WHY SCOTLAND MUST REDESIGN ITS VISION OF SHIPBUILDING TO BECOME AN INDUSTRY LEADER ONCE AGAIN
AS JIM McCOLL TAKES OVER THE AILING FERGUSON SHIPYARD THE WORKFORCE AWAITS THE TYCOON’S VISION OF HOW TO MAKE COMMERCIAL SCOTTISH SHIPBUILDING PROFITABLE AGAIN BY COLIN DONALD BUSINESS EDITOR
SCOTTISH business’s perennial white knight Jim McColl is expected to give a press conference next Tuesday to provide more detail about his proposed rescue of Ferguson Shipbuilders in Port Glasgow, the last commercial shipbuilder on the Clyde.
The Clyde Blowers tycoon has already done much more than offer salvation from the sack to Ferguson workers, even prior to his formal acceptance of the keys to the yard.
In a statement on Friday, McColl pledged to get the yard back to business by the end of the year, boost employment numbers to 100 by next February, and quadruple the workforce in three to five years.
He said: “There is an abundance of work out there which we believe Ferguson – with the necessary upgrade of facilities – can undertake.
“Already, we’ve had enquiries about orders. We have money allocated to go ahead with the immediate improvements that will secure that future.”
McColl’s phoenix company joins BAE at Scotstoun and Babcock’s at Rosyth as the fragile last remnants of two centuries of shipbuilding in Scotland, an industry with social, political and cultural resonances far greater than its current importance to Scotland’s GDP.
Anyone with an interest in Scottish manufacturing and its global reputation must applaud McColl’s repeated readiness to help out distressed Scottish concerns. His record of solving big problems to the benefit of Scottish workers speaks for itself.
McColl plans to invest “many millions” at the site while simultaneously seeking new orders, initially in the oil and gas and renewable energy sectors, but in the longer term seeking to launch new ships.
If no-one should underestimate McColl’s acumen, neither should anyone underestimate the challenge of building commercial ships in Scotland. Not that there is any special jinx on the country, which has suffered along with the rest of the Western European shipbuilding sector from the rise of lower-cost yards in eastern Europe and Asia, although many believe that this eclipse was far from inevitable.
Can McColl buck the trend by filling his order books with ship commissions? Those who know the world of shipbuilding believe its specialised dynamics mean the cards are stacked against new entrants, even ones with entrepreneurialism and experience.
McColl has already hinted at synergies with other parts of his empire which encompasses marine pumps and boilers, but Clyde Blowers’ links with shipbuilding remain tenuous.
According to Stuart Ballantyne, the expatriate Scots chief executive of Seacorp and former adviser to the Scottish Government, modern shipbuilding is “international, competitive, unpredictable, risky, multifaceted and fast”.
He added: “It leaves its members little time for contemplation, and little margin for error, and has no sympathy for failure, no tolerance for the inflexible, the weak or the intransigent.”
The Queensland-based figure, an authority on maritime commerce, who was asked by the SNP to contribute to a maritime strategy for Scotland, told the Sunday Herald that the best way for a billionaire like McColl “to turn a large
fortune into a small fortune” was to “buy a shipyard”.
On the face of it, making a success out of Ferguson looks challenging. The century-old yard has been limping along for two decades, losing tenders for ferries and other vessels to competitors in Poland and elsewhere, and adopting various patch-and-mend solutions to the underlying problem of the uncompetitive nature of Scottish shipbuilding. It once employed 400 people, but at the time of entering receivership, this had dwindled to just 77.
The patchwork of solutions adopted to keep the yard afloat have included manufacturing specialist vessels like a hover barge for transport in the Russian tundra, cable-laying vessels for the offshore wind industry, and even manufacturing steel towers for the wind turbines themselves.
While Ferguson previous owners, the Dunnet family, have won praise for seeking to diversify, they lacked Jim McColl-type deep pockets and potential synergies with a global engineering empire – the attributes that have given hope to the yard’s workforce.
Also in McColl’s favour is the fact that the world needs more ships – lots of them. For all the demoralisation of the industry over recent decades, maritime experts see no reason why Scotland
should not become competitive in a way that it never had to be in the days when the British Empire and the Royal Navy provided protected markets.
However, Ballantyne says the idea of a yard being able to compete for the occasional one-off order is not credible in today’s world, any more than a boutique car factory that could turn its hand to Range Rovers or Nissans. He is also doubtful that occasional orders from Caledonian MacBrayne – even if the rebooted Ferguson was more successful than its previous incarnation at winning them – could be the basis for an outwardlooking, fleet-footed operation that could cut it in today’s shipping world.
“If you are going to be as focused as you need to be start a shipyard in a country with five million people you need to be able to produce ships that are useful worldwide, not things that are designed to be purchased by a fairly inept customer like the Scottish Government [ie, nationalised ferry company Caledonian MacBrayne, or CalMac], which has a record of buying things for huge amounts of money that don’t work properly,” he said.
For Professor Alf Baird, head of the maritime research group at Napier University’s Transport Research Institute, a revival of Scottish shipbuilding has to start with a revival of expertise in marine architecture. Courses in this area, he says, are heavily dominated by foreign students.
“To revive shipbuilding in Scotland one of the things we have to address is the lack of design skills” Baird said. “The best designers are in Italy, Australia, Germany, Norway. These people study naval architecture at Glasgow University but they don’t practice it in Scotland.
“Yes, we did have a great tradition of ship design in Scotland, but you can’t live on tradition. I taught on this course a couple of years ago and there were no Scots students at all. If we aren’t producing our own designers of the future, then we start with a built-in disadvantage.”
Baird is an arch-critic of CalMac, the obvious end customer for any new entrant into Scottish shipbuilding, which, despite its need to replace an ageing fleet, he presents as an impediment to a revived shipbuilding sector. He claims its ships are designed by civil servants and trades unions, the latter with a view to maximising crew jobs, rather than by adopting the latest innovations on fuel and labour-saving maritime technology.
He hints that Scottish shipbuilding’s legacy is actually a disadvantage, as he sees it as having been a protected industry, built for empire trade or military purposes, which meant that yards “could be hopeless but still got orders”.
Baird’s unsolicited advice to McColl is to play an active role in improving Scotland’s maritime design skills and invest in the kind of covered assembly sheds that feature in the best facilities in Europe or Asia – an investment McColl has already suggested he may make.
“There is a potential for Scotland to do well,” he says. “The three things we need are better skills, more investment in infrastructure and better developed financial mechanisms, such as loan guarantees, that can make things happen. “Shipbuilding should be a strategic industry for Scotland but we need to develop a strategy based around the fact that, in Scotland alone, where the average age of a ferry is about 20 years old, we need to acquire about 100 new ferries in the next 10-15 years, and in Europe as a whole we need about 3000 new ferries that meet modern [environmental] fuel regulations and disabled access requirements.”
He advocates fresh thinking about how Scottish shipbuilding can plug into the global supply chain, for example, by importing readymade hulls from China and using local expertise on the higher-value fit-out closer to customers. Although the idea might seem challenging to the proud tradition of the Clyde shipyards, similar developments have occurred elsewhere, for example, in Transport Scotland’s discreet importing of large ready-made components of the new Queensferry Crossing from Shanghai.
It would be a surprise if Jim McColl, one of British industry’s pioneers of manufacturing in China, has not already investigated such options. We will learn next week if his plans for Ferguson include the immediate unveiling of a new blueprint for Scottish shipbuilding, or whether he will bide his time.