Clustering in defence-related procurement: the case of a Belgian naval construction cluster

ABSTRACT

This paper examines the importance of closer co-operation in defence-related procurement. Led by the decision that Belgium will lead the procurement of 12 Mine CounterMeasures Vessels (MCMV), the case of a potential Belgian naval construction cluster is discussed. The feasibility of a potential cluster is investigated by looking at key elements of a successful naval construction cluster, the Dutch naval construction cluster, and comparing those key elements to the current Belgian situation. Forming a sustainable Belgian naval construction cluster will be difficult. Most of the procurement process of the MCMVs is set on a European tender. In the long run, due to the absence of both a launching customer and leader firms, no party is able to carry the cluster with investments and knowledge spill-overs. In order to keep public support for large defence-related investments, clustering around the MCMV integration system and proactive cluster support is recommended.

KEYWORDS:

• Naval construction
• cluster
• Belgium
• defence industry
• public policy
• triple helix

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes on contributors

Prof. dr. Chris Peeters is senior lecturer at the Department of Transport and Regional Economics, University of Antwerp, Antwerp, Belgium. He is also senior partner at Policy Research Corporation, Antwerp, Belgium.

Ruben Pilon is junior consultant at Policy Research Corporation, Rotterdam, The Netherlands.

ORCID

C. Peeters http://orcid.org/0000-0002-5420-2615

R. Pilon http://orcid.org/0000-0002-1256-8336

Notes

1 M. Porter, ‘Clusters and the New Economics of Competition’, Harvard Business Review 76, no. 6 (1998): 78.

2 See e.g. A. Marshall, Principles of Economics: Unabridged Eighth Edition (Cosimo Inc, 2009); P. Krugman, Geography and Trade (MIT Press, 1993).

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4 G. Benito, E. Berger, M. De la Forest, and J. Shum, ‘A Cluster Analysis of the Maritime Sector in Norway’, International Journal of Transport Management 1, no. 4 (2003): 203–15; Shinohara, ‘Maritime Cluster of Japan’; M. Brownrigg, ‘The United Kingdom’s Maritime Cluster’, in Dynamic European Maritime Clusters (IOS Press, 2006): 93–103; P.D. Langen, ‘Clustering and Performance: The Case of Maritime Clustering in The Netherlands’, Maritime Policy & Management 29, no. 3 (2002): 209–21.

5 H. Etzkowitz and L. Leydesdorff, ‘The Triple Helix: University – Industry – Government Relations: A Laboratory for Knowledge-Based Economic Development’, EASST Review 14 (1995): 14–19.

6 E.J. Rozendaal, ‘Damen grijpt naast order van 2 miljard voor mijnenjagers’, PZC.nl, March 15, 2019, https://www.pzc.nl/walcheren/damen-grijpt-naast-order-van-2-miljard-voor-mijnenjagers~a8624b33/?referrer=https://www.google.com/.

7 16% in Romania, 8% in Italy, France and Norway combined. J.G. De Vries, ‘Project Joint Logistiek Ondersteuningsschip (JSS), Resultaten Gecombineerde Voorstudie-, Studie- en Verwervingsvoorbereidingsfase’, Letter to House of Representatives, November 3, 2009, https://www.parlementairemonitor.nl/9353000/1/j9vvij5epmj1ey0/vi8idk1g7rym.

8 The last class of ships that was taken into service in which Belgium took the lead in development was the Tripartite-class MCMVs. This class was taken in service in the 1985–1991 period. Be that as it may, the most recent project in which Belgium took the lead in development was the KMV-class MCMVs. This project was in the midst of development when the project got cancelled in 2002 due to funding issues. Although this class was never taken into service, it is the most recent project in which Belgium took the lead in development. Since 2002, the Belgian Navy procured two patrol boats in which a European tender was used as method of procurement.

9 C. Peeters, De Marine en de Marinebouw Cluster: Een ecosysteem onder druk (Nederland Maritiem Land, 2017).

10 M. van den Bossche, P. Van Donselaar, H. Van Haselen, R. Piers, and M. Van der Poel, De Nederlandse maritieme dienstverlening: economische betekenis en structuur (Delft University Press, 1999); M. van den Bossche, P. Van Donselaar, H. Van Haselen, and R. Piers, De Nederlandse visserijsector: economische betekenis en structuur (Delft University Press, 1999); M. van den Bossche, P. Van Donselaar, H. Van Haselen, and R. Piers, De Nederlandse watersportindustrie: Economische betekenis en structuur (Delft University Press, 1999); C. Peeters, S. Bruynseels, J. Colpaert, and A. Lefever, Het maritieme clustermodel: modellering en scenarioanalyse (Delft University Press, 1999); C. Peeters, F. Hendrickx, H. Kneepkens, and S. Bruynseels, De Nederlandse zeehavensector: economische betekenis en structuur (Delft University Press, 1999); C. Peeters, A. Lefever, J. Van der Linden, S. Bruynseels, and H. Webers, De Nederlandse maritieme cluster: economische betekenis en structuur (Delft University Press, 1999); C. Peeters, A. Lefever, A. Soete, P. Vandendriessche, and H. Webers, De Nederlandse Maritieme Cluster: Literatuuronderzoek en plan van aanpak economische impact studies (Delft University Press, 1997); C. Peeters, J. Nietvelt, S. Bruynseels, M. Pouwe, and A. Lefever, De Nederlandse waterbouwsector: economische betekenis en structuur (Delft University Press, 1999); C. Peeters, P. Vandendriessche, H. Webers, R. Van der Aa, P. Donker van Heel, V. Van Polanen Petel, and H. Otten, De maritieme arbeidsmarkt: vraag en aanbod van zeevaartkennis (Delft University Press, 1997); C. Peeters, H. Webers, J. van der Beek, and A. Lefever, De Nederlandse offshoresector: economische betekenis en structuur (Delft University Press, 1998); C. Peeters, H. Webers, E. Pernot, and V. Donink, De Nederlandsche maritieme cluster: monitor 2010: economie internationalisatie, arbeidsmarkt, innovatie (Nederland Maritiem Land, 2010); C. Peeters, H. Webers, and M. Pouwe, De Nederlandse maritieme toeleveranciers: economische betekenis en structuur (Delft University Press, 1996); C. Peeters, H. Webers, A. Lefever, and J. Van der Linden, De Nederlandse scheepsbouw-en toeleveringsindustrie: economische betekenis en structuur (Delft University Press, 1998); Y.M. Prince, A.P. Muizer, R. Braaksma, P. Van Eck van der Sluijs, J. De Jong, M. Overweel, and W. Van der Valk, De innovativiteit van de Nederlandse maritieme cluster (Delft University Press, 2000); G. Van Logtestijn, B. Swildens, and R. Haanen, Maritiem kapitaal forum: onderzoek naar de werking van de kapitaalmarkt in de sector van maritieme toeleveranciers (Delft University Press, 2000); Nederland Maritiem Land, De Nederlandse Maritieme Cluster: Beleidsaanbevelingen (Delft University Press, 2000); E. Urbanus and B. Rubbens, An International Shipping Company in the Netherlands: The Tax Perspective (Delft University Press, 2000); F. Waals, Maritieme websites en e-business: een verkenning (Delft University Press, 2000); H. Webers, C. Corstiaensen, V. De Kerpel, and C. Peeters, De Nederlandse maritieme cluster: economische monitor 2006 (Nederland Maritiem Land, 2006); H. Webers, S. Djohan, C. Van Hese, I. Thienpont, and C. Peeters, De Nederlandse maritieme cluster: monitor 2012 (Nederland Maritiem Land, 2012); H. Webers and C. Peeters, De Nedrlandse maritieme cluster: monitor en dynamiek (Delft University Press, 2003); N. Wijnolst, Dynamic European Maritime Clusters (IOS Press, 2006); N. Wijnolst, J. Jenssen, and S. Sødal, European Maritime Clusters (Foundation Dutch Maritime Network, 2003).

11 For instance, Art. 13(c), Article 346 TFEU.

12 The knowledge value is often higher as well. Again, it is a matter of gradation. Taking the lead in developing material resorts in a higher knowledge value compared to making use of a European tender.

13 TRIARII, Nederlandse Defensie- en Veiligheidsgerelateerde Industrie 2016 (TRIARII, 2016).

14 Original citation: “Een structurele relatie tussen defensie, R&D en industrie draagt beslissend bij aan de competitieve kracht van de DGI.” F. Bekkers, M. Boer, J. Esch, R. Korteweg, J. Selleslaghs, and P. Wijninga, De waarde van defensie (Hague Centre for Strategic Studies (HCSS), 2012): 63.

15 P. Kulkarni, ‘Review of Global Naval Shipbuilding Trends and Lessons for Indian Shipbuilding Industry’, Maritime Affairs: Journal of the National Maritime Foundation of India 11, no. 1 (2015): 116–32.

16 J. Parker, An Independent Report to Inform the UK National Shipbuilding Strategy (London: Ministry of Defence, 2016).

17 Former Imtech Marine.

18 The Hague Security Delta (HSD) and Dutch Institute for Technology, Safety & Security (DITSS) are two of the more well-known cluster organizations

19 Original citation: “Een realistische behoeftestelling vanuit Defensie moet de basis zijn van het marinebouw ecosysteem. Zo kan het ecosysteem, met vertrouwensrelaties tussen de Koninklijke Marine, de kennisinstellingen en de industrie, resulteren in grotere slagkracht met een kleinere investering vanuit Defensie.” Peeters, De Marine en de Marinebouw Cluster, 14.

20 de Langen, ‘Clustering and performance’.

21 Original citation: “Deze bedrijven hebben door hun grootte, marktpositie, kennis en ondernemerschap het vermogen en de prikkel om investeringen te doen met positieve spin-offs voor andere bedrijven in de cluster.” Peeters, De Marine en de Marinebouw Cluster, 44.

22 M. Nijdam and P. de Langen, ‘Leader Firms in the Dutch Maritime Cluster’ (presented at the European Congress of the Regional Science Association–ERSA, 2003).

23 G. Lorenzoni and C. Baden-Fuller, ‘Creating a Strategic Center to Manage a Web of Partners’, California Management Review 37, no. 3 (1995): 147.

24 Nijdam and de Langen, ‘Leader Firms in the Dutch Maritime Cluster’; Lorenzoni and Baden-Fuller, ‘Creating a Strategic Center’.

25 Eguermin divided its practices in 2015 into the “NATO Naval Mine Warfare Centre of Excellence” and the “Nederlands-Belgische mijnenbestrijdingsschool.”

26 Belgian Ministry of Defence, De Strategische Visie Voor Defensie (Brussel: Belgian Ministry of Defence, 2016): 12.

27 This statement is not without flaws. However, for the sake of simplicity, this rough split is maintained.

28 The guideline states that no governmental funds can be used to support defence-related projects. A more specific description follows in the following paragraph.

29 Across the Belgian MoD, not only within the Belgian Navy.

30 As of February 2018.