Shipbuilders Pin Merger Hopes on Orders for Military Vessels

Monday, January 22, 2007
According to reports, BAE Systems and VT Group plan to relaunch their British shipyards as big exporters of warships if a planned restructuring of their interests can be agreed. BAE and VT, formerly Vosper Thornycroft, are in talks to merge their shipbuilding assets, which include the Govan and Scotstoun yards on the Clyde and VT’s Portsmouth dock. The Times has learnt that the operational plans are well advanced and the aim is to create an entity capable of representing the UK in international markets. Britain’s once-dominant shipbuilding industry has been in decline since the end of the Second World War. British yards still build equipment for the oil industry and some specialist vessels, but the industry moved to countries such as South Korea and Japan in the 1960s and is unlikely to return. British shipbuilders are pinning their hopes and ambitions on the military sector. Domestic military procurement in the past focused on competition, with contracts awarded between yards just often enough to keep them open. These yards then went into the international market to supplement their work with export orders. Yet it has become obvious that Britain has not been overwhelmingly successful with this model. Last week VT won a rare export order for three patrol ships worth £400 million from Oman. BAE’s last export order was in 1999 for a £600 million, three-ship deal with Brunei. Those three ships are parked on the Clyde awaiting the end of an arbitration dispute with the Sultan of Brunei, who claims that the vessels are not as he ordered. The result of this arbitration could come next month. Source: Times Online

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