THE last shipbuilding yard on the Tees has been mothballed, with the loss of about 200 jobs.

Swan Hunter put its Port Clarence operation on to a care and maintenance cycle after work ran out.

John Mitchell, the company's project director, said: "There is only a handful of people left down there. You cannot employ people on thin air."

Swans will complete a £240m Navy contract for two Royal Fleet Auxiliary vessels next year. But the work being carried out on the Tees - fabricating superstructure units, such as the bridge and cabins - has been completed.

The 1,000-tonne modules have been shipped to Swan's Wallsend yard, on the Tyne, where they will be fitted to the second vessel's hull.

Mr Mitchell said there were no plans to close Port Clarence and said Swans was pursuing work in the oil and gas sectors, along with other Ministry of Defence (MoD) contracts.

Dutch entrepreneur Jaap Kroese brought shipbuilding back to the Tees when Swans bought the Port Clarence yard, in Stockton, from engineering company Kvaerner in 2001. He created 200 jobs, and pledged to invest £52m.

Kvaerner had closed the 41-acre site at the end of 1999, with the loss of 3,000 jobs.

The mothballing of Port Clarence puts the brief revival of Teesside's shipbuilding industry in jeopardy.

The A&P Group, based in Southampton, has a ship repair facility at the Cammell Laird yard, in South Bank, but does not make vessels.

Before Swans, the last Tees shipbuilder was Smiths Dock Company Shipyard, in Middlesbrough, which closed in 1987 with the loss of 1,295 jobs.

At its height in the early 1900s, the industry provided work for more than 3,000 people in Stockton alone.

Swans has a two-year gap in its order book. There are no further contracts until 2008, when a £2.9bn project to build two aircraft carriers is due to begin.

The contract is expected to create 1,500 fabrication jobs on the Tees and the Tyne, but bosses fear there will be no skilled workers left by then.

Its Tyneside workforce has already dwindled from 1,500 to about 600, made up of 300 sub-contractors, 200 core staff and 100 apprentices.

These will all be laid off at the end of the year if more work is not found.

One hope is that Port Clarence could become a ship breaker, recycling decommissioned warships.

The Department for the Environment, Food and Rural Affairs (Defra) has already looked at Teesside and Tyneside as a possible site for the operation.

Mr Kroese is in talks with Dutch group NV Ecodock about creating a North-East shipbreaking yard.

Mr Mitchell said: "We are trying to keep the yard going and keep those skills in the North-East.

"It is not going to create thousands of new jobs, but could be another project running alongside new build work."

The company also has its hopes pinned on the MoD bringing forward Royal Navy contracts, for either a £50m hospital ship conversion, or a fleet of oil supply vessels.

Bosses will travel to London next week to meet Government officials in another round of talks, which also involve regional development agency One NorthEast and the GMB union.

An MoD spokesman said the hospital ships contract was under consideration.