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

Ferguson was also part of the consortium which was eventually named preferred bidder to build the Royal Navy's new Type 31e frigates.

Early work, however, came 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 ships were to be a new hybrid design - powered by marine diesel oil and liquefied natural gas - and construction fell 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 two years after its launch it 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. The latest forecast is that it won't enter service until the summer of 2022.

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

'Customer disruption'

Jim McColl laid 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.

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

Ferguson said it expected to lose tens of millions of pound on the ferry deal. Its accounts blamed unforeseen costs on "post contract award, variations, interference, and disruption caused by the customer".

The Scottish government was unwilling to provide more money - and argued that providing more help might breach EU rules.

Matters came to a head in the summer when the Ferguson Marine Engineering Ltd went into administration. Despite a number of private bidders expressing an interest, the Scottish government ended up taking the yard into public ownership.

The latest update from ministers says the two ferries will eventually cost about £200m - more than double the original price tag - and will be delivered four year late.

A government report blames poor project management while McColl's firm was in charge with a lack of financial controls.

McColl has hit back, again insisting the fault lies chiefly with CMAL and suggesting it would now be cheaper to scrap the ferries and start again with a simpler design.

Despite the conflicting viewpoints, one thing is clear. The ferry deal that was meant to provide a lifeline to Ferguson has ended up dragging it down.

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