SWAN Hunter has subcontracted work out to Holland after falling behind schedule on a £120m contract.

But shipyard chairman Jaap Kroese last night moved to allay fears that the delay would jeopardise workers jobs at the Wallsend, North Tyneside, yard.

Swan's secured 1,500 jobs at the yard for four years when it won the contract to build two Alternative Landing Ship Logistic (ALSL) vessels designed to carry troops and equipment.

Just eight months into the contract, building schedules had to be rearranged to redress a three-month delay.

Mr Kroese said work on the bow sections of the ship had been subcontracted out to the Dutch firm, Centraalstaal.

He said this was because receivers had sold off vital equipment to carry out the task, and the yard was forced to rearrange its engineering programme to accommodate Glasgow's Govan yard.

He said: "A neighbouring yard was too expensive and Glasgow's Govan yard said it could only complete one bow.

"There is nothing unusual about subcontracting work out. If we had been allowed to follow our engineering programme we wouldn't have had this hiccup.

"This is no reflection on the performance of the workforce, who have done well."

Mr Kroese added: "We have invested £27m in the yard. The £700,000-worth of work on the bow sections is nothing."

Mr Kroese said the firm would be back on schedule within a few months and the delays would have no long-term impact on the yard.