Why Navantia rescued Harland & Wolff — and what it expects in return
They have a saying in Spain, says the new boss of Harland & Wolff, which translates literally as 'when you are hungry, then eat'. More figuratively, you might say 'needs must'.
Donato Martinez, the newly-appointed chief executive of the newly-created UK end of Navantia, the state-owned Spanish shipbuilder, is explaining why it acquired Harland & Wolff out of administration. It was the second time the Belfast shipyard had gone bust in five years, capping a chequered history all the way back to Victorian times.
The British government was in want of the three 216-metre long supply ships that it had ordered from the yard to service the aircraft carrier flagships of the Royal Navy. Navantia, already part of that contract, did not want to turn its back on a lucrative opportunity for that and future orders for Royal Navy or Border Force vessels. Yet the £93 million takeover resonates more than just political and industrial expediency.
On the one hand the historic Harland & Wolff yard, home of the Titanic, has been saved and is arguably on its surest footing in decades. On the other hand, it means for the first time in the history of the Royal Navy, vessels will be built by a foreign military power. Sir Francis Drake for one must be spinning in his watery grave.
The immediate goal is to get the three vessels — fleet solid support (FSS) ships in the naval argot, charged with delivering munitions, stores and provisions on the high seas — back on track.
Despite a year lost to the spiral into bankruptcy of InfraStrata, the stockmarket-listed previous owner, Martinez speaking at a Navy Leaders conference in Farnborough, says the newly-created Navantia UK can deliver all three vessels to the planned 2032 timeline.
Once a final critical design review is signed off this autumn, Belfast could be in production by the end of the year.
The original order with InfraStrata and Navantia was controversial because of the implied amount of Spanish content, that is only 60 per cent by value of the vessels would be made in the UK. Martinez says the commitment to UK content remains but will depend on how things go: 'The key priority is meeting the delivery date.'
• Ministers accused of 'backdoor bailout' for Harland &Wolff
Details of 'revised terms' with Navantia on which ministers came to in the deal to sell Harland & Wolff have not been disclosed.
The programme is now expected to come in at £2 billion, compared to the £1.6 billion previously quoted. Navantia says that is because of inflation on a programme priced in pre-pandemic times.
Navantia has committed to spend £115 million on its acquisition which also comes with the Appledore yard in North Devon, and the offshore wind and oil and gas yards of Methil on the Firth of Forth and Arnish on the Isle of Lewis in the Hebrides.
Harland & Wolff needs to be redesigned, new panel fabrication lines and workshops installed. Safety, environmental, maintenance, welfare and training facilities need upgrading.
'That has not been looked at for some years, for some decades in some cases,' said Martinez. 'We need to do this to build confidence and to be able to win more contracts.'
Harland & Wolff will remain a ship repair and maintenance yard for the likes of Stena, the shipping line. But as a construction yard it will now only be naval, no longer chasing commercial vessel contracts in competition with China and Korea.
The job is now to ramp up for the three FSS ships and win future work.
'As the phoenix rises from the ashes we need to hire. We currently have 600 people in Belfast including 170 apprentices. For FSS we will need 800 people next year and by 2029-30 [at the height of the programme] we will need 1,500.' By the early 2030s, the business across all the yards will be aiming to employ 2,000 people.
Navantia UK has its eyes on the next major Ministry of Defence contract for up to six multi-role strike and support ships — vessels to rapidly deploy Royal Marine commandos and other special forces.
'We would hope to have a major role,' said Martinez of a contract whose cost is as yet unspecified but is expected to produce work for ten years.
Navantia UK is also keen to develop Appledore with a capability for offshore patrol vehicles for the likes of the UK Border Force and uncrewed surface drone vessels of the future.
The Royal Navy also has a requirement for floating dry docks for submarines and warships and Navantia believes Methil and Arnish have the fabrication and welding capabilities for those.
The arrival of Navantia UK at Harland & Wolff creates a Big Three naval construction capability alongside BAE Systems building Type 26 warships on the Clyde and the nuclear submarines at Barrow and Babcock building Type 31 at Rosyth near Edinburgh.
'The pipeline is such that there is room for three of us,' said Martinez. 'Everybody will be busy.'
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