Future of BAE shipyards in balance

The UK defence group, BAE Systems, has dismissed reports of a boardroom disagreement ahead of the group’s interim results this week. Directors are meeting today to discuss the future of the company’s shipbuilding business, which has been put under review by Mike Turner, chief executive.

Reports at the weekend suggested some board members oppose the closure of the yards and are receiving support from the new chairman, Dick Olver. A spokesman insisted: “There is no furious row. There is no dissention. Of course, the future of the shipyards is under constant discussion but there is certainly not a division.” Privately however, reporters have been told that the latest rumours centre on directors wanting to keep shipbuilding and partnering with other yards such as struggling Swan Hunter, which warned earlier this year that it would be mothballed if new orders were not found within two years.

However, industry sources suggest that BAE is putting shipbuilding on the block to put pressure on the Ministry of Defence by claiming the company is not going to take on any more contracts in shipbuilding. There have been suggestions that the MoD could be drawing up plans for financial assistance for Swan Hunter, which the Government refuses to confirm. Talks between the yard and the MoD over changes to the transporter ships it is currently building are continuing, however.

Elsewhere, the MoD is threatening to blackball US defence groups unless they share technical data with British companies. UK rules allow arms companies to pass data to their US counterparts, but the reverse is prohibited, which the MoD argues prevents Britain and America working jointly on deals.