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Historic UK Shipyard to Shut Down

Friday, November 8, 2013

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Five centuries of shipbuilding will come to an end next year, as British defense contractor BAE Systems has announced plans to close its dockyard in Portsmouth, England, the home of the Royal Navy’s command.

Succumbing to a government austerity drive, a shipbuilding tradition that dates to the time of the Tudors will shut down in the second half of 2014, taking 1,775 jobs with it, the company announced Wednesday (Nov. 6).

Portsmouth Shipyard
UK Ministry of Defence

Budget cuts will end shipbuilding at the Portsmouth Dockyard in southern England after 500 years. Critics say the yard is being sacrificed to curry favor with Scottish voters.

An engineering team will be retained for new Type 26 warships that will be built in Glasgow, where BAE will consolidate its shipbuilding operations

Britain's largest military shipbuilder called Glasgow "the most effective location for the manufacture of the future Type 26 ships."

The layoffs amount to 1.2 percent of BAE's global workforce, the company said.

'Restructuring'

BAE announced the closure as part of an agreement "in principle" with the UK Ministry of Defence "to enable the implementation of a restructuring of its UK naval ships business."

The undisclosed cost of the restructuring will be paid by the Ministry of Defence, which also announced Wednesday that it had awarded contracts for three new Offshore Patrol Vessels to BAE. The ships will be built in Scotland for the Royal Navy.

Also announced was a related agreement will shift the majority of cost overruns on two Queen Elizabeth-class aircraft carriers now under construction at Portsmouth back onto BAE.

The ships are running more than a $1 billion over budget, and the government has been picking up most of that tab, in an agreement that Defence Secretary Philip Hammond called "lopsided and poorly constructed."

BAE also announced that the Ministry of Defence would invest more than £100 million ($161 million, 119 million euros) at the Portsmouth site "as the center of [BAE's] Maritime Services and high-end naval equpment and combat systems business."

Offshore Patrol Vessels
UK Ministry of Defence

The Ministry of Defence awarded a contract to BAE Systems to build three new ocean-going offshore patrol vessels in Scotland for the Royal Navy.

The series of agreements replace an unpopular 15-year Terms of Business Agreement (ToBA) that BAE signed in 2009 with the former Labour government.

Politics Eyed

The decision to close Portsmouth, in southern England, will spare BAE's shipyards in Govan and Scotstoun, Scotland.

The decision immediately sparked a public furor, with critics insisting that the English yard was sacrificed to gain favor with Scottish voters before next September's referendum on independence.

Prime Minister David Cameron denied the accusation, saying that the shipyard decision was made in the "national interest."

"These are extremely difficult decisions, and our first thoughts should be with all of those that are affected," he told Parliament this week during Prime Minister's questions.

David Cameron
Telegraph screen grab

Prime Minister David Cameron defends the decision before an angry Parliament.

He added: "We want our Royal Navy to have the best and most modern ships and the best technology.

"That means we will go on building warships on the Clyde [in Scotland], we will be announcing three new offshore patrol vessels, keeping that yard busy rather than paying for it to remain idle as the last government proposed."

Cameron also said that the job losses would not be as deep as portrayed.

"In Portsmouth, yes there will be job reductions, but there are many more people involved in ship servicing than in ship building, so the workforce will go from 12,000 to 11,000," he told the chamber.

Nevertheless, labor leaders called the decision a devastating blow to the region and the end of a proud historic tradition.

Waves of Layoffs

BAE has overseen multiple waves of layoffs in recent years.

In August 2010, the company announced the layoff of more than 2,000 employees in Sealy, TX (U.S.), after losing a contract to produce the Army's Family of Military Tactical Vehicles. Eight months later, 600 more positions at the same plant were struck.

In September 2011, BAE announced nearly 3,000 job cuts in its Military Air and Information and Shared Services businesses and at its headquarters at Farnborough, England.

The company has also seen smaller layoffs, both temporary and permanent, on both sides of the Atlantic in the last few years.

London's Telegraph offers a gallery of photos of the historic Portsmouth yard here.

   

Tagged categories: Economy; Government; Government contracts; Marine Coatings; Shipyards

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