Not since the Second World War has there been so much work in Britain for building warships. For decades the industry suffered death by a thousand cuts, as Britain’s declining role in the world and the end of the Cold War curtailed defence spending. But with a string of warship contracts either under way or in the pipeline, Europe’s most automated yard for building warships is being constructed on the UK south coast. VT Group, formerly Vosper Thornycroft, is investing £52 million on its facility at Portsmouth, with up to £30 million more to come.

The company is working on the two biggest Ministry of Defence warship contracts of recent times, the Type 45 destroyer, and the proposed £10 billion project to build and maintain two new aircraft carriers. VT will build the forward section, funnel and masts for the vessels, with the ship sections subsequently transported to Scotland for final assembly by BAE Systems, Britain’s biggest shipbuilder.

The first Type 45 is due for launch in 2005, with work on them stretching into the next decade. By then, the CVF carrier programme will be well under way, though VT does not yet know exactly what work it will do on the project. This controversial programme will be run by a joint venture between BAE and Thales, the French company with big interests in the UK. These two will sub-contract work between the UK’s four big shipyards, but first they must work out how their partnership will work.

VT’s traditional home is at Woolston, in Southampton, but the demands of modern shipbuilding meant that investing in a new “open plan” site at Portsmouth was more sensible. Woolston will close at the end of this year. About 1,000 staff will be moved from Woolston to Portsmouth, where new computer-driven equipment is being installed in giant hangars on a 33-acre site. The expansion has hit a problem, however. British shipbuilding does not have enough engineers and draughtsmen. So VT has set up a scheme with local universities to offer degree-level training. VT has stated ambitious efficiency targets to improve productivity by 20 per cent over three to four years, but internally the target is far more rigorous.