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Leaked memo raises questions on future of Portsmouth shipyard
There were new fears for shipbuilding in Portsmouth today after it emerged plans were being drawn up for the possible closure of two shipyards.
The MoD has admitted that there will be reduced demand for Royal Navy ships in the years to come.
And a leaked memo from BVT Surface Fleet's chief executive Alan Johnston says the MoD is willing to pay for thousands of redundancies to scale down Britain's capacity for building warships once the contracts to build two new supercarriers are complete in 2014.
The memo, leaked to BBC Scotland, shows Mr Johnston forecasting savings of up to half a billion pounds from the closure of two out of three yards after the contract ends.
That could signal the end for shipbuilding facilities at at two shipyards.
Currently there are three – one at Portsmouth and two in Scotland, at Scotstoun and at Govan, Glasgow.
BVT insists the memo only outlines the worst case scenario and insists its order book is crammed with orders.
When contacted by The News, the MoD admitted there would be reduced demand for Royal Navy shipbuilding in the future but said no decision had yet been made on closing down any shipyards.
A MoD spokesman said: 'The reality is that demand will drop.
'There will be a need for changes in our relationship with industry as demand decreases.
'There has not been a decision on whether this will happen or not.
'There has been no decision yet on cuts and certainly not a decision on where cuts will fall.'
The MoD spokesman added: 'Under the Defence Industrial Strategy 2005, we've been in discussion with the ship-building industry over the opportunities for long-term partnering arrangements which incentivise industry to drive down costs but allow increased profits where these are earned by improved performance.
'Negotiations with industry partners are still ongoing and no decisions have been taken, therefore. It would be inappropriate to comment further.'
Portsmouth City Council leader Gerald Vernon-Jackson said that closing down Portsmouth's dockyard would be a disaster for the city.
'It's worrying, it would not only be a disaster for Portsmouth it would be a disaster for the nation,' he said.
'Not only in the short-term but in the long-term it says we're no longer prepared to defend our trade and no longer prepared to have an independent navy.
'As an island nation we just can't do that, we have to have a UK ability to build warships.'
BVT has moved to reassure workers about its future operations but said it had planned for the 'worst case scenario'.
A BVT spokesman said: 'BVT Surface Fleet has a solid order book for the next 7-8 years and is in the strongest position that the shipbuilding industry in the UK has seen for a generation.
'As part of its prudent long-term planning, it considers a broad range of options, including worse case scenario planning.
'However, it is also planning for and confident in an extremely positive outlook. To that end, it continues to invest in designs, facilities and skills to secure the long-term future of both its Portsmouth and Clyde facilities.
'BVT continues to win orders both in the UK and overseas and is progressing well with a unique 15 years partnering agreement with the MOD that will further secure that future.'
MEMO NOTES
In the memo, Alan Johnston, chief executive of BVT Surface Fleet, says: 'BVT has committed to review its industrial footprint in light of the projected reduction in UK shipbuilding requirements post completion of the CVF (aircraft carrier) programme (current projections show that at the time the MoD requirements could be delivered from a single BVT facility) and MoD has committed to underwrite the necessary closure costs.
'These one-off rationalisation/investment costs are estimated to be between 115m to 165m for redundancies, site closure, environmental clean-up, equipment disposal and asset write-downs.
Discussions are under way to agree the specific mechanism by which they will be recovered (e.g. via overheads over an agreed time frame).'
CUTS COULD HAVE HUGE IMPACT ON THE ECONOMY
Cuts to the carrier programme would have a huge impact on the local economy.
A consortium of companies, including Portsmouth shipbuilders BVT are involved in The Queen Elizabeth Class Aircraft Carrier project.
As part of the deal, 1,300 Portsmouth workers will construct the massive hull sections of the carriers with a further 1,700 jobs created in support roles.
Dr Michael Asteris, a defence economics expert at the University of Portsmouth, said: 'Eight per cent of south Hampshire relies on Portsmouth naval base in one way or another.
'Our research has found 15 per cent of people in Gosport, 10 per cent of Portsmouth and eight per cent of Fareham are dependent on defence funding whether they are in the services or civilians. 'The naval base is not as big as it once was but it is still quite significant as a stabiliser for the local economy in the recession.
'After the Type 45 destroyers, the carriers are the bulk load for the naval base. People will lose their jobs if it is affected.'
Charlie Thompson, spokesman for BVT, said he was confident the report calling for cuts to the programme would not affect the project's progress. We remain very committed to delivering the capabilities of the Queen Elizabeth carriers on offer in conjunction with the MoD,' he said.
Mr Thompson estimated cancelling the carriers would cost 10,000 jobs in the maritime industry and many more in the supply chain.
'There are many contracts already in place. It would cost millions of pounds to cancel,' he said.
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Saturday 11 February 2012
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