Future of British shipbuilding in the balance

The future of hundreds of British shipyard jobs could be decided this week when executives from Britain’s leading shipbuilders meet ministry of defence officials to review the Royal Navy carrier programme.

Kellogg Brown & Root, a subsidiary of controversial US defence contractor Halliburton, is expected to be appointed to the role of project integrator for the CVF project within the next two weeks. Shipbuilders are concerned that the company will press for its oil production platform yard at Nigg, near Inverness, to be used to assemble the 60,000 tonne vessels. Nigg, a huge but mothballed facility on the Cromarty Firth, had its heyday during the 1970s and 1980s offshore construction boom, but has since struggled to find work. The assembly work had been earmarked for Babcock International’s Rosyth yard near Edinburgh.

If KBR is appointed, it is almost certain to trigger a political row with warnings that it could lead to the loss of more than 1,000 jobs at Rosyth. However, Geoff Hoon, the defence secretary, is said to have pledged that the work will go to Rosyth. The integrator role is understood to be a £5m contract to add extra project management but it is unclear whether it would give KBR a role in allocating assembly work to other yards.

Babcock is believed to have warned the MoD that it will be forced to end shipbuilding at Rosyth if it does not receive work on the carrier programme and would have to lay off workers next year if it fails to get the contract. The MoD has agreed to underwrite the costs of redundancies at the yard but only until October, making an early round of job cuts more likely. The prospect of a furious backlash in Scotland and lobbying by the shipbuilding industry in Whitehall could prompt a last-minute reversal. An alternative to KBR as the project integrator could be British construction firm Amec, which was lined up for the role earlier this year.

Some industry executives have warned that the involvement of KBR could jeopardise plans to consolidate the shipbuilding industry. Workers at Scotland’s remaining shipyards would benefit from an integrated strategy, with BAE Systems’ naval ships division ? based on the Clyde at Govan and Scotstoun ? in the frontline of any policy shift. The yards are already building the new type-45 destroyer and will construct massive sections of the aircraft carriers, work which is being split with French defence firm Thales.

The carriers, which will be the largest and most powerful yet constructed in the UK, have provisionally been named Queen Elizabeth and the Prince of Wales. The target dates to have them in service with the Royal Navy remain unchanged at 2012 and 2015.