U.K. Prime Minister David Cameron is closing Portsmouth shipyard in “the national interest,” putting 940 shipyard workers out of work in 2014 at BAE Systems naval ships systems business.
In all, BAE will see a total employee loss of 1,775 including the 940 from Portsmouth, with another 835 from Filton, Glasgow and Rosyth, through 2016, the company said in a statement Nov. 6.
The U.K. Ministry of Defense (MoD) will pay for the restructuring.
PM David Cameron said while the BAE shipyward workforce would drop from 12,000 to 11,000 there is plenty of work to come, according to a BBC report.
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| Queen Elizabeth Class Aircraft Carrier Photo: BAE Systems |
Defense Minister Philip Hammond told Parliament in a statement carried by BBC: “The loss of such a significant amount of jobs is regrettable but was always going to be inevitable as the workload associated with the carrier build comes to an end.”
MoD plans to commission three new ocean going offshore patrol vessels for the Royal Navy. They will be built By BAE on the Clyde in Scotland to sustain jobs in the warship-building industry–expected to bridge the gap between completion of the two aircraft carriers and the start of Type 26 Global Combat Ships. MoD would have had to pay BAE for the yard for periods when the yard was idle.
Additionally, Hammond said the government will invest more than $160.8 million in Portsmouth, which will be home to the HMS Queen Elizabeth and HMS Prince of Wales aircraft carriers.
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| Royal Navy River Class Offshore Patrol Vessels Photo: MoD |
BAE said it reached an agreement in principle with the government to allow the restructuring of its U.K. naval ships business.
The agreement includes: restructuring of the contract for the Queen Elizabeth Class Aircraft Carrier program; provision of additional shipbuilding work before the start of the Type 26 Global Combat Ships program; and the rationalization of the U.K. naval ship business to match future capacity requirements.
In 2009, BAE entered into “a Terms of Business Agreement (ToBA) with the MoD that provided an overarching framework for significant naval shipbuilding efficiency improvements in exchange for commitments to fund rationalization and sustainment of capability in the sector,” the statement said.
The agreements revealed Nov. 6, with an anticipated contract for the design and manufacture of the Type 26 Global Combat Ships program, will progressively replace the ToBA, the statement said.
BAE, joined with Babcock, Rolls-Royce and Thales in the Aircraft Carrier Alliance, has agreed to revised terms of the Queen Elizabeth Class Aircraft Carrier contract. The contract will be amended to accommodate program changes and activities previously excluded from the contract, the statement said.
“Under the new Target Cost contract, the industrial participants’ fee will move to a 50:50 risk share arrangement providing greater cost performance incentives,” the BAE statement said. “The maximum risk to the industrial participants will continue to be limited to the loss of their profit opportunity.”
The revised contract also reflects the increased maturity of the program, the company noted, with structural assembly of the first of class vessel now substantially complete.
A significant reduction in workload will follow the peak of activity on the Aircraft Carrier program, the six Type 45 destroyers and two export contracts.
“The anticipated Type 26 program will, in future years, address some of that workload reduction,” the statement said. Meanwhile, a proposed contract for three Offshore Patrol Vessels will provide additional capability for the Royal Navy and sustain key shipbuilding skills.
Subject to consultation with trade union representatives, BAE proposes to consolidate its shipbuilding operations in Glasgow with investments in facilities to create a world-class capability, positioning it to deliver an affordable Type 26 program for the Royal Navy, it said.
Under these proposals unveiled Nov. 6, shipbuilding operations at Portsmouth will end in the second half of 2014. Subject to consultation, Lower Block 05 and Upper Blocks 07 and 14 of the second Queen Elizabeth Class Aircraft Carrier will be allocated to Glasgow.
When job cuts go into effect in 2014 at Portsmouth, it will bring 500 years of shipbuilding there to an end. Portsmouth, vital embarkation point for D-Day in World War II, is home to the Royal Navy and Royal Marine Commandos.
Portsmouth also is where Henry VIII’s flagship the Mary Rose was built and where Nelson’s flagship HMS Victory, the victor of Trafalgar and oldest commissioned warship in the world, is docked. The Royal Navy’s museum is located there, too.
Implementing the restructuring will sustain BAE’s ability to deliver complex vessels to the Royal Navy and ensure employment for other employees across the United Kingdom.
BAE’s statement said the company remains committed to continued investment in the Portsmouth area as the center of its Maritime Services and high-end naval equipment and combat systems business.