Glasgow Shipyards
The cost to the Scottish economy of shipyard job losses could be far too high says a report (Reuters)

The damage wrought to Scotland's economy by the cuts announced by BAE Systems at naval yards in Glasgow could be far higher than previously thought.

According to an impact assessment by Strathclyde University's Fraser of Allander Institute, scrapping 800 BAE jobs would lead to a further 1,600 job losses in the supply chain across Scotland and cost the economy a total of £195m.

A spokesman for the institute said that the BAE job losses were devastating to Scotland's economy.

"While there is clearly relief that closure of the yards has been averted, it is useful to consider the scale of the job cuts on the Scottish economy as well as the remaining impact of the Glasgow naval yards on the Scottish economy.

"Govan and Scotstoun shipyards employ around 3,200 people in Glasgow, and the cuts announced by BAE will reduce the workforce by around a quarter."

The institute said its estimate of about 2,400 jobs being lost around Scotland, including those at the shipyards, as a result of the cuts was equivalent to 1.4% of all Scottish manufacturing jobs or 0.1% of all jobs in Scotland.

The spokesman explained how the institute calculated the impact of the cuts to the wider Scottish economy.

"Using this data, plus some plausible estimates and Type II multipliers from the 2009 Scottish Input-Output tables published by the Scottish government, we can estimate the likely impact of the announced redundancies on GVA [Gross Value Added] and jobs in the Scottish economy," the spokesman said.

Keep Building

But the institute was optimistic about the viability of shipbuilding in Scotland if the cuts announced by BAE did not go ahead.

It estimated that continuing work at the Govan and Scotstoun yards could support a total of 7,000 Scottish jobs.

This, it said, could generate £244.7m for the economy

BAE Systems announced it was cutting 1,775 jobs at three UK shipyards across England and Scotland.

The defence giant said it would slash 940 jobs in Portsmouth in 2014 and 835 across Filton, Glasgow and Rosyth by 2016.

BAE confirmed that it was overhauling its naval manufacturing operations and the cost of the restructuring would be "borne by the Ministry of Defence".

To offset the losses, the MoD and BAE announced that three new patrol vessels would be built for the Royal Navy at Govan and Scotstoun until work started on the Type 26 Global Combat ships sometime after 2014.