Scotland swoops to rescue failing shipyard
In first nationalisation of its kind since the Seventies, the SNP government steps in to safeguard 300 jobs
THE Scottish government has launched a surprise takeover of Ferguson Marine – the first nationalisation of a British shipyard since the Seventies.
Ferguson had been teetering on the brink after costs spiralled out of control on a contract to build two ferries for the Highlands and Islands.
The Port Glasgow shipyard’s administrators and Scotland’s SNP government have struck a deal to complete the ships and safeguard about 300 jobs. The government will run the yard for a month but if a buyer cannot be found, the company will enter state ownership.
The ferries, under construction for Caledonian Maritime Assets (CMAL), were on a £97m fixed-price agreement but the programme hit cost overruns and delays.
Ferguson, which was rescued by Scottish entrepreneur Jim Mccoll five years ago, blamed costly design changes to the ferries. However, a government-ordered review found that many of the cost overruns and delays emanated from the shipyard.
It is the first time a UK shipyard has been taken over by the state in 42 years, when the Nationalisation Act consolidated the foundering industry in the face of a global drop in demand for ships and a wave of cheap vessels being built in south-east Asia.
Sir John Parker, a veteran of the industry and a leading figure during the 1977 nationalisation, warned that state ownership could bring problems. “You are incredibly dependent on the quality of politicians in charge of shipbuilding and their interest in it,” he said. “Some interfere, taking up time and resources, some let you get on with it.”
Sir John, the author of the recent National Shipbuilding Strategy, added: “There is no real long-term plan – priorities change as politicians or governments do.”
Ferguson’s rescue is likely to cause anger in North Devon, where the Appledore shipyard closed earlier this year with the loss of 200 jobs.
Dr Martin Stopford, a shipbuilding expert, said he was “astonished” at the Scottish government’s move. “Ferguson’s been limping along for a while. If Appledore, which was a shipyard with a reasonable record, could not succeed, you’d have to assume Ferguson, which was more volatile, faces a challenge.”
Derek Mackay, Scottish Economy Secretary, said: “Public control will provide much-needed continuity of employment and ensure the completion of the CMAL ferry contracts at the lowest possible cost to the taxpayer.
“It is absolutely essential that the outstanding contracts to build these two ferries are completed in order to sustain the Clyde and Hebrides Ferry Services network and provide vital support for the economies of our island communities.”
The nationalisation of the yard contrasts with the plight of Harland & Wolff, the Belfast shipyard that went into administration earlier this month.
Administrators of the shipyard where the Titanic was built more than a century ago have extended the temporary lay-off of workers to allow more time for talks with potential buyers.
BDO Northern Ireland, which was appointed as administrator, said it had held “positive discussions with interested parties for the sale of the business as a going concern”.
The extension of the lay-off, which was due to expire yesterday, means that the workers’ employment contracts remain in force even though they are not being paid. BDO did not specify an end date for the extended lay-off. The shipyard, which once employed 30,000 people, now has 123 staff.