Ferguson Marine: Swinney urged to act over funding stalls

The Herald Scotland

5 days ago

The Herald can reveal uncertainty continues to surround whether a vital £14.2m support package for Ferguson Marine will pass due diligence tests.
The Port Glasgow yard is also not certain to get the money it needs to complete an island vessel at the centre of a "new farce" over soaring delays and costs.
The £35m extra public costs for Glen Rosa being asked for by Ferguson Marine is to become subject to further 'due diligence' probing by ministers before a decision is made on whether the extra money will be provided.
Glen Rosa was expected to be taking passengers in September - but now Ferguson Marine has admitted the full sign off and delivery will not be until next year - between April and July.
The Scottish Government has already carried out a 'due diligence' exercise over the provision of a direct uncontested contract to Ferguson Marine to build seven new ferries. But that was rejected as it was felt it would be subject to a state aid legal challenge and the contract eventually was given to a Polish yard.
Yet the yard's business plan to 2029 assumed direct award for that Scottish Government small vessel replacement programme. It was an integral part of a plan to deliver a "sustainable, profitable, efficient and competitive yard".
That business plan was approved and submitted in June last year before being verbally accepted by ministers the following month, when Ms Forbes publicly stated an intention to invest £14.2m to upgrade the yard. The plan is based on the yard remaining under public ownership for at least the next five years.
Kate Forbes (Image: Andrew Milligan) Now calls are being made for the First Minister to make an urgent statement to clear up the uncertainty over the continued funding of the yard.
It comes after the Herald revealed that the cost to the taxpayer of Ferguson Marine has hit £750m.
Financial statements up to 2025/26 have revealed that budgets set by the Scottish Government for Ferguson Marine were overspent to the tune of £210m in the first five years since it was nationalised at the end of 2019 as it attempted to deliver two long-delayed and wildly over-budget lifeline ferries.
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The costs so far of the beleaguered Inverclyde shipyard firm - which includes sums to cover running costs, wages and a dramatic slump in the value of the stricken vessels - soared to nearly £710m before the board last week sought £35m more public money from the Scottish Government because of further rises in costs to deliver Glen Rosa, the second of the two ferries.
The Ferguson Marine bill is enough to cover the cost of 13 ferries of the type currently being built for Scotland at the Cemre Marin Endustri shipyard in Turkey.
Ms Forbes has consistently told MSPs that the £14.2m support package over two years to help secure Ferguson Marine's future was in place and in March told MSPs that "hundreds of jobs have been protected only because of the actions of the Government".
In March she told MSPs that there needed to be support for Ferguson Marine to be as competitive as possible so that it is able to secure work through a fair and open procurement process and that "that is the reason for the £14.2m investment"
She further told them: "The bottom line is that we have agreed to invest £14.2 million in equipment for the yard so that it can compete on a global basis."
But officials have consistently confirmed to the Herald that the two-year investment remains subject to the kind of due diligence tests that stopped the yard from getting the small vessels ferry contract.
That due diligence investigation, which involves passing detailed legal analysis and independent financial and commercial assessments, was supposed to be complete by the autumn of last year.
The board of the loss-making Scottish Government-owned firm has admitted that questions over further financial support from ministers is casting a "significant doubt" on the its ability to continue operations.
Katy Clark (Image: Parliament TV) Katy Clark, Scottish Labour's spokesman for community safety said: "It's outrageous that the future of the yard and investment plan for the ferries has been left in limbo for so long.
"The SNP government has allowed this indefinite cloud of uncertainty to remain by mothballing a clear decision on the yard.
"At the same time £750 million of public money has been squandered due to the endless delays.
"There's no clear resolution in sight on the SNP's watch with a total lack of leadership from the First Minister."
The West of Scotland MSP added: "John Swinney must make an urgent statement at Holyrood setting out once and for all about how and when the investment for the yard and ferries will finally be delivered."
The company running the last commercial shipyard on the Clyde has been dogged with issues with the delivery of lifeline ferries Glen Sannox and Glen Rosa which were due online in the first half of 2018 when Ferguson Marine was under the control of tycoon Jim McColl.
The last estimates suggest the costs of delivery of the vessels will have soared to more than five times the original £97m cost.
Ferguson Marine, which employs over 400 staff including over 100 sub-contractors was taken over by the Scottish Government at the end of 2019 following its financial collapse under the control of Mr McColl as a row erupted over long delays and mounting costs over the delivery of the vessels.
Losses incurred by Ferguson Marine have totalled over £2.7 million in the last two full years.
Ferguson Marine has a 'letter of comfort' which says that "it is our present policy, including with active consideration of the business plan budget and future work of the group, subject to the approval of the Scottish Parliament and in so far as permitted by applicable laws and withing agreed budgets for at least a period of 12 months...to continue to provide support to the group".
Ferguson Marine (Image: George Munro) Despite that, the board in financial papers acknowledged that there [is] uncertainty surrounding the future levels of support required....including due diligence surrounding letters of assurance and investment in the yard [that] indicate a material uncertainty related to events or conditions that may cast significant doubt on the group's ability to continue as a going concern and, that it may be unable to realise its assets and discharge its liabilities in the normal course of business."
Ferguson Marine (Port Glasgow) which made a net loss of £1.3m in 2022/23 had previously been concerned about the risks to the business and pointed to a failure to get a committed investment at that point of £25m to support future work at the Inverclyde after the delivery of Glen Sannox and Glen Rosa.
Ousted Ferguson Marine chief executive David Tydeman had indicated the reduced £14.2m over two year would not itself be enough.
Under his leadership, the loss-making shipyard firm, which relies on public funds, had previously stated that a failure to get a committed investment of £25m to support future work had cast "significant doubt" on its ability to continue.
Investment was required for a vital new plating line and software to raise productivity and help it compete for future work and it was hoped there would be delivery by December, last year. But that hasn't happened.
At the time Ferguson Marine admitted it was not as competitive as other yards that have modern plating lines and modern facilities.
As the plating line cannot be installed for nearly two years the yard would not get decent productivity until 2027, even if ordered now, which makes pricing for future work harder.
Mr Tydeman was fired on March 26 after a tumultuous two years at the helm of the nationalised shipyard after he told ministers there would be even further delays to Glen Sannox and Glen Rosa being built for state-owned ferry operator CalMac at the Inverclyde yard.
Further delays to the delivery of Glen Rosa have come after wellbeing economy secretary Màiri McAllan said last year that Ferguson Marine considered the latest delays and costs forecasts - which had Glen Rosa ready to use in September - was the "final position" after the firing of chief executive David Tydeman.
As the deputy minister Kate Forbes communicated her "disappointment and frustration" to the board about the further delays and costs rise, it was confirmed that the additional £35m funding needed to complete Glen Rosa "will need to be considered in accordance with a stringent due diligence process."
This is expected to be a thorough examination of the business and investment, before further project financing is given and would assess the technical, legal, financial, and operational risks and opportunities associated with it.