Shipbuilder administration is ‘hammer blow’ to energy workforce, says union

A union has said a shipbuilder going into administration is a “hammer blow to Scotland’s energy workforce” and called on the UK and Scottish Governments to keep their promise of a just transition.

Harland and Wolff, which has two shipyards in Scotland: one in Methil, Fife; and the other at Arnish on the Isle of Lewis; announced on Monday it was going into administration.

The Belfast-based company, which famously built the Titanic, said there will be between 50-60 immediate redundancies, but says staff at its four shipyards, including Belfast and Appledore, north Devon – would not be affected.

Gary Cook, GMB Scotland senior organiser for manufacturing, said: “This is a hammer blow to Scotland’s energy workforce and an all too familiar story.”

It marks the second time in five years the business has gone into administration.

The administration process will be confined to the holding company, Harland and Wolff Group Holdings PLC, and the operational companies which run the yards are expected to continue trading.

A company statement said: “A full review of all group holdings commenced in July and has concluded that H&W Group Holdings PLC is insolvent on a balance sheet basis as per its last audited accounts and most recent management accounts.”

Insolvency practitioners Teneo will act as administrators and shares will be delisted.

The company is part of a consortium that landed a major contract to build new fleet solid support ships for the Royal Navy.

It had applied for a £200 million loan guarantee from the UK Government as part of efforts to restructure its finances.

However, the UK Government decided in August not to act as a guarantor on the lending – while also ruling out direct funding to maintain the company’s liquidity.

A welder at the Harland and Wolff construction yard in Methil (Andrew Milligan/PA). PA Media

Mr Cook said: “Just this week, it was announced Grangemouth will cease refining operations with hundreds of redundancies.

“But it does not need to be the end of the yards at Arnish or Methil. They can and must be cornerstones of Scotland’s manufacturing foundations.

“Both the Scottish and UK Governments have made promises of a just transition. It’s now time for them to keep those promises and secure the future of these yards.

“If a just transition is to be anything other than a hollow phrase, then the cycle of crises must be broken. Both yards need public investment to make them competitive so they can build Scotland’s offshore wind here at home.”

In June, First Minister John Swinney said the Scottish Government would work with the UK Government to ensure the shipbuilder can upkeep its employment at both Scottish sites.

He said: “There is obviously a situation where Harland and Wolff are trying to secure additional investment in their operations.

“Our priority is to make sure that we do everything that we can to support employment at Arnish and Methil.

“The Scottish Government will do that in concert with the UK Government where it’s possible for us to support such proposals.”

In a written statement to Westminster on Monday, Business Secretary Jonathan Reynolds explained why the UK Government had rejected the request to act as a guarantor on fresh lending sought by the company.

He said it had not been an easy decision but there was a “very substantial risk that taxpayer money would be lost”.

He added: “The Government believes, in this instance, that the market is best placed to resolve the commercial matters faced by Harland and Wolff.”

A UK Government spokesperson said: “While we know this will be a concerning time for those affected, Harland and Wolff has been clear this process will in no way affect jobs at its shipyards or core operations such as delivering its contracts for the Ministry of Defence.

“We are clear that following a thorough review of the company’s financial situation, at present the market is best-placed to address these challenges, and providing Government funding would have meant a significant risk of losing taxpayer money.

“We are continuing to work extensively with all parties to find an outcome for Harland and Wolff that delivers shipbuilding and manufacturing in Belfast, Scotland and across the rest of the UK and protects jobs.”

The Scottish Government was contacted for comment.