Scotland

The lifeline ferry deal that went adrift

Glen Sannox Image copyright Getty Images

When Ferguson Shipbuilders went bust in the summer of 2014 it seemed the last shipyard on the lower Clyde was heading for oblivion, more than a century after it was founded by the four Ferguson brothers.

But within weeks, in a deal brokered by the Scottish government, a white knight stepped forward in the shape of Jim McColl.

A self-made billionaire, he was one of the most prominent business figures to support Scottish independence ahead of the referendum in September that year.

Image copyright Sandy Young
Image caption Jim McColl stepped in to rescue the shipyard in 2014

McColl, who made his fortune transforming the ailing Clyde Blowers into a portfolio of engineering investment companies, was adamant that Scottish shipbuilding could have a bright future.

Investment swiftly followed - the old buildings were demolished and replaced by state-of-the-art fabrication and design facilities.

The workforce at Ferguson Marine Engineering Ltd as it became known rose from about 70 to 350, including apprenticeships in one of the most socially deprived areas of Scotland.

Image copyright Ferguson Marine
Image caption The workforce at Ferguson Marine has risen five-fold since its takeover

The new owner has plenty of ideas for the yard's future - refitting superyachts, fishing vessels, a new generation of hydrogen-powered ships.

Ferguson is also involved in two out of the three consortia currently bidding to build the Royal Navy's new Type 31e frigates. If successful that would secure Scottish shipbuilding jobs for generations to come.

Early work, however, has come from the Scottish government-owned ferry company CalMac.

The yard started off with an order for a small diesel/electric hybrid ferry - but in the summer of 2015 it received a major boost when it won a £97m order for two much larger ferries.

Ironically this apparent lifeline was to cause major problems for the shipyard.

The new ships were to be a new hybrid design - powered by marine diesel oil and liquefied natural gas - and construction has fallen way behind schedule.

Image copyright Getty Images
Image caption Work on Glen Sannox has fallen way behind schedule

The first ferry Glen Sannox - destined for the Arran route - came off the slipway in November 2017 and was expected to enter service in mid-2018 but remains moored beside the yard while work continues.

The second ferry, currently known as Hull 802, earmarked for the Skye, Harris and North Uist route, is still being assembled and may not enter service until 2021.

The delays in delivering the vessels are having a knock-on effect on CalMac's already under-pressure west coast ferry services.

Jim McColl lays the blame for the problems at the door of CMAL- the company that owns and manages ferries and other assets on behalf of the Scottish government.

'Customer disruption'

In a BBC interview last summer he accused CMAL of making repeated design changes - a claim denied by CMAL. The prototype hybrid design also requires lengthy certification processes from insurers and regulators, he said.

At the end of last year, Ferguson said it expected to lose nearly £40m on the ferry deal. Its accounts blamed unforeseen costs on "post contract award, variations, interference, and disruption caused by the customer".

The Scottish government has made two loans to the company, totalling £45m, but is refusing the re-negotiate the fixed-price cost of the original ferry contract. The eventual cost of building the ships could rise to double the original £97m price tag.

The Clyde shipyards once dominated the world's shipbuilding industry but Ferguson Marine is the last remaining commercial yard (the other two yards in Glasgow are run by BAE Systems making warships).

The ferry deal that was meant to provide a lifeline to Ferguson now appears to be dragging it towards the rocks.

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