VSEL poised to expand as profits leap

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The Independent Online
VSEL, the Trident submarine builder, yesterday signalled its determination to combat the dramatic decline in the UK warship-building industry by capturing a larger slice of the market for surface vessels, writes Michael Harrison.

Reporting a 16 per cent increase in pre-tax profits last year to pounds 55.6m, the Barrow-based shipbuilder forecast that the industry will have shrunk from five yards employing 21,000 people in 1990 to two or three yards with a total of just 6,000 workers by the mid 1990s.

VSEL confirmed it would cut a further 3,200 jobs over the next two years, starting with the closure of its other yard, Cammell Laird on Merseyside, next month with 500 redundancies. This will take the workforce down to 5,000, compared with 16,500 four years ago.

But Noel Davies, VSEL's chief executive, said he was much more confident now than three months ago of maintaining the workforce at that level while work continues on the pounds 2bn contract for four Trident submarines

There had been fears that the workforce at Barrow would slump to 2,000-3,000. But following its success in clinching the controversial pounds 170m Royal Navy order for a new helicopter carrier last month, VSEL has re-entered the Ministry of Defence's surface ship programme with renewed vigour.

VSEL has discussed taking over construction of the three frigates being fitted out at Swan Hunter with the Government and the yard's receivers. 'The job has got to be finished whether on Tyneside or elsewhere and we are willing to offer our services on a sensible commercial basis,' said Mr Davies.

VSEL also plans to tender for two Royal Navy heavy artillery carriers worth pounds 500m and additional Type 23 frigates and may bid for a further batch of minehunters this summer.

The City lifted the shares 26p to 795p in response to the profits surge, an 18 per cent rise in the final dividend to 20p and an increase in VSEL's cash pile to pounds 250m.