SHIPBUILDING, NORTH-EAST COAST (Hansard, 19 February 1954)

§ Mr. Frederick Willey (Sunderland, North)

I take this opportunity of raising the question of shipbuilding for the third time in this Parliament. I make no apologies for again raising this matter, because Sunderland is probably more vitally concerned with the future of shipbuilding than any other town in the country, and I am very surprised to see that the hon. Member for Sunderland, South (Mr. P. Williams) is not with us this afternoon.

First let me thank the Civil Lord for the two visits he has paid to Sunderland, which were very much appreciated by all those engaged in the industry in Sunderland. I also thank the First Lord, who spent part of his Recess in visiting the North-East Coast shipyards, and I should like to express my appreciation of the action taken by the Minister of Supply in setting up an inter-Departmental committee, which has undoubtedly brought about some improvement in the supply of steel plates. I also thank the Chancellor of the Exchequer for so readily meeting my point when I took up with him the question of credit facilities. In fact, the Economic Secretary immediately pursued the matter and there is no doubt that his action has brought some improvement in the shipbuilding position.

Having been so congratulatory, let me return to my major complaint against the 2381 Admiralty, and that is that they are too complacent. When we discussed the broad question of shipbuilding in the summer, the main point which I raised was that, in 1953, it was clear that orders were lagging behind output. I mentionedthen that we had appearing, for the first time, cancellations, although I was happy to say that these cancellations had not then affected the Wear yards.

The Civil Lord's reply was that the industry was in a prosperous condition. I accept that, and it is a tragedy that this industry, in its prosperous condition, has delayed so long in settling the wage claims that have been allowed to distract the industry. I recognise that the work done in modernising the yards on the Wear, but it is really folly to allow dividends to run up as they have done over the last 12 or 18 months.

Coming back to cancellations, the Civil Lord said it would be absolutely wrong to attach any special significance to the cancellations at the present time. That was in the summer of 1953. I felt that the Civil Lord was wrong about that. It is quite clear now that he was wrong and I regret very much that the cancellations have now affected the Wear yards. I do not think that the Civil Lord will be so optimistic this afternoon, because the anxiety which I have expressed over the past 18 months is now widely shared throughout the industry and outside. I noticed some weeks ago that the "Newcastle Journal" has taken the same point of view. If I may quote that newspaper, which has devoted a good deal of its energies over the past few months to the problems affecting the industry in the North-East, it says: A situation is developing in the North-East which, if unchecked, could have the most dire effects on the area's prosperity and on the well-being of thousands of its people. That is the view which I take. I do not want to deal generally with the industry, because I realise that there will be another opportunity of dealing with shipbuilding, but I want to mention one or two factors that particularly affect us in Sunderland.

As I mentioned before, we are particularly concerned at the fall in our proportion of the world's shipbuilding output. In 1953 it was one-quarter of the total world output, in the previous 2382 year 30 per cent., but in the immediate post-war years it was as high as 50 per cent. This affects Sunderland because we are specially concerned in the export market. Our excellent relations with Scandinavia, for example, were built up on the goodwill which was promoted by some of the shipbuilders on the Wear.

I have previously mentioned the special importance of Norway. The 1953 figures reveal that although the export of shipping to Norway was a little more than in the previous year, it was only one-half of the 1951 figure. My earlier remarks about this are now borne out, in that we cannot expect, or if we are to expect we must take special steps to promote, the former high level of exports of shipping to Norway.

There are two further questions on exports that very much interest us on the Wear. I am told that Poland is prepared to place orders abroad for tankers; and the Wear, of course, provides a major part of the tanker building capacity of the industry. I have also read in the Press that the Soviet Union is offering to place abroad orders for five tankers and 50 cargo vessels. Cargo vessels and merchantmen are a particular concern of the Wear. I know the difficulties about these matters, but if the Civil Lord can give any information about these orders from Poland and the Soviet Union it would help us a great deal.

Contemporaneously with the fall in our share of world output, we have seen the revival of yards which directly compete with us. The rehabilitation of the German and Japanese yards was to be expected. However this is not a major factor in the problem which faces the Wear shipbuilders. Neither do I think it is a question of costs. I was very comforted when the Civil Lord said last time that steel costs were much less in this country than in the competing countries—that is why the Government should have left the steel industry alone. In comparison with Germany, for example, the cost of steel to the Wear shipbuilders is £10 a ton less than to our competitors in Western Germany.

The major factor, I think, is the pattern of world trade and the fall in freight rates and the general fall in the profitability of shipping. This means that Sunderland is especially concerned, because we have relied almost wholly on merchant shipbuilding. It means also 2383 that we must readjust our view as to the future of the industry. We have now reached a period in the post-war phase when we have to reconsider the position of the yards and what output we can expect.

I mention only two other matters, both of which are of particular concern to Sunderland. It would be wrong on this occasion to deal with it at length, but we cannot ignore the fact that in one form or another State aid is being given in most of the competing countries, certainly in Western Germany and Japan. The other factor is that the problem facing shipbuilding is urgent. It is much more urgent for us on the Wear today than it was 18 months ago. Some of our smaller yards are already very anxious about the position. If we are not careful, some of the smaller yards will be in difficulty much sooner than many people anticipate. I am personally aware of the difficulties which small yards have already faced.

What can we do about it? I can only plead again, as I have pleaded before, for the Admiralty to take the obvious step, and that is to get all sides of the industry and shipping together to re-examine its prospects. I am comforted that the "Newcastle Journal" takes the same view. It calls for "a fact-finding conference"; I asked for a working party. Something like that must be done to examine problems such as these.

Regularly in connection with the Wear, though admittedly not so frequently recently, I have been raising the question of the supply of steel plates. I know we have got promises about it. But what has been done about the capacity for plate production? Let me acknowledge again the work of the Shipbuilding Advisory Committee, but I am sure a more direct approach to the industry is necessary. We have got further to improve the present provisions governing the supply of steel plates. I concede it has been improved, but it would considerably help the industry if we could remove this worry of out-of-sequence deliveries. Supplies have improved, but the position of the shipbuilding industry is not nearly as easy as it was 18 months or two years ago.

We should have a realistic examination of the capacity of the industry and the steps necessary to ensure a reasonable stability of output. That is what I 2384 have pleaded for the Wear, year in and year out. We have also to consider seriously the question of efficient output, because one can easily see what has happened recently about some of the work that has been put out on the world market. There is a very sharp competitive spirit, and I would welcome initiative from both sides of the industry to tackle this problem of the speed of output. I would ask the Admiralty to consider—I do not think it can avoid the issue—what sort of measure of State aid can be given to the industry.

These are matters which broadly I have raised before. However, if the Civil Lord will not go with me nationally, I should like him to look at this point from the aspect of the North-East. There is a great deal of enterprise there and a tremendous skill in that industry. It is an industry of which the country can be justly proud. We should seek to call all sides of the industry in the North-East together to look at this problem.

I am very conscious when looking at the problem of the Wear that we have got to take it as a whole. One of the important factors affecting shipbuilding is want of space. More and more space is required by the yards. On the Wear we are limited in space and it is an incredible feat that we have eight great yards on that narrow, winding river.

I should like the subject to be fully examined so that the problems affecting the Wear as a whole can be investigated. We talk about the virtues of competition, but there are also virtues in co-operation. Nationally this great industry is going to face a vast and difficult problem. I shall not mind if the Minister does not go the full way with me from the national point of view if he will try to do something to encourage us in the North-East to examine our difficulties and to see what our basic prospects are.

It seems to me that in the Development Areas we are in a new phase. In saying that I know I am going beyond the responsibility of the Civil Lord, but it should be pointed out that now the post-war period is coming to an end we must get a realistic estimate of the prospects and capacity of the basic industries in the North-East. The Coal Board must tell us what is the future of mining, the shipbuilding industry must take a realistic 2385 view of its prospects. After that we shall have to consider what particular industries should be taken up there, and, if the need arises, we shall have to consider what steps should be taken by the State to aid this great national industry of shipbuilding.

I know that the Civil Lord has taken special steps to encourage us in the North-East, but I ask him again this afternoon to face up to this essential problem and to realise that we can no longer think in terms of the immediate post-war years, and to give a lead by summoning both sides of the industry. I do not mind whether the hon. Gentleman calls it a fact-finding conference or a working party, but I want him to do something to bring both sides of the industry together.

I hope the wages dispute will be settled shortly, and when it is out of the way all of us concerned in the industry should put our brains together to try to formulate a solution which will bring for the first time a measure of stability to this great national industry.

§ The Civil Lord of the Admiralty (Mr. Wingfield Digby)

Very soon the House will be debating a somwhat similar subject on the Navy Estimates, but today we are confining ourselves to shipbuilding on the North-East Coast. Since the last two debates to which the hon. Member for Sunderland, North (Mr. Willey) referred, the outlook is slightly different and the stress is perhaps more on other problems than it was in June last year.

The hon. Gentleman has run true to form and once again has been pessimistic and tended rather to cry "Wolf." As I was listening to him I could not help wondering if he had read the remarks about pessimistic speeches which were reported in the newspapers yesterday. Such speeches were much deprecated by Mr. E. J. Hill, the Chairman of the Shipbuilding Sub-Committee of the Confederation of Shipbuilding and Engineering Unions, who said: There is…nothing strange or alarming in the present position. Obviously the hon. Gentleman completely disagrees with that view.

Be that as it may, we must take a balanced view of this industry in its own interests, and it would be a mistake to be too alarmist. The Admiralty are responsible as the sponsors of this in- 2386 dustry, but our power to help it is somewhat limited, and we have no absolute power over such a thing as the flow of orders. Indeed, this is essentially an industry which depends upon world tendencies and upon such factors as freight rates.

The North-East Coast is an important area for shipbuilding and ship repairing, and those two industries are extremely important to the area, as about 39,000 people are employed there. They represent nearly one quarter of all those employed in these industries in the United Kingdom. The First Lord paid a useful visit to the area only last month. I myself was in Sunderland in November and had the chance of going round three yards which I had not previously visited. I am sure that I learned quite a lot from that visit.

If we compare 1953 with 1952 in the North-East area it will be seen that the comparison is not nearly so bad as we might have imagined from listening to the hon. Member for Sunderland, North. Launchings have gone up from 552,000 gross tons to 598,000 and completions have gone up from 543,000 to 576,000 gross tons. Last year completions in that area were 47 per cent. of the United Kingdom total. Of this, the tanker tonnage completed was no less than 60per cent. of the total. At the end of 1953 there were under construction no fewer than 97 ships totalling 826,000 gross tons, excluding the Admiralty tankers.

As to fitting out, the picture is also more favourable than it was in 1952, there being 40,000 gross tons more being fitted out at 31st December, 1953, than there were in the previous year. So the picture for the North-East Coast last year shows a very distinct improvement, due no doubt largely to the improved steel position. On 1st January of this year the order book for the year was for 175 ships, totalling 1.6 million tons, and most of the larger yards have booked work well into 1956, which is quite a long way ahead.

Nevertheless, of course, it is quite correct that orders have fallen off very substantially, and indeed during 1953 the number of new orders placed was not very large, although the order book still remains a very long one. But one good feature about this shortening of the book is that it makes delivery dates better.

2387 There is no doubt at all that when owners are placing orders they like to have delivery of a ship within a fairly foreseeable time, because otherwise their calculations about how that ship is to earn its living are very much more difficult.

The hon. Member for Sunderland, North mentioned the question of Russian orders. As far as is known at the Admiralty, none of the firms in the North-East Coast area has been trying to obtain Russian orders, but if those firms should wish to do so and if they were to succeed the Admiralty would certainly look with favour on their efforts provided, of course, that they were consistent with security controls.

I should like to stress this question of delivery dates once again. I have said that our delivery dates are shortening, and I believe that to be a favourable factor in obtaining orders both from this country and overseas. At the same time it must not be forgotten that delivery dates overseas are also shortening. I shall have something to say about that when I speak of foreign competition.

The picture will also not be complete without some reference to ship repairing. I am afraid that towards the end of last year there was a notable falling off in the volume of ship repairing, as can be seen by comparing figures for September last with figures brought up to January of this year. During that time there was quite a falling off in the total load of ship repairings which is, of course, a very important matter for the North-East Coast.

We are watching the situation, although there are certain factors which make one believe that it is perhaps inevitable at a time when so much new shipping is being built that there should be some falling off in ship repairing. As regards Admiralty contracts, we do go very carefully into the varying needs of each area, and we do this with the aid of other Government Departments before Admiralty work is placed. Admiralty work is very small in comparison with the total amount of ship repairing capacity in this country.

I should like to take the opportunity of commenting once again on the enterprise which has been shown in the North-East, and the amount of capital that has 2388 been expended, in expanding and modernising plant. There is no doubt whatever that in the period to which we are coming it will be extremely important that our yards should be as up-to-date as they can be. We have many examples on the North-East Coast of money and trouble having been spent in trying to make yards more up-to-date.

That brings me to the subject of foreign competition. Some of our foreign competitors have yards which have been largely reconstructed since the war, or are perhaps newer than many of our own yards. That makes it all the more important, if we are to meet increased competition from abroad, and compete successfully—as I am sure we shall—that our methods should be as up-to-date as possible. The North-East Coast has certainly taken very wise steps to prepare itself for the increasing difficulties of the competitive situation.

It is perhaps significant that the hon. Member dwelt rather less on the subject of steel plate than on previous occasions. There is no doubt that the situation is easier, although there is not yet enough steel plate for the full capacity of the yards. There is no doubt that it would be a great advantage to the yards to have larger supplies of steel plate, which would then be a reserve to cushion them against bad sequence deliveries.

However, the situation is better and last December deliveries to the North-East Coast were larger than ever before, even allowing for the extra Austrian plate that had been received in the previous months ending with October. The hon. Member mentioned steel plate capacity. That is something which has to be planned many years ahead and the new capacity will not be coming in for a little while.

Foreign competition, I agree, has to be taken more seriously than in the past. I believe that with reconstructed yards we shall be in a very good position to face it. Despite some disadvantages, I believe that we shall, with our shipbuilding tradition and skill, be able to keep British shipbuilding second to none in the world.