SNP pours millions more into ailing Ferguson Marine as ferries go out to tender

Struggling shipyard Ferguson Marine has been thrown a £14.2 million lifeline by ministers to help it win new orders - but the workforce’s hopes of being handed CalMac’s next ferry contract have been dashed.

Deputy First Minister Kate Forbes announced on Tuesday that she had accepted the Scottish Government-owned firm’s funding plea in full. But an order to build a fleet of small electric ferries for CalMac will be put out to competitive tender rather than be directly awarded to the yard.

Ms Forbes said the two-year investment was to “improve productivity and build a sustainable future”, but a direct award risked delaying completion of the seven ferries because of the legal complexities.

Concept image of the new electric ferry design for CalMac. (Photo by Transport Scotland/naValue) | Transport Scotland/naValue

She also underlined the long-awaited cash injection would still need to pass “detailed legal analysis and independent financial and commercial assessments”, which are due by the autumn.

Ms Forbes said separate talks were in their “final stages” with BAE Systems about the yard securing further work on the Type 26 frigate programme for the Royal Navy.

She said this could lead to “significant” and “substantial” new work compared to the relatively small scale steelwork the yard has completed for the programme in Glasgow so far.

Ms Forbes said the investment - for which the yard has been lobbying for months - would make a “huge difference to the ability of the yard to secure more work” and ensure it was “fit for purpose”.

She said it would involve equipment upgrades “to make it a modern yard which will open up a huge world of possibilities” for bidding for other work.

Ms Forbes defended not making a direct award to avoid the “worst of both worlds” - she said such a move was likely to become entangled in legal issues because of Government subsidies to the yard, which would also delay delivering the new vessels to islanders.

She said an open competition would “protect the taxpayer”.

Ms Forbes justified revealing the investment decision in Aberdeen - 160 miles from Port Glasgow - during a series of visits in the north east, as enabling it to be announced “as quickly as possible”.

The move comes as two large ferries being built at the yard for CalMac remain incomplete, six years late and four times over budget, with Glen Sannox now due to be delivered next month and sister vessel Glen Rosa in September next year.

The Deputy First Minister described the Scottish Government’s commitment to the yard, which it nationalised five years ago to avert closure, as “unwavering”.

However, she said Ferguson Marine now “requires change and investment to target new opportunities.

“The [yard] board has developed a business plan that it believes has the potential to secure a competitive future,” she said.

“Subject to independent legal and commercial analysis, the Scottish Government will provide significant new funding to support the yard’s modernisation and improve productivity.

“Additional funding goes hand in hand with winning new commercial contracts, and it is extremely good news that talks with BAE Systems to secure further work have reached this advanced stage.”

However, Ms Forbes added: “Extensive analysis and legal advice confirm that a direct award of the small vessels phase one contract to FMPG [Ferguson Marine Port Glasgow] introduces substantial risks and uncertainties for the shipyard and the communities which rely on the lifeline vessels, due to the strict conditions imposed by the UK Subsidy Control Act.

“Instead, we will do everything which is legally possible to support the yard and the workforce to secure a long-term future, which is why we have come to an agreement on initiatives and funding to improve productivity.”

Transport Scotland said the procurement process for the electric ferries would assess if shipyards interested in bidding for the contract met the financial and technical criteria to take on the project.

Estimated costs for phase one of the Small Vessels Replacement Programme are around £175 million for the new vessels as well as port improvements and shore power upgrades.

The invitation to tender for this contact is expected to be issued around September, with a view to awarding the contract in March 2025.

The ferries will operate on the Colintraive-Rhubodach (Bute), Lochaline-Fishnish (Mull), Tarbert (Loch Fyne)-Portavadie, Iona-Fionnphort (Mull), Sconser-Raasay, Tobermory-Kilchoan (Mull) and Tayinloan-Gigha routes.

Transport Secretary Fiona Hyslop said: “The Scottish Government is absolutely committed to improving our ferry fleet to better meet the needs of island communities, so I’m very pleased to see the procurement process for seven new small vessels get underway today.

“Our intention is that these ferries would be deployed on seven existing routes, but would also bring benefits to two other routes from the redeployment of existing vessels [Largs-Cumbrae and Oban-Lismore].

“The new vessels will also be electric, helping us to deliver a significant improvement in emissions and local air quality and taking us towards a lower carbon ferry network.”

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GMB Scotland, the main union at the yard, welcomed the investment, but warned that contracts for new ships was the only way to secure Ferguson Marine’s long-term future.

Louise Gilmour, the union’s secretary, said: “There can be no shipyard without ships. The workforce at Ferguson Marine is committed, skilled and entirely blameless for the errors made in recent years.

“Those skills will be crucial if the yard is to have a secure future and if Scotland is to have a successful industrial strategy. This yard is capable of becoming a cornerstone of that strategy and helping protect Scotland’s shipbuilding heritage for new generations of workers and apprentices.

“Their jobs must be secured while the yard becomes commercially competitive to ensure their skills are available when ships are again built there.

“This is an opportunity that must not be squandered and every pound of investment must be spent to ensure the yard is swiftly in a position to win future contracts and create skilled, well-paid jobs in Inverclyde for decades to come.”

Scottish Liberal Democrat economy spokesperson Willie Rennie, in a reference to the sacking of a yard chief executive in March, said: “We’re all praying that the SNP Government don’t repeat the horrific mistakes of the last two ferries built at Ferguson Shipyard, although the loss of the expertise provided by David Tydeman is a great concern.

“The decision to opt for a competitive tender process is risky as the yard needs a regular drumbeat of orders and work to maintain the skilled workers essential for the construction of the ferries.”

Scottish Conservatives transport spokesperson Graham Simpson said: “We have said for months the yard would need fresh investment if it was ever to be in a competitive position again.

“Ferguson Marine – and the employees there – have suffered due to the failures of the SNP for too long. Today’s announcement from the SNP is long overdue, but welcome.”

But Mr Simpson said it had taken “far too long” to launch the next ferry order process, “to the dismay of islanders”.

He said: “It is vital the SNP ensures it delivers value for money for taxpayer and puts the needs of island communities first. Given the secrecy that has been at the heart of the SNP’s ferry scandal, the process of awarding this contract must be fair and transparent throughout.

“Once it is awarded, it must deliver ferries that are on time and on budget and are lifeline services islanders will be confident are reliable.”

Diane Burke, commercial director of CalMac, said: “Everyone at CalMac is committed to providing the best service possible and the news that even more new vessels will soon join our fleet is a major step towards this.”