Leaked memo raises questions on future of shipyards

(Reuters)

The long-term future of two British shipyards has been brought into question after a leaked memo reportedly showed plans which could see them close them within a decade.

Reports claim the memo was sent from the chief executive of the Govan and Scotstoun yards in Glasgow to senior executives at owners BVT Surface Fleet which also has an operation in Portsmouth.

The memo is reported to state that the Ministry of Defence is willing to finance redundancies in order to scale down Britain's capacity for building warships.

It is also said to show BVT Surface Fleet's chief executive Alan Johnston forecasting savings of as much as half a billion pounds from the closure of two out of the three yards after the contract for two aircraft carriers is completed in 2014.

A BVT spokesman said that he could "not deny" that a memo existed.

However, he said that the company were not expecting to close any facilities in the "foreseeable" future.

He said: "As a business we plan for all sorts of scenarios both good and bad.

"BVT Surface Fleet has a solid order book for the next seven to eight years and is in the strongest position that the shipbuilding industry in the UK has seen for a generation.

"As part of its prudent long-term planning, it considers a broad range of options, including worse case scenario planning. However, it is also planning for and confident in an extremely positive outlook.

"To that end, it continues to invest in designs, facilities and skills to secure the long-term future of both its Clyde and Portsmouth facilities.

"BVT continues to win orders both in the UK and overseas and is progressing well with a unique 15 years partnering agreement with the MoD that will further secure that future."

A spokesman for the Ministry of Defence said: "Under the Defence Industrial Strategy 2005, we have been in discussion with the ship-building industry over the opportunities for long-term partnering arrangements which incentivise industry to drive down costs but allow increased profits where these are earned by improved performance.

"Negotiations with industry partners are still ongoing and no decisions have been taken, therefore, it would be inappropriate to comment further."

BVT Surface Fleet (BVT) was created in early 2008 bringing together the surface warship building operations of BAE Systems and VT Group, including their joint venture, Fleet Support Limited.

Leader of the Scottish Liberal Democrats Tavish Scott MSP said: "Labour must immediately end the uncertainty surrounding the future of naval shipyards on the Clyde.

"They can not leave hard working men and woman high and dry without knowing their future.

"The Government must make an urgent statement on this potentially devastating news for Scotland."

MSP for Govan and Scotland's Deputy First Minister Nicola Sturgeon said: "These reports will cause deep concern among the workforce and communities on the Clyde.

"I have recently spoken with Alan Johnston, chief executive of BVT who had assured me the company was working to secure the long term future of the yards and I will be contacting BVT to demand assurances over their commitment to the Clyde yards and the long term future of Scotland's ship building expertise."