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.