Uncertainty over BAE systems shipbuilding

The long-term future of shipbuilding in Glasgow is uncertain again after confirmation the two Clyde yards, Govan and Scotstoun, could be sold. BAE Systems is reviewing its naval business which is thought to have attracted interest from American defence firms and a rival UK shipbuilder.

As Europe’s biggest defence firm, the company generates larger sales in the US and mainland Europe than in Britain, where it has struggled to make naval programmes profitable. BAE Systems has contemplated a tie up with several large US companies in the past few years but, companies like aircraft builder Boeing, did not want to be involved in shipbuilding and the disposal of the shipbuilding business is seen as a move which will speed up a transatlantic merger.

A spokesman said that US defence firm General Dynamics and British shipbuilder VT Group had expressed interest. Analysts valued BAE’s shipbuilding operations at £350m to £400m. Formerly Vosper Thorneycroft, the Portsmouth-based VT Group declined to comment but industry sources said that the shipbuilder’s potential interest was likely to be limited to BAE’s surface ships business and related support services. VT is already involved with the Clyde yards on the building of the Type 45 frigates.

General Dynamics was seen as more logical for the submarine building facilities at Barrow-in-Furness, suggesting that BAE may be seeking two parallel deals. The latest company to be linked with BAE systems? shipbuilding business is the French defence giant, Thales, which, together with BAE, is involved with the carrier programme for the Royal Navy.