Cammell's liner hopes sinking

Future of shipbuilding in Birkenhead looks stark

The future of the Cammell Laird shipyard looks uncertain after the chairman of the company offering the lifesaving deal to build two cruise liners said they had been "over ambitious" and had "had enough".

Jim Davis, Chairman of Luxus, the US-based company, told the BBC that "the chances (of reaching a deal) are diminishing" but that "it's not over yet".

"It's a time when a certain amount of inventiveness has to be applied to get anything done and I think they were a little overambitious," added Mr Davis.

Asked if Luxus could secure the funding, Mr Davis said, "I'm not confident, I'm sad to say".

A spokesperson for Cammell Laird told BBC Online that they could not comment but the union that represents the workers at the yard thinks there is still some hope.

Government aid package

The Department of Trade and Industry (DTI) offered a further $100m to the Merseyside shipbuilder on Monday to help it win the $500m (£344m) contract to build the ships for Luxus.

The DTI could not comment on the state of negotiations.

Luxus Company

Registered in British Virgin Islands

Led by experienced shipping industry figures

Company has never built a ship

The offer means the government has cut its demand for a refund, should the project fail, to 30%, or $150m, of the cost of the contract. It usually demands a 100% refund guarantee.

The UK government has already offered $300m in guaranteed loans to underwrite a contract with Luxus.

The French government has also offered Cammell Laird aid - in a deal that would see the cruise liners being built in France.

A deal with France could lead to the loss of British jobs and had put the DTI under political pressure to make a better offer.

Jobs at stake

The Luxus deal would secure 1500 jobs at Cammell Laird and about 4000 jobs with suppliers.

The ship builder came under increasing pressure last year after it unexpectedly lost a Ministry of Defence roll-on, roll-off ferry contract.

Costa Classica deal left Cammell with sinking feeling

Cammell Laird also laid off 450 workers last year after a dispute to upgrade an Italian cruise liner.

The contract had been with Costa Classica - an Italian unit of the US group Carnival.

The Italian ship turned back en route to Birkenhead in the UK last year over doubts that the work could be done in time.