Babcock to give Rosyth yard the kiss of life

Chris Godsmark Business Correspondent
Tuesday 26 November 1996 00:02 GMT

The controversial privatisation of Rosyth naval dockyard was finally secured yesterday when the Government announced the sale of the facility to Babcock International, the troubled engineering and contracting group, for an undisclosed price.

Announcing the decision, the Ministry of Defence also pledged to provide work to refit Royal Navy aircraft carriers and nuclear submarines which should secure more than 3,000 jobs for the next five years. Rosyth's trades unions, which had earlier fought the sell-off, described the decision as a "fait accompli".

The news ends a long saga in the turbulent history of Rosyth, which was put up for sale by the Ministry of Defence three years ago and subsequently threatened with closure. Serious negotiations with Babcock had dragged on for more than two years.

The price tag paid will not be revealed until the contract is officially signed, though it is believed to be at the lower end of a range of between pounds 20m and pounds 30m and is slightly less than analysts had expected. Dr John Parker, Babcock's chairman, said it would be paid out of the company's net cash reserves of more than pounds 35m.

James Arbuthnot, the minister for defence procurement, said the deal would save taxpayers some pounds 100m over the next 10 years and would give employees at Rosyth a long-term future.

He said the MoD would be using the yard for the forthcoming refits of two nuclear-powered submarines, HMS Sceptre and HMS Spartan, along with the refits of the Navy's aircraft carriers, HMS Invincible and HMS Ark Royal, which will begin in 1998 and in effect give the yard a full order book.

Dr Parker said the work would provide stability for the workforce of 3,200 people beyond the year 2000, though the long-term aim was to diversify into non-Government contracts.

He explained: "The allocated workload gives work for about five years at current capacity levels and then it's up to us to become more competitive and get work from outside."

Rosyth had recently won three other contracts from the Royal Navy: decommissioning the Polaris submarine HMS Resolution and the pounds 30m refit of the destroyer, HMS Cardiff.

The sale also marks another stage in Babcock's struggle back to profitability after disastrous losses in its materials handling division. Profits last year fell from pounds 7.8m to pounds 3.1m.The guaranteed work from Rosyth, which the company has managed since 1987, provides annual revenues of over pounds 200m, accounting for the major chunk of its facilities management business.

Rosyth began life during World War One as a battleship base, and gradually moved into refitting work. By the 1970s it was concentrating on refurbishing nuclear and conventional submarines and the Royal Navy's shrinking fleet of destroyers and support ships.

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