TNAG-1158-FCO40-1438-Visit-by-Margaret-Thatcher--UK-Prime-Minister--to-Hong-Kong--1982 — Page 142

CONFIDENTIAL

SHIPBUILDING

GENERAL BRIEFING

BRITISH SHIPBUILDERS (BS)

Finance

BS's financial performance is greatly improved. Trading losses were over £100m (

over £100m (after crediting Intervention Fund) in 1979/80; in 1981/82 BS expect to be below their loss target of £25m. Their EFL of £250m in 1979/80 has been halved to a provisional £125m announced for 1982/83.

At the same time IF subsidies have been reduced

in 1979/80 to £45m in 1981/82.

G

£65m

Defence Cuts

-

The cuts will reduce job opportunities in surface warship

building; actual job losses will depend on BS's success in gaining alternative work for example Cammell Laird and Scott Lithgow which have broken into the offshore market.

BS, supported by the Defence Sales Organisation, are putting much effort into winning export orders for larger warships.

Shiprepair

The BS Chairman has given assurances, publicly to the Industry and Trade Select Committee, that it is not his policy

to quote uneconomic prices and that he intends to get

shiprepair yards into profit or close them. Employment on ship repairing in BS has halved since 1978 to around 4000

now. DOI Ministers are willing to take up with BS complaints of unfair pricing.

Withdrawal from Shiprepair

Under current legislation selling off any of BS's major

activities, such as shiprepair, is a matter for BS.

BS has a statutory duty to engage in shiprepair.

Moreover,