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1,500 BAE jobs threatened at Portsmouth shipyard

Defence group launches review that could end shipbuilding on south coast

Trade unions and politicians have urged BAE Systems to clarify the future of its Portsmouth shipyard after the defence group launched a review that puts at least 1,500 jobs under threat on the south coast.

The UK’s largest manufacturing employer is mulling the closure of its shipbuilding operation at Portsmouth, which accounts for about half of the 3,000 BAE staff employed at the site. The rest work on services, maintenance and upgrades of the Royal Navy ships also based there.

According to union and Whitehall sources, the shipbuilding side of the business in Portsmouth is most at risk from “restructuring” by BAE, which would allow the more profitable servicing unit at the dockyards to continue. The defence group has appointed LEK Consulting, a management consultancy, to review the future of its shipbuilding and ship maintenance arm, which also includes two sites on the Clyde, at Scotstoun and Govan.

Prospect, the union that represents 300 BAE workers at Portsmouth, said it feared the company would announce the closure of the shipbuilding side of the business. “There are so many rumours and reports about what is going to happen and that is unfair on all the workers,” said John Ferrett, a Prospect official.

The GMB union’s Gary Cook said there was only a few years’ work left at Portsmouth, although the firm could benefit from export orders for the Type 26 combat ship, which is being built for the Royal Navy but is also aimed at foreign buyers of frigates. “The UK is very well placed because we have a reputation that is second to none, with a highly skilled and motivated workforce,” said Cook.

The Unite union warned that “critical skills” could be lost. Ian Waddell, a Unite national officer, said: “Workers and their families at the Portsmouth shipyard will be deeply worried.”

News of the threat to BAE’s Portsmouth operation comes before publication on Wednesday of growth figures for the UK economy, which many analysts expect to show a small fall in output in the final three months of 2011.

Mike Hancock, Liberal Democrat MP for Portsmouth South, where the yard is sited, said BAE appeared to be playing a game of brinkmanship. “I think this is a shot across the government’s bows by BAE, saying that if you don’t give us work we will shut the shipbuilding side of things,” he said. Hancock added that closing the shipbuilding operation would have a “catastrophic” effect on the area.

Workers at the 500-year-old Portsmouth dockyard – where the Tudor warship the Mary Rose was built – have been building hull sections for the HMS Queen Elizabeth and HMS Prince of Wales aircraft carriers but are not guaranteed to get the Type 26 work.

Penny Mordaunt, Conservative MP for Portsmouth North, said she was “deeply concerned” by the threat of job losses.

If the shipbuilding is wound down, the Ministry of Defence will have to bear costs that could run into hundreds of millions of pounds under an agreement the MoD signed with the company in 2009. This guaranteed BAE a minimum of £230m a year in shipbuilding and support work over 15 years. The agreement can be cancelled at any time but the MoD would be “liable for remaining industry closure costs and compensation to BAE Systems for their lost investment”.

In 2010, the cancellation cost was estimated to be £630 million.

Prospect said BAE appeared to be laying the groundwork for the closure of the shipbuilding yards when it announced two months ago that it was separating the service and support work into a different business. “They disaggregated the two sides, having spent three years before that bringing them together. It seemed to us that they were separating all the profit-making parts from the loss-making parts.”

A BAE spokesperson said: “As part of our business planning activity, we are reviewing how best to retain the capability to deliver and support complex warships in the UK in the future. This work is ongoing and we will keep our employees and trade union representatives fully informed as it progresses.”

Defence cuts have already forced BAE to cut 3,000 jobs at its military aircraft operations. The group employs 100,000 people and has significant presence in the US, which accounts for about half of its sales.

The MoD is set to axe up to 60,000 military and civilian posts in the next eight years, and is in the process of a second round of a redundancy programme that was launched last Spring.

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