The ending of more than 500 years of naval shipbuilding in Portsmouth will inevitably lead to laments about Britain's industrial decline.

This was an industry that at its peak built great ships such as the Queen Mary and HMS Dreadnought, constructed in Glasgow and Portsmouth respectively in the early 20th century.

The boom lasted well beyond the second world war. According to consultancy IHS, 134 vessels – 1.47m gross tonnes of shipping – were produced in the UK in 1976. But competition from Japan, South Korea and now China has taken its toll, with the industry producing just four ships in 2011. Even Royal Navy tankers are being built in the vast shipyards of South Korea now.

Conversations with veteran industrialists about the state of shipbuilding today do not yield whimsical reminiscence of the good old days. Instead they produce regrets that tough commercial decisions – of the kind that saw France and Germany aggressively pursue markets such as nuclear power or premium cars – were not made in Britain in the 70s and 80s. Sir John Parker, the former chief executive of Harland and Wolff, the much-diminished Belfast shipbuilder, said the industry missed an opportunity in the Thatcher era.

"One of my big industrial disappointments or even failures is that I failed to persuade the government of the day that there was a big future in building cruise ships. Whoever used run-of-the-mill bulk carriers or tankers drifted to the lowest-cost country. So how you survived in higher-cost countries was more sophisticated ships like cruise ships. I saw that there was going to be a lot of growth in cruise ship building so we demonstrated that this was a real growth industry. And nearly 25 years on, those forecasts would have underestimated the demand." Thus the industry drifted to the east.

A shipbuilding industry remains in the UK, although it will be even smaller in the wake of Portsmouth and the winnowing down of what remains on the Clyde.

According to the UK Marine Industries Alliance, the wider UK sector employs nearly 90,000 people with a turnover of nearly £10bn.

Some of it is envied abroad. Dorset-based Sunseeker, a maker of luxury yachts, was bought for £320m by China's second richest man in June. And these are the niches that the industry occupies: bulge-bracket naval work that has just been dealt a ruinous blow; and specialist work like Sunseeker.

Parker's regret is that the UK did not spot the big opportunities in the 80s and, backed by government support, claim them for its own. This applies to every British industrial sector under Thatcher, Major and Blair.

It is also worth being hard-nosed about Portsmouth, Scotstoun and Govan. These yards have produced state-of-the-art work in the HMS Queen Elizabeth and HMS Prince of Wales aircraft carriers and the manufacturing in their cavernous yards is an impressive site to behold. But these were sites dependent on one buyer: the British taxpayer. So when the £5.4bn carrier programme ended, job cuts were inevitable.

This should be borne in mind if you walk down the Clyde, towards Dumbarton, from Glasgow's Riverside Museum and its collection of shipbuilding memorabilia. The walk encompasses the still-active Scotstoun plant and the derelict, undeveloped sites that once surrounded it, including the John Brown yard that launched the Queen Mary. It would have been a different sight if successive governments had guided the shipbuilding industry to a sustainable future.