Ferguson Marine will ‘struggle’ without deal to build new ferry, warns yard boss
The new boss of a publicly-owned shipyard has said the business will “struggle” in the future if it is overlooked for a deal to replace an aging ferry.
With the MV Lord of the Isles having sailed for the first time in 1989, the Scottish Government – through its wholly-owned ferry operator CalMac and procurement body Caledonian Maritime Assets Limited – is looking for a replacement.
The tendering process has not yet opened but Ferguson Marine in Port Glasgow, Inverclyde – which is also owned directly by the Scottish Government – is expected to bid for the contract.
I do support a direct award for the Lord of the Isles replacement
The yard’s reputation has been marred in recent years due to the building of the Glen Sannox and Glen Rosa – intended to operate between the Isle of Arran and the mainland.
The cost of the two vessels has increased fourfold and repeated delays have seen only the Glen Sannox enter service so far.
Appearing before the Scottish Affairs Committee at Westminster on Wednesday, Ferguson chief executive Graeme Thomson pushed for a direct award of the deal to the yard.
“I do support a direct award for the Lord of the Isles replacement,” he said.
“I am not aware of what might be any challenges or blockers to that, but I know the Scottish Government are considering how that would be sentenced.”
Asked about potential implications if the yard does not win the contract, Mr Thomson said: “It would be very difficult for us, it would be very challenging.”
The Scottish Government has previously been reticent to award contracts directly to Ferguson, fearing potential legal action under UK-wide state aid regulations which could hold up the building of ships needed for Scotland’s west coast islands, including the seven small vessels which are being built by a yard in Poland.
Deputy First Minister Kate Forbes – who is also responsible for the economy – was repeatedly pressed on the issue in the lead up to the award of the Small Vessel Replacement Programme, but claimed legal advice showed “substantial risks and uncertainties” in a direct award.
If such a move is not forthcoming, Mr Thomson said Government intervention is needed to ensure Ferguson is operating on a “level playing field” with international yards that are able to undercut them on costs due to support for their own governments.
“We’re okay with competition, as long as we’re playing on a level playing field,” he said.
“As long as there’s a situation that prevails that international yards can do it cheaper than us because of the tax breaks, the labour rates, whatever, then we’ll never be playing on a level playing field.”
Mr Thomson echoed calls from politicians to introduce a social element to the weighting of bids – which primarily focus on design and cost – which would take into account the impact on jobs created in the country, along with consideration of the benefit brought to local supply chains.
The yard announced last week it had been awarded a contract by defence firm BAE Systems to build sections of one of the Type 26 destroyers being built along the River Clyde in Glasgow, with Mr Thomson saying Ferguson will have to “demonstrate” its ability to BAE in the hopes of winning more work.