Failure to win 7 ferries contract a red herring for Ferguson Marine's survival

Ministers have pledged to shipyard workforce to “stand with you long into the future”

The prophets of doom had a field day over the future of the Ferguson Marine shipyard after it failed to win the contract for seven CalMac electric ferries.

The Scottish Conservatives claimed it could "prove the death knell" for the Port Glasgow yard.

Glen Rosa was launched in April 2024 | John Devlin/The Scotsman

However, I suspect opposition politicians, in seeking to inflict political damage on the SNP, would have been tempted to be equally critical had the firm won the order. Might they have denounced ministers for entrusting the yard with more work while it remained embroiled in the fiasco over the previous ferries contract?

But more significantly, the decision to award the first part of the "small vessel replacement programme" (SVRP) to a Polish yard may prove to be a red herring to Ferguson Marine's survival.

As I reported last year when ministers announced a competition for the order rather than directly awarding it to the Scottish Government-owned yard, they knew it was unlikely to win.

That view was shared by industry sources both inside and outside the yard. I have also had it confirmed the contract was not part of the yard’s recovery plan. One told me on Tuesday the yard was “under no illusion as to the challenge they faced in winning”.

However, as Deputy First Minister Kate Forbes told BBC Radio Scotland on Monday, thanks to £14.2 million of public funding pledged to modernise the yard to make it more competitive, it would be "far better placed to potentially win" the second phase of the SVRP for a further three ferries.

The money, which has yet to be agreed, would be provided over two years.

Ferguson Marine also still has Glen Rosa to finish. The second of two CalMac ferries ordered - almost unbelievably - a decade ago, Glen Rosa won’t be completed until at least September and there’s every chance that will be pushed back again, possibly by as much as another six months, when the yard updates MSPs on progress next week.

Meantime, a new chief executive is due to be announced shortly, potentially this week, replacing stand-in John Petticrew. Mr Petticrew had held the fort since David Tydeman was controversially sacked a year ago until unexpectedly quitting last week, weeks before his extended term was due to finish.

Mr Pettricrew and the yard have both emphatically denied a claim that he left because of a dispute over a revised plan to finish Glen Rosa.

The key task for the new person at the helm would seem to pressing ahead with overhauling the yard with the Scottish Government money, while also securing enough work to keep the workforce employed, but at the same time not overreaching itself - as it arguably did with the Glen Sannox and Glen Rosa contract.

As one source with knowledge of the company told me: “The challenge is how much it will cost to keep the yard alive pending the second phase [of SVRP] to cover overheads of £20m a year including salaries. The yard needs a lot of work to break even and it needs the work soon.”

But they warned: “Production will be disrupted during the upgrading, so the target perhaps will be two years before the yard can use the upgraded facilities and have enough work in parallel building up. Any new contract should be a year from contract to cutting the first steel for efficient work.”

Other work could include a long-awaited bigger contract in the Royal Navy’s type 26 frigates programme for BAE Systems in Glasgow than the relatively small orders the yard has completed so far. It is hoped that will be announced next month.

Ferguson Marine is also hoping to build replacements for two Western Ferries vessels it constructed 20 years, as I revealed last week, while other possible orders include a new Corran ferry for Highland Council.

At the launch of Glen Rosa in April last year, the-then wellbeing economy secretary Màiri McAllan pledged to the workforce the Scottish Government would “stand with you long into the future”.

However long that promise proves to endure, with a Holyrood election next year, the SNP won’t allow its own shipyard to fail just yet.