The Harland & Wolff shipyard in Belfast has served almost its entire workforce with 90-day protective redundancy notices. Unless the yard wins a major contract by the summer, up to 1,800 workers could be out of work. Redundancies are likely to begin in June and the yard could close by September.
Harland & Wolff had pinned its hopes on winning a $650 million contract from Cunard for the building of the luxury liner Queen Mary II, but negative comments about the yard by Cunard's management in recent days has put the prospect into serious doubt.
The yard is bidding for a lucrative British naval contract to construct two aircraft carriers worth £1.5 billion, although this alone would not save the jobs in the short term because, were the company to be successful, work would not begin for some years. It is also in the running for a number of other British Ministry of Defence contracts.
Yesterday, Harland & Wolff's chief executive, Mr Brynjulv Mugaas, said: "The extent to which this [the redundancies] will be implemented will depend upon the ability of the company to secure work in the immediate future.
"We very much hope that we shall not have to action this notification in its entirety. Our current order-book is scheduled for completion around June of this year and we are already beyond the point where there was a compelling argument to begin a redundancy programme, as a number of trades are not fully utilised. As such, we must take actions base on commercial reality," he added.
While management was exploring every opportunity to secure work of any kind, the current uncertain situation made the redundancy notifications "unavoidable".
Last night, after the protective notices were issued, the shipyard in Queen's Island, east Belfast, was a desolate sight as rain poured down on the deserted premises.
A union representative, who met Harland & Wolff managers yesterday afternoon, called on everybody to rally around.
"Our union now calls on all representatives, all people who have influence, not only here but in Westminster and in Europe, to give all their protection, help and support to the shipyard at this time," he said.
The MP for East Belfast, Mr Peter Robinson, said the redundancies would have a "devastating impact, not only on east Belfast but on the entire Northern Ireland economy".
He was, however, "not without hope" that the Queen Mary II contract could still be won, Mr Robinson told The Irish Times.
"I have been involved in talks both with the Northern Ireland Secretary, Peter Mandelson, and with the Secretary for Trade and Industry, Stephen Byers, today and both fully recognise the seriousness of situation.
"We are currently trying to put a package together that will convince Cunard to place the order with H&W," he said.
According to the east Belfast MP, the yard's main difficulty in winning the order is Cunard's practice to pay only a small percentage up-front with up to 85 per cent of the invoice being settled only on completion.
Such an arrangement would require Harland & Wolff to secure major loans and guarantees before being able to accept the order, something for which it would need help from the British government. The director of the Northern Ireland Labour Partnership, Mr David Bleakley, described the redundancy notices as "only the tip of what could become a very dangerous iceberg for the Northern Ireland economy".
The East Belfast Assembly member, Sir Reg Empey, said news of the redundancy notices was very disappointing, although with the absence of orders, there had been fears of such an eventuality.
The Industrial Development Board and the relevant British government departments were engaged in positive and strenuous efforts to win new orders but shipbuilding was a commercial business and "at the end of the day they are limited in what they can do".
"That, however, will not diminish the efforts to try to win the Cunard order," added Sir Reg.