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Clydeside Shipyards
A debate on motion
S2M-2276, in the name of Trish Godman, on the future of Clydeside shipyards.
The Deputy
Presiding Officer (Murray Tosh):
The final item of business is a members' business debate on motion S2M-2276,
in the name of Trish Godman, on the future of Clydeside shipyards. The
debate will be concluded without any question being put.
Motion debated,
That the Parliament offers its compliments to the managements, workforces
and trade union representatives of the shipyards of lower and upper Clyde
who, over and beyond the superb ships they build, work so hard and in a
spirit of co-operation to ensure that their maritime industry continues as a
viable and important element of the local economies; believes that it is
essential that the fine skills, employed in the yards, should be maintained
and enhanced by sound apprenticeship schemes, and considers that the
Scottish Executive should do everything in its power, on its own account and
in co-operation with the appropriate UK ministers, to assist our Clydeside
yards to secure vessel orders.
The Deputy Minister
for Enterprise and Lifelong Learning (Allan Wilson):
I join colleagues in offering my congratulations to the member for West
Renfrewshire, Patricia Godman, on securing this important debate.
Shipbuilding is clearly of significant constituency interest to her, and I
know that maintaining a successful shipbuilding presence on the Clyde is a
topic that is close to her and her constituents' hearts. She has shown today
and previously — and will no doubt do so again in the future — that it is
something for which she is prepared to fight vigorously. She is to be
commended for that.
The debate seems to be an opportunity to declare personal commitments. For
what it is worth, my grandfather worked in the Glasgow yards for Harland and
Wolff. I recall being on the Upper Clyde Shipbuilders marches that John
Swinburne mentioned: I do not know whether he was there, but I know I was.
For shipbuilding on Clydeside, and throughout Scotland, this is a time of
significant opportunity but, as we have heard, it is also a time of
significant challenge. We in the Executive are aware of the challenges to
which members have referred. We are committed to helping our shipbuilding
industry and its highly skilled and professional workforce to meet the
challenges.
We have an excellent working relationship with all three major shipyards in
Scotland which, with the trade unions who represent the workforce, work with
the Executive and Scottish Enterprise on the Scottish marine industry
steering group. The forum provides the opportunity to exchange ideas and to
develop the industry.
We share a common view with the steering group about what future success for
shipbuilding must be founded on. First, it must be founded on exploiting the
high skills levels and dedication of the workforce. Secondly, it must be
founded on promoting innovation and encouraging the adoption of best
practice to enhance productivity and competitiveness, which is the focal
point of tonight's debate. There can be no complacency on that point:
everything we do is geared towards that.
The issues that have been raised fall into two areas: those that relate to
Ferguson's on the lower Clyde and those that relate to BAE Systems at
Scotstoun and Govan, to which Pauline McNeill referred.
Ferguson's success to date has been founded on identifying specialist
markets in ferries, offshore vessels, tugs, fisheries protection vessels and
fisheries research vessels. There can be no doubt but that that market is
characterised by fierce international competition and intense and sometimes
aggressive pricing. The market is largely dominated by public procurement
and therefore is subject to the public procurement rules of the EU. In
recent years, Ferguson's has successfully competed in that market: successes
have included repeat orders from Stirling Shipping—
John Swinburne:
Is it not a fact that a Government order for a defence vessel can be built
within the Government's own country and it is not necessary to invite
tenders from abroad?
Allan Wilson:
Yes. I will come on to that. I thought that John Swinburne would be aware of
that. I am talking about the commercial market in which Ferguson's operates.
As I was saying, it has been successful with orders from Stirling Shipping,
with a three-vessel order for ferries from Plymouth City Council, with
fisheries research vessels and with new fisheries protection vessels. None
of those orders is easily won. Competition in an open and value-for-money
driven public procurement regime is intense.
Trish Godman:
I will clarify what I meant by a review of the procurement regulations. It
seems to me that it is about the interpretation — if I can say this in the
chamber: I could not say it outside — that civil servants make of the
regulations.
Civil servants in France, Germany and Holland seem to be able to interpret
the regulations in a way that enables those countries to build their own
ships, but we seem not to be able to do that. We are continually caught up
in questions of whether we will get the orders and what the procurement
rules are. A review of how we interpret the regulations is needed.
Allan Wilson:
Any regulation is subject to interpretation. Such interpretation is not
restricted to civil servants who work for the Scottish Executive or, for
that matter, for the UK Government. The regulations are also subject to
interpretation by, dare I say it, lawyers and the courts and, of course, by
the competing companies.
If you allow me, Presiding Officer, I will now deal with some issues that
have been raised.
The Deputy
Presiding Officer:
There is some time in hand.
Allan
Wilson: The issues are
complex and important. I would like to get on the record certain points in
relation to some of the statements that have been made.
Ferguson's recent losses have been mentioned. I appreciate and share the
disappointment that everyone feels at the loss to a Polish yard of the
orders for the general lighthouse authority and the Natural Environment
Research Council. When companies have concerns about the procurement
process, they can and should seek legal advice — I make that important point
in direct response to Trish Godman.
There are routes for recourse through the relevant courts if necessary. I
stress that the Executive has no locus to intervene in procurement that is
funded by UK public bodies. However, the Scottish ministers seek assurances
from UK ministers that procurement programmes comply with European rules.
Ultimately, if Ferguson considers that procurement has not followed the
proper procedure, it is for the company to take the necessary action.
Currently, two procurement processes are at an advanced stage: for a
Caledonian MacBrayne vessel; and for two Scottish Fisheries Protection
Agency vessels. Of course I am aware of concern about perceived low-bid
prices, which have been repeated tonight, and of the feeling — I will put it
no more strongly — that illegal or legal state aid subsidy has been paid to
the competition. Very strict rules on state aid and aid to commercial
shipbuilding are set out in the European Commission's framework on state aid
to shipbuilding. All member states are subject to the same state aid regime
and their obligations are set out in the framework. If a company — or a
member of the Scottish Parliament, a journalist or whoever — is in
possession of sufficient evidence of illegal aid or unlawful Government
subsidy, there are appropriate routes for thorough investigation through the
EC with, if appropriate, the support of the UK Government.
Mr McFee:
Does the minister seriously suggest that a company such as Ferguson should
take the appropriate legal action to try to ascertain whether a steel
company in Poland that supplies a Polish yard has received a hidden subsidy
from the Polish Government? Is that a serious way of progressing the matter?
Does the minister think that there is a greater role for the Scottish
Executive in pursuing such issues?
Allan Wilson:
I hope that the member was not deliberately misinterpreting my comments,
which reflected an important fact. If a company is in possession of
sufficient evidence of illegal aid or unlawful Government subsidy, there are
appropriate routes through the EC, which can be facilitated by the Scottish
Executive and/or the UK Government. It is important to stress that there
must be evidence, which could be elicited on inquiry or discovered through
subsequent inquiry.
I will briefly talk about the significant challenge that the lack of new
build and design work on the Clyde presents for the naval sector. I met
Pauline McNeill, Bill Butler, Gordon Jackson and others today and I am
particularly conscious of the need to sustain employment levels and the
necessary skills mix, to which Pauline McNeill referred, through the promise
of orders to come, which does not sit well in a cut-throat business
environment.
I am happy to repeat what I said to Pauline McNeill: the Executive will
continue to highlight to the UK Government the need to ensure that
short-term pressures are not allowed to undermine the longer-term strategy.
That is an important point. Such a strategy should allow for the timing of
programmes to be smooth, to sustain the minimum core capability required to
deliver on future programmes and to provide naval exporters with a viable
platform from which to secure orders from overseas navies and Governments. I
am delighted to say that BAE excels in that.
The Executive and its agencies will continue to support shipbuilding on
Clydeside through co-ordinated action on the marine industry. That action
will focus on maintaining the strength of the excellent skilled workforce in
the yards, and it will continue to support the industry in the recruitment
of apprentices through the modern apprenticeships programme. That programme
has been a real success story in shipbuilding with 250 modern apprentices
now at BAE.
As I have discussed with Pauline McNeill, Bill Butler and Gordon Jackson,
our action will also highlight the need for the UK Government to understand
the short-term pressures that yards face and the need for action to overcome
those pressures — such as the recent awarding of the Ark Royal refit to
Babcock.
We will consider carefully and sympathetically any application by the yards
for regional selective assistance and we will support other ways of boosting
productivity and promoting innovation. That will assist and support Scottish
shipbuilding to succeed in domestic and overseas markets.
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