Swan?s swan song?

Swan Hunter, the last remaining shipyard on the Tyne, is likely to be mothballed with the loss of more than 300 jobs, all but marking the end of naval shipbuilding in the North-East. Swans has been given no alternative but to close its yard in Wallsend, North Tyneside, after the Ministry of Defence (MoD) yesterday announced it had ended its contract with the company because of spiralling costs on the construction of two 16,000 tonne displacement landing ship dock auxiliaries for the Royal Fleet Auxiliary service.

After months of speculation, the last uncompleted ship, the ?Lyme Bay?, will be transferred to BAE Systems’ shipyard at the Govan yard on the Clyde in Glasgow. BAE had won a contract to build two similar vessels. The other Swan Hunter ship, ?Largs Bay?, had been accepted off contract on April 25 ?in good condition?. The MoD said the contract with Swans no longer represented value for money after costs and delays on the ?Lyme Bay? reached an ?unacceptable? level and the shipbuilder was now unlikely ever to work in the defence industry again.

Swans owner Jaap Kroese said the yard would be mothballed in the next two weeks.

“I am not in the job to make people redundant, but that is what is going to happen,” he said. “About 300 jobs are going to go imminently, probably over the next few weeks.

There will just be a couple of people left and the yard will run on a care-and-maintenance cycle.” He said Swan Hunter’s future now rested on “new opportunities including ship breaking”. He added: “If successful, the transition may enable the company to sustain its current workforce of approximately 160 jobs.”

More than 1,600 ships, including more than 400 naval vessels, have been built at Swan Hunter, but the ?Lyme Bay? will be the first in the yard’s 145-year history to leave the yard uncompleted. The MoD will pay Swans in full for the work they have carried out on the ?Lyme Bay?, which is heavily over-budget, a year overdue and still months away from completion. The cost of the two Swan Hunter ships is £309m – far more than the original contract price in 2002. The MoD confirmed that this figure is set to increase further. It said: “The MoD will make payment to Swan Hunter in full and final settlement for work done up to the date of closure in accordance with the terms of the settlement.”

Yesterday, Defence Procurement Minister Lord Drayson said: “The cost growth and delays on this project have been unacceptable. “The Ministry of Defence has reached the conclusion that the contract no longer represents value for money. We need to act to bring certainty to the programme.”

David Bowles, chairman of Northern Defence Industries, which represents the defence manufacturer sector across the region, said the future looked extremely bleak for Swans.

“It is a huge shame for the North of England that this will be the last complete naval ship we will see being built in the region,” he said. “We all feel very sorry for everybody at Swan Hunter and for Jaap Kroese, who worked very hard and invested a lot of money.

But the demands of the contract were just too much for the resources of the yard.”