Royal Navy: Shipbuilding of Fleet Solid Support vessels under threat due to Harland and Wolff money troubles

Belfast-based shipbuilder Harland and Wolff applied for a £200m loan guarantee from the government while trying to restructure its finances. The company is part of a consortium that landed a major contract to build Fleet Solid Support ships for the force.

In a written statement to parliament yesterday, business secretary Jonathan Reynolds explained why the government had rejected the request to act as a guarantor on fresh lending sought by the company. Scottish first minister John Swinny has said both the UK and Scottish governments are looking for ways to proect jobs, with the company facing an uncertain financial future.

Mr Reynolds said no direct funding would be offered to help maintain the company’s liquidity. “After a detailed review of an application by Harland and Wolff for a UK Export Finance Export Development Guarantee (EDG), His Majesty’s Government has decided not to proceed with the provision of a guarantee,” the Stalybridge and Hyde MP said. “This decision was based on a comprehensive assessment of the company’s financial profile and the criteria set out in our risk policies. We have also decided not to provide any form of emergency liquidity funding.

“While such a decision is not easy, it is my assessment, following extensive engagement by my officials with market players, that HM Government funding would not necessarily secure our objectives and there is a very substantial risk that taxpayer money would be lost. The government believes, in this instance, that the market is best placed to resolve the commercial matters faced by Harland and Wolff.”

Harland and Wolff, which famously built the Titanic, has four sites in the UK. This includes one in Belfast, two in Scotland - two in Methil on the Firth of Forth and Arnish on the Isle of Lewis - and one in Alledore, north Devon. The company said last Friday that they would look for alternative new debt facilities from current lender Riverstone Credit Management - while having discussions with investment bank Rothschild & Co to asses “strategic options”. Chief executive John Wood has taken a leave of absence with immediate effect. Russell Downs, an industry expert in refinancing and recapitalisation, has stepped up to take on the role of interim executive chairman.

Mr Reynolds said the company seeking further financing would “allow the business to continue pursuing its short and longer-term objectives, in which the Government continues to take an interest”. He added that he knew reports over the company’s future would concern employees and those who work in connected supply chains, stating that he is looking to find a “positive outcome” across all four sites.

“My officials will continue to work closely with those in the Ministry of Defence and the National Shipbuilding Office on the Fleet Solid Support contract, for which Harland and Wolff remains a key subcontractor,” he said. “Officials in the Ministry of Defence are also well engaged with the prime contractor, Navantia UK, to monitor delivery of this important contract. Shipbuilding supports 42,600 jobs nationwide, adds £2.4 billion to the economy every single year, and is an important pillar of our civil and defence industrial base. We are committed to supporting vibrant and successful shipbuilding and fabrication industries, and our skilled workforces who deliver them, in all parts of the UK, in which Harland & Wolff has its role to play.” Mr Swinney was asked today about what steps the Scottish government are taking. The politician said a number of talks have taken place between deputy first minister Kate Forbes, the UK government and trade unions to safeguard the future of employment about Harland and Wolff’s sites. “There is obviously a situation where Harland & Wolff are trying to secure additional investment in their operations,” the Scottish National Party leader said. “Our priority is to make sure that we do everything that we can to support employment at Arnish and Methil. The Scottish Government will do that in concert with the United Kingdom Government where it’s possible for us to support such proposals.”

Matt Roberts, national officer with the GMB union, said Harland & Wolff’s have been “at the heart of UK manufacturing for centuries”. He added: “They are critical to our future security in building the Fleet Solid Support ships for our Navy and in providing the renewables infrastructure needed to reach net zero. These yards must be saved and their long-term sustainable future secured.”