Valuable contracts to scrap Navy ships being lost to foreign companies:

Former Royal Navy aircraft carrier HMS Invincible sits is scrapped on the beach at Aliaga scrapyard in the Aegean port city of Izmir in Turkey Photo: REUTERS 

A British ship-breaker is fighting to keep the recycling of Royal Navy ships in the UK and end the spectacle of once-proud vessels being torn apart on foreign shores

A British family firm is fighting to end the forlorn sight of once-proud Royal Navy warships being torn to pieces for scrap on foreign beaches.

Swansea Drydocks is vying for the contract to break up three decommissioned British frigates. The company is hoping to beat foreign competition - primarily from Turkey - to win the tender to recycle unwanted Type 42 destroyers HMS Edinburgh, HMS Gloucester and HMS York.

HMS Edinburgh in Navy service before her decommissioning in 2013

However, Swansea Drydocks Ltd (SDL) says it is facing an uphill battle on the soon to be announced contract because of cheaper labour costs abroad as the Ministry of Defence’s disposal arm looks to award contract – as well as less onerous environmental controls in some non-EU countries.

Last year the company won the contract to scrap Type 22 frigate HMS Cornwall, a deal the MoD said had to go to a UK ship-breaker to show this country had the ability to dispose of vessels. This was so the Navy’s fleet of decommissioned nuclear submarines can be recycled in Britain to safeguard the technology they contain.

But other than HMS Cornwall, few other from Royal Navy ships have been scrapped in the UK.

• From mooring to no more - See how HMS Cornwall was recycled by SDL in pictures

According to Karl Dunn, managing director of SDL, 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 since 2008. At today’s scrap metal prices, the 100,000 tons of scrap metal generated represent a turnover of more than £200m.

He added: “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.”

His company was set up in 2009 with a view to meeting incoming EU controls to recycle ships in the most environmentally friendly way and SDL breaks them up in dry dock - recognised to be the best practice. However, many past contracts won in Turkey have seen ships some run up on beaches - leading to pictures of the Royal Navy’s former flagship being torn apart on the shoreline.

Mr Dunn said: “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.

“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 said that while SDL might offer less money to the MoD’s disposal arm to buy the ships for scrap, the value added by the work they create and taxes paid to Government coffers outweighs the lower price the company might offer - meaning the Uk gets a greater overall benefit.

“For each Type 42 we break up - and we could do all three simultaneously - we would create jobs for 25 people for a year, and pump money into the local economy, boosting the value of the contract being awarded to a British company,” Mr Dunn said. “At the moment those jobs and money are being lost to Turkey.”

“We believe that UK taxpayers should get the very best returns from the sale of the vessels, including the most environmentally sound means and this means considering any non-direct returns when considering UK bids. At present this is not the case and until it is all the work will go abroad.”

SDL is calling on Government to take into account the indirect benefits when awarding the contracts.

HMS Cornwall as SDL gets to work on recycling the decommissioned Type 22 frigate

In a letter to SDL, the MoD said it was “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”. Including the trickle-down effects that awarding the contract to a UK company would mean the MoD would “breach of the principles of the TFEU”, the MoD added.

Source: the telegraph. 11 April 2015

http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/11526858/Valuable-contracts-to-scrap-Navy-ships-being-lost-to-foreign-companies.html