Shipyards' future secure

21 Jul 2009

by Brian Currie, The Herald 

A multi-million pound deal that could see a new generation of frigates being built at Govan and Scotstoun shipyards on the Clyde has been signed between the Ministry of Defence and the yard's owners BVT.

The Terms of Business Agreement guarantees BVT will receive a minimum of MoD work worth £230m a year for the next 15 years.

The investment is included in the £4bn cost of the two giant aircraft carriers that fill the order books for about the next seven years. For the remainder of the 15-year-period the money will provide a minimum annual guarantee.

An MoD spokesman said the long-term deal would secure key maritime industry skills after work starts to run down on the carriers.

BVT chief executive Alan Johnston said completing the agreement and the partnership it created between the company and the MoD was "hugely significant" for the UK maritime sector.

He said: "It will ensure that we can affordably deliver key capability to the Royal Navy in the UK for many years to come, strengthen our competitiveness in the international market and deliver a security to the shipyards that has not been known for decades".

The agreement was announced by Quentin Davies, the Minister for Defence Equipment and Support, who said it would help BVT build a "world-class, sustainable business".

The guaranteed finance would give the company a "strong foundation" to bid for other work both in the UK and overseas.

Mr Davies added: "The guarantee of 15 years' worth of work is especially pleasing to announce in the current economic climate.

"We have invested heavily in modernising the Royal Navy and have substantial contracts for the two Queen Elizabeth Class aircraft carriers and six Type 45 destroyers with BVT.

"The contract we have announced today will help the industry preserve a valuable skills base as the sector restructures to meet our future needs and will lead to significant financial benefits to the MoD and Royal Navy."

However, Mr Davies warned there was a need to "reduce overcapacity" in the UK warship industry after the carriers were completed.

But, he said, it was "paramount that we balance supply and demand in the future, primarily to sustain key maritime skills and jobs that will, in turn, ensure our key industrial capabilities are preserved".

He said the agreement gave "an unambiguous commitment to the company for a certain minimum level of workload in the areas of warship design and build work and elements of warship support covering all surface warships".

"In return, BVT has committed to the transformation of the sector into a sustainable entity for the future," he added.

Scottish Secretary Jim Murphy said the deal meant a "bright and brilliant future" for the Clyde yards.

He said: "It gives the industry the framework it needs to plan confidently for the future. That means jobs and it means skills for Scotland and it is great news, especially coming at a time of economic uncertainty.

"The British Government strongly supports the Clyde yards - this announcement shows that we back up our words with action.

"It also shows the faith the UK Government has in the skills and knowledge of our yards and the strength we have in pooling our resources.

"This news comes at a time when a Clyde-built Type 45 destroyer carries out successful sea trials, on top of a seven-year order book on the Clyde and the cutting of the first steel for the next generation of aircraft carriers. It is a huge signal of confidence in Scotland's capabilities."

John Dolan, the GMB convener at Scotstoun, said the signing of the agreement was "excellent" news.

"It is particularly encouraging for the young people at the yards," he said.

However, the deal is expected to generate £350m of savings during the 15-year period of the contract and Jamie Webster, the GMB convener at Govan, said he was concerned at how "efficiences" would be achieved.

He said it was still unclear how many shipyards would be operated by BVT once the carrier work was finished.

As The Herald revealed earlier this month, leaked documents showed there were plans to reduce warship building in the UK to just one yard and that the MoD had agreed to underwrite the cost of redundancies.

Any fight for survival would be between the combined Govan and Scotstoun yards, which employ 3500 workers, and BVT's facility at Portsmouth.

Produced with the permission of the Herald & Times Group.

  • Ships at BVT Surface Fleet on the River Clyde

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