Government to invest £14.2m in beleaguered Ferguson Marine shipyard

The Scottish Government has said it will invest £14.2m investment into the beleaguered Ferguson Marine shipyard.

However, it will not directly award the nationalised ferry builder a contract for seven new electric vessels confirmed on Tuesday.

The Government-owned yard has been under pressure in recent years due to the late and over-budget construction of two ferries for the west coast fleet.

The Glen Sannox and Glen Rosa are set to cost hundreds of millions more than originally planned.

Scotland

Seven new electric ferries confirmed for Scotland

The Scottish Government said the procurement process for the fleet will take around eight months.

The Government has been urged to take action, including in funding upgrades at the site which would allow the yard to continue operation beyond the completion of the two ferries, as well as to directly award a new CalMac contract for small vessels to the Port Glasgow facility.

An announcement from transport secretary Fiona Hyslop, however, has ended such hopes, with the contract for the seven electric vessels – valued at an estimated £175m – being put out to competitive tender on Tuesday.

While the direct award will not take place, funding will be targeted at modernisation of the yard, with bosses also in the final stages of talks with defence giant BAE Systems to build Type 26 frigates, according to economy secretary Kate Forbes.

She said: “Now that Glen Sannox is approaching handover, our focus is on the next phase for (Ferguson Marine Port Glasgow’s) future. That requires change and investment to target new opportunities.

“The board has developed a business plan that it believes has the potential to secure a competitive future.

“Subject to independent legal and commercial analysis, the Scottish Government will provide significant new funding to support the yard’s modernisation and improve productivity.

“Additional funding goes hand-in-hand with winning new commercial contracts, and it is extremely good news that talks with BAE Systems to secure further work have reached this advanced stage.”

On the direct award, Forbes said such a move creates legal risks around state aid regulations – something the Government cited repeatedly when asked about the contract being handed to Ferguson.

“Extensive analysis and legal advice confirm that a direct award of the small vessels phase one contract to FMPG introduces substantial risks and uncertainties for the shipyard and the communities which rely on the lifeline vessels, due to the strict conditions imposed by the UK Subsidy Control Act,” Forbes said.

“Instead, we will do everything which is legally possible to support the yard and the workforce to secure a long-term future, which is why we have come to an agreement on initiatives and funding to improve productivity.”

Speaking to journalists in Aberdeen, Forbes said the direct award could be tied up in legal wrangling and subsequently be “the worst of both worlds” for those on Scotland’s islands.

Forbes added the Scottish Government’s commitment to shipbuilding on the Clyde “remains unwavering”, but added: “The company will of course be able to consider a bid, either individually or in partnership with other yards, but its long-term future depends on winning work on a competitive basis.”

Scottish Conservative transport spokesman Graham Simpson said it is “vital” the contract provides “value for money for islanders”.

He added: “Given the secrecy that has been at the heart of the SNP’s ferry scandal, the process of awarding this contract must be fair and transparent throughout.

“Once it is awarded, it must deliver ferries that are on time and on budget and are lifeline services islanders will be confident are reliable.”

Scottish Liberal Democrat economy spokesman Willie Rennie said the decision not to award the contract to Ferguson Marine is “risky” because the yard will need “a regular drumbeat of orders” to keep the doors open.

Alba Party general secretary Chris McEleny – a former Inverclyde councillor – said: “This is nothing short of a betrayal of the people of Inverclyde and the workforce at Ferguson’s in Port Glasgow.

“The Scottish Government should be under no doubt, their decision today not to directly award this work to Ferguson’s has put shipbuilding on the lower Clyde on the verge of extinction.”