Memorandum submitted by the Scotland Office
(SHP 9)
Post-Devolution Developments
The interest of Scots in shipbuilding was again galvanised
in 1999 when the industry was rocked by the Kvaerner Group's decision
to exit shipbuilding, which put the Govan yard up for sale. The
prompt action taken by the then Minister for Business & Industry
at the Scottish Office, Lord Macdonald of Tradeston, in setting
up the Kvaerner Task Force help support the determination of the
workforce and their communities in securing a sale of the yard
and lift the immediate threat to shipbuilding at Govan. Following
the delivery of the Devolution settlement the Scotland Office's
most immediate involvement with shipbuilding was taken forward
by the then Secretary of State, Dr John Reid, in partnership with
the Scottish Executive, to assist negotiations with interested
parties, culminating in the sale of the land to Clydeport plc
and the transfer of operations and employees to BAE SYSTEMS.
This partnership with the Executive has become the
pattern for Government support in Scotland. The Executive are
able to support and identify the particular needs of Scottish
business, including shipbuilding, alongside the Scotland Office's
responsibility to represent those issues where relevant on matters
reserved to Westminster.
Fluctuating Fortunes
In 2000, shipbuilding on the Clyde comprised 4 yards:
BAE SYSTEMS Marine at Govan and Scotstoun on the Upper Clyde;
Ferguson Shipbuilders at Port Glasgow on the Lower Clyde; and
Ailsa-Troon at Troon on the Firth of Clyde. Although shipbuilding
was fiercely competitive in the commercial and naval markets there
had been some success. Ferguson's secured orders with Western
Ferries and Northlink for Ro-Ro's as well as an order for a tug
supply vessel for Stirling Shipping. However at Troon there was
more disappointing news when Cathelco announced that its Ailsa-Troon
yard would close. On the Upper Clyde yards although the BAE SYSTEMS
facilities benefited from the transfer of work to complete the
eight landing craft utilities and the news that two of the three
Type 45 destroyers, also for the MoD, would be built on the Clyde
there remained a significant gap in the order book. In 2001 the
sweetness of the MOD's decision to extend the Type 45 order to
six ships, with a significant involvement for the Upper Clyde
yards in a workshare arrangement with Vosper Thornycroft, was
tempered by the bitter news that BAE SYSTEMS considered and announced
that around 1,000 redundancies were necessary to address the gap
in the order book and their internal overcapacity.
Clyde Shipyards Task Force
The Scottish Executive Minister for Enterprise &
Lifelong Learning, Wendy Alexander, called an exploratory meeting
with the key stakeholders to investigate the options and scope
for action. The Minister of State Mr George Foulkes and the Minister
for Energy and Industry at the DTI, Brian Wilson represented the
Government on the Clyde Shipyards Task Force which was formed
in August 2001. The Department has already provided your Committee
with a supply of copies of the final report which was handed over
on 4 February 2002. In addition to the 29 recommendations identified
for action by the Task Force partners and for consideration by
other Departments there were some key outcomes. Importantly, the
number of redundancies required had been reduced to 450 by a range
of measures including voluntary redundancies, redeployment, retraining
and a redistribution of workloads as well as the award of the
contract for two Landing Ships Logistics from MoD. The 2 Employee
Support Centres which were established were also seen as a vital
support to those employees still likely to be affected by redundancy.
Scotland Office Activity
On the recommendations themselves, a key area of
support in which our Department is able to support the Upper Clyde
yards in realising its future success is in relation to Recommendation
5. In taking forward the recommendation, advice was sought from
the Ministry of Defence, who agreed to a continuing liaison so
that Scotland Office Ministers can lend support at the right time
to achieve maximum effect. Officials in the Department have established
arrangements with both the MOD's Defence Exports Services Organisation
(DESO) and BAE SYSTEMS Export Shipbuilding to identify key export
targets and opportunities and track progress to maximise the Secretary
of State and Minister of States opportunity to promote Clydeside's
interests. It should be recognised here that BAE SYSTEMS' Export
Shipbuilding achievements were awarded the Queens Award for Enterprise
in the International Trade category in April 2002.
Outlook
Mr Foulkes believes that the foundations for success
are now there. On the Upper Clyde the work for BAE SYSTEMS' Clyde
yards on six type 45 Destroyers, the award of two Landing Ships
Logistics and completion of the batch of smaller Landing Craft
Utility, are part of the biggest warship programme for many years,
and should secure work throughout the decade. For the first time
in generations this has given both yards a firm footing on which
to plan for the future. Alongside last year's addition of a new
Fisheries Research Vessel for DEFRA for Ferguson's puts the whole
of the Clyde on a much healthier footing.
17 May 2002
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