Government to invest in Ferguson revamp but no direct award of ferries contract

A contract for seven new small ferries will not be directly awarded to the beleaguered Ferguson Marine shipyard, the Scottish Government has said as it announced a £14.2 million investment in the site.

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.

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 £175 million – 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, Ms 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,” Ms 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, Ms 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.

Ms 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.”

Martin McCluskey, the Labour MP for Inverclyde and Renfrewshire West, also said it was “very disappointing that the Scottish Government have decided against a direct award to Fergusons”.

He added: “People will be left wondering why Scottish Government ministers aren’t willing to award the contract to a Scottish Government-owned yard in order to protect jobs.

“While the investment in the yard is welcome, what is needed is a sustainable order book that can secure shipbuilding on the lower Clyde, and the jobs and skills that come with it. That is what the workforce at the yard deserves.

“It is important that the yard tenders for this work and the Cabinet Secretary gives any submission from Ferguson Marine the consideration it deserves.”

Louise Gilmour, GMB Scotland secretary, said: “There can be no shipyard without ships.

“The workforce at Ferguson Marine is committed, skilled and entirely blameless for the errors made in recent years.”

She added: “This is an opportunity that must not be squandered and every pound of investment must be spent to ensure the yard is swiftly in a position to win future contracts and create skilled, well-paid jobs in Inverclyde for decades to come.”

Welcoming the announcement Ferguson Marine Port Glasgow (FMPG), interim CEO John Petticrew said: “This investment is good news and underlines the determination we all have to secure a sustainable future for the yard and shipbuilding on the Clyde.

“It will allow us to gain production efficiencies and secure more work.”