Shipbuilding Merger May Cut Jobs

Wednesday, May 10, 2006
Britain’s three big shipbuilding and defense groups have held exploratory talks about creating a new company or alliance in a move that would put thousands of Scottish shipbuilding jobs under threat. BAE Systems and VT Group have tabled various alternatives for Britain's naval shipbuilding industry should they decide not to proceed with a bid for Babcock International, the warship builder and support services group. Under Takeover Panel rules, the two companies have until May 18 to decide whether to make an offer for Babcock. Alternative proposals could see the three shipbuilders take stakes in a new business or collaborate through a three-way alliance. The government endorsed the need for consolidation in the UK maritime sector in a defense white paper published in December. An alliance or combination would have far-reaching implications for Scotland's shipbuilding sector. The shipbuilding interests of BAE Systems and Babcock International are focused on Glasgow and Rosyth while VT Group is based in Portsmouth. BAE Systems Naval Ships employs 3,000 people at Scotstoun and Govan, while Babcock has 12,000 employees at Rosyth. Despite a current glut of orders, UK shipbuilding is forecast to have a severe oversupply problem in ten years' time. Steep job cuts are seen as inevitable. (Source: The Scotsman)

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