THE future of the Ferguson shipyard in Port Glasgow has been the subject of much speculation over the past weeks and months.
I am well aware that it’s been an incredibly difficult time for everyone connected to the yard, from the 300-strong workforce to the wider community around it, and the shadow of closure has been a very real threat hanging over the business.
On the 9th of August, this came to a head when the directors of the yard filed a Notice of Intention to appoint administrators, effectively starting the process to put the business into administration.
In response to this series of events, and in order to protect jobs, secure a future for the yard and complete the vessels being built there – including the two Caledonian Maritime Assets Ltd (CMAL) ferries – the Scottish Government made the decision to take the yard into public control while the administrators complete a marketing process.
This is expected to last another two to four weeks.
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I want to be clear from the outset that this is not a course of action we took lightly.
In fact, the Scottish Government has been working for over two years to find a resolution to the difficulties at Ferguson’s and throughout that time our preference has always been to identify viable commercial options to keep the yard going and to finish the vessels.
No such solutions have come forward.
There have also been suggestions that we have turned down a viable offer from Clyde Blowers Capital (CBC) to save the shipyard, but that is not the case.
We considered their offer fully, but it gave us no certainty on the delivery of the vessels and saw no money invested by the company themselves. There were also serious concerns that entering into the proposal would have been unlawful.
It goes without saying that the Scottish Government must act in the public interest, lawfully and deliver value for money at all times. I could not and would not act outwith the law.
And while we were unable to accept CBC’s proposal, it’s worth pointing out that the Scottish Government has supported the business significantly in recent years, including providing a commercial loan of £30 million in June 2018 for working capital and to support diversification – in addition to a £15m loan provided in September 2017.
These loans were provided to provide working capital and diversify the business and on the basis of a pipeline of work that FMEL indicated they could win.
We will look to use part of this £45m loan to fund a credit bid to acquire the yard should no viable commercial offer be forthcoming following the marketing period.
In the meantime, we are working hard to pick the business up and refocus efforts on completing the vital CMAL contract, as well as the other vessels under construction in the yard.
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It’s no secret the current ferry fleet is being pushed to its full potential in order to provide the increased level of service that passengers expect. These two new ships will provide much-needed support for the economies of our island communities.
In order to get the right structure in place to take the business forward, we have appointed a Turnaround Director to stabilise the business, establish its financial position, and put in place a programme to complete the two ferries in the shortest time possible to ensure value for money to the taxpayer.
Developing a revised cost analysis to establish the actions required to complete the two ferries will be one of the main tasks for the business and we are already working closely with the management to create a clear understanding of the costs of completing the two vessels.
To aid this work, I have formed a Programme Review Board to work to secure the most effective delivery programme for the CMAL vessels in terms of time, cost and impact on the workforce. The group includes representatives from key stakeholders and sector experts including – Transport Scotland, Marine Scotland, David MacBrayne Limited, Scottish Enterprise and CMAL, as well as representatives from the on-site workforce.
The group will establish the cost and timescales to complete the vessels and will monitor the progress of delivery against these new milestones.
A key focus over the coming weeks will be to get this task right and set the yard on the right path to show it can deliver to programme and cost.
Throughout all of this, the Scottish Government will continue to work closely with staff and the trades unions – as well as the yard’s suppliers – to ensure as smooth a transition as possible.
There is no doubting the capabilities of the highly skilled workforce, and we still believe there is a future for the Scottish shipbuilding industry.
I gave a commitment to the workforce and our island communities that we would safeguard the jobs at the yard to ensure the delivery of the new ferries. The alternative was for us to walk away, allow the company to go into administration, with jobs being lost and the vessels left as empty shells.
Ensuring a future for the shipyard is the right thing to do. And while clearly there is much yet to do, our actions have ensured that there will be a tomorrow for Ferguson’s.
Derek Mackay is Cabinet Secretary for Finance.
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