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Clyde Shipyards

Volume 720: debated on Thursday 18 November 1965

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Motion made, and Question proposed, That this House do now adjourn.—[ Mr. O'Malley.]

11.7 p.m.

I am very glad to have the opportunity of bringing the Government's attention to some aspects of the plight of the Clyde shipyards. I appreciate the attendance of the hon. Member for Renfrew, West (Mr. Buchan), who represents a Clyde shipyard seat, and other Scottish colleagues who are showing their undoubted interest in the question.

I have for some time been reluctant to press this question in the House because I think that all connected with the industry agree that nothing does more harm than the constant repetition of its problems and its serious difficulties. Frequent speeches about labour problems, demarcation disputes, heavy trading losses, late deliveries and yard closures can have the effect of scaring away many able young technicians and managers from taking up employment in the industry—and it is youth, enthusiasm, optimism and flexibility which are the qualities most urgently required in the yards today. Anyone making such a speech therefore takes on a considerable responsibility, but I am convinced that the present plight of the Clyde yards must be clearly and accurately voiced in the House, particularly as the Government will soon be called upon to take action on the recommendations of the Geddes Committee.

What do we mean by the Clyde shipyards? The industry covers a wide area and also a wide variety of shipbuilding capacity. On the one hand, we have the great yards like John Browns of Clydebank, Fairfields and Stephens of Govan, and Scotts of Greenock, who specialise in the massive bulk vessels for carrying oil as well as the intricate and costly detail of Admiralty vessels or passenger liners. There are the yards like Lithgows of Port Glasgow, the Greenock Dockyard, and the Glasgow yards of Connells and Barclay Curie, who have obtained orders for bulk carriers in face of world competition. Then there are the specialist firms—Yarrows for ferries and vessels of war, Ferguson Brothers, Ailsa of Troon, Scotts of Bowling and the Ardrossan Dockyard for smaller vessels like dredgers or tugboats. And there are the repairers like Barclay Curie of Elderslie and the new giant Firth of Clyde Dry Dock Company.

Between them, the yards now employ some 17,800 manual workers, which shows how vital their prosperity is to the Clyde district. And if we accept the normal estimate that for every man directly employed in the yards, three outside depend on subcontracted shipyard work, it would seem that about 70,000 families depend on shipbuilding for their livelihood. Apart from those working on ships, there are the shopkeepers—even the newsvendors—whose prosperity is inescapably linked to the yards.

The output of the yards last year was around 345,000 tons and a similar total is expected this year. Although value, and not tonnage, is a better measure for comparison, the news report yesterday that one Japanese yard hoped to launch no less than 620,000 tons this year could not have escaped notice in the Clyde.

What of the problems? The first is the stark question of economic survival. In the past few years we have seen the closure of seven major yards including Blythswood, Denny, Harland and Wolff and Hamiltons, and almost all the closures have stemmed from financial crises or the lack of profitable contracts. Those which survive face serious problems, and hardly one yard is making profits on its shipbuilding activities. This problem of mounting losses was clearly spotlighted by the difficulties of the Fairfield Yard, in whose best interests the hon. Member for Glasgow, Govan (Mr. Rankin) has so ably campaigned.

On the other hand, there is little shortage of work—at a price—and many firms find themselves in an impossible position. If they take on work at current uneconomic prices to cover part of their overheads, long-term ruin must inevitably come. If they reject contracts, the yard's immediate future is endangered and the skilled labour force dispersed.

The uneconomic level of ship prices is a world problem stemming from a surplus shipbuilding capacity throughout the globe. Some countries support their yards with subsidies for prestige or political reasons, and as the crisis develops, unprotected industries abroad look for similar cover, as can be seen from the recent proposal of the Common Market Executive that member States should have minimum subsidies of 10 per cent. and maximum grants of 15 per cent.

The shipbuilders on the Clyde look to the Government to try and have subsidies abolished by international agreement, but failing this it seems inevitable that Governments must consider granting subsidies as great but no greater than those of our international competitors.

Another problem is credit. While refusing to continue the Shipbuilding Credit Scheme the Government introduced new export credit facilities which forced our yards directly into the fierce international market. The result has been a good number of export orders at unremunerative prices, while our own shipping companies, presented with high interest rates and credit restrictions, have built abroad.

The principle of international trade is the exchange of different commodities, but not necessarily the taking in of each other's washing. British yards, accustomed to catering for the needs of our own great shipping industry, find it difficult to appreciate why credit facilities for foreign owners should be so much better than for our British owners and I know that on the Clyde the prospect of renewed shipbuilding credits is keenly awaited.

The success of the yards depends to some considerable degree on investment and on ensuring that the full range of building, refitting and repairing facilities exists on the Clyde for all sizes and types of vessels. Much investment has been undertaken by the yards themselves and the Government-supported dry dock at Greenock has answered a crying need for major dry dock facilities.

At this time, however, there is doubt as to whether the very adequate Clyde facilities will match up fully to the enormous carriers and tankers planned for the future. In this connection, the ambitious scheme sponsored by Messrs. John Brown, in which the firm hopes to obtain the co-operation of other yards, is of vital concern. At this stage in the shipyards' history it is clear that a major scheme of this sort could not go ahead without Government support and encouragement. It may be that the Government will question whether they can afford to do this, but many Clyde shipbuilders looking to the future must wonder if we can afford not to.

While such measures on the Government's part could help the Clyde yards, it is clear that the greater part of their problems can only be resolved by management and men. The acute shortage of skilled labour is one of the main difficulties at present and one which can fairly be blamed on the previous Administration. Why? Because they were so successful in attracting new and lighter industries offering remunerative employment in pleasing working conditions that many traditional shipyard workers have obtained employment outwith their own industry. However, although there is an acute shortage of skilled men, it is undeniable that much of the shortage could be made good by the more effective deployment of existing skilled labour.

In the yards we have almost 20 trades— including platers, caulkers, burners, welders, riveters, sheet metal workers, blacksmiths, shipwrights, electricians, joiners, plumbers, coppersmiths, brass finishers, etc.—and all have their own field of work protected and defined by rigid demarcations. This rigidity stems from deep-rooted fears of redundancy— not just the mass unemployment of the 1930s but the structural unemployment which can arise from new techniques and redundant trades even in conditions of full employment. The example and the history of the riveting trade is a recent reminder of this fear.

To remove this inflexibility, which can often result in skilled men wasting hours on a job waiting for the odd hole to be drilled or the odd joint to be tack welded, the fear at the root of rigid demarcations must be tackled. This can only be achieved if skilled men can be assured of smooth entry into another trade after appropriate retraining in the event of structural redundancy.

The other approach is apprenticeships. At present a five-year apprenticeship is required for every trade and this must be commenced not later than 17 years of age. In addition, entry into apprenticeships is restricted by many unions which insist that for every five skilled men there must be only one apprentice.

If existing trade demarcations are retained, there is a very strong case for a shorter apprenticeship. Much better would be the provision of a general apprenticeship, say, in the steelwork trades, with specialisation limited to the last year. In this way, while avoiding the danger of Jacks-of-all-trades, provision would be made for transfer to other trades in later years and skilled men would be able to carry out the incidental work associated with their own trade. Such measures would guarantee the jobs of shipyard workers in the Clyde and elsewhere more effectively than any demarcation barrier which ever existed.

Progress in this direction is slow, but the Boilermakers Society, whose membership includes almost all the steel work trades, has recently concluded some very statesmanlike agreements in the Clyde providing for a measure of inter-changeability. The E.T.U. has also taken the initiative in this field. Time is short, but at least the moves are being made in the right direction.

Another vital problem is labour relations. Between January and October, 313,000 hours were lost on the Clyde because of strikes or unofficial meetings in working hours. Although this might only represent about three days for the average worker in 10 months, the unofficial and unexpected nature of a considerable series of stoppages by small groups of men makes the problem much more serious. A two-day strike by 20 maintenance electricians will not affect the total figure very much, but such a dispute can disrupt progress throughout the yard and can result in delays in production leading to late deliveries and heavy penalty clauses.

The answer here is that trade union officials must exercise greater discipline over their members and, therefore, must keep in touch with their day-to-day problems. The employers must give the backing to the unions which makes such discipline a possibility. The plain fact is that unofficial strikes take place because unofficial action often appears to pay a handsome dividend.

How often are reasonable claims, advanced in accordance with the agreed procedure by reasonable trade union officials, subject to frustrating delays in negotiations and then to eventual offhand rejections? How often are such rejections followed by unofficial action by the men covered by the claim which leads almost immediately to speedy discussions and eventual concession of the claim? From this the Jack Dashes of tomorrow are born.

It is easy to blame the harassed employers who have to cope from day to day with the constant alarms and cries which inevitably occur in this complex and confusing industry, but I am convinced that a greater degree of consistency in wage negotiation would lead to greater peace and harmony in the future.

I have only briefly gone over some of the problems and I hope that the Minister will be able to give us a general indication of what he thinks about the outlook for the Clyde. One problem has caused a little anxiety. We were delighted recently that the Scottish Office, with the optimism for which it is becoming noted, spent many thousands of pounds of public money to raise the level of the Erskine Bridge. This was done to enable an aircraft carrier to pass under—an aircraft carrier whose cancellation is under consideration, I believe. I appreciate that having had no notice of this, the Minister may find difficulty in replying. However, perhaps the Under-Secretary of State for Scotland, whose great interest in the industrial problems of the Clyde we know, may have advised the Minister about this.

I am grateful for the opportunity to put these problems, and I look forward to the reply.

11.20 p.m.

I will be very brief, because my hon. Friend the Minister of State will wish to reply to most of the issues which the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) has raised.

The hon. Gentleman got nowhere with every problem. The problem at the moment is not lack of orders and certainly not that of boundary disputes. The problem is that, despite the orders, the yards have been unable to make a profit. There thus arises the question of the size of the shipbuilding industry and whether we leave it in the realms of trying to make a profit, letting the unfit go to the wall, as was suggested by the last Administration, or involve the public presence in the shipyards.

Secondly, far from its being the fault of the men, to a very large extent it has been the fault of the management in failing to develop new forms of technique and making the right kind of expenditure into the right kind of research. One thinks of the proportion of research devoted to hull and propulsion instead of into the nature of shipbuilding and one remembers that 75 per cent. of costs are incurred at termini rather than when the ship is in transit. One considers the lack of investment in technological advance.

The hon. Gentleman glossed lightly over the problem of the lack of skilled workers. On the Clyde, where there is a shortage of about 900 skilled men, the basic reason for that is that over the last 13 years of Tory rule there was constant migration of our best and most highly skilled men to the richer pastures in the South from the Tory-controlled Clyde where there was a decline in these skills.

11.21 p.m.

I would not have believed that any intelligent person could have voiced so many inaccuracies in such a short time about any industry which determines the future livelihood of so many of his constituents. I will express one agreement with the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor)—it is pleasant to note that while so many of my hon. Friends who represent Scottish constituencies are present with me, he has not one hon. Member on his side of the House, neither on the Front Bench nor the back benches, to support him. He is alone in the House, and that is a disgraceful reflection not only upon himself, but on the point of view which he has been expressing about the future of the Clyde shipbuilding industry.

He trotted out a lot of the old dogma which comes from those who have had a sparse interest in the industry as a whole. He referred to what he called the shortage of apprentices and he trotted out the old credit scheme which the Tories introduced in 1963 and he spoke of the problem of competition from new industries. He failed to do a service to the House and the Clyde shipbuilding industry by not facing the real challenge to the industry and by failing to point out for the enlightenment of the House what must happen within the industry in order that in future it can face its challenges, particularly the international challenge.

Let us examine some of the points he raised; first, the intake of apprentices. The unions really have moved on this matter and it is no longer a problem on the Clyde. In February, 1965, there were 8,585 journeymen and 1,477 apprentices in the industry. The latest figures which I have, for the latter part of August, 1965, are that there are 10,513 journeymen and 1,729 apprentices. These figures reflect the increased activity in the yards. My right hon. Friend the Minister of Labour has told me that there has been an increase in the intake of potential apprentices in recent months, and no unfilled vacancies are in circulation at the moment. Therefore, what the hon. Gentleman had to say about apprentices had no validity.

On the issue of employment generally; the hon. Gentleman ought to examine the previous Administration's record. Over the period 1957 to 1964, the number of operatives employed in merchant shipbuilding in the United Kingdom fell heavily, by 37 per cent., but the reduction was sharper in the west of Scotland where it fell by nearly 50 per cent. In seven years of Tory administration there were despair and despondency throughout the whole of the industry and particularly on the Clyde.

This year, the trend has been reversed. By August, the increase throughout the United Kingdom as a whole was 8 per cent. and in the west of Scotland it was 15 per cent. For the first time in the past seven or eight years the trend has been reversed.

The hon. Gentleman referred to John Brown's. The proposal which he mentioned was advanced by John Brown's in April of this year.

First of all they want to straighten the River Clyde opposite their yard and to develop the existing bed as a site for three building docks and fabrication sheds. This would enable them to increase their annual production to around half a million gross tons, comparable with the larger Japanese yards. The estimated cost of the building docks and the associated facilities would be in the region of £15 million to £17 million, and an interim report by the Clyde Navigation Trust shows that £3 million extra would be required for the river works.

This is a laudable scheme, an imaginative venture, but it is not cheap. The report has been submitted to the Geddes Committee and the Board of Trade. I have received a copy. Because the Geddes Committee will be looking at this I cannot at this stage comment further on the scheme.

Let us look at the problem of shipbuilding and how it affects the Clyde. There are three major changes. They are, local competition, international competition and the change that has to take place within shipbuilding so that the industry changes its outlook from being dependent on home orders, and sets out to capture export orders. We have activated the regions far more than the previous Administration ever did and we have stopped the vortex-sucking pull of the South. Since 1st November, 1964, until 31st October, 1965, the first full year of our Administration, 259 I.D.C.s were approved in respect of 10,022,000 sq. ft. of factory space and an estimated 22,464 additional jobs. In the last year of a Tory Government there were 194 I.D.C.s with an estimated 12,726 jobs.

I did not interrupt the hon. Gentleman and I have not the time.

Secondly, in the first ten months of 1965, the number of new companies coming to Scotland for the first time was 39 —four more than the whole of 1964, which in itself was a record year. We have launched a new programme for advance factories, and in this Government's first year of office 21 advance factories have been authorised for Scotland, compared with 23 during the last five years under a Tory Administration.

There is, of course, keen competition for labour, particularly skilled labour, but unemployment in Scotland has dropped from 4 per cent. in October, 1963, to 2·7 per cent. last month. This is in itself a challenge to shipbuilding on the Clyde. Working conditions, industrial relations, consultations, permanency of work—all of these will be in direct contrast in these new industries. Although there may be an anxious time for those who work in shipbuilding during the growth of this challenge, it is likely that the industry will have to take steps by countering with better conditions, including its man-management relationships, and building the bridges of confidence by genuine consultations between management and men.

The hon. Gentleman cannot expect the Government to slow down their regional development for the sake of shipbuilding, and the workers of Scotland and its representatives in this House would not expect us to do so.

Mollycoddling is not the answer, but the challenge to become competitive and make the industry attractive is. That is what I expect to see happening.

In the international field, the Swedes have a higher standard of living and they are more successful than we are. The Japanese, too, are better. They can lay down a 70,000 deadweight ton tanker in 22 weeks, from keel to launching. In Britain it takes twice as long. These countries can do this because they have examined more scientifically the building techniques involved. This is where management must look at British shipbuilding. A few weeks ago I had an expert on critical path analysis in my office to show me a film and give me a talk on the technique. How many yards are applying that technique in production? Only nine. This is what really matters—how fast steel can flow through the shipyards, how fast we can build ships, bring down costs, increase productivity, and gradually compete with the Japanese.

Then there is the changing pattern of shipbuilding output. Prior to the advent of this new Labour Administration the British shipbuilding industry had been accustomed to exporting 20 per cent. of its annual output. Those days must go—if British shipbuilding is to survive. The Swedes and the Japanese at their worst in past years were exporting 40 per cent.; in some instances 70 per cent. —at their best. With the introduction of the easier and cheaper credit scheme for export of capital goods—not just for shipbuilding—that industry was incidentally assisted. This year, the first of this Government, the industry has captured 1½ million gross tons of shipbuilding orders, most of which, 1 million tons, were export orders. That is the trend for the future. British shipbuilding must never again rely on British shipowners or horns orders for its existence. It must be prepared to capture more export orders in the future than ever in the past.

The hon. Member talked of the Tory shipbuilding credit scheme. Does he really want to resurrect a scheme which was an abysmal failure, which did nothing for the industry at all? This was more political than a design to assist the industry. It was introduced in May, 1963. It was designed to last a year, until May, 1964. Two months before the scheme came into operation all shipowners who knew it was coming into being delayed orders. Those who had a phased programme, and were going to place orders after the scheme, brought them forward, so we got premature ordering; but also late ordering—later than it would otherwise have been—so that we had a bunching or orders. Orders totalled 900,000 tons of shipping. The scheme cost £75 million of credit. But it failed. What it did was to give a temporary injection into the industry, to deal with the unemployed shipyard workers, of whom there were at that time 19,000. That was the Tory Administration of that time trying to improve matters just before the election, but the scheme did nothing for the industry at all. There was a chance to do something for the industry, and they failed. Few yards did not fail to make themselves more efficient in that time. The scheme really hid the inefficiencies and it kept the yards going— and we have seen some evidence of that today, and it slowed down the natural rationalisation which would otherwise have taken place. It was a failure. Then we came into office in October, 1964. The industry was as sick then as it was in 1963, and six months after the scheme itself had finished in May, 1964. By October, 1964, the industry was sick again. There had been a short-term injection, but no permanency, and it was not planned as a permanent cure for the shipbuilding. That is what we are intent on now.

The main problems facing the industry are slow building, late launches and the resulting danger of nations abroad losing faith in us. The time has arrived when the national leaders in the unions in the industry and the Shipbuilding Employers Federation should get together and issue a clarion call to all those who work in the yards, whose future is at stake, to examine their techniques, iron out restrictive practices which exist on both sides, among managements as well as the men. Management should confide in the men. Let them not wait for Geddes. Let them not wait for another Fairfield's. Let them tackle the bottlenecks which exist in the industry so that we can increase productivity and increase building now. That must be done and that is the lesson the industry is learning today. I hope that it will tackle it immediately.

Would the hon. Gentleman explain the reason for his outrageously offensive reply which, I believe, is foreign to Adjournment debates and to the speech which I made?

If the hon. Gentleman is misinformed and tries to mislead the House in what purports to be an intelligent appraisal of the shipbuilding industry of the Clyde, it is up to me most forcibly to impress on him that he is wrong.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Twelve o'clock.