Letter to the Committee from the Department
of Trade and Industry (SHP 7)
Dear Mr Whatley
The Minister of Energy and Industry, Brian Wilson,
has asked me to write to you to submit the Department's written
evidence for your Committee's Enquiry into Employment in Shipbuilding
on the Clyde. Mr Wilson is pleased to have this opportunity of
doing so as he believes that this Government has a good story
to tell relating to support for the shipbuilding industry across
the whole of the United Kingdom. Government Ministers have been
regularly saying publicly that shipbuilding is important and have
taken a number of tangible steps to support the industry's efforts
to improve its position. Government also recognises the wide range
of high value skills inherent in modern shipbuilding and there
are projects in place to improve training capacity.
A great deal of important work has been carried out
for the benefit of the UK's shipbuilding industry and there have
been many new initiatives to assist the industry to improve its
competitiveness and win new orders. Rather than detailing everything
in this letter, I am attaching an explanatory Annex prepared by
the Department of Trade & Industry's Marine Unit.
At the same time, Mr Wilson appreciates the uncertainty
which arose on the Clyde as a result of the redundancy programme
announced last year by BAES Marine Ltd, which led to the establishment
of the Clyde Task Force and on which Mr Wilson was pleased to
sit. Indeed, BAES' previous experience of the Prestwick Task Force,
which Mr Wilson established when Scottish Industry Minister, was
significant in encouraging BAES to participate. The redundancies
on the Clyde arose from short-term gaps as BAES Marine's work
tailed off before the start of manufacturing on orders subsequently
secured from the MoD, principally the Alternative Landing Ships
Logistic.
At this point Mr Wilson wishes to commend the very
constructive work undertaken by the Clyde Task Force which, amongst
other conclusions, succeeded in reducing the number of jobs lost
and identified potential future markets for Clyde-built ships.
It is certainly true that the merchant shipbuilding
market is difficult, with low prices and excessive capacity across
the whole of Europe and the world generally. But the Ministry
of Defence will, in its own evidence, be pointing to the very
substantial order book for the future which includes the two Alternative
Landing Ships Logistic under construction at Govan and work on
six Type 45 Destroyers, with an order for up to a further six
Destroyers likely in due course. A substantial part of the work
for these Destroyers will be undertaken on the Clyde, with the
First of Class being assembled and launched at Scotstoun. A potentially
even larger prize is the work to construct and assemble two new
aircraft carriers, the largest warships ever to be built in the
UK. Although a decision on precisely how and where these vessels
will be built is some months away—and will be taken by whichever
of BAES and Thales wins the Prime Contract Office competition—the
programme is so large as to offer tremendous opportunities for
UK shipyards. Mr Wilson therefore believes that, thanks to MoD
orders, the Clyde has a certain work-programme for at least the
next 10 years, certainly unparalleled in the recent history of
the Clyde.
Even though all the initiatives on productivity,
marketing and training set out in the Annex are proceeding well,
the Government is not sitting back complacently and awaiting results.
Ministers are continuing to improve their involvement with and
support for the industry. Only recently, there were further improvements
to the Shipbuilding Forum and Government's relations with the
industry. The Shipbuilding Forum, under the Chairmanship of Brian
Wilson, agreed to expand membership of the Forum and to establish
a high-level Steering Group which will be responsible for determining
and driving forward the industry's agenda for further improvements
to competitiveness.
The Steering Group and Forum will in future be chaired
by a senior industry representative, to give even greater "buy-in"
from the industry, though Ministerial involvement will in no way
be diminished. The Steering Group is actively working on a Strategy
Implementation paper which it is intended would be adopted by
the whole Forum, including the Government Departments sitting
on it. And, finally, the Steering Group will be considering whether
the appointment of a "Maritime Industry Coordinator"
would create an additional asset in bringing together the wide
range of manufacturing, employment and academic sectors of this
very important industry—both of these were Recommendations
in the Clyde Task Force Report.
As I said at the outset, Mr Wilson is pleased to
have had this opportunity of setting out the very comprehensive
range of measures that Government has introduced to support the
shipbuilding industry and the very close cooperation that exists
between employers, unions, suppliers, customers and Government
to ensure the industry achieves its full potential. The industry
works in a challenging global market environment but there remain
opportunities the Government trusts the industry and its workers
will meet.
Mr Wilson also looks forward to giving oral evidence
on 19 June, when I shall be the accompanying official.
Yours sincerely
N R Brice
Marine Unit
1 May 2002
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