For some time now, manufacturing has been in decline in the UK as demand for products such as steel and metalwork has dropped across Europe. This week, Tata Steel announced its plans to cut 900 jobs in the steel industry across the UK, a decision which is bound to take a heavy toll on communities in south Wales.
Unfortunately, this appears to be simply the tip of the iceberg for bad news in the manufacturing industry in the past few days, as defence giants BAE Systems is also considering downsizing in order to save money. The company has revealed that it is currently deciding which of its three UK shipyards is most dispensable in order to remain profitable in the future.
BAE Systems owns shipbuilding facilities in Portsmouth and also in Govan and Scotstoun on the River Clyde in Glasgow. While no closures have been confirmed, it is believed that the Portsmouth base is most at risk causing potentially hundreds of redundancies in the area.
Talks are expected to last until the end of this year, with directors of the company due to release a statement sometime before New Year’s Day. Of course, due to the nature of manufacturing at the Portsmouth yard, the Ministry of Defence will also have to be consulted throughout this period.
It is partly this tie to the government that has led to the need for a closure somewhere in the country, as due to spending cuts there is no longer the demand to keep three shipyards in operation. Last year, BAE Systems was heavily affected by the cuts to defence spending, causing a 14 per cent drop in annual sales and a fall in profits of 7 per cent to £2 billion.
The shipyards are currently working on two aircraft carriers, both known as the Queen Elizabeth in honour of Her Majesty’s Diamond Jubilee this year. Yet upon completion of these, there is expected to be a gap in production before work commences on the Type 26 Global Combat Ship building programme in association with the Royal Navy. Again, this is due to government cuts to the defence budget.
UK chief executive of BAE Systems, Nigel Whitehead, stated that environmental issues also played a role in the decision to examine the necessity of having three operational shipyards in the UK.
He said; “The issue is how to consolidate but make sure that we have preserved the capability to design and manufacture complex warships.
“We anticipate that there will be a big reduction in footprint and we anticipate that part of that might actually be the cessation of manufacturing at one of the sites.”
While closure of the Portsmouth shipyard would be a problem in the area, given that 1500 workers are employed by the company there, the closure of one of the Glasgow sites could be disastrous in a region that already boasts higher unemployment than many UK cities.
However, spokesman for the manufacturers’ union, Jamie Webster, believes that the two Clyde sites will be saved thanks to the competency of workers there. Yet he has pressed for the company to make any announcements regarding redundancies as soon as possible so workers can begin searching for alternative employment should the need arise.
He said; “Obviously going into the yard this morning there will be heightened apprehension.
“I have emphasised very strongly to the company that the sooner the announcement is made the better. The delay in announcement will not help anybody.
“Obviously that would be in the next two to three weeks, before Christmas, so that we know exactly where we are in relation to the future – although I am very confident that the Clyde will come through this.”
Should the Ministry of Defence be pushing for a larger budget from the Government to prevent large scale redundancies like this, or can the money from defence be better used elsewhere in our society?
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