Ferguson shipyard made £100m loss after being nationalised

Ferguson went into administration following a dispute over the construction of two ferries

A nationalised shipyard tasked with delivering two ferries recorded a £100m loss in the first few months it was under Scottish government ownership.

Ferguson Marine (Port Glasgow) Holdings Ltd was nationalised in August 2019 after it went into administration.

The firm went bust amid delays, cost overruns and recriminations over an order for two CalMac ferries.

The turnaround director appointed by the government insisted the losses were due to "accounting matters".

Ferguson Marine was contracted to deliver two vessels for CalMac for £97m, with an initial completion date set for 2018 but the work has seen repeated delays and overspending.

The ferries, Glen Sannox and a still to be named ship known as hull 802 are not expected to be completed until 2022 and 2023 respectively, with the costs having doubled.

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Companies House accounts published on Wednesday show that Ferguson Marine reported a £100m comprehensive loss between 12 August 2019 and 31 March 2020.

However, in a letter to a government committee in March, Ferguson Marine director Tim Hair said the loss did not reflect the performance of the Inverclyde shipyard.

Tim Hair earns £790,000 a year to run Ferguson Marine for the Scottish government

He said it was based on "the auditor's view of the contractual arrangements in place at the time the shipyard was brought into public ownership".

He said that as a result of contractual changes "the reported loss will not be realised and will therefore be reversed in the accounts for the year ending 31 March 2021 which will show a corresponding profit".

He added: "Both the 2020 loss and the 2021 profit are simply accounting matters that are not reflective of the underlying performance of the shipyard, and do not have any impact on the estimated costs to complete the ferries."

'Solid track record'

He said the total costs of remedial work to complete the vessels were unchanged at between £110.3m and £114.3m.

Last year Mr Hair was paid more than £790,000, including fees and expenses. His fees/salary amounted to £2,565 per day to run the enterprise for the Scottish government.

In a response to a Freedom of Information request, Ferguson Marine said Mr Hair's salary was "consistent with market rates which reflect the highly specialised nature of a role that requires senior level experience and a solid track record of transforming failing businesses".

In a damning report in December 2020, MSPs on Holyrood's rural economy and connectivity committee said the procurement of the boats from the Ferguson Marine yard in Port Glasgow was "a catastrophic failure".

The committee inquiry found that the procurement process was "not fit for purpose".

What's the background?

Ferguson shipyard won the £97m contract to build two new ferries for Arran and the Hebrides in 2015.

The ships were to be a new hybrid design - powered by marine diesel oil and liquefied natural gas - but construction fell way behind schedule.

• Why are we building gas-powered ships?

Glen Sannox - destined for the Arran route - was expected to enter service in mid-2018 but it remains moored at the yard. It is not expected to be in service until next year.

A second ferry, earmarked for the Skye, Harris and North Uist route, is not expected to enter service until 2023.

In 2019 the yard collapsed owing more than £49m to the Scottish government, and it was eventually taken into public ownership.