Clyde shipyard Ferguson set to go into administration Published duration 9 August 2019

image copyright Getty Images image caption Two CalMac ferries have been at the centre of a long-running dispute

The firm behind the Ferguson shipyard in Port Glasgow has begun the process of going into administration.

Ferguson Marine Engineering directors have served notice of their intent to go into administration and to do so by the end of next week.

The business has been involved in a long-running dispute with the Scottish government over the construction of two ferries for CalMac.

Ministers said they were committed to securing the future of the yard.

They want to see the vessels under construction completed, and the jobs of the yard's 350 staff safeguarded.

Ferguson Marine's chief executive Gerry Marshall said in a statement: "It is with great regret and disappointment that the directors of Ferguson Marine Engineering Limited have served notice to appoint an administrator to the company.

"This decision has not been taken lightly, but the directors do not consider there to be any other options in the current circumstances.

"However, the directors will continue to support the shareholder and the Scottish government to realise a positive outcome for the business and its employees."

image copyright Getty Images image caption The Glen Sannox has been awaiting completion at the yard since its launch

The ferry order which appears to have triggered the shipbuilder's difficulties is being procured through a public-sector agency CMAL.

The yard's parent company, Clyde Blowers Capital (CBC), is controlled by industrial tycoon Jim McColl.

CBC tabled a proposal last month for the Scottish government to take a share of ownership. The government rejected that plan

In a statement, CBC added: "We understand that this decision has not been taken lightly and is fundamentally due to CMAL and the Scottish government's inability to find a resolution to the additional costs encountered during the build of the two prototype LNG dual-fuelled ferries.

"As shareholder we have provided a number of viable proposals to avoid the process of administration and save the jobs of 350 employees, however CMAL and the Scottish government have consistently refused to participate in productive discussions, leaving the directors of Ferguson Marine Engineering Limited with no other options given the circumstances they are faced with."

Launching into uncharted waters

image copyright Getty Images

Like a ship at its launch, gathering momentum as it descends the slipway, there's not much that can stop Ferguson Marine Engineering Ltd from plunging into the uncertain waters of government ownership.

Happily, it is unlike yards on the narrower upper Clyde in that launches do not carry the risk of getting a severe dunt on the opposite bank. But there's a lot about these waters that is uncharted.

The £97m ferries contract is behind schedule and considerably over budget, and the company's finances are precarious.

There have been suggestions the government could use a clause in the £45m of loan agreements between it and Ferguson Marine Engineering Limited (FMEL), through which it could take over the yard for only £1.

Hybrid power

The two ships being built for CalMac, the Scottish government-owned ferry company, have caused particular difficulties because of their innovative hybrid power systems, using diesel and liquefied natural gas.

Following the news of possible administration for the business, First Minister Nicola Sturgeon said the government was determined to protect jobs and secure the future of the yard.

A Scottish government spokeswoman added: "Our priority remains to ensure the completion of the vessels under construction, secure jobs for the workforce and protect the future of shipbuilding at the site.

"We have been working to secure a future for the shipyard for two years, and it is disappointing that we have not been able to reach a commercial solution with CBC that would have prevented administrators becoming involved.

"We appreciate that this will be a concerning time for the workforce, their families and the local community, and we would like to reassure them that we are committed to maintaining the jobs on the site and building a secure future for the yard and its workforce.