SHIPBUILDING in Scotland will wither in the global marketplace, it has been claimed, after BAE Systems scaled back much-vaunted investment plans that would have been a “game-changer” for the industry

The defence giant has confirmed it will no longer invest in a major new outfitting hall to build new frigates for the Royal Navy.

Instead it will this summer begin a series of less dramatic investments at both its facilities, Govan and Scotstoun, to enable it to carry out what is now a smaller contract than first mooted.

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Shipbuilding insiders stress that scrapping the giant shed, planned for Govan, is just the latest move to downgrade multi-million-pound investments on the Clyde mooted before the Scottish independence referendum in 2014.

Analysis: Why shipbuilders take the long view

The investment in shipbuilding had been much-trumpeted ahead of the vote on Scotland's future. Nine months before the ballot, Charlie Blakemore, who is now operations director of BAE Systems, could not have been more upbeat: "It will provide a capacity that is world-class," he said.

"We will be able to compete in a more level playing field."

Last year, Defence Secretary Michael Fallon boasted that the order for Type 26 frigates - eight rather than an originally proposed 13 - would secure jobs on the Clyde for 20 years. But unions believe underinvestment is threatening the yards' long-term future after that job is done.

The trade union convener for the yards, Duncan McPhee, said: "BAE is investing in infrastructure which is essential for the Type 26 programme and in facilities for employees which is welcome.

“However, the investments are not on the scale we had hoped for. This is not the game-changer it could have been and we have long argued that this is a missed opportunity to provide world class shipbuilding facilities in Glasgow which would have helped us secure future export contracts.

“Unfortunately, it still means we are constructing ships outside rather than under cover, which is not the way modern shipyards should operate."

Critics in the yards condemn what they called the "make do and mend" attitude of BAE Systems and its paymasters at the UK Ministry of Defence. The firm, they say, is doing the bare minimum it can to deliver eight Type 26s or "global combat ships" as the navy calls them.

Back in early 2014 BAE Systems said it wanted to build a £200-£300m "frigate factory" at Scotstoun, effectively securing work on the Clyde for decades and opening up real prospects of export orders. Executives, however, said they would also consider what they called a "sub-optimal" Plan B, a £100m investment including the new shed at Govan. They dropped plans for the frigate factory in 2015. Now they have also binned their Plan B.

Insiders - and politicians - are particularly worried about how the Clyde yards will compete for export orders, including for another kind of frigate currently being planned, the Type-31.

One competitor, Irving of Nova Scotia, is building a warship dock hall similar to the ones abandoned by BAE Systems and is currently advertising to lure skilled Clydeside shipbuilders to Canada.

BAE Systems used to build frigates in covered shed at Scotstoun but this was demolished in 2014 to make way for a new high-tech factory which failed to materialise. The area is now derelict.

Chris Stephens, the SNP MP whose constituency includes the Govan yard, has warned that the Clyde is now facing "constrained capacity", that its facilities are just not big and modern enough to fight for other orders. He is campaigning for major reconstruction for the two yards.

Mr Stephens said: "MOD pressure not to invest in the frigate factory, which resulted in the demolition of the covered berth and module hall at Scotstoun, means that the Clyde has constrained capacity.

"Shipyard reconstruction will unlock significant long term advances and savings for the industry. It will mean that more orders can be won, not only here but overseas. Investment in that reconstruction will see the full potential of shipbuilding on the Clyde being realised."

Labour's Ian Murray MP agreed: "Construction of the new Type 26 frigate on the Clyde secured the future of the yard for the next twenty years. But we need to have a view to the long term - the shipyard needs to be in a position to bid for the Type 31 frigates and others in the future.

"If not, these contracts will go elsewhere and potentially overseas. The UK and Scottish Governments need an industrial strategy that invests in defence and commercial shipbuilding on the Clyde to increase opportunities for shipbuilding."

Sources close to BAE Systems have confirmed big ticket highly visible investments, such as the outfitting hall, are not going to happen. Investment programmes, they said, had "evolved" from 2015. Sources argue the firm is still putting £100m in to its twin yards on the Clyde, which now effectively act as a single production facility.

A spokesman for the firm said: “We are investing in modern technologies, systems, ways of working and our infrastructure as we continue to transform the way we design and build warships.

"We are making significant investments in Glasgow and our focus is to design and build complex warships to the highest quality whilst ensuring we deliver value for money for our customer and are well placed to compete effectively for future orders.”

Recent investments have included new robotic welding systems, already in place at Govan. Office spaces and amenity areas and fabrication facilities were upgraded last year. Infrastructure improvements to enable the Type 26s to be build at Govan and then fitted out in Scotstoun are currently scheduled to begin in the summer.