Shipbuilder awarded CalMac ferries contract reports £60m losses

A shipbuilding firm with the contract for two delayed CalMac ferries said it expects to lose £39.5 million on the deal.

Ferguson Marine, the firm with the contract for two delayed CalMac ferries, have posted huge losses. Picture: John Devlin
Ferguson Marine, the firm with the contract for two delayed CalMac ferries, have posted huge losses. Picture: John Devlin

Ferguson Marine made a loss of £60.1 million in 2016, according to its accounts which were filed more than a year late.

The Inverclyde firm blamed the losses on “interference and disruption” from the Scottish Government’s ferry company Caledonian Maritime Assets Ltd (CMAL), and said it wants to renegotiate its £45 million Government loan.

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Ferguson Marine’s owner Jim McColl, an economic adviser to First Minister Nicola Sturgeon, rescued the last commercial shipbuilder on the Clyde from administration in 2014, saving approximately 150 jobs.

However, the company is engaged in a dispute with state-owned CMAL over two new ferries due to operate on CalMac’s Hebridean routes.

A strategic report with the firm’s latest financial statement says: “The directors believe that post-contract award, variations, interference and disruption caused by the customer have resulted in additional unforeseen costs.

“FMEL (Ferguson Marine Engineering Limited) are raising a contractual claim against the customer for these losses.”

A spokesman for Ferguson Marine said: “In our latest published accounts, we have provided for identified cost overruns, in line with accepted accounting standards.

“These cost overruns are a direct result of the unforeseen complexities of building the two prototype, first in class, dual fuel LNG vessels for our client, CMAL.

“We fully expect to recover the costs identified and are subsequently in discussions with professional claims experts with the aim of submitting a formal claim to CMAL within the next few weeks.

“We firmly believe that following a period of remarkable transformation, which has seen significant investment into the yard’s facilities and workforce, Ferguson Marine Engineering Limited is now well placed to embark on an exciting phase of sustained growth.”

A CMAL spokesperson said previously: “Ferguson Marine Engineering Ltd (FMEL) is under contract to supply the design and build of the two dual fuel ferries. It is an industry standard design and build contract with a fixed price and defined delivery dates.

“FMEL entered into the contract with full and prior knowledge of the specification and terms of the contract. CMAL fundamentally disagrees with any assertion that there have been significant design changes to the vessels. Minor changes have followed the contractual process and costs for these have been agreed with FMEL.

“These costs have been covered by a three per cent project contingency budget held by CMAL.”

Commenting on the situation, Liberal Democrat transport spokesman Mike Rumbles said: “These ferries are already months behind schedule and now the firm in charge of construction is posting significant losses.

“This has been a poorly managed and opaquely funded deal from the beginning.

“The Scottish Government must ensure that the boats, which ministers backed with tens of millions of pounds worth of extra secretive loans, are delivered and hi-tech manufacturing jobs secured.”

Scottish Greens transport spokesman John Finnie said: “Scotland is a maritime nation with a rich shipbuilding history. The much needed replacement ferries being built on the Clyde should be a great news story. Instead we’ve this ongoing dispute.

“In time the veracity of the competing claims will be established, meantime, further replacement vessels are urgently needed so the Scottish Government better get its procurement sorted out, soonest.”