Contracts to be awarded to Glasgow shipyards

An agreement to be signed within weeks will help ensure some defence work for the Clyde for the next 15 years, the Scottish Secretary said today.

And this could include work on a new generation of frigates, it was later revealed.

Jim Murphy said the "terms of business agreement" between the Ministry of Defence and warship builder BVT would offer "real assurance" for future jobs.

He was speaking after a visit to BVT's Scotstoun yard in Glasgow, the day after a leaked memo suggested that two of BVT's three yards could close after a contract for two giant aircraft carriers is completed in 2014.

The author of the memo, BVT surface fleet chief executive Alan Johnston, who accompanied Mr Murphy on today's visit, insisted the document was no more than the type of "worst case scenario planning" conducted by all prudent firms.

He said: "What we are looking at in these stolen documents are planning scenarios.

"We are looking at planning scenarios on the downside, but our aim is to drive for the upside of this business – and we see a very solid future here on the Clyde."

Mr Murphy insisted: "There's seven years of work here, and we are looking over the next few weeks to sign an agreement that would guarantee some work for the next 15 years.

"Our message as a Labour Government, trade unions and management is that the Clyde has a remarkable history in shipbuilding, but it also has a big future."

BVT employs 7,000 workers at the Govan and Scotstoun yards in Glasgow, at Portsmouth, and at a facility in Bristol.

The leaked memo contemplated the period after work on the two giant aircraft carriers is finished, and said MoD requirements could be delivered from a single BVT facility – and that the MoD had "committed to underwrite the necessary closure costs".

The "terms of business agreement" to be signed shortly is a 15-year pact setting out how the MoD and the company will work together.

It was expected to include provision for up to 18 new-generation frigates to replace the Type 22 and Type 23 vessels.

Mr Johnston said that, under current planning, steel for these could begin to be cut in 2013 and Govan could be a contender – "I would suspect that's a prospect".

Decisions on where these would be built had not yet been made but the firm had the flexibility to switch work between its yards – as shown by work now under way at Scotstoun on vessels which had started to be constructed at Portsmouth.

Mr Johnston said: "First, this is the first time in a generation that a shipyard can look seven years forward and see a steady full order book.
"We have to be confident that we are signing a 15-year agreement with the MoD which commits sole-source activity – BVT – to provide the Future Surface Combatant (the frigates).

"In terms of the agreement, I am confident we will have those ships in design and construction over the next few years, ready to start steel cutting in 2013."

John Dolan, Scotstoun convener for the GMB union, insisted his industry had a good future.

He said: "This industry is not closing.

"Whether anybody offers money for redundancy or not, they have to take into consideration the views of the workers – whether they want redundancy or not.

"We have been in worse corners before, and we have fought them, and we will do it again if necessary.

"But at this stage, it's a huge future.

"We have no problems with the company or the Government about the future of shipbuilding on the Clyde."