BAE's Govan shipyard adds £324m to UK’s finances

11 Aug 2009

By Douglas Hamilton, The Herald

A report from Strathclyde University's Fraser of Allander Institute published today shows that BAE's warship division added almost £600m to the UK economy, including £324m generated from its yards at Govan on the Clyde.

The study highlights both the economic and social benefits of BAE Systems Surface Ships, formerly BVT Surface Fleet.

It shows that the company's Scottish operations supported more than 8000 jobs in total, with 3400 people employed directly in the Clyde yards - almost 7% up on last year.

The study examines the direct and indirect economic impact of BAE System's operations in Glasgow, Portsmouth and Bristol for the financial year 2008/09 covering employment, wages, turnover and contribution to gross domestic product.

BAE is one of the biggest defence companies in the world. Its range of products includes military aircraft, missile systems, electronics, ships and armoured vehicles. It has 105,000 employees worldwide.

The warship division generated a total turnover of £1.12bn, including £698m from its Scottish operations. BAE Systems Surface Ships' yards at Govan and Scotstoun contributed £127m to GDP directly, with an additional £198m created in the wider economy through the knock-on effects of wage and supplier payments.

The group's warship divisions employed 3404 people directly at Govan and Scotstoun. The report says for every 100 people the company employed, a further 137 jobs were supported elsewhere in the economy.

The employees at BAE Systems Surface Ships in Glasgow in 2008/09 supported an additional 2312 jobs in Scotland. The study calculates the Glasgow warship operations supported 5717 jobs across Scotland.

The Clyde yards generated £226m in wages. Every £100 paid directly in wages to its employees supported £120 of wage income elsewhere.

Alan Johnston, managing director of BAE Systems Surface Ships, said: "The findings of the study demonstrate that our business and the warship industry continue to thrive and the number of people in Scotland who benefit from the Clyde yards continues to increase year on year.

"Despite the current economic climate, we have seen significant growth in the past year and have the strongest future order book that this industry has seen in many years. Our long-term partnernering agreement with the Ministry of Defence will help us to sustain key industry capabilities in the UK and we will continue to invest in our people and facilities to ensure that, as part of BAE Systems, we remain at the heart of the Scottish economy."

The report reinforces the importance of BAE Systems' commitment to working closely with its supply chain and industrial partners to drive innovation, enhance efficiencies and develop the skills necessary to ensure the long-term contribution of the warship industry to the UK and Scottish economies.

The study notes that the group's surface ships business has quadrupled its commitment to research and development to £2.5m.

It also continues to invest in skills to provide a strong base for its future domestic and export business, with around 80 young people joining its apprenticeship scheme in September.

Commenting on the Fraser of Allander report, Scottish Secretary Jim Murphy said:"BAE is rightly proud of the economic contribution it is making in Scotland. Its partnership with the UK government makes the finest warships in the world right here in Glasgow and supports a total of 8000 jobs in the city and beyond. The Clyde yards have the strongest order in many years and the future looks bright.

"Breaking up Britain would sink shipbuilding on the Clyde and destroy 8000 jobs. These ships would be built in what remains of the UK and not Scotland. Yet we still hear nothing from those supporting separation on how they would replace the jobs that would go in the Clyde yards, Faslane and elsewhere."

Reproduced with the permission of the Herald & Times Group.

  • HMS Defender, built at the Govan shipyards