Work has begun in Portsmouth on a key section of a new aircraft carrier.
Defence giant BAE has confirmed it is considering closing one of its major shipyards in a move that could threaten 3,000 jobs in Portsmouth.
A total of 250 jobs have been protected by a £45m Government contract for testing Royal Navy warship weapons systems.
The future of more than a thousand workers employed in the shipbuilding industry in Portsmouth remains under a cloud of uncertainty - that's despite a day full of ceremony when BAE Systems handed over an ocean patrol vessel to the Brazilian navy.
Even as the event was taking place, the company's managing director was still unable to give a firm commitment that it would continue operations in the city. This from our correspondent Martin Dowse.
APA, the second of three Ocean Patrol Vessels built by BAE Systems has been handed over to the Brazilian Navy in a ceremony at Portsmouth Naval Base.
A £133m contract with BAE Systems for the supply of three Ocean Patrol Vessels and ancillary support services was signed 11 months ago. First of class, AMAZONAS, arrived in her home port of Rio de Janeiro two months ago.
The ships are effective for search and rescue, maritime security and humanitarian relief operations and will provide Brazil with enhanced maritime capability.
More than a thousand workers employed in Portsmouth by Britain's biggest defence supplier have been told they'll know by Christmas whether the city's shipyard has a future.
BAE has three UK bases. One in Portsmouth and two in Glasgow.
The group employs nearly 3,000 people at the Portsmouth shipyard which looks most likely to close - with the loss of up to 1,500 jobs, we've been told.
Last year, BAE's sales fell 14% and profits are down 7% to under £2billion.
Chief Executive Nigel Whitehead says the firm can't rule out closing down the site once current contracts are completed.
"We continue to work closely with the Ministry of Defence to explore all possible options to determine how best to sustain the capability to deliver complex warships in the UK in the future.
"This work is ongoing and we are committed to keeping our employees and trade unionsinformed as it progresses."
A decision over the future of the BAE Systems shipyard in Portsmouth is expected before Christmas.
In a Sunday newspaper interview, Nigel Whitehead, the UK chief executive of BAE said the defence company expected “a reduction in footprint” with one of Britain's three major shipyards likely to close.
3,000 people work at the site in Portsmouth. BAE Systems also has two bases in Glasgow, at Govan and Scotstoun. The Navy’s base at Portsmouth, where BAE also does repairs, is not at risk.
Southampton Itchen MP John Denham has highlighted his concern over the future of 1,300 jobs at Portsmouth dockyard. It comes after business secretary Vince Cable reportedly said a shipbuilding project - which would guarantee production at BAE Systems in Portsmouth beyond 2014 - was ‘not a runner’.
He said: "Vince Cable and the Tory-led Government cannot just wash their hands of the dockyard future so soon after the announced closure of Ford in Swaythling. Ministers let Ford keep them in the dark. But on this issue there is no excuse – they know what the problem is and they need to tackle it”.
BAE Systems have said work is "ongoing" to try and secure a £150m project to build two offshore patrol vessels. It come after the business secretary Vince Cable raised doubts over the plan which could secure 1,300 jobs at its Portsmouth shipbuilding base.
In a statement, BAE said: “We continue to work closely with the Ministry of Defence to explore all possible options to determine how best to sustain the capability to deliver complex warships in the UK in the future.
"This work is ongoing and we are committed to keeping our employees and trade unions informed as it progresses."
The business secretary has queried plans to secure 1,300 jobs at BAE Systems' shipyard in Portsmouth. Vince Cable has questioned a £150m project that would guarantee production at the site, and secure 1,300 jobs, beyond 2014.
The dockyard has no orders beyond 2014, when it finishes work on the aircraft carriers HMS Queen Elizabeth and HMS Prince of Wales. Portsmouth North MP, Penny Mordaunt, has backed a £150m proposal to build two offshore patrol vessels, filling any construction gap.
But, Mr Cable told a national newspaper about the proposal: "I don't think it's a runner. It would only be a runner if there was a demand from the armed services."