Swan deal to shape policy

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The Independent Online
THE Government's decision on the future of Swan Hunter, likely to be announced this week, could provide a pointer to a new policy on defence procurement, according to industry insiders.

If Swan is allowed to collapse, there will be only one British yard capable of building ships bigger than a frigate, and the Ministry of Defence will have to find an alternative to its normal competitive tendering process to control costs.

Last Thursday's defence statement included an announcement that tenders will be placed for two new Royal Marine assault ships, to replace HMS Fearless and HMS Intrepid, as well as three Type 23 frigates and up to six nuclear submarines.

There are only three yards physically capable of building the assault ships. One, Harland & Wolff, is believed to have withdrawn from naval work, following a string of problems with its last contract. The others are Swan and VSEL, the Barrow- based builder of Trident submarines.

The future of Swan depends on it winning a contract to lengthen and refit a landing ship, the Sir Bedivere. If it wins this, it will be bought by Cherbourg-based CMN, which said it would bid for the assault ships if the takeover went ahead. If Swan loses the contract, it will close when its workload runs out in November.

The defence review has raised the stakes for the shipyards. If Swan survives, it will have a good chance of building one or both assault ships because it has more experience of surface vessels than VSEL. It has thus been transformed in CMN's eyes from a useful addition to a glittering prize.

However, Swan must still cut its Barrow-in-Furness workforce: this has already fallen from 14,300 to 6,000, and is likely to drop to 5,000.

The other naval yards were also given hope by Mr Rifkind's statement.

Vosper Thorneycroft, the builder of small ships based in Southampton, will build seven mine hunters worth pounds 250m, while GEC-owned Yarrow, on the Clyde, is expected to win the order for the three Type 23 frigates.

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