Exclusive:Ferguson Marine ditch additional warship work after rejection of investment by ministers

Economy secretary Neil Gray said the government was rejecting a request for £25m in additional investment.

Taxpayer-owned shipyard Ferguson Marine has ditched work on a complex bulbous bow it had hoped to build for the Royal Navy after the government rejected a request for £25m in additional investment.

The embattled Port Glasgow shipyard had hoped to fill half of its operational capacity with work on the new Type 26 frigates.

However, that required a significant amount of investment in a new plating line, burning tables and better computer software, worth £25m.

Neil Gray, the economy secretary, told MSPs last week that subsidy control rules had scuppered the proposals following due diligence from consultants on behalf of the government.

The minister also said the yard had ditched work due to this decision.

In their annual accounts, Ferguson Marine’s chief executive David Tydeman makes clear that this investment was required for additional work on the warships to be feasible.

He said: "With investment from Scottish Government in upgrading the shipyard facilities, FMPG would be well placed to compete for further larger units upon completion of the pilot project, but as this investment remains unconfirmed at the date of this report, these opportunities are at risk"

After being asked about the work on the warships, Mr Tydeman told The Scotsman: “At the time of preparing the accounts we were aware of several planned ITT programmes for the T26 and T31 warship programmes which are subject to confidentiality clauses until awarded, and again after award.

“The business plan we set out earlier in 2023 focused on a priority preference to secure the SVRP programme and also enough supporting work in the supply chain for the warships programme to fully occupy the shipyard for several years. We are continuing to respond to tender invitations and will confirm our position once secured and approved by the client.

“Our ability to secure longer term work is linked to the productivity of the yard which will be significantly enhanced once investment in plating, burning and other facilities is secured.”

Mr Tydeman had previously said a programme of work with BAE would have the potential to use more than half of the capacity at the yard.

However, a Scottish Government procured report into the productivity of the yard said it required investment to become three times more productive in order to become competitive within the global shipbuilding market.

The future of the shipyard is also heavily reliant on the ferry procurement body, CMAL, awarding a contract for its small vessel replacement programme. The government is considering whether it is possible to sidestep a full procurement by directly awarding the contract to the yard to keep it afloat.

A Scottish Government spokesperson said: “The Scottish Government is committed to finding a sustainable future for Ferguson Marine.

“We are working with the Board to build on its initial proposition and develop a new business plan and investment case. These must reflect deliverable market opportunities and be compliant with subsidy control rules.”