Deloitte secures future of Scottish shipyard

23 August 2019 Consultancy.uk

The UK has seen another industrial manufacturer fall victim to turbulent trading conditions in 2019. Fortunately for the Ferguson shipyard in Port Glasgow, administrators from Deloitte have secured a deal which will see the yard nationalised by the Scottish Government if a buyer is not found within four weeks.

At the start of August 2019, the historical shipyard of Harland & Wolff Heavy Industries collapsed into administration, having traded in Belfast since 1861. Famous for having built the majority of the ships intended for the White Star Line, the increasing uncertainty surrounding Brexit seemed to push the firm over the edge, following a poor period of trading.

Now, Ferguson Shipbuilders has become another casualty of the troubled manufacturing scene in the UK, collapsing into administration for the second time in five years. The firm, which constitutes the last shipyard remaining on the lower Clyde, initially went bust in Summer 2014. On that occasion, the company was bailed out by billionaire Jim McColl, who rebranded it as Ferguson Marine Engineering, and upped its headcount from 70 to 350.

Deloitte secures future of Scottish shipyard

While initially the firm looked set for a bright future, winning a £97 million Scottish Government order for two new ferries for Caledonian MacBrayne, (CalMac). The ferries for CalMac – which is the largest operator of passenger and vehicle ferries, and ferry services, between the mainland of Scotland and 22 of the major islands on Scotland's west coast – soon became a millstone around Ferguson’s neck, however.

CMAL, the company that owns and manages ferries and other assets on behalf of the Scottish Government, pushed Ferguson Marine hard to complete the ferries on time and on budget, prompting a continued dispute with the shipbuilder. McColl contended that CMAL made repeated design changes, which CMAL denies. Ferguson Marine went on to reveal last year that it expected to lose nearly £40 million on the ferry deals, and while it received two loans from the Scottish Government worth a total of £45 million, the company was ultimately unable to stay afloat.

Administrators were appointed from Deloitte, but while BDO is still searching for a rescuer for Harland & Wolff, the news in Scotland seems to be much brighter. Deloitte described the ferry contract as being "materially behind schedule and over budget," before swiftly agreeing a deal with the Scottish Government to secure the future of Ferguson, come what may. The deal, wherein the Scottish Government has agreed to buy the facility if no private buyer is found in the next month, means work on the CalMac ferries and other contracts can continue while efforts to find a commercial buyer get under way.

Michael Magnay, Partner at Deloitte, said, "We are grateful for the support afforded to the business by Scottish ministers at what is undoubtedly a very challenging period for all stakeholders, and in particular its employees. With this support we will keep the yard operating whilst we proceed to actively market the business for sale, in order to secure its long term future."

Speaking to the BBC, Finance Secretary Derek Mackay said the alternative was for the government to "stand aside" while jobs were lost and an important infrastructure contract went unfulfilled. He added that public control would provide “continuity of employment” while ensuring the completion of the ferry contracts “at the lowest possible cost to the taxpayer.”

Workplace representative body GMB welcomed the news, with the union's Scotland organiser Gary Cook commenting, "That is a very welcome development, particularly after all the recent uncertainty. Our members were caught in the middle of a situation that had nothing to do with them and their relief will be palpable. It is five years since the yard went bust and the Scottish government has prevented that from happening again."


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