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EDITIONS
Thursday, 30 January, 2003, 21:04 GMT
BAE Systems wins carrier deal
Artist's impression of the Thales aircraft carrier
UK defence giant BAE Systems has won the lead role in a 2.9bn ($4.8bn) contract to build two new aircraft carriers for the Royal Navy.

But the work is to be shared with rival bidder Thales, a French company that will provide the main design.

Defence Secretary Geoff Hoon
A partnership appears to offer the best means of drawing in the resources and expertise necessary

Geoff Hoon, Defence Secretary
Both firms have promised to carry out most of the work in the UK.

The contract is expected to create about 2,000 jobs and secure a further 10,000 at UK shipyards.

"We envisage that this alliance will be led by BAE Systems as the preferred prime contractor with responsibility for project and shipbuilding management," Defence Secretary Geoff Hoon told the Commons.

"Thales UK will assume a major role as the key supplier of the whole ship design.

"We judge that a partnership appears to offer the best means of drawing in the resources and expertise necessary to deliver a programme of this magnitude."

Giant project

The Ministry of Defence order is made up of 2.9bn in building costs for two aircraft carriers, but billions of pounds will also be spent on maintaining the ships over their service lives.

Menzies Campbell, Liberal Democrat foreign affairs spokesman
This is a high risk decision with long-term industrial and military consequences

Menzies Campbell, Liberal Democrat foreign affairs spokesman

The two 950-foot-long, 60,000-tonne carriers will be the biggest British warships ever built.

They will replace the Royal Navy's three existing carriers, Illustrious, Invincible and Ark Royal.

The ships are to be built by a combination of yards - BAE Systems Marine at Govan, Vosper Thornycroft at Portsmouth, Swan Hunter on Teesside and Tyneside and Babcock BES at Rosyth.

The vessels will be built in several sections before bringing them together for final assembly at the Rosyth shipyard.

There had been speculation that BAE Systems might not get the deal because of its history of cost overruns and technical problems with previous defence contracts.

The company's share price fell following the announcement, closing 5% down, although many traders had already bought into the stock, in anticipation of the deal.

'High risk decision'

Shadow defence secretary Bernard Jenkin said that in splitting the work between BAE Systems and Thales, Mr Hoon had "bottled out" of the decision.

HMS Ark Royal as it leaves Rosyth under the Forth bridge in Fife, Scotland
The Ark Royal is one of the carriers being replaced by the new ships
The Liberal Democrats also expressed doubts about the move.

"It remains to be seen whether this shotgun marriage between BAE Systems and Thales can be made to work," said Menzies Campbell, the Liberal Democrat spokesman on foreign affairs.

"This is a high risk decision with long-term industrial and military consequences.

"The future of shipbuilding on the Clyde and the sustainability of Rosyth and other yards depends on success."

'Vote of confidence'

Unions welcomed the decision, saying the decision to make BAE Systems the lead contractor was great news for Scottish shipbuilding.

Bill Morris, TGWU general secretary
The challenge is now for BAE Systems to deliver on time and on budget

Bill Morris, TGWU general secretary
"This is the biggest decision that the MoD have taken in decades and is a much needed shot in the arm for Scottish shipbuilding and the wider manufacturing sector," said John Quigley, Scottish regional secretary for the Amicus union.

"It is vital that the contract allows each UK yard to play to its strengths.

"The world class shipbuilding workers in Scotstoun, Govan and at Rosyth have been through difficult times in recent years, but hopefully this decision will give them renewed optimism for the future."

Bill Morris, general secretary of the Transport & General Workers Union, said: "This is good news for British industry and a vote of confidence by the government in British manufacturing.

"I believe our quality British workforce will deliver a quality British product.

"The challenge is now for BAE Systems to deliver on time and on budget."


 WATCH/LISTEN
 ON THIS STORY
The BBC's Evan Davis
"It's an odd deal"
Nigel Stuart, MD BAE's Future Carrier Programme
"The whole programme will sustain and create 10,000 jobs in the UK over the next 10 years"
See also:

30 Jan 03 | Business
30 Jan 03 | England
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