Alf Young: Shutting up shop and shipping out

Scotstoun shipyard on the Clyde, a location that encapsulates the heritage of the industry. Picture: Ian Rutherford

In the centre of my village stands a quaint, single-story building. Our village club, in form, perhaps, more suited to the Cotswolds than the Campsies.

Our club was built in 1911. It was a generous gift to the community from a recently-arrived local resident, Alfred Fernandez Yarrow. I’ve been thinking about our benefactor this week as the future of shipbuilding on the Clyde has again convulsed political debate, this time with a constitutional twist.

The shipyard Alfred Yarrow built on farmland on the edge of Glasgow is, today, one of the two BAE Systems yards that have survived the latest rationalisation of UK shipbuilding, this time at Portsmouth’s expense. But survival is still costing more than 800 skilled jobs here in Scotland.

The yard they now call Scotstoun launched its first destroyer in July 1908. Anyone steeped in the Clyde’s maritime story will always think of it as Yarrows. However Alfred Yarrow’s venture wasn’t Clyde-built from the start. He actually began building his warships, as a 23-year-old, in 1865. In London. On the Isle of Dogs. Tempting fate he launched his yard at Folly Wall in Poplar.

Yarrow’s original business thrived. He was an innovator. He was exporting to Africa. Even South America. But he could see risks looming too. Costs were rising. Steel had to be brought in from distant parts of the country. Other Thames yards were giving up the fight. Alfred Yarrow cautioned his senior staff against thinking they were so clever they could keep going when rivals were going under.

Despite being the wrong side of 60, Yarrow resolved to take his business – lock, stock and barrel – to a part of the UK where building ships was still a growth industry. When word got out, he was bombarded with offers from councils and dock authorities throughout Great Britain to build his new yard there.

More than 400 invitations flooded in. Come here. No, come here. Yarrow finally settled on Glasgow and a greenfield site on the edge of Scotstoun. Nearly 5,000 tonnes of machinery and materials were sent north by train. Three hundred of his London workforce decided to make the move too. Yarrow built brick cottages, each with its own garden, to ease the move.

The Yarrow cottages are still there. Like our village club, architecturally they look slightly out of place, now surrounded by stone-built Glasgow tenements. But they serve as a potent reminder that matching capacity to demand in shipbuilding is a challenge almost as old as the industry itself. And one that’s getting harder all the time as major new competitors, like China, enter the fray.

This week Nicola Sturgeon has been keen to steer the political debate beyond what impact a Yes vote next September might have on BAE Systems decision to favour the Upper Clyde over Portsmouth for building the next generation of Type 26 frigates. Scotland’s deputy First Minister wants us all to focus on how shipbuilding in Scotland can secure a strong long-term future by diversifying beyond a dwindling naval requirement for new warships to defend these islands, whatever their constitutional make-up after next year’s referendum.

Scotstoun, as we’ve seen, has specialised in naval ships ever since Alfred Yarrow first set foot on the Isle of Dogs, nearly a century and a half ago. But as far as its sister yard, Govan, on the other side of the river, is concerned, I’m afraid Nicola Sturgeon’s prescription is, in reality, a journey back to the future.

Since the end of the Second World War until 1999, all the groups that have built ships at Govan have been serial diversifiers. From the UCS work-in in 1971, through the creation of state-owned British Shipbuilders in 1977, till BAE, which by then owned Yarrow’s Scotstoun yard, leased the site from Clydeport as the new millennium beckoned, in each successive guise Govan has built a bewildering range of commercial shipping.

While nationalised, the yard launched a series of bulk carriers for Poland. And several grain carriers that plied their trade on Canada’s Great Lakes. There were general cargo vessels, some for a Scottish shipowner, Lyle Shipping. Even a large car ferry for service across the North Sea from Hull. Offshore supply boats. Dredgers. Coal boats. Even a couple of canal boats.

But look at Norway, Nicola Sturgeon insists, warming to a old nationalist theme. “A country the size of Scotland’s got 42 yards that produced a hundred ships last year.” If they can do it, why can’t an independent Scotland, with all our shipbuilding heritage? She didn’t mention that, between 1988 and 1999, Govan was owned by a Norwegian shipbuilder, Kvaerner. In that time Govan launched four liquified natural gas tankers and six chemical tankers. It also launched a sophisticated satellite launch control vessel. Even an icebreaker.

But Kvaerner walked away and no longer builds ships, even in Norway. Nor does its old Norwegian rival Aker. As well as acquiring Govan, Kvaerner had also acquired a dominant slice of Finnish shipbuilding after Wartsila Marine, the Baltic’s major cruise ship builder, had filed for bankruptcy in 1989. By 2005, Kvaerner, also teetering on the edge of bankruptcy, was swallowed up by Aker.

Aker then joined forces with Alstom in France, builders of Cunard’s Queen Mary 2, to try and create a dominant force in European cruise ship building. Aker had the bigger share. But within a year it was selling down its stake and in stepped a Korean conglomerate, SSangyong Heavy Industries, now known as STX Group.

By the start of 2009 STX ran the whole show. It had come from nowhere in less than a decade to become the fourth largest shipbuilding group on the planet. It was taken there by Kang Duk-Soo, a former salaryman in the cement division, who had climbed to the top on a growing mountain of unserviceable debt. STX is now on the rocks.

In January it disposed of its offshore and specialist ship division to Fincantieri, the major Italian shipbuilding conglomerate. Renamed VARD, that consists of five yards in Norway, two in Romania, two in Brazil and one in Vietnam. The dominant part of Norway’s shipbuilding success, as hailed by Ms Sturgeon, is now Italian owned and competing internally with lower cost yards elsewhere. And Norway’s state-owned oil company, Statoil, is procuring its current generation of drilling rigs from another South Korean group, Samsung.

Meanwhile in September STX Europe announced the closure of one of its Finnish shipyards, Rauma, next June with the loss of 700 jobs. And the troubled Korean group’s biggest creditor, the state-owned Korea Development Bank, is pushing for the other French and Finnish yards to be put on the market too.

Finland could end up with nowhere to build its own naval ships. Norway, on the other hand, has in recent years taken delivery of five frigates. All five were built by Navantia, Spain’s state-owned shipbuilder. There appear to be several aspects of Nordic shipbuilding prowess Nicola Sturgeon won’t want to emulate.