Deadly game of musical chairs

THE STRANGE tale of Swan Hunter and its on-off rescue is only the latest chapter in the untidy run- down of Britain's naval shipyards. Since they were privatised in the mid-1980s, they have been playing an alarming version of musical chairs.

Cammell Laird has already been knocked out; Swan's future is in the balance; and there is no guarantee that all the other yards - VSEL, Vosper Thorneycroft and Yarrow - will avoid another round. Some pundits believe there is room for only one builder of surface ships and one submarine yard. On that basis, only VSEL at Barrow, with its submarine expertise, is reasonably safe.

The rules of the game require the yards to do their best to win each of the few contracts the Ministry of Defence puts out. In the past there was enough, more or less, to keep them all in business (as a matter of policy, governments did not want yards to close).

That changed in the mid-1980s, just when the yards were privatised and left to survive on their own often thin resources. Frustratingly, promised contracts frequently failed to materialise or were 'pushed to the right' - into the next financial year.

Each MoD contract - typically worth hundreds of millions - has spelt reprieve for one and alarm for the rest. In 1987, Cammell Laird, VSEL's yard at Birkenhead, launched a Type 33 frigate, and the chief executive, Rodney Leach, said it had 'been right to the brink of the precipice, had looked over and then turned back'. But it lost a contract to build three Type 23 frigates to Swan Hunter in 1989, which led to its closure in 1993.

By then, it was Swan's turn: it lost out to VSEL (working with Kvaerner Govan) on the contract to build a helicopter carrier. The management team put the company into receivership: CMN, a French company, is negotiating to bring Swan out again, but it is clear that there are immense pressures within the industry to let the Tyneside yard sink. If Swan goes, the next round of musical chairs will be put off that much longer.

In fact, if CMN does take Swan over, it could change the rules of the game. The French are determinedly looking for export orders (as is Vosper Thorneycroft, which specialises in smaller craft), which will give the Tynesiders a much bigger pond in which to fish.

Naval yards could in theory bid for civilian business (as they used to). The subsidies that merchant yards receive (but naval yards do not) are disappearing.

But one merchant builder says they will not win civil business because they are too inefficient.

They have to be expert at responding to daily changes in design from the MoD - and that means they cannot also match the out- and-out efficiency of the merchant builders.

(Photograph omitted)