CMN proposes new Swan Hunter deal: French firm offers to pay designers and seek new work, while receiver would be responsible for completing last frigate

THE 100-strong design team at the Swan Hunter shipyard will be made redundant next month unless a new deal can be agreed between Soffia/CMN, the French company trying to buy the yard, and Price Waterhouse, the receivers.

The future of the workforce of 650 at the Tyneside shipbuilder looks increasingly uncertain after Soffia/CMN's announcement yesterday that it will not take over completion of the yard's last remaining contract, for the frigate HMS Richmond, from the receivers. CMN is instead offering to pay the pounds 200,000 monthly wage bill of the designers while it tries to bring new work into the yard. Completion of the Richmond would be the responsibility of the receiver.

Gordon Horsfield, joint administrative receiver at Price Waterhouse, said the latest proposal was similar to one it had already rejected and much less attractive than the previous plan. He said it would leave Soffia/CMN with no financial responsibility for the current Richmond contract and offered less continuity to the workforce.

'The receivers are mindful of the length of time they have spent negotiating with CMN since the turn of the year, without a result,' he added. A spokeswoman for the receiver also said that if no agreement with CMN was reached, the yard would be sold piecemeal when the ship was finished at the end of October and the workforce would lose their jobs.

CMN's change of tactics follows an announcement by the Government last week that it was dropping the fixed price for the frigate contract agreed with CMN by pounds 700,000 to pounds 57m. The French group said there was no justification for the change in the original price, which was agreed with the Ministry of Defence last month.

Roger Freeman, the Minister for Defence Procurement, defended the drop in price for the frigate contract, saying taxpayers would pay less if the contract remained with the receiver.

'Swan Hunter must compete and be responsible for their own destiny. There is an important principle at stake here. We cannot subsidise a shipyard by paying a significant sum over and above what would otherwise be the case simply to keep Swan Hunter alive.

Fred Henderson, of CMN, said: 'We believe that leaving the frigate contract with the receiver until its completion in November will provide the solution to the impasse that we reached last week with the MoD.' He said that if the new offer was accepted by the receiver, the Swan Hunter design team would start work on a tender for an ocean survey vessel for the Royal Navy, worth pounds 30m to pounds 40m.

The main hope for the yard's survival is its ability to win this order, but the contract may not be awarded until the end of the year. Swan Hunter will be competing with its rival, VSEL, and with Appledore, an independent shipbuilder with a yard on Tyneside.

(Photograph omitted)