LAST September you first broke the news that Ferguson Marine Engineering Ltd (FMEL) asked Holyrood for a £15m tranche to stave off cash flow problems due to delays on the contract for two new Ferries. In June a further £30m was given. This transaction was not made public for seven months, thereby giving the impression that FMEL had no financial problems. This loan was unsecured, in that while the loan could be converted into shares there was no guarantee that the shares would hold their value. It later transpired that this loan might have to play second fiddle to Ferguson’s insurance company HCCI if Ferguson’s folded like a cheap suit. The final bill is now thought to be almost double the original £97m contract price.
After almost a year of wrangling, both parties are no closer to a resolution. Holyrood’s solution to the problem is to consider nationalisation (“Nationalising shipyard touted in row over ferries”, The Herald, July 20). The SNP does not want a potential marine albatross round its neck, especially so soon after the financial fiasco of a loss of more than £40m at Prestwick. How much money it is prepared to throw at MV Glen Sannox and Hull 802 is anyone’s guess.
Two things are certain, first is that nationalisation is not the answer. Second is that we the taxpayers are in for at least £45m. The loss to Jim McColl might not be just be a shredded reputation, a cancellation of the seat next to Nicola Sturgeon on her Council of Economic Advisors and no invitation to the next Garden Party. What particularly galls me is that this company appears to be part of a very large and indeed successful engineering group. Mr McColl however does not seem to be willing to prop up his new venture in shipbuilding from his own resources, rather see it wither on the vine.
Some years ago a senior judge in England ruled that in such a case “the mother was strangling its own child” and it was not allowed to place the company in question in administration.
On nationalisation, I presume there will have to be a new management team and an open-ended bank account for a starter. Meanwhile, the old problems are still to be solved. At first it was the propulsion system to be blamed. Now the charge is that there were too many changes to the original specification, a charge that has been robustly defended by the prospective owners. Holyrood appears to be on the side of the prospective owners, but not to be involved in a legal battle, as that might turn out to be a Pyrrhic victory, where the case is won but it cannot get its money back.
I recall in the past Lithgows was forced to send two partl- completed ore carriers back to Norway to be finished. The Scandinavian yards appear to have no problem in turning out much larger vessels with the same propulsion system. The consequences for the tourist industry as well as the inhabitants of the isles are dire if this dispute is not speedily resolved
On a lighter side perhaps when Hull 802 is christened it should be named Egg on Boaty McBoatface.
Robin Johnston, Newton Mearns.
HAVING broadly approved of Pinstripe’s last two articles, I must say he has reverted to type in today’s article (“Scottish Government is far too willing to waste our money on lemons, ” The Herald, July 22).
He cites Prestwick Airport, which the Scottish Government bought for £1, to protect the jobs at the various small companies located there; I think it hoped it would become a spaceport, but the powers that be in that industry chose to use a green field site in the far north.
What really got his ire was Ferguson Marine, a shipyard in Port Glasgow; the SNP Government offered assistance to save 150 jobs. The problem here is that the two ferries being built have run into design problems, with specifications altering as they go, and the customer disavowing the requested changes. I think there are now 350 jobs at stake and the future of shipbuilding in Scotland.
The case for BiFab is complex; here we have a yard with expertise and capacity and oilrigs to be based in the Forth, but the owners choose to have the rigs built in Indonesia and towed halfway round the world to the Forth – economically and environmentally stupid, to put it mildly.
And as a throwaway, Pinstripe thinks the money would be better spent on the A9; when the SNP came to power in 2007, it had the dualling of the A9 in its manifesto, with £500 million to be found from the money to be spent on the Edinburgh Tram System. This did not suit the Opposition and it outvoted the minority government. I think the money wasted on the trams doubled at least; the enquiry on that has not yet reported.
Jim Lynch, Edinburgh EH12.