UK shipyards win £1bn MoD contracts

The Government threw a £1bn lifeline to Britain's ailing ship industry yesterday as it announced the award of Ministry of Defence contracts.

The Government threw a £1bn lifeline to Britain's ailing ship industry yesterday as it announced the award of Ministry of Defence contracts.

Geoff Hoon, the Secretary of State for Defence, awarded an £800m order to Belfast's Harland & Wolff yard for two of six new "ro-ro" (roll-on roll-off) ferries. BAe System's Govan yard, on the Clyde in Glasgow,and Swan Hunter secured a £300m order to build two amphibious landing ships each.

The other four ro-ro ferries will be built at the Flensburger yard in Germany, bringing the total value of the orders to £1.25bn.

The news of orders, which will safeguard 600 jobs in Belfast, came as the Prime Minister, Tony Blair, visited Harland & Wolff. The Belfast yard has announced two rounds of redundancies already this year due to falling orders. One thousand new jobs will be created on Tyneside, with an equal number being safeguarded, while 1,000 jobs will be secured in Glasgow.

Mr Hoon hopes the warship work will tide Govan, which BAE took over from Kvaener last year, through until 2002 when a contract for three new ships kicks in.

Harland and Wolff's chief executive Brynjulv Mugaas said that, subject to the finalisation of the contracts, design work would commence immediately. This week the yard reported third-quarter losses of £11.1m and yesterday began a court battle with a Texan company, Global Marine, over £23m which it says it is owed as a final payment for a sophisticated oil drill-ship.

The announcement was welcomed by unions. Roger Lyons, general secretary of the Manufacturing Science and Finance union said: "This is a good day for UK ship building."

Mr Hoon made his announcement in the House of Commons at the start of a debate on defence procurement.

European Commission competition rules prevented the Government from giving UK yards preferential treatment for the ferries order, because they will not be used exclusively for military purposes.