Tyne's last shipyard clings to hope of a future: The only company interested in buying the Swan Hunter shipbuilder, which made some of the world's best naval vessels, is expected to decide whether to proceed with a takeover today. Frank Goodwin reports

TYNESIDE has been synonymous with shipbuilding for generations. Daniel Defoe wrote in 1727: 'They build ships here to perfection. I mean as to strength and firmness to bear the sea.'

When the industry reached its peak immediately after the First World War, more than a dozen shipbuilders dominated the north and south banks of the river Tyne. But one was pre-eminent - Swan Hunter, known locally simply as Swan's.

During the 1960s, when supertankers such as the 253,000-ton Esso Northumbria were under construction, Swan's paid the daytime lighting bills of homes overshadowed by its giant hold. At nationalisation in 1977, 11,000 people worked for the company.

Swan's has built more than 2,700 vessels since 1860, including the Atlantic greyhound Mauretania, then the biggest ship in the world, which captured the Blue Riband in 1907 and held it for a record 22 years. The company's reputation with the Royal Navy is second to none. The Type-22 frigate HMS Chatham left Tyneside defect-free in 1989 - an event unique in post-war naval history.

But when Swan's failed to secure an order to build a helicopter carrier from the Ministry of Defence in May last year, the company, which had been privatised in 1986, went into receivership. More than 1,600 redundancies have taken place in the past 15 months, leaving just 630 workers at the yard. Swan's sole prospective buyer, the French Soffia- CMN group, has until tomorrow to complete a takeover deal, otherwise Price Waterhouse, the receivers, are expected to make Swan's prestigious design team redundant, effectively ending any hope of a going-concern sale.

Swan's closure would be a bitter blow for an area which has seen its coal and manufacturing industries devastated - the last pit closed in 1992, and all the other shipbuilders have long since disappeared.

The community united behind a campaign to save Swan's and preserve Tyneside's proud heritage. The singer-songwriter Mark Knopfler, of the rock group Dire Straits, who grew up in Newcastle, said in May last year: 'Lose your shipyard, you lose the skills, you lose the community. Keep the shipyard open.'

The workforce knew the only way it could assist the receivers in the search for a buyer meant continuing as before, building some of the world's best warships. Three frigates were under construction when the yard became insolvent - two have since been completed to time and budget as men, proud of their craft to the last, worked themselves out of jobs.

The last frigate, HMS Richmond, due to leave in November, has set a number of new quality records during sea trials. In an MoD report earlier this year, Commander Colin English wrote: 'This is considered to be a remarkable achievement considering the shipbuilders' receivership position and the problems facing the workforce.'

David Swan, 54, a project quality inspection manager, was among 140 redundancies at the yard in May. He was the last working link with the company's co-founder, Charles Sheridan Swan. Mr Swan said: 'My great- grandfather will be turning in his grave. The thought that all the effort he put into building up the yard was going to waste would anger him. After the way the yard has worked successfully and employed skilled labour over the decades, to see it thrown in the rubbish bin by the present government is disgusting.

'The problem is, the North- east of England is not a Conservative stronghold. They're not going to lose any seats if Swan's closes. People on Tyneside have done everything possible to keep the yard open, but I think this government is hell-bent on a policy of industrial genocide. It wants to get rid of all the so-called dirty industries - iron and steel, coal, heavy engineering and shipbuilding. Swan's is just the latest sacrificial lamb.'

Mr Swan, a widower, is restoring musical boxes and looking after his two sons. 'Some of the lads made redundant over one year ago are still coming into Swan's job shop on a regular basis and looking for work without success. The chances of finding something in this area are remote.'

Around Swan's Wallsend yard, one in three men is on the dole, in a region which has the worst unemployment rate in mainland Britain. A survey by the shipbuilders' union conducted last May revealed three out of four redundant workers had been unable to find a new job. Many feel betrayed by their former bosses, who bought Swan's from the Government for a cut-price pounds 5m, but failed to end its unhealthy reliance on dwindling MoD contracts.

Andy McClelland, a shipwright, was a member of Swan's so-called dinosaur squad. He said: 'We used to do all the heavy lifting. We were involved in the whole construction of the vessel, from laying the keel to the day it got launched. Then we would move onto the next one.'

Mr McClelland, 53, was among 510 workers made redundant last December. With the receivers unable to finance the company's severance pay scheme, he ended up with just pounds 5,000 redundancy from the Department of Employment, despite 30 years' service.

The day he was told of his redundancy Mr McClelland cried. 'I loved Swan's,' he said. Now he is getting used to his wife, a nurse, being the breadwinner. 'I feel very guilty that my wife is going out supporting me. I have been a bit down in myself, I don't know whether you would call it depression. I would like to think I was a carefree lad but that is not the point - we all want a job. I'm 54 next month, I would hate to think I am on the scrapheap.'

Like Mr Swan, Mr McClelland hopes to get his old job back should Soffia-CMN create an Anglo-French shipbuilding alliance. Iskandar Safa, the French group's chief shareholder, has offered to recruit from among those made redundant if he needs extra labour. In return, the depleted workforce has bent over backwards to accommodate Soffia- CMN's takeover demands. Last month it voted to accept abolition of Swan's lucrative severance scheme.

Now the whole deal hinges on Soffia-CMN and the MoD agreeing terms for the completion of HMS Richmond - on 9 August the MoD dropped the price by pounds 700,000, which has prompted the French group to review its whole acquisition plan. Yesterday Soffia-CMN rejected revised terms from the MoD, which incorporated a pounds 350,000 increase, and accused the Government of being indifferent to the plight of shipbuilding on Tyneside. Roger Freeman, the Minister for Defence Procurement, has called for new talks.

Mr McClelland said: 'If you buy anything you bargain, bargain, bargain. It's a cat and mouse game and unfortunately we are the mouse. The Government has been no help whatsoever but I feel it in my bones that CMN will buy Swan's' The 650 workers left at Swan's, together with the whole of Tyneside, are hoping Mr McClelland is not wrong.

(Photographs omitted)

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