Kingdom supply the designs,the British might be able to afford to equip their ships fully and the Americans might save enough money to buy more ships.

There is already a good deal of British kit on American ships and American kit on British ships.
Each nation could build domestically to guarantee security of supply.


Chuck Hill said...

When we first started hearing about the CVFs (before I learned they planned on using the F-35B) It occurred to me that the US should loan the UK one of our conventionally powered CVs so that the RN could get back into operating conventional carriers.

Chuck Hill said...

TangoSix, Maybe you can answer this one:

tangosix said...

Hello Chuck Hill,

I read Bryan McGrath's comments earlier and I planned to do a short post on just that subject but I have not read the cited paper yet so I will wait until I have got round to that before posting.