BAE shipyards in Govan and Scotstoun could face closure by the end of the year

THOUSANDS of Scottish shipbuilding jobs have been thrown into doubt after defence giant BAE suggested it would close one of its three UK yards by the end of the year.

With only one of the yards outside Scotland and BAE contractually tied to retaining a presence in the UK if it is to win British defence contracts, the announcement has raised fears the prospect of independence could seal the closure of one of its centres north of the Border.

The firm employs about 3,500 workers in Scotland at Scots­toun and Govan. Its third main UK base is Portsmouth with about 5,000 workers, although fewer than half are employed in shipbuilding.

There is unlikely to be sufficient work available to keep all three busy and profitable as cuts in defence spending take their toll. BAE chief executive Nigel Whitehead said a decision was expected before the end of the year.

The Scottish Government has pledged to work with the firm to ensure that Scottish jobs are protected, but Labour says uncertainty over independence could seal the fate of one of the Clyde yards.

Mr Whitehead said: “The issue is how to consolidate… but make sure that we’ve preserved the capability to design and manufacture complex warships.

“We anticipate that there will be a reduction in footprint, and we anticipate… that part of that might actually be the cessation of manufacturing at one of the sites.”

It is believed at least 1,000 jobs are at risk, but it is unclear if more jobs in the supply chain could be hit.

BAE is a key partner in the construction of the two Queen Elizabeth class aircraft carriers being built at the Portsmouth yard and in Scotland.

However, after their construction is complete, there is only expected to be the need for one centre for naval shipbuilding in the UK to build the next generation of Type 26 frigates.

Earlier this year, BAE appointed consultants to carry out a review of the business. The firm’s yard in Portsmouth is widely believed to be the most vulnerable, but the prospect of Scottish independence will be a factor in the firm’s decision.

Scots will go to the polls in 2014 and a Yes vote could have ramifications for shipbuilding.

The “terms of business agreement” (TOBA), which BAE Systems has with the government, specifies that naval shipbuilding has to be placed through the firm in the UK.

Ian Davidson, the Labour MP for Glasgow South West, who represents the yards, said: “Obviously if Scotland were to separate from the United Kingdom, then the terms of business would preclude any orders for the Type 26 being placed on the Clyde.

“There is a major difficulty about the timing of any Type 26 orders. These are scheduled to be placed before the date of the referendum and it is likely that BAE will play safe and place the order with Portsmouth, where there is no danger of separation.”

The firm could also decide to break up the order in such a way that the first and possibly second ships were placed with the Clyde, the MP added, and the rest switched to Portsmouth.

But this latter scenario would mean “immense additional costs”, said Mr Davidson.

The MP chairs the Scottish affairs committee at Westminster, which has been conducting an inquiry into the impact on defence jobs of independence and its report is expected in the next few months.

A Scottish Government spokesman said: “BAE Systems is an important employer in Scotland. We will monitor this situation closely and work with BAE with the aim of ensuring any future plans protect the interests of employees and shipbuilding in Scotland.”

There are already concerns over the impact on the future of jobs at the Clyde yards after the carriers contract is completed, because there won’t be sufficient work in the interim until the frigates contract comes on board. Union leaders are scheduled to meet UK procurement minister Philip Dunn this week at Rosyth.

BAE says it has been working with ministers to explore all options for maintaining the UK’s shipbuilding capability.

The future of BAE’s three main shipyards has been in doubt for some time after the carriers contract is completed.

Westminster SNP leader and defence spokesman Angus Robertson said: “While it is dis­appointing that BAE Systems are reportedly considering closing one of their UK shipyards, the Scottish yards go into this pro­cess in a very strong position.

“Just last week leading defence expert Ian Godden highlighted the strength of Scotland’s defence industry because of its industrial and engineering capability. These strengths must be taken into account by BAE, and hopefully it will help them conclude that there should be no reduction in manufacturing capacity in Scotland.”

Jim Murphy, shadow defence secretary, said: “There must be clarity from the UK government over the future of these yards and workforces.

“Scotland has such a proud shipbuilding history and it should be a part of our future as well. We know for a fact independence would close the Scottish shipyards. The rest of UK would become a foreign country to Scotland, and the UK Royal Navy has not built a warship in a foreign land in living memory.”

The Ministry of Defence says it is up to the company itself to decide how best to deliver the naval vessels it has already agreed to produce.

Ian Waddell, national officer with the Unite union, said: “Workers are in a great deal of uncertainty. This has been hanging over their heads for months.

“There are a lot of skilled workers, with years of experience, at these yards.”