BAE warns Govan yard `needs to win new MoD business'

THE DEFENCE group BAE Systems warned yesterday that future employment prospects at its Govan shipyard near Glasgow are wholly dependent on new orders being won.

The group was announcing completion of the pounds 2.25m rescue acquisition of Govan from Norway's Kvaerner agreed in July. BAE has agreed a 20 year lease of the land and buildings in a joint deal with the port services group Clydeport, which will own the site. "The Govan yard is helping already with an important order and we know from previous co-operative working arrangements the high quality of output." said BAE'sRod Leggetter. "However, nobody is under any illusions that a critical factor in the shipyard's future is winning new business, in particular the roll-on-roll-off vessels contract for the UK Ministry of Defence."

On Tuesday, the MoD extended until 14 January the time allowed for confirmation of bids for six roll-on-roll-off equipment transport vessels to allow bidders more time. Bids were first submitted in July and a decision had been planned for the autumn. Govan is part of the Sealion consortium, one of four bidders. The MoD said it wanted to ensure maximum value for money and was "keen to ensure that UK shipyards are given every chance to prove their competitiveness".

Govan's fate hangs in the balance as difficult conditions prevail throughout the Scottish shipbuilding industry. The takeover deal agreed in July after talks with the Government lifted a threat over 1,200 jobs because work at the yard was due to run out in the autumn.

The construction and engineering group Kvaerner, which committed itself in April to exiting shipbuilding worldwide, undertook to pay for any redundancies from the yard over the next three and a half years after rejecting an earlier, lower bid.

In a statement confirming completion of the buyout, Kvaerner said it had also sold the Greenock-based diesel engine component manufacturer Kvaerner Kincaid to the Swedish company Scandiaverken. Terms were not disclosed.