THE current crisis in Port Glasgow all stems from a £97 million contract awarded to the Ferguson Marine shipyard in October 2015.
Just a year earlier the firm, one of the last commercial shipbuilders on the Clyde, had gone bust, before being rescued on the eve of the independence referendum by Clyde Blowers, the investment firm of billionaire Yes backer Jim McColl,
It was a good news story for an industry that hasn’t had much in the way of good news over the last few decades.
Under McColl, investment flowed into Ferguson’s. New state of the art fabrication and design facilities were built, and the workforce rose from about 70 to 350, including apprenticeships.
Their first big contract came from Caledonian Maritime Assets (CMAL), the publicly owned body who have responsibility for Scotland’s ports and ferries.
The firm were tasked with building two brand new, cutting edge, hybrid, environmentally friendly ferries that would be powered by marine diesel oil and liquefied natural gas.
Both vessels are now months behind schedule.
Glen Sannox, which is due to work the Arran route, came off the slipway two years ago and was expected to go into service in the Summer of last year. It’s currently 13 months behind schedule.
The second ferry, currently known as Hull 802, earmarked for the Skye, Harris and North Uist route, is still being built. It’s around 19 months later.
McColl says the fault lies with CMAL, and has described the contract as an “albatross”.
He says they’ve asked for hundreds of design changes, pushing the cost of making the vessels up by millions.
Previously, McColl said: “If we could just wave a magic wand and get rid of those two vessels that would be a godsend to us because they have just been a headache from day one.
“I think we’re probably running between 40-50% over budget which amounts to roughly £40-£50m.
“We’ve documented over 600 design changes. Now, some of those are down to us, but a good chunk of them that have impacted the schedule and the cost are as a result of changes requested by CMAL.
“The design of the propellers, the ultimate overall length of the ship, we’ve been changing quite a bit from the beginning.”
CMAL has flatly denied this. They say they have not changed the tender specification, which was to have both ferries built for £97m. Though they say a significant change was required when Ferguson model prototypes “did not initially meet the specification requirements”.
Late last year Ferguson put in a claim for compensation, but this was dismissed by CMAL, who said it did not contain “valid grounds for compensation based on the agreed terms and conditions of the contract”.
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”.
It’s thought costs have now doubled.
Last week Ferguson announced that they were going into administration.
McColl is keen to avoid this. He asked the Government, who have loaned the firm £45m, to absorb around half the over-run costs in return for an equity stake, but ministers say this would be illegal and go against EU state aid rules.
That’s left the Government considering nationalisation.
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