Ferguson shipyard could be nationalised amid ferry row By Douglas Fraser

Business and economy editor, Scotland Published duration 19 July 2019

image copyright Getty Images image caption More than a year after its slipway launch, work continues on Glen Sannox

The Scottish government is drawing up plans to nationalise Ferguson shipyard on the Clyde.

That option is the increasingly likely outcome of a dispute over the building of two west coast ferries for CalMac.

The BBC has learned of "fraught" negotiations over a bill that is now understood to be nearly double the original £97m contract price.

Tycoon Jim McColl, who rescued the yard from collapse five years ago, stands to lose tens of millions of pounds.

That is far removed from the heroic status he was given by SNP ministers when he stepped in to save the totemic shipyard in Port Glasgow - the only commercial yard left on the lower Clyde.

That was only days before the referendum on Scottish independence, and was partly brokered by Alex Salmond as first minister.

Derek Mackay, the finance and economy secretary, is now handling the talks with Clyde Blowers, Mr McColl's holding company.

That takes the dispute out the hands of Caledonian Maritime Assets Ltd (CMAL) - the government-owned firm that placed the orders and owns CalMac's fleet.

The official comment from the Scottish government was: "The Scottish government, Ferguson's and CMAL are focussed on the completion of the current ferry contracts and securing a vibrant future for the yard. We continue to work together to achieve that."

Privately, the government is determined to ensure the yard remains open. Its current workforce is about 350.

The lifeline ferry deal that turned sour

image copyright Getty Images

When Ferguson shipyard went bust in the summer of 2014, a white knight stepped forward in the shape of self-made billionaire Jim McColl.

Massive investment swiftly followed; old buildings were demolished to make way for state-of-the-art fabrication facilities and the skilled workforce rose five-fold in one of Scotland's most deprived areas.

The following year the yard received a major boost when it won a £97m contract to build two dual-fuel ferries for CalMac.

But neither ferry has yet to be delivered, Ferguson is losing millions on the deal - and one of the most prominent business figures to support Scottish independence ahead of the 2014 referendum is now locked in a bitter dispute with the Scottish government.

But ministers are not giving ground on the fixed price contract agreed between Ferguson Marine and CMAL.

It is claimed that doing so would bring legal action by other bidders that failed to win the contract.

The dispute on the contract was reviewed by a senior lawyer, whose report is being kept confidential.

It is understood to be more favourable to CMAL than to Ferguson's position, but the review's scope and caveats leave the contractual dispute open to protracted legal action.

The Scottish government's position is that Ferguson and Clyde Blowers should pay the additional costs, of about £90m. It is claimed that ministers then want the yard to continue as a successful business.

If not, then a sale of the assets could be agreed, with the price set independently.

Government loans

The other option is insolvency. From there, issuers of £25m in bonds would have a first claim on the company's assets, but the Scottish government also has security over assets.

That is because the Scottish government has loaned Ferguson £45m over the past five years, in a series of decisions which have provoked controversy at Holyrood.

Sources at Ferguson believe the Scottish government wants to nationalise the yard, in a political project linked to public ownership of rail and other transport operators.

The yard would then become solely focused on a programme of replacement ships for CalMac, which are well behind schedule.

image copyright Getty Images image caption The shipyard, beside Newark Castle, has had major investment under Jim McColl's ownership

The winner of the franchise for the passenger service linking Orkney and Shetland to the Scottish mainland is due to be announced in the next few weeks, pitting state-owned Cal-Mac against Serco, the incumbent operator.

However, further nationalisation would also put the SNP government under pressure over the cost of sustaining loss-making enterprises, already including Prestwick Airport and BiFab, which has mothballed fabrication yards in Fife and another in Lewis.