Forgemasters nationalised to protect nuclear fleet

SHEFFIELD Forgemasters has been nationalised amid fears that a crisis at the firm would jeopardise the £40bn programme to build next-generation nuclear missile submarines for the Royal Navy.

Ministers will use £2.6m of taxpayer money to buy out existing shareholders including former boss Graham Honeyman, and the state is taking on £17m of the troubled steel maker’s debt.

The rescue, by the Ministry of Defence, will end concerns that poor financial performance at Forgemasters could hold up the manufacture of parts vital for building the new Dreadnought class of Trident missile subs.

Forgemasters – which is known for working on an aborted long-range “supergun” for Iraqi dictator Saddam Hussein in 1989 – has struggled financially for years. It was forced to beg for a £30m emergency loan underwritten by customers BAE Systems, Babcock and Rolls-royce five years ago to stay afloat.

Although Forgemasters has a regular supply of defence work it has made only small profits and was left unable to invest in new equipment needed for projects essential to national security.

Accounts for the year ending December 2019 show the company had sales of just £79.3m and made a pre-tax profit of £800,000. During the period it also landed contracts worth £66m, which

the business said would provide “core revenues” through to 2022.

David Bond, chief executive, said: “This is an unusual deal, but public ownership of this key sovereign capability is a sensible outcome.

“We are the only company in the UK capable of this kind of work and the Government wants to preserve that capability. There are very few companies around the world who do what we do, and many of them are in countries we would never do business in.”

He said it would be difficult for the Government to even buy parts from the US if Forgemasters went bust, as defence firms there are struggling to keep up with demand from the US Navy.

Forgemasters was not in danger of failing without government intervention, Mr Bond said, but it could not afford to make the huge investments needed to match MOD requirements.

The Government said that it ultimately hopes to return the business to private ownership.