Select Committee on Work and Pensions Minutes of Evidence

Memorandum submitted by Scottish Enterprise (SHP 3)


  This submission should be read alongside the Clyde Shipyards Task Force Report[1] in which SE Glasgow played a leading role. SE does not wish to simply duplicate the contents of this report and this submission emphasises some of the main messages of the report, namely:

    —  Shipbuilding on the Clyde has a future if BAE SYSTEMS can deliver on the strategy presented to the Taskforce.

    —  Shipbuilding is a high value added industry demanding sophisticated engineering skills and offering sustainable opportunities for young people in the area. Attracting young people into the industry will be a critical issue if it is to thrive.

    —  Regenerating the communities damaged by the previous decline in shipbuilding remains a challenging task.

SE has a strong role to play in supporting the future of shipbuilding on the Clyde through the continued work of the Taskforce, through skills support and through investment in shipbuilding communities.


UK shipbuilding currently employs 24,000 directly with a further 50,000 involved in contract and supply. It turns over some £1.75 billion a year accounting for 1 per cent of world market share. Naval orders from the Ministry of Defence are currently providing the bedrock of demand with merchant ship deliveries running at around 25 ships per annum. In comparison the Dutch have order books running in excess of 200 per annum. [1]

1.  Scottish Enterprise (SE) were invited to lead a Taskforce chaired by the Minister for Enterprise, Transport and Lifelong Learning, Wendy Alexander MSP, in response to the announcement from BAE SYSTEMS that 1,000 employees were to be made redundant in the Upper Clyde shipyards.

2.  SE Glasgow led on behalf of the SE Network with Ron Culley managing the Taskforce's work and SE Glasgow's senior staff chairing three of the four sub-groups set up to look in detail at aspects of the challenge.

3.  Given the central role SE has played in the production of the Clyde Shipyards Task Force Report, this submission will be brief as SE fully supports the work of the Taskforce and the conclusions of the report.

4.  This submission will highlight the conclusions of most significance to SE, comment on the relationship with the Working Group examining the wider regeneration of the Clyde Waterfront and advise on progress being made towards implementing the recommendations.

5.  The Taskforce will meet twice during 2002 to review progress against each of the 29 recommendations [3]

Main Conclusions

6.  Shipbuilding on the Clyde has a future. If BAE SYSTEMS holds to the strategy set out to members of the Taskforce, there is a good prospect of an order book for a workforce of some 2,000 in the Govan and Scotstoun yards for at least another 10 years.

7.  With BAE SYSTEMS choosing to concentrate on naval shipbuilding, the decisions of the MoD will be critical. The Taskforce report outlined the schedule of warships for the MoD[5]. Securing a share of the orders for the 12 Type 45 destroyers, the four Alternative Landing Ships Logistics (ALSL) and the two aircraft carriers are all significant to the future of the Clyde yards.

8.  So too will be BAE SYSTEMS continued efforts to secure export orders and to match the packages offered by foreign competitors such as those from the Blohm and Voss yard in Hamburg which a delegation from the Taskforce visited [6]. Blohm and Voss are one example demonstrating that technical advances in commercial shipbuilding can sit alongside naval work and, whilst naval will be the main source of work for BAE SYSTEMS Marine, opportunities for securing appropriate commercial work should not be ignored.

9.  Shipbuilding is a high value added, knowledge intensive industry. The Taskforce were impressed at the complexity of the engineering skills involved in building modern, cutting-edge technology warships. Very little of the value of naval ships lies in the basic structure. Some 70 per cent is embedded in the sensor, weapons and control systems [7].

10.  If the Clyde is to retain a significant role in shipbuilding it is the design skills in these areas that will be crucial. The strategy framework for the Enterprise Networks set out in the Scottish Executive document "A Smart Successful Scotland"[8] stresses the importance of supporting ventures with high added value. Naval shipbuilding on the Clyde is clearly one such venture. SE will continue to play its role in supporting this venture through its leadership of the continued work of the Clyde Taskforce, its support for skills investment and its investment in community regeneration in Govan and Scotstoun.

11.  Another role SE must play is in assisting the recovery of the damaged shipbuilding communities. The effects of the previous long-term decline have been severe. Both the Govan and Scotstoun communities have seen the heart of their employment base wither as yards closed and as many of the mechanical engineering companies that supplied the yards lost their customer base.

12.  A previous study carried out by SE confirmed how far the shipbuilding cluster had collapsed with very little of the historic supply chains connected to the yards remaining [9].

13.  The consequences for unemployment, poverty and dereliction in the shipbuilding communities have been well recorded with both Govan and Scotstoun/Yoker now benefiting from Social Inclusion Partnerships. In Govan, SE Glasgow also continues to support Govan Initiative Ltd., a local economic development company initially set up by the Scottish Development Agency, Strathclyde Regional Council and Glasgow City Council to provide additional focus to economic development in an area of particular disadvantage and opportunity. Scottish Enterprise Dunbartonshire has and continues to work through the Clydebank Task Force to develop responses to the change in employment and industrial base of that area.

14.  There are several opportunities that SE can grasp to help Govan and Scotstoun continue their recovery. The strategic regeneration of the Clyde Waterfront is especially important and is explained below. Within the context of a strategy for the waterfront, SE and other partners can also support many of the individual projects outlined in the Taskforce report[10]. SE is committed to doing so.

15.  SE welcomes the Trades Unions and the Taskforce's success in reducing the immediate impact of BAE SYSTEM's redundancy programme, thereby helping to minimise further damage to these communities. SE has and will continue to assist in delivering support to those made redundant through short term training, re-skilling and careers support. Measures used include Modern Apprenticeships, Training for Work and REACT (a dedicated redundancy management organisation) which staffed the two Employee Support Centres (ESC) in Govan and Scotstoun. Both ESC's include a telephone based call centre helpline set up in partnership with the Scottish University for Industry.

The Regeneration of the Clyde Waterfront

16.  Regeneration of the Clyde Waterfront from Glasgow City Centre west to the Erskine Bridge can play a key role in ensuring that Glasgow and the wider conurbation builds on its growing reputation as a dynamic business location and an attractive place to live and enjoy life.

17.  In a developing partnership with three local authorities and the Scottish Executive, SE is taking forward a concerted effort to develop an investment plan to support the strategic regeneration of the Clyde Waterfront so that the future economic role of the riverfront will match its historic role in providing jobs for the West of Scotland. Work to build on existing strategies for particular locations on the Waterfront began following a meeting initiated by the Minister for Enterprise, Transport and Lifelong Learning in November 2001.

18.  The approach is to strengthen the connections between the actions of all the potential investors both public and private. Key existing proposals include the International Financial Services District centred on Broomielaw, Pacific Quay's Digital Media Campus, Clydeport and the Bank of Scotland's Glasgow Harbour project and the developing visions for North Renfrew and Clydebank.

19.  A strategic framework will be set out to give confidence to investors and citizens that partners have a clear ambitious vision for and commitment to the waterfront. Issues such as transport, river infrastructure, marketing and development funding will all be examined. It will be critical that the employment benefits from development should be accessible to local people and that the redeveloped waterfront should be as open as possible to the people.

20.  Specifically the work will:

—  Identify the full development potential of the area through a strategic benchmarking, market assessment and economic impact study;

—  Assess technical and infrastructure issues that may need to be addressed to achieve the potential of the area.

21.  The outputs of the first stage of the initiative will be discussed at a summit with the Minister, private sector investors, council leaders and chairs of the appropriate public sector bodies on 23 May 2002.


22.  Ron Culley has been asked by the Minister to chair two meetings—in June and in December—to review progress in the implementation of the Taskforce report. A schedule of progress to date has been compiled by the Scottish Executive and we understand that this will be submitted by them as evidence. We conclude our submission by noting in summary highlights of the progress so far made relevant to SE.

23.  SE welcomes the good news for BAE SYSTEMS Marine on progress in implementing its strategy for the Clyde yards. The signings of contracts for the two ALSLs and the six Type 45 frigates are both very encouraging. The announcement by Thales of its own strategy for the construction of the aircraft carriers also confirms that there is likely to be a role for the Upper Clyde whichever of BAE SYSTEMS or Thales wins the prime contracting office role. The full extent of the comparable man hours involved in each proposal however remains confidential and is consequently uncertain.

24.  In increasing the support to Govan and Scotstoun, SE Glasgow is currently completing the design and development of a fund in partnership with the Strathclyde European Partnership (drawing on European Regional Development Funds) and Glasgow City Council. It is hoped that a fund of £15 million can be secured. This fund will provide flexibility in responding to many of the project opportunities specified in the Taskforce report.

25.  Other opportunities—particularly the suggested "Institute of Science and Technology"—will need to be carefully considered in light of current initiatives such as the proposed Intermediate Technology Institutes. These Institutes are designed to allow universities to realise their intellectual property, through identifying research ideas suitable for commercialisation.

26.  The redundancy programme was delayed to ensure completion of the Auxiliary Oiler (Wave Knight) currently finalising outfitting at Inchgreen in Greenock. To date, some 122 of those made redundant have registered for assistance and of these, 43 have been placed in employment or training. Five have retired. This work will continue.

27.  In addition to the £15 million fund being considered by Scottish Enterprise, Glasgow City Council and Strathclyde European Partnership, SE has already set aside and is spending over £1 million of funds for the appropriate training, re-skilling and careers support.

28.  In conclusion, SE fully supports the work of the Clyde Shipyards Task Force, welcomes the Task Force report, will continue to work in partnership and play a significant role in the development and delivery of several of the key project recommendations.


1.  SSA Yearbook 2002, Shipbuilders and Shiprepairers Association

2.  Clyde Shipyards Task Force Report, Scottish Executive/Scotland Office/Department of Trade and Industry, January 2002, p16 -19

  3.  Clyde Shipyards Task Force Report, p12-14

4.  Clyde Shipyards Task Force Report, p41

5.  Clyde Shipyards Task Force Report, p31

6.  Clyde Shipyards Task Force Report, p34

7.  Clyde Shipyards Task Force Report, p41

8.  A Smart Successful Scotland, Scottish Executive, . . .

9.  Marine Engineering, Technologies and Services Cluster Analysis for Scottish Enterprise, Frontline Management Consultants and Ron Botham Associates, June 2000

  10.  Clyde Shipyards Task Force Report, p78

26 April 2002

1   Available from the Scottish Executive. Back

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