Tide of history turns on river of steel: The fall of Swan Hunter seems to signal the end of Tyneside's long and famous shipbuilding tradition

THREE YEARS ago, almost to the day, a group of North-east shipbuilders met in Newcastle upon Tyne for tea and biscuits, followed by a polite lecture entitled 'Improving Productivity In A Japanese Shipyard'.

The audience listened attentively as Isao Ohno explained how his company, which owned Oppama Shipyard, was successfully overcoming the depression in world shipbuilding.

One of his listeners recalled this within hours of Tyneside's last shipyard - Swan Hunter, at Wallsend - slipping towards oblivion. 'The Japanese attention to detail and to change seemed unending,' he said. 'They had achieved and maintained the precise triangular connection between shipbuilder, ship operator, and sources of material - ore and oil - that Japan has to import.' From his briefcase he took a copy of Mr Ohno's lecture. 'Here, look at the detail.'

Mr Ohno's disclosures of how the Oppama Shipyard fine-tuned quality control, man-hour cost and delivery times are indeed impressive. A machine can be adjusted to cut two pieces of steel plate simultaneously. A crane operator can be given other work between lifts. Mr Ohno had explained how a 43 per cent man- hour reduction was achieved by continuous fine-tuning during construction of a series of 80,000- tonne oil tankers over five years.

The man recalling all this said: 'We are now adopting the methods and approaches that the Japanese have been using for years.'

Too late. Since Mr Ohno's visit, his hosts - the North East Coast Institution of Engineers and Shipbuilders - have ceased to exist (depleted membership). Last week's failure of Swan Hunter to win a Royal Navy warship order not only puts the company in the hands of receivers and 7,000 jobs at risk, it effectively ends Tyneside's shipbuilding tradition, its roots in mid-18th-century wooden warships and its heyday around 1900.

That was the year Mr Ohno's Oppama yard was opened by Sumitomo Heavy Industries. It was a small affair, unable to meet more than a fraction of shipbuilding demand for the Russo-Japanese war of 1904-5. The river corridors of Tyne and Wear, on the other hand, hummed with activity, and Britain dominated shipbuilding, launching more than half the world's tonnage - including hulls for the Japanese to pit against the Russians.

The position was reversed long ago. With British yards producing fewer than 1 per cent of the world's merchant ships, Japan enjoys about 40 per cent of the market. The once-deafening clangour of Tyneside - two dozen large shipbuilders and engine works in scores of yards - is now a death- rattle. 'This is our family's darkest hour,' said David Swan, great- grandson of Swan Hunter's founder. 'How the old man would have fought to keep this place open.' He suggests an epitaph: 'Being best was not good enough.'

Driving from central Newcastle to Wallsend, one sees many reminders of Tyneside's beginnings: Roman settlement, Hadrian's Wall, medieval fortress, coal, docks. The demand for colliers boosted the development of shipyards. The launch by Palmer's yard (just across the river from Swan Hunter) of the John Bowes in 1852 marked a turning point from wooden to iron cargo vesels. Palmer's closed its last yard 14 years ago. Armstrong's at Elswick became the main naval yard, its close links with the Royal Navy prompting many foreign governments to place orders. Armstrong's closed its Elswick yard in 1919 and its other naval yard west of Wallsend in 1985.

Turning off Hadrian Road towards the river, one does not immediately spot evidence of decay. Beyond the blue clocktower, the canteen is busy and the computer- aided design facility hums. But at the outfit shops, faces are glum.

It is the same in Newcastle itself. At university campus and railway station, in hotel lobbies and taxis, people ask each other: 'Are they (Swan Hunter) really finished? Is that it?' - as if they are about to lose their raison d'etre, or the final thread of citizenship.

Tyneside has been distressed before. After 1900, the peak years of shipbuilding gave way to a succession of increasingly serious slumps, alternating with shorter boom periods. Foreign competition became more intense.

After the boom created by the First World War the industry was drastically reduced in size, and, by 1931, 60 per cent of shipbuilding workers were unemployed. Further pain followed the Second World War, with surplus capacity, steel shortages, labour stoppages and inadequate levels of modern technology (it was not until the Sixties that the equipment laid down in 1903 for Swan Hunter's construction of the Mauretania was finally taken out of use). In 1958-64, depression in world shipping coincided with intense competition from Japanese and European yards. This time the collapse feels final.

'We're talking about the psyche of the region,' said Dr Raouf Kattan, head of Newcastle University's marine technology department. 'There are few creations of man so readily identifiable as a ship. They even get a fine lady to smash a bottle of champagne over it. Ships have their own careers and personalities - some with a propensity to go to war, others to strike icebergs. When a shipyard closes, it's not just the yard - it's the industrial base all around it that has to seek employment and sustenance elsewhere in order to survive.'

Yet, all is not quite lost. The river's small repair yards probably will survive. There is a healthy business for offshore-rig construction. In West Newcastle, Vickers turns out plenty of heavy machinery, including tanks. Mining safety equipment continues to emerge from a firm in Walker. At Gateshead, the Japanese firm, Komatsu, produces tractors and diggers for a market growing hungrier by the day (if we are to believe economic forecasters).

Tyneside may take a lesson from Wearside, which has already been through this sort of thing. After Sunderland lost its last yard in 1988, the Government offered a rescue package that has since created 12,000 jobs, half of them in yet another Japanese enterprise, Nissan.

It is curious how a Tyneside tour brings continual reminders of the Japanese. Dr Kattan has studied their operating costs and efficiency standards. His university colleague Brian Newman, who is researching a British shipbuilding history project (two years done, eight years to go), is also well versed on Japan's yards. Perhaps surprisingly for a region whose most famous product has been eclipsed by the Japanese, neither Swan Hunter workers nor union officials had an unkind word to say about them.

There is anger at the Ministry of Defence for splitting Swan Hunter's lost contract between Barrow in Cumbria and Govan in Glasgow. Within the next 10 years, much of the world's merchant shipping, whose owners are being crippled by repair bills for vessels well past their break-up date, will have to be replaced. It is too late for Tyneside to feast on that prospect. As Alex Ritchie, a chronicler of the industry, observes: 'In the end British shipbuilding had nowhere else to go but down.'

That must have been obvious to most when Mr Ohno addressed the North-east shipbuilders three years ago on such themes as histograms, cause-and-effect diagrams, scatter diagrams and 'understanding the present conditions and setting a target'. Tynesiders who kept copies of his lecture think wistfully of Oppama Shipyard.

(Photograph and map omitted)