Only Bishopton can make new tank shells Closure may cost #200m in contracts

The site near Glasgow produces two tank shell propellants so technologically advanced that they are kept secret even from the United States, Britain's closest ally.

The propellants are capable of firing rounds with consistent accuracy in temperatures ranging from Arctic cold to the heat of deserts. Both are unique to the Scottish site.

One propellant is also a key element in the sales pitch now under way to persuade a number of overseas customers to buy the Challenger 2E, the export version of the British Army's fleet of main battle tanks, in a package which includes shells and training.

Now a confidential internal analysis conducted for BAe and obtained by The Herald reveals that the shutdown of Bishopton late next year with the loss of 284 jobs could jeopardise the entire deal and wipe out expected follow-up and export orders.

The analysis says: ''The specific propellant requirements are such that RO Bishopton is the only manufacturer of this type of propellant. Transfer of this manufacture poses many difficult problems.

''The MoD have gone to great lengths to restrict knowledge of this programme even to the USA and particular aspects of this charge system are highly classified. The Bishopton closure will seriously impact on the timescale of this programme and seriously increase the technical risk.

''It is likely that the in-service date will not be met, and this threatens the very existence of this high-value programme.'' The in-service date refers to the time when the rounds will be available to units in the field.

The programme for ''desertised'' ammuntion is worth #100m in the development phase and #80m a year from 2009 onwards.

A second contract for upgrading existing tank rounds on a 10,500-shell order representing two years' work at Bishopton from 2001 until May 2003 is also under threat.

The report says: ''The propellant for this contract is Rowanite 304. This is a composition unique to the UK and, in view of its use in the war round, attracts security restrictions.

''A great deal of process development would be required before any other manufacturer could be qualified. Recovery of these costs will have a serious impact on the eventual price of the product.

''We will also need the fullest co-operation of the customer in overcoming any security issues, and it seems likely that the only option for alternative supply will be the USA, a country not noted for low cost supply of high-energy propellants.''

The analysis says that the quest for a foreign partner with a cheaper cost-base than Bishopton had been narrowed to the United States and South Africa, but that only low-tech contracts could be given to Pretoria, since it was regarded as a security risk by the UK's Ministry of Defence.

Senior management visiting South Africa to discuss the sale of Challenger 2 tanks were ''prevented from discussing any aspect of CHARM 3 (state-of-the-art tank ammunition) with either Denel or the South African government by the UK Ministry of Defence.'' Denel is South Africa's biggest arms manufacturer.

The analysis adds: ''One significant problem which exists with South Africa is that they are considered to be a security risk by the UK MoD.''

In effect, reluctance to transfer advanced technology to that state hinges on the fact it might sell it on to hostile regimes like Libya or Syria.

The MoD gave a #100m contract for basic artillery ammunition to Denel subsidiary Somchem in December, triggering BAe's announcement of the Bishopton closure.

The Scottish site is the last production centre for artillery, tank, and mortar ammunition, anti-aircraft missile, and military ejector seat propellant in the UK.

BAe's own secret report concedes that Bishopton, although ''of dated design '' meets all British safety , performance, and quality standards and would be difficult to match even by friendly European manufacturers.