Ferguson’s wins a Scottish government contract to build two new ferries. The deal, which is worth about £97m, was confirmed at the SNP’s annual conference in Aberdeen by Transport Minister Derek McKay.
The Glen Sannox is launched into the Clyde by Sturgeon, who says:
These state-of-the-art ferries are more sustainable, therefore contributing to Scotland’s world-leading climate change goals. They are also capable of carrying more vehicles and benefiting the communities that rely on them.
Ferguson Marine’s owner, Jim McColl:
The successful launch of the MV Glen Sannox marks an important milestone in Ferguson Marine’s journey to becoming a world-class shipyard. As this is the first ferry in the UK capable of being run on liquefied natural gas and marine gas oil, not only has this been an extremely exciting and ambitious project for both FMEL and CMAL, but it has been an extremely complex one as well. The experience and knowledge gained during this project will be of enormous benefit to the competitiveness of Scottish shipbuilding in the future as technology continues to develop to meet tightening clean energy legislation,
CMAL’s Kevin Hobbs:
The use of LNG in maritime transport is a sign of our ongoing commitment to exploring new fuel technologies for ferries, as well as a wider commitment to innovation in Scotland and consideration for the environmental impact of transport.
Gibson confirms the MV Glen Sannox will enter service in the summer of 2019:
Regarding deployment of the Glen Sannox on the Ardrossan route, it was confirmed to me on August 14 through a parliamentary question that it will enter service next summer, with a June delivery followed by two months of crew familiarisation and sea trials.
Transport Minister Matheson tells the Scottish Government’s rural economy and connectivity committee that the ships could be sailing next year but he admits there are there are questions about whether this will happen.
Where we are with these two vessels is simply not where any of us would want to be. We want to see these vessels being utilised and on routes. At the present moment, the indications are they expect both vessels to be completed next year, one in the earlier part of the year prior to the summer, and one later in the year. However, there are still some questions about their ability to keep to those timescales…Last August we had a £3.5m resilience fund provided to CalMac to assist them in maintaining their existing vessels, to try and help improve reliability and we will provide a further £4m in this financial year in order to allow that to continue to be supported, to help mitigate some of the risks associated with vessels going off service.
In response to West of Scotland Conservative MSP Jamie Greene, who asked when the ferrie would be ready, Mathieson said the delays were “disappointing”. The minister also said he had not personally visited the Port Glasgow shipyard to see progress on the ferries.
The Ferguson shipyard is bought by the Scottish government. Ministers will now operate the yard under a management agreement with administrators Deloitte. The Scottish government wil buy the facility if no private buyer is found within four weeks. McColl, who could not persuade ministers to pay more than the £97m contract price for the disputed ferries, will no longer own the yard. The agreement means work on the CalMac ferries, and other contracts, can continue while efforts to find a commercial buyer get under way. Finance Secretary Mackay:
We have always been clear that we want to complete the vessels, secure jobs and give the yard a future. Public control will provide much-needed continuity of employment now and ensure the completion of the ferry contracts at the lowest possible cost to the taxpayer. It is absolutely essential that the outstanding contracts to build these two ferries are completed. [Putting the company into administration’ was not an outcome I was willing to consider.
Speaking after meeting board members at the shipyard, Mckay says the new delivery schedule for the two ferries must be set by October.
We have always been clear that we want to complete the vessels, secure jobs and give the yard a future. On Friday, I met with the excellent workforce and stressed the Scottish government’s commitment to achieving the best possible outcome for the yard. Today, I convened the first meeting of the newly-established programme review board and tasked them with establishing a new delivery schedule for both vessels and a revised cost window. This group will help assess the current situation and ensure the effective and efficient delivery schedule of the CMAL ferry contracts as quickly as possible.
On Good Morning Scotland, McColl says more work should have been done on the vessel’s design before the contract was tendered.
We have incurred significantly higher costs in the work we’ve had to do on these ferries, and we’ve been engaging with CMAL to discuss these costs. Maybe the best way to put it is that we’ve been frustrated in these discussions. We’ve been discussing it for over a year, and we have been funding that, so it’s been using a lot of our capital. We’ve been funding it solely. Our view is that these have been genuine changes that have had to be made to the work we’ve been doing, and they’re changes that ought to be incurred by the buyer. I believe that perhaps more design development work could have been done prior to the invitation to tender going out, rather than dealing with multiple things that are arising as we got into the build process. But we’re working diligently through that.
McColl also told the programme that Ferguson Marine had been extensively refurbished to prepare it for new Royal Navy and commercial contracts.
Administrators for Ferguson’s say they have held talks with several potential buyers (the exact number is not known) and are “encouraged” by the interest so far. The yard will be bought by the Scottish government if a private buyer is not found within four weeks of the date of the firm going into administration. Deloitte:
The joint administrators are undertaking a sale process and are actively engaged in discussions with a number of potentially-interested parties, however it is early in the process and therefore it is not appropriate for us to comment further at this stage. We have been encouraged by the level of interest in the yard so far but would encourage any remaining parties who may have an interest to contact us.
The Scottish government:
Ministers remain committed to the completion of vessels, securing jobs, and working towards finding a solution to support future shipbuilding at the site. Deloitte, as administrator, is currently going through the process of market testing for a private buyer. We will also start work to determine the optimal structure for the yard to ensure its long-term future. Our first priority is to establish a new delivery programme to ensure the completion of the CMAL ferry contracts.
It emerges that the bridge of the Glen Sannox still has no windows almost two years after launch. Black shapes were instead painted on the control room of the Glen Sannox prior to launch by Nicola Sturgeon in November 2017. GMB Scotland secretary Gary Smith:
[An inquiry] will also need to establish why a ferry ‘launched’ nearly two years ago has no windows on its bridge. What appears to be windows is actually black paint.
Fake windows were painted on a couple of years ago. It’s thought it was to make the boat look more finished than it really is.
A “statement of affairs” produced by Deloitte, the administrator of the shipyard, show £49.7m is owed to the Scottish government – nearly £5m more than previously revealed. The Scottish government said it provided two commercial loans totalling £45m to Ferguson Marine, on which interest applies. The new figures also reveal that two partially-built CalMac ships at the centre of the firm’s collapse have been valued at £48.3m, nearly half the value of the £97m deal agreed to build the ships. Ferguson Marine went bust owning more than £73m. Further details from the document show that:
- £15.8m is owed to finance firm HCCI
- The Scottish government is owed £49.7m
- A total of £3m is owed to Clyde Blowers Capital, owned by former Ferguson boss Jim McColl
- There is an outstanding debt of £426,000 owed to HMRC
- The 300-strong workforce is owed £164,000 in overtime, holiday pay and pension contributions
- £1m is due to the European Commission.
- £3.9m is owed to business creditors, including a number of local Inverclyde companies
The former chairman of Ferguson Marine says he is taking legal advice on whether the Scottish Government’s report on his management, drawn up after it took ownership of the yard, was defamatory. He says the report is aa “snow job” to cover up the role of Caledonian Maritime Assets Limited, the government agency involved in procuring the ferries. McColl says design changes by CMAL caused the delays. and cost overruns.
[Criticism of the management team is] outrageous and unacceptable – the team selected were some of the best in the UK, and head and shoulders above those in there now. I’ve asked if we can sue them for defamation of character. There needs to be an inquiry. The way they’ve handled this is incompetent.
McColl also challenged the Scottish government’s plan to spend £100 million completeing the ferries, which would write off more than £80m already spent on them, as well as the £45m in loans from the Scottish government that have already been written off.
You’d be better building from scratch and to a design that’s more suited to what’s needed. They could probably build three smaller vessels for less than £100m and it would give them more flexibility.
The Glen Sannox enters the Dale Marine dry dock, a short distance down thr river from Port Glasgow, for remedial work. The ship will have its bulbous bow replaced, paint will be repaired and marine growth will be removed. The ship is due to return to the Ferguson yard at the end of August. Turnaround director Hair:
This is a key milestone in the recovery programme for the dual fuel vessels. Some work has been carried out on MV Glen Sannox at the shipyard, but the dry dock period is important because it will bring the vessel up to a condition that will allow us to move forward in earnest with the vessel completion plan. It is also another clear sign of recovery for the shipyard business and comes only weeks after the launch of a steel barge for a customer in the offshore oil and marine sector.
The ferry returns to the water after dry dock works are completed. 42 tonnes of mussels were removed from the hull, its bulbous bow replaced, paint repaired, and external welding completed. Hair:
Following a period of uncertainty due to COVID-19, it has been really gratifying to see our team return to outdoor working on MV Glen Sannox. We’ve made some solid strides forward over the last few weeks on MV Glen Sannox and have slightly extended the dry dock period to take advantage of the stability of the vessel whilst stationed there to carry out some additional tasks. Now that the ferry has been brought up to its current condition and has returned to our shipyard, the next steps will include work on the superstructure, electrical work and the installation of approximately 16km of pipework.
Holyrood’s Rural Economy and Connectivity Committee publishes a report calling for “root and branch” reform of the system for procuring ferries and concluding that the established procedures are “no longer fit for purpose”. Former bosses at Ferguson shipyard, ministers, state-owned CMAL and Transport Scotland are all criticised. Committee convener Edward Mountain:
All parties involved must share in the responsibility for the catastrophic failure to deliver this contract on time or on budget. A lack of due diligence, poor project management and a failure by all parties to take the necessary action to resolve problems as they emerged means that the cost of the contract has increased from £97m to almost £200m while the island communities who are relying on theses ferries to be delivered continue to suffer.
We remain fully supportive of the efforts of CalMac, CMAL and Transport Scotland in delivering ferry services on the Clyde and Hebrides Network and to the Northern Isles, but we also recognise the challenges in doing so and the need for continuous improvement to optimise delivery. We have already committed to commission a study of the legal structures and governance arrangements which exist between the “tripartite group” of Transport Scotland, CMAL and CalMac and will publish a ferries stakeholder engagement strategy.
We have a successful track record of delivering ferry projects on time and budget and we are committed to continuous improvement of our processes, so steps are already being taken to further develop the planning process for new ferries.
Ferguson Marine announces it is hiring 120 extra staff, mostly pipe fitters and steel workers. The extra workers will mean the shipyard can be in production seven days a week during spring and summer and will bring total number of staff to more than 500. The new workers will be working on MV Glen Sannox and hull 802 for at least six months. Turnaround Director Hair:
Last year was challenging, with disruption created by the pandemic, but we’re confident we can increase momentum in 2021. We are confident, despite many challenges, 2021 will be a pivotal year in securing the long-term future of the shipyard. We must do everything possible to deliver the dual fuel ferry programme, improve productivity, secure contracts for future vessels, and protect local jobs.
An extra £4.3m in costs have been added to the cost of the MV Glen Sannox and it sister ship. The Port Glasgow shipyard had to suspend working for four months during the first lockdown and was closed for another four weeks earlier this year. The shutdowns cost £3.3m and £1m respectively.
Tunaround director, Tim Hair, says the Covid shutdowns were being treated as “exceptional costs”, but the previously-announced remedial work, costing £110m-£114m, remained within budget. Hair said that 80% of design work was now signed-off by regulators and that the latest delivery schedule of April to June 2022 for Glen Sannox, and December 2022 to February 2023 for the second ship, was still achievable. Hair says the yard should be able to take on new work from next spring.
To date, 191 applications have been received for skilled workers, with 40 so far identified as having the relevant skills.
Ferguson Marine says the Glen Sannox will now be handed over between July and September 2022 – 15 weeks later than expected. The ship, destined for the Arran route, was originally due to enter service in 2018/19. The nationalised shipyard says Covid disruption and a shortage of local skilled labour were to blame. The comapny says it said it had only been able to recruit 40 skilled workers locally, 100 short of its target – and was now having to recruit overseas workers, via sub-contractors. The second ship, currently known as Hull 802, will be delivered between April and July 2023, according to the latest schedule. Turnaround director, Tim Hair:
I know the further delay to the project will be a disappointment to island communities and others who await the arrival of the new ferries. There remains a lot of work to do on the vessels, but it is important to recognise the level of progress too, as well as the significant operational improvements we have implemented to introduce robust and effective business processes. We have, in effect, created a functioning shipyard business from a standing start.
Ferguson’s announces, that after two years at the company, Hair will step down as turnaround director. He spent two years as turnaround director. He will be replaced by Tydeman in February. Chairman Alistair Mackenzie:
[It is] the right time to welcome a permanent and longer-term leader…The board and wider team at Ferguson Marine extend our thanks to Tim Hair for his leadership, expertise and commitment over the past two years. It has been challenging, not least because of a global pandemic, but he has implemented a series of important changes, systems and controls and built an experienced and skilled team to strengthen the business and establish a solid footing for growth.
Chairman Alistair Mackenzie and board member John Hudson both step down from their roles at Ferguson marine for personal reasons. Mackenzie:
I have decided for personal reasons that now is the right time to stand down. I have been proud to serve on the board of Ferguson Marine, supporting the business during a highly challenging period as it recovered from administration and through a transformation programme. Working with the wider board and senior management team, significant progress has been made to improve governance, processes and systems and to strengthen the workforce.
I would like to thank John Hudson as he departs, as well as the wider board and shipyard workforce, for their commitment and support during the last 18 months. With the arrival of a new chief executive, and three new board members in the coming months, I am sure the shipyard will continue to strengthen.
The Arran Ferry Action Group raises concerns about the absence of a key hull feature required for the Glen Sannox to operate efficiently at 14.5 knots. Additional confusion arises over the divergence of design between Glen Sannox and sister ship Hull 802, which were intended to be identical in design and specification. Chairman Sam Bourne:
It is such a terrible mess. The whole thing is complete confusion and it affects the performance of the boats. Fitting a ducktail now is bound to further delay the completion of the vessel. And if it is needed on 802 why is it not on Glen Sannox which has the same hull. You are going to have two boats that do not meet the spec that was given and are not identical. If one has it and the other hasn’t it just won’t meet the performance targets set. If the boats don’t meet the performance specifications, CMAL can refuse it and then who owns these vessels. If you have an inefficient hull form, they will cost more money to operate, and the green criteria they try to hit, you can throw those in the bin. Serious questions have to be asked of those who run the businesses at the time to allow this.
We are satisfied that the vessels meet the required specification, and are continuing to work closely with Transport Scotland, Scottish Government and Fergusons to manage the delivery of the two vessels.
A summary judgment is granted in favour of HCC International insurance aganst CMAL to claim £5 million owed as a result of the way ministers bought the shipyard when it was in administration. The Scottish government, which owns CMAL, said it was aware. Deputy High Court Judge Simon Gleeson:
It is easy to see why this decision seems to have caused so much anger and irritation amongst the Scottish ministers. In paying for the business of FMEL (Ferguson Marine) by reducing FMEL’s liabilities to them, they believed that they were simply transferring their own money from one pocket to another, with the transaction having no impact on their overall obligations. The discovery that the choice of transaction structure had resulted in their being required to pay a little over £5million to a third party must have been highly unwelcome.
Scottish government spokesman:
We are aware of a summary judgment that has been made in the English courts in relation to the claim.
The Glen Sannox needs assistance from two tugs, including the 23-foot CMS Wrestler, after it breaks free of its mooring in Port Glasgow.
In a letter to Lockhart, convenor the Scottish Government’s Net Zero committee, Ferguson Marine’s turnaround director says that in the week before Christmas 2021, engineers unwound coils that had been installed in late 2018/early 2019 and found some of them were too short to reach the necessary equipment. After three weeks of investigation, Ferguson engineers believe that at least 400 cables will need to be addressed, with the worst case requiring 939 cables to be replaced. The faulty cables were installed by a sub-contractor before the shipyard went into administration – none of the cables were installed after the Scottish Government took control of the yard. Most or all the vables will need to be cut out and the process started again. Hair says it is not currently possible to determine the impact on schedule and cost of the problem. Hair:
I regret to advise you that a problem has recently emerged with the build of 801 which I thought I should immediately bring to your attention. Commissioning and further cable installation cannot take place until the legacy cables are corrected, delaying the overall project to deliver 801. There will inevitably be knock-on effects that will delay the schedule for 802. At present it is not possible to determine the impact on schedule and cost.
The ferries are now three years overdue, less than half built and are predicted to cost £110 million more than originally estimated. Hair says that the ships are “significantly less than half built” and that 95% of the ships design has not been agreed with CMAL more than four years after the ships were ordered. He said that more naval architects and engineers have been taken on to deal with this. The shipyards executive said that the planning process for changes to the design under the yards prior to nationalisation was “either absent or badly flawed”:
The number of £110m [the extra money needed to finish the project] has been arrived at from a very detailed examination of the two vessels and an understanding of the work that needs to be done in order to bring them up to a viable standard.It is a very significant number but it is a number that has been based on as rigorous an assessment as we’ve been able to carry out. It’s one where I am confident we can deliver the two vessels for that amount.
Committee member and Tory MSP Peter Chapman said people would find the situation “absolutely incredible”.
How the heck do you get to £110m, which is more than what the original cost was to start from scratch with a pile of steel and nothing?
In the Scottish Parliament, Shadow Transport MSP Graham Simpson expresses his frustration at the lack of answers over how much longer it will take to get the Scottish ferries ready.
Well, I’m asking a question in this chamber, and I expect to get an answer and the minister has not made an attempt to answer the question, which is by how long the ferries are delayed. It is not acceptable. We’re at a crisis point here. Just yesterday, only 13 out of CalMac’s 29 routes were operating normally. Islanders are at their wits’ end. There’s no slack in the system, so when a ferry breaks down, the knock on effects are horrendous. We need a steady pipeline of new ferries being ordered.
Business Minister Ivan McKee responds:
The Scottish Government is committed to ensuring that Scotland’s islands have got the connectivity. That’s why we are making that substantial investment into ensuring that that is indeed the case. The details of the impact of that cable issue are being worked through at the moment and we will report back when the robust information is available as to the implications in terms of time and cost of that particular issue.
The Turkey order had been part of a £580 million investment in further expanding the ferry service. In contrast McKee’s predecessor, Graham Dey had asked for £1.5 billion over 10 years. A cross party visit to the shipyard planned for January had been cancelled and rescheduled for April 2022 . A freedom of information request to get an answer for when the two ferries will be ready, failed to be answered within the required 20 days and has been escalated to an appeal.
Concerns are growing about engines purchased for the two Calmac ferries more than five years ago. Despite costing four million pounds, the state run Ferguson shipyard has never tested them. The process of testing allows ships engines to be both assessed and prevented from losing condition. It has been revealed that the first time this will be done is late summer 2022 which may be too late and they may seize up. Dr Spyros Hirdaris a head of Maritime Safety:
There is a high possibility that the ferry engines won’t work and it seems very high risk to expect everything will go according to plan. If you have a car for a long time and never switch on the engine it’s probably not going to work. It’s extremely important the engines are tested on board so it’s not a good thing that they haven’t been tested for all this time. They should have tested the functionality of the engines. There could be problems because the engines have been there for a long time. The engines could halt, there could be malfunctions in some of the sub-systems, there could be problems with lubrication and corrosion of engine components.There are a number of things that may not work, for example the dual-fuel system may not operate properly because it’s such a long time since it has been tested.
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