(c) crown copyright
Catalogue Reference:CAB/129/159/26
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J
IS D O C U M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y S
T
C P ( 7 1 ) 126
GOVERNMENT
COPY NO
0
6
2 N o v e m b e r 1971
CABINET
T H E S T A T E OF THE S H I P B U I L D I N G
INDUSTRY
N o t e b y the S e c r e t a r y of State f o r T r a d e a n d I n d u s t r y
1,
In D e c e m b e r 1970, the E c o n o m i c P o l i c y C o m m i t t e e a c c e p t e d the
c o n c l u s i o n s of a n O f f i c i a l R e p o r t on S h i p b u i l d i n g P o l i c y .
T h e s e w e r e that
a f t e r the ending of the S h i p b u i l d i n g I n d u s t r y B o a r d ( S I B ) in D e c e m b e r 1971,
t h e r e w o u l d be n o c a s e on e c o n o m i c g r o u n d s f o r g i v i n g s p e c i a l s u p p o r t to
the i n d u s t r y o t h e r than that a f f o r d e d b y the h o m e c r e d i t s c h e m e a n d b y
" s h i p b u i l d e r s r e l i e f " (the l a t t e r b e i n g a 2 p e r cent s u b s i d y ) .
It w a s
c o n c l u d e d , h o w e v e r , that on r e g i o n a l e m p l o y m e n t g r o u n d s a n y m a j o r
c l o s u r e s ought to b e p h a s e d o v e r a p e r i o d .
T h i s p o l i c y w a s r e v i e w e d b y the
C o m m i t t e e in M a y 1971 and r e a f f i r m e d .
2.
T h e f i r s t r e a l test of the p o l i c y c a m e w h e n U p p e r C l y d e S h i p b u i l d e r s
( U C S ) c o l l a p s e d in June 1971.
W e l e t the c o l l a p s e take p l a c e and h a v e b e e n
s e e k i n g to p i c k u p the b i t s , r e d u n d a n c i e s b e i n g p h a s e d o v e r a p e r i o d at h i g h
c o s t t o p u b l i c f u n d s , in v i e w of the h i g h l e v e l of u n e m p l o y m e n t on C l y d e s i d e ,
N o w w e a r e faced with C a m m e l l L a i r d , saved f r o m imminent c o l l a p s e by
the p r o m i s e of a G o v e r n m e n t l o a n , though only t e m p o r a r i l y ; D o x f o r d w h i c h
c o u l d g o the s a m e w a y at a n y m o m e n t , and S w a n H u n t e r and L o w e r C l y d e
e i t h e r of w h i c h c o u l d c o m e to g r i e f and w o u l d no d o u b t b e in g r e a t e r d a n g e r
of d o i n g s o a s a r e s u l t of c o n f i d e n c e b e i n g s t i l l f u r t h e r s h a k e n b y
C a m m e l l L a i r d or Doxford.
T h e A n n e x g i v e s m o r e d e t a i l s of the s i t u a t i o n
of s o m e m a j o r g r o u p s .
3.
T h e b a c k g r o u n d to a l l this is inefficient m a n a g e m e n t ;
inadequate
f a c i l i t i e s and b a d l a b o u r r e l a t i o n s d e s p i t e the G e d d e s r e p o r t of f i v e y e a r s
a g o , the a c t i v i t i e s of the S I B and the e x p e n d i t u r e of s o m e £ 6 0 m i l l i o n of
public funds.
W e p e r h a p s don*t need a m e r c h a n t s h i p b u i l d i n g i n d u s t r y in
the l o n g t e r m b u t
4
if w e m e a n to h a v e one it w i l l take a p r o p e r s t r a t e g y to
a t t a i n it i n v o l v i n g a s u b s t a n t i a l n e w d e p a r t u r e ;
large sums;
f u r t h e r e x p e n d i t u r e of v e r y
a n d the i n t r o d u c t i o n of h i g h q u a l i t y m a n a g e m e n t .
A l l these
things w o u l d h a v e t o b e found b y G o v e r n m e n t b e c a u s e t h e r e i s n o b o d y e l s e
p r e p a r e d to d o s o .
1 CKf R E T
4.
E v e n if w e initiate the d e v e l o p m e n t of s u c h a s t r a t e g y it w i l l take t i m e
to w o r k out and c e r t a i n l y w o n t h e l p in the s h o r t - t e r m to m e e t the p r o b l e m s
of a c o l l a p s i n g i n d u s t r y .
That c a n only b e a c h i e v e d b y b a l i n g out a s w e a r e
d o i n g at U C S and a r e p r e p a r i n g to d o at C a m m e l l L a i r d at v e r y h i g h cost
p r o v i d i n g little o r nothing t o w a r d s the r e s u r g e n c e of a c o m p e t i t i v e i n d u s t r y
f o r the f u t u r e .
T h e r e a r e s o m e 55, 000 j o b s In a l l d i r e c t l y at r i s k , the
l a r g e m a j o r i t y in a s s i s t e d a r e a s ( A n n e x g i v e s d e t a i l s ) .
In a d d i t i o n a l a r g e
n u m b e r of j o b s w i l l b e at r i n k in s u p p l i e r s , the m a j o r i t y a l s o in a s s i s t e d
areas.
T
5.
A w o r k i n g g r o u p of o f f i c i a l s h a s b e e n l o o k i n g once a g a i n at the
w h o l e p r o b l e m and h a v e t r i e d to d e v i s e a m e a n s of r e s c u e .
I have no doubt
that this c a n b e d o n e but it m u s t b e r e a l i s e d that it w e adopt such a s c h e m e
it is in p l a i n c o n t r a d i c t i o n with our announced p o l i c y t o w a r d s i n d u s t r y in
g e n e r a l and this i n d u s t r y In p a r t i c u l a r .
A n d it w i l l c o s t a g r e a t d e a l
p e r h a p s £40 m i l l i o n o r m o r e .
M o r e o v e r if a s is l i k e l y it a i m s at
s u b s i d i s i n g u n v i a b l e b u s i n e s s e s b e f o r e they c o l l a p s e w e a r e g o i n g to h a v e
to e x p l a i n w h y w e d l d n t d o j u s t that in the c a s e of U C S .
p
T
6.
T h e r e is n o c a s e w h a t e v e r on i n d u s t r i a l g r o u n d s f o r adopting t h e s e
short-term policies.
O n the c o n t r a r y it is quite p r o b a b l e that to p u r s u e
t h e m w i l l in the end m i l i t a t e a g a i n s t the d e v e l o p m e n t of a sound m e r c h a n t
shipbuilding industry.
T h e only r e a s o n f o r t h e m is the u n a c c e p t a b l y high
l e v e l of u n e m p l o y m e n t .
B e f o r e putting f o r w a r d a n y p r o p o s a l s to s a v e
s h i p b u i l d i n g f i r m s f o r e m p l o y m e n t and s o c i a l r e a s o n s , I a m s u r e that w e
should p a u s e and c o n s i d e r the f u n d a m e n t a l q u e s t i o n s of i n d u s t r y p o l i c y
w h i c h a r e at i s s u e .
J D
D e p a r t m e n t of T r a d e and I n d u s t r y
2 N o v e m b e r 1971
S E L E C T E D
S H I P B U I L D I N G
C O M P A N I E S :
E M P L O Y M E N T
Company
Austin & Pickersgill
(subsidiary of L o n d o n
Freighters Ltd)
Cammeir Laird
( S & E )
Doxford & Sunderland
Harland & Wolff
Robb
Caledon
Ltd.
Ltd.
F I N A N C I A L
Ltd.)
S T A T I S T I C S
Employment
on
Shipbuilding
Latest Turnover Sunderland
(S.DA)
2,500 .
N/A
Lowestoft
1 ,100
4,321,000
Birkenhead
(D.A.)
7,000
24,200,000
Sunderland
(SDA)
4,100
17,070,000
Belfast
5,500
Location
Overseas
Brooke Marine Ltd.
( s u b s i d i a r y of D o w r e t t H o l d i n g s
A N D
Burntisland
Dundee
Leith
(D.A.)
2,100
Profit/(Loss)
1969
-
N/A
5,889,000
£
-
Before T a x 1970
0
N/A
1,708,000
52,000
48,870
(7,970,448)
562,000
(623,571)
( r , 250,000)
(8,330,000)
(182,000)
(238,000)
(617,000)
Company
Location
Employment
on
Shipbuilding
Latest
Turnover
Profit/Loss) Before Tax
1969
£
19 70
£
Scott Lithgow
Lower Clyde
(S.D.A.)
6,250
17,596,232
Swan Hunter Group (shipbuilding activities)
Mainly.Tyne
(S.D.A.)
17,000
64,000,000
(5,057,728)
N/A
Yarrow (S)
(subsidiary of Yarrow.& C o .
Upper Clyde
(S.D.A.)
3,800
7,982,369
(1,147,996)
(2,724,526)
N/A
(1,559,123)