UK engineering giants win mainland projects

PUBLISHED : Friday, 06 May, 1994, 12:00am
UPDATED : Friday, 06 May, 1994, 12:00am

TWO of Britain's biggest engineering firms, Amec and Babcock, have clinched separate deals to set up fabrication plants in China.

In Guangzhou, Amec will jointly set up a fabrication yard at the Huangpu shipyard with the China Offshore Industrial Corp to manufacture offshore production platforms of up to 5,000 tonnes.

Babcock International has linked up with Wuhan Boiler Works to set up a boiler factory to supply equipment for power stations throughout the Far East.

The deal will cost 450 jobs at Babcock's main factory in Renfrew, Scotland, when the firm moves half its manufacturing base to China. More job losses are likely.

''In China, labour costs are a tenth of what they are in Britain,'' said a Babcock spokesman.

''Overall manufacturing costs are 30 per cent cheaper in China.'' Both deals reflect an important shift in emphasis away from Britain and western Europe towards the growing offshore and power markets in the Far East.

Amec, which has been in the region less than three years, will pay half the costs of setting up the Huangpu facility. It will also provide project management and engineering design services.

The yard will be bigger than Amec's existing facility in Britain and will be the cornerstone of Amec's push to bid for onshore and offshore fabrication work worldwide, particularly on Chinese and Vietnamese oil and gas projects.

Amec, which has seen demand for fabrication work in Britain fall dramatically in the past 18 months, has made a similar agreement with a Singaporean yard.

In Hong Kong, Amec is building part of the North Lantau expressway in a joint venture with several Chinese firms.