Appledore Shipyard (Hansard, 29 April 1983)

§ Mr. Tony Speller (Devon, North)

It is always sad to have the Adjournment debate at the end of a damp Friday preceding a bank holiday. I wish at the outset to set the record straight from the debate we had last week on shipbuilding. In that debate I mentioned my regret that neither my hon. Friend the Member for Devon, West (Sir P. Mills) nor I had been able to see Sir Robert Atkinson, chairman of British Shipbuilders. In some of our local press—but not the Bideford Gazette, which is the local paper for Appledore shipyard—it was indicated that my hon. Friend thought that Sir Robert was away "on holiday". I am glad to set the record straight by saying, first, that he was not on holiday; secondly, because of his work load, he did not go away at all; and, thirdly, following the shipbuilding debate, I am happy to say that he saw us at British Shipbuilders' headquarters last Tuesday.

That completed the circle for the two local Members of Parliament, the shop stewards representing the work force and the chairman of British Shipbuilders, who was accompanied at our meeting last Tuesday by an old friend of Appledore and of North Devon, Mr. Jim Venus, now head of the small shipbuilding division and previously managing director of Appledore Shipbuilders. Therefore, there are no issues dividing the board from the work force. It is heartening that both the board and the work force express themselves in near identical terms. Both seek jobs and prosperity for our most efficient and hard-working yard.

Appledore shipyard is a covered yard, so wind and weather have little effect on work. Its record is second to none in productivity and in the absence of absenteeism. The spirit of Appledore is the spirit of all those along the rivers Torridge and Taw. The work ethos is strong, and pride in the quality of work is shown by the way son follows father working in the yard.

British Shipbuilders has shown its faith in the future. For example computervision was installed at Appledore before anywhere else in the British shipbuilders group. It provides—for those not familiar with such matters—a three-dimensional model of the ship in the computer data base, and it can reduce man-hours in building a ship by 25 per cent. How is that for productivity?

In addition, IBM/CADCAM—for those ignorant of such matters, that stands for computer-aided drafting—has been installed. I notice that nearly all the illustrations in the booklet "Productivity Improvement in Ship Design and Construction", a copy of which I have given the Minister, feature Appledore, making it one of the leaders in technology and productivity.

The work force has accepted not only the new modern aids, which are labour saving — unfortunately, labour saving may mean job losses—but a revolutionary new Chirillo concept, named after the United States expert. It can best be described as a form of modular building, which requires multi-skills, so the restrictive practice element has virtually disappeard from Appledore shipyard. That absence of restrictive practice is yet another reason why Appledore deserves the success that it has worked so hard to achieve.

1172 We all think that we know the basic problem. We think that there is not enough work or, just as drastic, that there are too many shipyards for the work available, but that is only the start of the problem. Not only are British ships built abroad but foreign ship work seldom comes here. The reason is not quality, capacity or outmoded habits—all the things that are said to damn British industry. The key is finance—the credit package that tells the buyer how to pay the seller and also how big the hidden subsidy will be.

Appledore has done wonderful work for firms such as Wimpey in the past, but how can we match the terms that they may get elsewhere? Britain is literally transparent in its attempts to help this ailing industry. Anyone can tell when we seek to bend the rules, but who stops France from doing just that? What aid is being given to Japanese shipyards, not just by their Government, but by their steel industry, so that they have about 50 ships to build in their home yards at present?

I am here to plead the case of Appledore the excellent, but I plead also the cause of British Shipbuilders—a business with no fixed equity capital at all. It has asked for emergency action. Is the Minister prepared to say whether the Government will take action on ships similar to the action taken by our right hon. Friend the Minister of Agriculture, Fisheries and Food on other products, such as sheepmeat, when there has been a vast structural surplus in the EC?

I understand that help can be provided for Appledore and the rest if we invoke articles 4 and 6 of the European Council directive on aid for shipbuilding, dated 28 April 1981. Article 6, subtitled "Crisis aid", states: Production aid in favour of shipbuilding may be considered compatible with the common market if it is granted to deal with the effects of a crisis characterisd by a poor order situation leading to substantial under-utilisation of the means of production. That covers our problem—poor orders, with under-utilisation of the means of production.

Together with my neighbour and good friend my hon. Friend the Member for Devon, West who, alas, is unable to be present today, I have approached our friends at the Ministry of Defence in search of work from that side. We have consulted the chairman of British Shipbuilders and the chairman of our shop stewards. I pay my respects to all those in manufacturing who are genuinely the best of British.

Too many of us in the House are wholly town or wholly country Members. I am proud of the shipyard in my constituency. I am proud of the modern forward-looking industry, set in a green field site, which, in appearance, seems to be millions of miles away from Tyneside, Teesside or our standard industrial heartland. I live at Instow, looking across the Torridge estuary. From my front window I see Appledore shipyard and from my back window I see north Devon sheep farms. That is the joy of having a green field site, where initiative and enterprise must be made to pay and where in future we will produce the industry of which we have only dreamt for the past 20 years.

When shipbuilding demand perks up, we must have healthy, profitable yards to build from and upon. Appledore shipyard is one of those. It will be profitable, even in this hard year. I ask my good friend the Minister to reassure me so that I may in turn reassure my friends who are also my constituents.

§ The Minister of State, Department of Industry (Mr. Norman Lamont)

I greatly admire the enthusiasm with which my hon. Friend the Member for Devon, North (Mr. Speller) put his case, and I liked his phrase "Appledore the excellent". The yard deserves that description, just as it deserves my hon. Friend's tremendous enthusiasm for it.

The problems facing our shipbuilding industry have received much attention in the House during the past few weeks. Recently, we had a half-day Supply debate on shipbuilding, but my hon. Friend is right to focus attention on the yard in which he is interested. Our debates cover the entire industry, and often the problems of individual yards are not fully debated and explored.

My hon. Friend asked for assurances, and I hope that the tone of my remarks will give him some assurance. I understand his anxiety which arises out of the announcement by British Shipbuilders on 19 March of the jobs that would be at risk if the current market position continued. The statement identified about 8,800 jobs at risk, of which about 200 were at Appledore. My hon. Friend will understand it if I say that those 200 jobs are only a small percentage of total jobs at risk, although of course they are very much his concern. Appledore has been lucky to escape some of the consequences of restructuring, because 24,000 jobs have been lost in British Shipbuilders since vesting day. I appreciate my hon. Friend's anxiety about the fact that no fewer than one in every four jobs in British Shipbuilders is believed to be at risk today. That is bound to cause anxiety to hon. Members with shipbuilding constituencies.

British Shipbuilders will review the position and will meet union representatives in the middle of next month. The outcome of that meeting will depend upon its assessment of the market. That meeting goes side by side with the Government's examination of the propositions put to us by the chairman of British Shipbuilders, Sir Robert Atkinson. My hon. Friend will recall that I told the House during the previous debate on shipbuilding that Sir Robert advanced some ideas to help British Shipbuilders to weather the severe crisis that it, in common with foreign shipbuilding industries, faces. I assure the House that nothing would be excluded from our consideration, and that we shall examine those ideas carefully and sympathetically because we recognise the extent of the crisis.

My hon. Friend referred to article 6 of the European Community shipbuilding directive, which was entitled "Crisis aid", and implied that that aid was available. Although we operate within the framework of the directive, member states have not yet agreed on the action to be taken under that article. We cannot give aid without having an agreement within Europe, so I cannot promise early action through the directive. However, we are considering it to see what other European countries are doing.

My hon. Friend in his speech today, and in his speech during the previous debate on shipbuilding, drew an analogy with agriculture on two grounds. The first was the extent of the support given to agriculture compared with that given to shipbuilding. Secondly, he asked why we could not take action similar to that taken on lamb by my right hon. Friend the Minister of Agriculture, Fisheries and Food.

1174 The two situations are, however, rather different. First, the British shipping industry, which is the equivalent of the consumers of lamb, is international. Ships operate under the British flag in many parts of the world and many British shipping interests relate to cross-port traffic. In such an international industry, ship owners and managers attach great importance to the freedom to place orders for shipbuilding wherever they wish. Of course, they would prefer to buy British but they must buy in such a way that their own competitiveness is not undermined.

Secondly, shipbuilding is a highly subsidised industry both in this country and world wide. Whatever the arguments in agriculture—I hesitate even to put my toe into those waters—I cannot see that it would be in the interests of the customers of shipbuilding—that is, the shipping industry — for there to be more and more subsidies when those subsidies have created a large part of the problem. The problem in shipbuilding is vast overcapacity worldwide and huge amounts of tonnage laid up all over the world, which are helping to drive freight rates lower still. That merely adds to the problems of shipowners and more subsidies would exacerbate the problem.

We cannot isolate ourselves from the international problem. It is not susceptible to instant solution, nor to solution by one nation or even by Europe alone. Even Japan, one of the most competitive and aggressive shipbuilding nations in the world, is not immune to the crisis and has suffered a substantial contraction in its shipbuilding industry. Therefore, we should not think—I do not suggest that my hon. Friend believes that we should—that we can somehow wish the problem away.

Our industry has been heavily supported through the intervention fund and the home credit scheme. My hon. Friend said that credit and finance were the key to the problem. We believe that our credit arrangements, combined with direct production subsidies through the intervention fund, make aid to the British shipbuilding industry equal to that of our major competitors.

My hon. Friend described British Shipbuilders as a firm without capital, but I am sure that he is aware that it has received large amounts of public dividend capital. Since 1979, we have put more than £600 million worth of aid into British Shipbuilders. Since vesting day, more than £250 million has been put into British Shipbuilders through the intervention fund, which is a direct production subsidy. My hon. Friend will be interested to know that in the same period £9 million worth of intervention money has been committed to Appledore. It is therefore clear that we support shipbuilding heavily.

My hon. Friend said that when we do something the whole world sees it. That is perhaps a fallacy, as we see only that which we can see so how can we know that everything that we do in this country can be seen? I assure my hon. Friend that we are determined to support the British shipbuilding industry strongly. I hope that he will forgive me for making those few minor points about the general scene to put his remarks into context.

I very much agree with my hon. Friend's comments about Appledore and the merits of that yard, which is such an important employer in his constituency. An enormous amount can be said in favour of the yard. It has some of the most modern facilities, including covered building berths. It is one of the first yards within British Shipbuilders to benefit from an advanced system of computer-aided design. It also has the advantage, although 1175 the industry faces serious problems, of not having to face savage international competition because it is at the small end of the market. It has outstanding records for productivity, restrictive practices, delivery dates and facilities. In every way it is an excellent yard.

My hon. Friend voiced the fear that British Shipbuilders might direct orders away from Appledore to give business to other yards with a shortage of orders. British Shipbuilders' policy is to reinforce success and to encourage high productivity. It does not allocate orders. It expects its subsidiaries to do their own selling and to offer prices that reflect their strength. My hon. Friend need not worry that in British Shipbuilders' overall policy the strength and advantages of Appledore will be neglected or lost.

My hon. Friend must be anxious about redundancies throughout the industry. That is a matter for the management of British Shipbuilders which has to make the decisions. Appledore's record speaks for itself. It is outstanding, and I should think that British Shipbuilders will be anxious to maintain Appledore's outstanding performance.

My hon. Friend said that there were few orders from abroad. I was not sure whether he was talking of British Shipbuilders or Appledore. British Shipbuilders has done well in orders from Hong Kong, Brazil and other countries, but not many orders have been placed with Appledore. I think that that is because it is at the small end of the market and is able to get business because of the loyalty of smaller owners who want small vessels and are loyal to their country.

Appledore is well served by public sector orders for ships. It has just completed a dredger for the Mersey docks and harbour board and has on hand a substantial and important contract for the Natural Environment Research Council vessel Charles Darwin. It also has a tradition of naval work. Currently it has a support contract for two naval auxiliaries, RMAS Kinterbury and HMAV St. George, both of which were built at Appledore and delivered in 1981. I understand that the yard also undertakes minor refit work for smaller marine and army craft which operate in that part of England.

1176 The yard has tendered, and no doubt will be tendering, for other larger scale MOD work in prospect. It tendered unsuccessfully for the first four fleet minesweepers for the Royal Naval Reserve, the tender for which was awarded to Richards of Lowestoft last September. A further batch is in prospect and Appledore is among those yards which have tendered. Tenders have also been received from Appledore, among other yards, for various other naval support craft, and other tenders for such craft may be invited. Those tenders which have already been received are being examined and orders will be placed over the coming months.

My hon. Friend has seen the Under-Secretary of State for Defence, who is aware of the importance of ensuring that Appledore is given every fair opportunity to tender for suitable contracts. I am sure that that will be so. Appledore needs new orders, but its present order book is still better than other similar British Shipbuilders' yards. It stretches into 1984 and there are reasonable hopes of adding to it. Its management is chasing all possible orders with vigour, at home and abroad.

It is an inescapable fact that British Shipbuilders has already emphasised that the level of employment that can be maintained in British Shipbuilders depends upon the intake of new orders.

The ability of yards such as Appledore to compete for orders of the kind for which it is suited depends ultimately on fundamental improvements in productivity. I am quite sure that, because of the excellent background to which my hon. Friend referred, Appledore is well positioned, and it may be that exhortations and strictures have less application in Appledore than in other parts of British Shipbuilders.s I congratulate my hon. Friend on raising this matter and putting his case with such vigour. I cannot make firm promises, but I think that Appledore's prospects must be relatively favourable. I know that my hon. Friend's determined efforts on behalf of his yard will also serve the interests of his constituents.