Swan Hunter calls in the receivers: Last shipyard on the Tyne at risk along with 7,000 jobs after loss of crucial warship order

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The Independent Online
MORE THAN 7,000 jobs are at risk on Tyneside after the Wallsend-based warship builder Swan Hunter - the last on Tyneside - was forced to call in the receivers.

The move came after the loss earlier this week of a crucial pounds 170m order for a Royal Navy helicopter carrier to two rival yards, VSEL in Barrow and Kvaerner Govan on the Clyde, whose bid was pounds 50m lower.

As the receivers moved in yesterday with a warning that lay-offs at the yard may be inevitable, the management of Swan Hunter called for an independent investigation into how the Ministry of Defence awarded the controversial order.

The yard will run out of work next year when it completes a contract for three Type 23 frigates - the second is due to be launched today. There is an immediate threat to the 2,200 workforce in Wallsend, where there are pockets of male unemployment reaching 50 per cent.

An estimated 5,000 further jobs in local supply companies and service industries depend on the yard.

The Northern Development Corporation says the North-east has suffered 240,000 job losses since 1978 in three traditional industries - coal, shipbuilding and steel.

More than 20,000 jobs were lost in shipbulding and repair from 1981 to 1989.

Mark Homan, of Price Waterhouse, one of three administrative receivers appointed yesterday by Lloyds, Swan Hunter's bankers, meets MoD officials this morning to discuss the yard and the frigate contract. He is also due to meet the Department of Employment and Department of Trade and Industry.

'Depending on the outcome of these discussions we shall know whether Swan Hunter can be maintained as a going concern in the short term and we shall also have a better idea of the prospects for employees and others affected by the insolvency,' he said. 'Regrettably, some lay-offs may be inevitable.'

At a press conference last night Mr Homan said he would try to sell the yard as a going concern, saying: 'Our wish is to hold together the manufacturing facility here and the skills, while we try to find a buyer for the business.'

The managers of Swan Hunter, who bought the yard from state-owned British Shipbuilders in 1986, described the collapse as 'a bitter blow to a dedicated and superb workforce' and blamed the MoD in part. They said the ministry had failed to pay a pounds 20m claim for costs involved in completing an order for a Royal Navy supply vessel.

The managers also said they could not accept the 'credibility' of the pounds 50m difference in the price tendered by VSEL and Kvaerner Govan for the helicopter carrier. The belief on Tyneside is that Swan Hunter tendered to a much more demanding and expensive naval specification for the warship while the rival bid was based on less exacting commercial ship specifications.

Stephen Byers, Wallsend's Labour MP, placed much of the blame for the collapse on the Government, saying it 'knew many months ago that whichever yard didn't get the order would face difficulties. Eventually the whole sordid story about why Swan Hunter has been done down will come out.'

Bleak future, page 3

(Photograph omitted)

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