Orders of the Day — Shipbuilding

Part of the debate – in the House of Commons at 11:50 pm on 20th November 1990.

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Photo of Mr Jim Sillars Mr Jim Sillars , Glasgow Govan 11:50 pm, 20th November 1990

As hon. Members' contributions have demonstrated, this is not a theoretical argument. It is about real people and the impact upon real jobs in our communities. I represent the constituency containing Kvaerner-Govan. It employs a core group of 1,600 men and women and is up to about 2,000 at present. It makes a £35 million plus contribution to the local economy and is engaged in an investment programme of £26 million to improve the yard's productivity. However, if faces severe difficulties in adjusting from our historic past to the present and moving to a future where it can compete at an international level with anyone in the world. Given time, the management and the workers could do so.

The managers and trade unions at Kvaerner dispute—I join them in this—the rosy view of the world shipbuilding industry presented by the Minister and the Commission. On page 8 the Commission's consultative document talks about the situation in the shipbuilding industry. It says that the recession … may be slowly coming to an end". It goes on to say: all aspects of the situation improved … these developments if sustained—may lead to a situation where competition distorting measures can be eliminated. That comment is laced with qualifications such as "may", "perhaps" and "if".

I have a letter from the managing director of Kvaerner—Govan. It says: I can also divulge to you that, as a result of the Gulf crisis, several shipowners have postponed discussions with us on new contracts until the market situation is clarified. The customer for our last LPG tanker order recently decided not to make use of an option we had agreed for an additional ship, again because of uncertainties arising out of the Middle East situation. In other words, until the crisis is over, the market is flat.

What concerns people in Kvaerner and other parts of the country is the role of the Commission under the seventh directive. My information—I am certain that it is accurate—is that the Commission's proposal is to move from a ceiling level of 20 per cent. to 11 per cent. Disgracefully, in the negotiations the Department of Trade and Industry has been talking about 10 per cent. or lower. The last time there was a precipitate change in the level of aid from 26 per cent. to 20 per cent. Kvaerner lost two ships. Given the current margins, a drop from 20 per cent. to 11 per cent. or 10 per cent. will be a severe handicap in the competitive international world.

I want to lend my weight, for what it is worth, to what was said by the hon. Member for Gateshead, East (Ms. Quin) in respect of the Commission's so-called study, which builds up to the argument about the correct ceiling level for aid. It is a deeply flawed study, particularly when five of the eight ship types are taken from a single yard in Denmark, with a tax regime that is heavily weighted and is probably worth a subsidy of about 30 per cent. The Minister asked the hon. Member for Gateshead, East what level of ceiling aid she wanted. I can tell him what I want. I want 18 per cent. That is a reasonable position for yards such as Kvaerner to be in now. That is what we want from the Department of Trade and Industry in its discussions with the Commission.