Recommendation 76

Professor Keith Hartley of the University of York told us that there was a limited understanding of shipbuilding supply chains: The problem we face in the Scottish shipbuilding industry is that, although we know the major primes like BAE and have a limited amount of information on their supply chains […] These supply chains are very complex, and Governments do not understand them and do not have any knowledge about them. They have knowledge about the first tier suppliers to the primes, but beyond that they really do not understand and have little knowledge.123 Knowledge gaps in this area make it more difficult to assess risks. For example, if a prime contractor sources components from a sole supplier, there is a risk of significant disruption if that supplier goes out of business. The MOD has recognised the importance of building more resilient supply chains in its new Defence Supply Chain Strategy, published in November 2022, which places a new emphasis on resilience in response to challenges like the COVID-19 pandemic and the conflict in Ukraine.124 Improving understanding of supply chains could also bring opportunities. For example, as industry knowledge about regional supply chains grows it could encourage greater collaboration between neighbouring businesses.125