Examination of Witnesses (Questions 48
MONDAY 20 MAY 2002
48. Good afternoon, gentlemen. Thank you very
much for coming along this afternoon. If there is anyone who would
like to make a brief opening statement or just introduce the witnesses,
please do so.
(Mr Carrigan) We have not rehearsed because
we assumed we were doing this separately as unions rather than
as the CSEU. The unions here represent the bulk of the Confederation
of Shipbuilding and Engineering Unions, and that is a national
organisation borne out of all the shipbuilding and engineering
unions over the past century or so. We represent the Scottish
Committee of the CSEU, or the Confed as it is colloquially known,
and it is a confederation of unions. We act very well together
normally, except when clerks write to us and say we will give
evidence as individual unions, so apologies if we have not got
one single voiceas John would know,
we are not speaking in Unison today! However, we can strive for
consensus. All of us have worked in the shipbuilding industry.
I served my apprenticeship in the shipbuilding industry, as did
Jim Moohan, full-time officer. Jamie and John work in the industry,
Davie works in the industry and Hughie was a draughtsman in Yarrows
a few years ago as well. So we all have experience of the industry
and we are perhaps Clyde-built but coming from different unions.
The one thing we would say is that we do not want to dwell on
the past but it is clear that shipbuilding has a glorious past
in Glasgow and, as a former pupil of Anniesland College, I am
sure there are a lot of interesting tomes in here about naval
architecture and so on. We recognise the history, the heritage
and tradition. Certainly as someone who worked for around 10 or
15 years in shipbuilding, I can say there is a lot of camaraderie
as well in the workforce, and it is probably akin to the mining
industry in that regard, and we are proud of that. But we have
to look forward, and the reason we are here is because we have
concerns about redundancies on the Clyde. When I served an apprenticeship
in the 1960s there were many yards and the AEEU alone had several
thousand members, whereas today the AEEU have some 700 members,
and that has happened in the past 25 years so you can see the
decline in numbers. We were concerned about the strategy of the
company. If you think of the former Yarrows, over the past six
years there have been three different owners, or certainly three
different liveriesGeneral Electric, Marconi and now BAE
SYSTEMSand that has caused a lot of uncertainty. One of
the points I would like to make is that while we are very much
in line with what Ron Culley and Robert Crawford and Scottish
Enterprise have said previously, we believe the Task Force have
done an excellent job, have identified a lot of issues, brought
forth a strategy, but nevertheless there is still uncertainty
in the ranks of our members because they have seen different strategies
from different companies over the past six years, and if a company
decides to sell a part of the business or cuts off warship building,
then things could change. The point is, we have heard promises
before and we are a bit cynicalsceptical is probably a
better wordabout long-term strategies. We certainly hope
it is right. We are optimistic in many ways but it would be wrong
if we did not come here today and express some caution on the
part of our members. In particular, there is concern in Scotland.
If you remember less than two years ago, the existence of Govan
was threatened. The Government helped and the local MPs were very
active in the campaign to retain the Govan shipyard. We were successful
in that campaign, there was a good campaign right across Government,
all political parties, the local community, trade unions and workers
themselves, and we were successful in ensuring there was a continued
existence for Govan. At that time, the former Yarrows yard, Scotstoun,
was seen as having good, reliable work, MoD work was something
they were good at, they had proven themselves over many years,
and the irony today is that today there is probably more certainty
about Govan and more uncertainty about Scotstoun, and it would
be wrong not to echo those fears in this Committee. We are certainly
of a mind to say there is no distinction or difference in outlook,
values, goals, between the workers in Govan and the workers in
Scotstoun. There have been differences of opinion, as you would
get when you get integration of two yards and two employers, when
you get different terms and conditions with all those stresses
and strains, but having said that over the past 12 months or so
there has been an excellent bonding between the two workforces
and they are interchangeable to all intents and purposes. What
we do have is some concern about Barrow.
49. Can I stop you there because we have a whole
series of questions and we will probably come to some of these
issues you want to raise. As time is limited we want to get on
to those. Can I start off by asking you why you think BAE SYSTEMS
Marine announced 1,000 redundancies on Clydeside in July 2001,
when about half of that figure now looks to be more likely?
(Mr Carrigan) It came as a surprise to me but not
to my colleagues on the shop floor, because we had had informal
chats with the company and I was expecting 2, 3, 400 redundancies,
and when they announced 1,000 I was surprised. When we faced the
company they said it was better doing it in one tranche rather
than several tranches, and that was the reason they gave to me.
(Mr Moohan) I believe like most companies they do
now and again a restructuring process and they took the opportunity
at the time the Type 45 programme was announced to put their house
in order as they deemed fit. That, of course, on the back of winning
the order was very disappointing from our point of view. We felt
and still feel that we could ill afford to lose the skills of
the 1,000 which were announced in July 2001, and our objective
was to contain as many shipbuilding employees as we could in Clydeside
for the short, medium and long-term future, and really to have
a sound footing to move forward with the company.
50. Can you give us some indication of what
efforts have been made by the trade unions to help protect work
in the Clyde shipyards?
(Mr Dolan) More flexibility across trade unions and
across trade groups; more flexibility across the two yards when
before there were two separate yards. So mobility and flexibility
is what the trade unions are addressing now.
51. There was an opinion voiced by Ron Culley
about some misgivings he had about Barrow and working with the
other two yards on a three yard strategy. He felt the infrastructure
was not there to work together properly, could you comment on
how you feel about the three yard strategy of the company over
the next ten years, whether you think it is viable? Do you see
(Mr Dolan) We do not believe the three yard strategy
is a forward-looking strategy because of the placings of the yards.
A two yard strategy would be better. Apart from that, there is
a problem with Barrow, and this is no disrespect to colleagues
in Barrow as far as shipbuilding is concerned. They have concentrated
solely on submarine building in the last 25 years, so there is
a whole generation of shipbuilders who left shipbuilding and were
not encouraged into the shipbuilding industry in Barrow, and this
is causing us problems at this present time and we see further
problems down the line.
(Mr Moohan) The CSEU believe that when the partnership
was created between Clydeside and Barrow, we had to take a long-term
view of it, that to protect job security we had to go forward
in a fashion which would protect each other's interests. We expected
there to be difficult times in the future. I did mention in my
submission that with the Type 45 programme we cannot afford any
slippage. One of the failures in the past was there was no continuity
with the programme, and that is why it is important, if there
are peaks and troughs, which we hope there will not be in the
future, we have the ability to have a movement of workforce between
the three yards for their protection, so they can expand their
horizons not only with the MoD but with the commercial market.
So really the partnership we see operating hopefully in the long-term.
We have had a few hiccups but hopefully those will disappear and
we will have long-term job security and a partnership.
(Mr Carrigan) As members of the Task Force we certainly
signed up to the Task Force Report and it did say that the BAE
SYSTEMS strategy is coherent and robust, and we would endorse
that. There are differences in emphasis between us clearly. As
I said earlier, there are some perceptions that perhaps the company
will veer more towards looking after the Barrow workforce than
the Clyde workforce at times of famine, but I am mindful of the
fact that in Holland and Germany there is no reason why you cannot
build ships in an assembly fashion in the way they build oil rigs.
Our priority of course is to get work for the Clyde and that is
what we are pushing for. We do not have any problem with Barrow
being successful, but what we do not want is see the company's
emphasis change towards Barrow and away from Scotstoun.
52. So you would not see any likelihood of any
work transferring from the Clyde down to Barrow?
(Mr Carrigan) I think it is happening now, to be frank.
(Mr Dolan) The problem we see with Barrow, believe
us, is that if Barrow shipyard could have built ships both Scotstoun
and Govan would be closed. That is a fact over the last three
years, since this became a partnership with BAE SYSTEMS; if they
could have cracked shipbuilding we would have closed. The advantage
we have is that the company is now looking at a better strategy
for the Clyde. That is a long-term view but we have a problem
(Mr Webster) I do not like crying over spilt milk
at any time, and I do not like looking back too often, and I am
certainly not anti-Barrow, just pro-Clyde. Regardless what the
view is in the trade unions, whether we are of one voice or otherwise,
it would be totally fair to sayand I am talking daily on
the shop floor with the guys in the shipyard, we have serious
concerns about the strategy. It is nothing to do with being anti-Barrow
but that something is seriously wrong. We are not in any way being
vindictive. I will go with the plan that the Task Force, the Government
and the company announced, this three yard strategy set-upwe
thought it would be petty not tobut that does not mean
to say we totally agree with it. I have grave reservations about
it. I hope I am proved wrong because if I am wrong then we will
all work happily ever after. If I am right, we will have problems
with the MoD and the company will have to review the strategy.
So I will put my hand up and say that we do have reservations
and it is nothing to do with being critical of Barrow. The evidence
supports that fact.
53. Would it not also be fair to say that it
is not a three yard strategy for the Type 45s, it is a four yard
strategy, because Vospers is also involved in the building of
this ship. Nothing much has been said about Vospers' involvement
in this, yet we stand and fall with the first six ships.
(Mr Scullion) There was a big concern if we went down
the road it was a Barrow or a Clyde or a South of England situation.
I do not think that is the type of position we want to put across
here to this Committee today. It is very important that people
understand that the strategy of BAE SYSTEMS rests on the investment
programme being delivered, and I welcome the fact that the Task
Force is going to be keeping their eye on that, for want of a
better terminology, in June and also towards the tail end of the
year. It is very, very important to ensure there is continuity
of work for our members, but it is also important to note that
there is more than enough work at the present time from the Ministry
of Defence to keep everybody happy if there is a planned, co-ordinated
approach taking place. You have the auxiliary oilers, the eight
landing craft, the two Alternative Landing Ships Logistics, the
six Type 45 Destroyers, two or three submarines, two aircraft
carriers, a casualty receiving ship, the future surface combatants,
which will be the Type 33 replacement, you have maritime underwater
capability review, you have all these options there and they will
be coming to fruition in the next 10 to 15 years. That is more
than enough work if there is a planned, co-ordinated approach
taken to it by Government in conjunction with the strategy which
BAE have put in front of the workforce.
(Mr Torrence) Hughie is 100 per cent correct on strategy
but the strategy has to encompass the fact that all warships have
to be built in the UK. I do not know if you know but on Monday,
at Govan, Swan Hunters opened two logistics ships, and if you
cannot build the bow sections on time they put them out to tender,
Govan tendered to build them, we can build them in time, but we
lost that bid and the two bow units are going to Holland. That
flies in the face of what the Defence Secretary said on 21 January,
that the Government "insists that all new warships are built
in this country".
You know the problem we had with the roll-on roll-off ferries
which were supposed to be commercial ships, but now with a warship
part of it will be built in Holland, and the Dutch have put it
to Poland and Romania as well. So we have a very dangerous road
here with warships which could end up in Europe or anywhere. What
I am saying quite plainly, and backing up what Hughie said, is
that we have a strategy here, we have enough warships to keep
every yard in Britain going full-steam if we can insist they are
built in the UK because that is the crucial issue at the moment.
Before we go to commercial ships, we have to guarantee the warships
are built in the UK.
(Mr Moohan) On the two bow units which
went abroad, it should be noted that they were 15 per cent over
tender and I find that very disturbing because we are very cost
effective. I am putting the marker down that they went 15 per
cent over and I would like that to be investigated because it
gives us a cost concern for the future if two bow units can disappear
in that manner.
54. I tried this question earlier and I did
not really get much of a response and perhaps that was fair enough
but I want to run this by you. The UK MoD is the largest single
customer of British industry and it is clearly something that
the shipbuilding industry depends on in its entirety, as far as
I can see for at least another ten or 15 years exports depend
on it as well because they come off the back of things being produced
in the UK. Do you ever project forward on the implications of
an independent Scotland? It is a very serious question and it
is one of the key arguments in politics in Scotland. I would expect
trade unions to have a sense of how that would affect the workers.
(Mr Carrigan) I am not a civil servant so I can give
you an answer on that. The answer is that the Confed of trade
unions and all the unions hereand in fairness we should
declare an interestare affiliated to the Labour Party
55. I think we have to be very careful on this
because we are going down a political route. You can give a quick
answer but I am going to bring Michael Weir in soon.
(Mr Carrigan) Secondly, we are in effect a lobbying
organisation, in my view, and the reason why we still have ships
on Clydeside and particularly Govan on Clydeside is because we
were able to lobby a UK Government for MoD work. I think that
would be much more difficult under an independent Scotland. It
does not mean there will not be work coming from elsewhere but
certainly from a UK warship position I think my own union's view
would be that we would find it more difficult in the future to
win MoD orders.
56. But would you not accept that an independent
Scotland is also going to need ships and may need more specific
types of ships, and it is a bit short-sighted just to say it is
the UK MoD or nobody, given the history of the yards on the Clyde?
(Mr Carrigan) I do not want to get involved in a defence
Chairman: And we are not going to!
(Mr Carrigan) My understanding is that with the SNP
if there is a need for ships, they would be different ships and
smaller ships, they certainly would not be the aircraft carriers
we are projecting over the next decade or so.
57. How many aircraft carriers will be built
by the UK Government after these ones?
Chairman: I do not think the unions can answer
for the UK Government.
58. Can I turn to the question of procurement.
Are there any suggestions from yourselves on how we can improve
the process of procurement? Keeping in mind what has been said
earlier, two bow units going to Holland, is there any way we can
look at restrictions on work going abroad and making sure they
are built in UK yards?
(Mr Carrigan) Very much so. We have had various meetings
with Geoff Hoon and various ministers within the MoD and have
put proposals to them, as indeed have our national officers within
the Shipbuilding Forum. As Hughie said earlier, there is a lot
of work within the MoD and if the orders are given out in the
correct fashion there is enough work for the main shipbuilders
over the next 10 years. What can we do on procurement? In our
view there is unnecessary competition. We are all in favour of
value for money for the taxpayer, and it would be wrong for any
particular company, including BAE SYSTEMS, to assume they have
a monopoly on orders, we acknowledge value for money, but the
way the MoD have moved under the Smart Procurement objectives
indicates there is a lot of money spent unnecessarily on what
we consider to be false competitive arenas. The Task Force looked
at that in detail and have made recommendations to the DTI and
the MoD that they should look at this in greater detail. There
is a lot more which can be done, certainly in the foreign naval
areas. There is more which can be done in terms of subsidies and
support, and export credit guarantees and so on. We think that
is something which the Scottish Grand Committee should pursue.
(Mr Scullion) The question of procurement is key really,
particularly when it comes to the possibility of design work going
abroad in the first instance, as happened with the ALSLs.
The information which we have received is that the design work
which went to Holland only constituted 5.5 per cent of the actual
order cost, but in extending that, there were lost opportunities
to employ British workers and the circulation of the cash within
the UK economy. You referred to the Scottish Enterprise submission,
in paragraph 10 they do state quite specifically that if Clyde
is to retain a significant role in shipbuilding, it is the design
skills which will be crucial in the future. As a consequence of
that design order going to Holland for the ALSLs, in conjunction
with the equipment procurement decisions which were taken and
the subsequent sub-contracting deals which took place, in excess
of 40 per cent of the order, that is £65 million out of a
£120 million contract which is paid by the UK, is going abroad.
That is something which we believe is fundamental to the future.
If we are talking about a build in the UK policy, that should
be from the cradle to the grave, from the concept straight through
to build, launch and the through life of the ship. That is the
true meaning of "build in Britain" as far as we are
concerned in the warship industry.
(Mr Webster) In preparing for this meeting
today we wanted to paint a clear picture for the Committee to
take back not just to the House but the public, otherwise we would
be doing ourselves a great disservice. Having come through the
quagmire of the ro-ro affair which almost brought Govan to its
knees, and I have to say the sham in relation to whether it could
become a military ship or not resulted in us losing out to Germany,
I would like to re-emphasise the meeting with Geoff Hoon in January
where he indicatedand this concerns methere was
a view by some of the Chiefs of Staff that to take almost all
the capability of shipbuilding in the UK and put it out to tender
was an option some of the Chiefs of Staff regarded as possible.
I have to say, and this is not alarmist, this is factual, the
situation regarding the two bows of Swan Hunters and allowing
them to go to Holland may seem minor, but it would be a watershed
and disaster for shipbuilding. If that is allowed to happen we
have broken the whole concept on which the UK builds military
ships. Although Geoff Hoon said he did not personally support
that, I think we are entitled to ask the Committee to go back
to the Defence Secretary and ask him if he will reiterate the
commitment he gave regarding keeping the capability in the UK.
Furthermore, I also have to say it is not just protecting shipbuilding
in the UK, I am seriously alarmed at the situation that if we
continue to allow a naval capability and the defence industry
to go out of the country, it is a volatile world out there, we
see it around about us, and today's allies might be tomorrow's
enemies. Hypothetically should we bank on foreign capabilities
and cheaper markets we risk losing the capability to build naval
ships if the UK. It would be a brave man who would state at a
future time that we were no longer in a position to do that work
in the UK. If any Government leaves this country stripped bare
of the capability to defend itself, it may be okay right now but
in the long term they are totally abdicating their responsibilities.
That might not be popular but if you look at it, what I am saying
is true. That situation regarding the bows has to stop right now.
It is a very serious situation. Please understand that.
(Mr Dolan) The bows going to Holland
is not just the Government's responsibility, it is BAE SYSTEMS
and that should be discussed because they have a major responsibility
for the future of shipbuilding on the Clyde. The Government must
have an investigation into BAE SYSTEMS and their prices. We have
lost out on a couple of orders which would have kept the people
who were made unemployed recently in a job if BAE SYSTEMS had
put in realistic prices. We were warned by the Ministry of Defence
on a number of occasions to go back to BAE SYSTEMS and tell them
to get their house in order as far as prices were concerned. Someone
has to talk to BAE SYSTEMS about that.
Chairman: We will be having BAE SYSTEMS before
this Committee soon when we will ask them questions.8
59. Are you suggesting, John, that the tendering
by BAE leaves a lot to be desired?
(Mr Dolan) Yes, I am. BAE SYSTEMS know the prices.
Let me make this quite clear, we are not very highly paid for
tradesmen, none of us sitting at this table are highly paid, so
the bid that goes in, I do not know what they are doing with it,
I believe it should be investigated.
5 The invitation to give evidence from the Committee
which was sent on 5 February 2002, requested a joint team from
the GMB, AEEU and MSF Unions. Back
See Ev 67. Back
See Ev 67. Back
See Ev 67. Back
See Ev 37. Back