SHIPBUILDING yards across the country are planning a joint contract to fight competition from European and Far East rivals.

Talks between officials from Cammell Laird, which operates a yard in South Tyneside, and Harland and Wolff, are aimed at producing a contract to build armed forces transport ships.

The two shipbuilders have told the Ministry of Defence (MoD) that they would be prepared to co-operate in a bid to fight off competition from outside the UK.

Although the two companies are expected to submit separate bids for the £200m contract for six ferries, a deal could result in the groups sharing the six ships.

The scheme would help yards spread the work and smooth out often volatile demand.

Brett Martin, chief executive of Cammell Laird said the company was "pushing" the scheme

"In that way you achieve the economies of scale you get from series building, but in splitting the ship into bits you also spread the work around the UK," he said.

The MoD has called for a further round of bids from the competing consortia which are due next week.

Officials from the MoD stressed its choice would be based on value for money and made under European public procurement rules.

The Cammell Laird shipyards at Hebburn secured work for 150 people at the site last week after clinching a contract to build a ferry for a Norwegian operator.