LONDON, UK - A British family firm wants to end the forlorn sight of Royal Navy warships being torn apart for scrap on foreign beaches.
Swansea Drydocks is competing for the contract to break up three decommissioned British frigates and is hoping to beat foreign competition - primarily from Turkey.
The company is bidding to recycle the Type 42 destroyers HMS Edinburgh, HMS Gloucester and HMS York, but is facing an uphill battle on the soon to be announced contract because of cheaper labour costs abroad.
In addition to lower labour costs, foreign scrap yards also have the advantage of less onerous environmental controls than those in EU countries, allowing countries such as Turkey to offer much better rates.
Swansea Drydocks last year secured the contract to scrap Type 22 frigate HMS Cornwall, but the Ministry of Defence publicly admitted that the deal only went to a UK ship-breaker to test whether the country had the ability to dispose of naval vessels.
The Royal Navy prefers not to scrap its decommissioned nuclear submarines abroad to safeguard the technology they contain, but few other warships have been broken up within the UK.
According to Karl Dunn, managing director of Swansea Drydocks, since 2008 contracts to more than 15 Navy vessels - including Falklands war veteran aircraft carrier Invincible and her sister ship Ark Royal - have gone to Turkish shipyard Leyal Gemi Sokum.
Those contracts represented potential turnover for the shipyard of more than US $300-million at today's scrap metal rates.
The company was set up in 2009 with a view to meeting incoming EU controls to recycle ships in the most environmentally friendly way.
SDL breaks them up in dry dock, which is recognised to be the best practice, whereas in Turkey the ships are more commonly run up onto the beach and torn apart.
"We can break up ships in the way that is recognised as best practice but we are losing out because we do it that way," says Dunn. "We scored very highly in the technical side of the last contract but lost out on the financials because we can't compete with the cheaper labour costs abroad."
He added that while SDL might offer less money to the MoD's disposal arm to buy the ships for scrap, breaking the vessels up at home represented trickle down value to the economy through the work they create and taxes paid to the government.
The Ministry of Defense has responded, however, saying that it is "bound by the principles of the Treaty on the Functioning of the European Union (TFEU)" and could "not discriminate on grounds of nationality and must treat all competitors equally".
"The Government is saying under EU rules it has got to be a fair competition to win these deals but what has Turkey got to do with Europe? It's a candidate member," says Dunn.
Source: big news network. 12 April 2015