Scottish government to step in at Ferguson Marine as dispute over costs threatens closure

This article is more than 1 year old

This article is more than 1 year old

The Scottish government is expected to nationalise the last civilian shipbuilder on the Clyde this week in an effort to save two high-profile ferry contracts.

Derek Mackay, the Scottish finance secretary, said ministers were likely to take over running Ferguson Marine Engineering from its owner later this week following a long dispute about cost overruns on two passenger ferries.

Jim McColl, Ferguson’s owner and billionaire founder of industrial investment firm Clyde Blowers Capital, has accused the state-owned ferry agency Caledonian Maritime Assets and the government of failing to pay for extra work on the prototype hybrid-powered ferries.

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McColl put Ferguson Marine into administration last week after running out of money and the yard will close on Thursday unless the government or a new buyer steps in.

Mackay said: “Our preference has been to identify viable commercial options to keep the yard going and to finish the vessels. No such solutions have come forward.

“The Scottish government has now indicated to all relevant parties that we are ready and willing to take Ferguson Marine into public ownership and deliver the ferries to secure the continued employment of the workforce in the yard.”

The ferries are due to run on two popular Hebridean ferry routes, one servicing Arran and the other running between Skye and North Uist, as part of the Caledonian MacBrayne fleet.

McColl has accused Caledonian Maritime of making costly design changes which were not covered by the fixed-price design and build contract, set at £97m. He said the redesigns would cost £61m and offered to pay up to £40m towards them, but a government review supported Caledonian Maritime’s view that the changes were included in the contract.

The Scottish government said a bail-out for Ferguson Marine would break state aid rules and invite legal challenges from unsuccessful bidders. McColl has already received £45m in Scottish government loans because of cashflow problems with the ferry contract.

In an interview with the Mail on Sunday’s Scottish edition this weekend, McColl blamed ministers for its collapse. “The way they are acting right now is economically damaging for the local area and for Scotland,” he said. “The government should not get away with abusing their power like this.”

The dispute is embarrassing for Nicola Sturgeon, the first minister. McColl had been a Scottish government industrial policy adviser and was once a prominent supporter of Alex Salmond’s plans for Scottish independence.

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McColl rescued Ferguson Marine from closure in the closing days of the 2014 independence referendum campaign after Salmond appealed for help. Sturgeon has used its yard at Port Glasgow for Scottish National party election campaigning, including for the local SNP MSP Stuart McMillan, whose father once worked at Ferguson’s.

Gary Smith, general secretary of GMB Scotland, a union which represents many of Ferguson Marine’s 350 employees, welcomed the decision to keep the yard open but said public ownership limited the yard’s options for winning new contracts under EU state aid rules.

“It’s not clear-cut,” he said. “However, the reality is the yard will close on Thursday unless the government nationalises it.” Smith said he had asked ministers to give the GMB a seat on the board. “It gives the Scottish government the chance to have a new form of public ownership where the workers have a stake in that.”