View from City Road: Unpalatable facts for Swan Hunter

Reprieve or stay of execution? As revealed in the Independent on Saturday, the French shipping group Soffia-CMN has agreed with the receiver of the Swan Hunter shipyard to keep it open for about 12 months. The plan is that Swan Hunter should bid, and, it is hoped, win, a batch of defence work being placed early next year. The yard's remaining 630 workers should, however, hold their breath rather than raise a glass to their French saviours. The news does nothing to alter two unpalatable facts: there is massive overcapacity in shipbuilding; and the MoD prefers to use other UK shipyards.

The MoD has in essence already made up its mind on which yard gets what out of its ever-dwindling budget and Swan Hunter is not on the list - VSEL for submarines, Yarrow for frigates, and Vosper Thornycroft for minehunters. Rosyth and Devonport will get all the refit work.

Making Swan Hunter into a commercial shipyard probably won't help much either. With European Commission subsidies to commercial yards being withdrawn at the end of 1995 there is likely to be a rush of orders placed before the deadline. Even so, many European commercial yards cannot compete with the Japanese and Koreans.

Furthermore, making vessels like bulk containers is not where Swan Hunter's expertise lay. If it cannot compete on its own terms with British defence yards, it is on even shakier ground competing with the likes of Germany's Bremer Vulkan, and even Northern Ireland's Harland & Wolff. There is no joy in writing such a negative commentary; unfortunately commercial reality is a harsh master.