UNION leaders fighting to save one of the last shipyards on the Tyne have had their hopes dashed.

The GMB, Amicus and T&G unions left crisis talks with the Government last night with no assurances of work for Swan Hunter's Wallsend yard in the near future.

The blow came as one of the senior managers at the shipbuilder admitted the yard would be mothballed unless more contracts were found.

Swan Hunter project manager John Mitchell said: "We cannot sit here facing a brick wall just saying that something will come along.

"We are doing everything we can and looking into every avenue in order to keep the yard going, but if all else fails, then it (mothballing) is something that could happen."

Owner Jaap Kroese has applied for licences to operate a shipbreaking business at the yard. That would keep the workforce of 800 employed.

Mr Kroese had been working with colleagues in NEMOC (North-East Marine and Offshore Cluster) to start the breaking business with Dutch partners NV Ecodock in the vacant A&P yard.

But after the Dutch company twice postponed a visit to Newcastle, Mr Kroese applied for the licences, which could take up to three months to secure.

The company has been laying off staff as work nears completion on the second of two Royal Fleet Auxiliary vessels.

Mr Mitchell said: "The workforce is used to this type of work and the ebb and flow of contracts coming in. There are certainly people we don't want to lose - our key workers - and we will do everything possible to avoid that."

Yesterday, The Northern Echo revealed that union leaders were meeting Minister for Defence Procurement Lord Drayson about the future of the yard.

Tom Brennan, regional secretary of the GMB, said after the talks: "It was very disappointing. The MoD is saying that there are no orders that can be brought forward. Their priority is getting the existing contracts completed on time."