The next item of business is a statement by John Swinney on Ferguson’s shipyard. The cabinet secretary will take questions at the end of his statement; there should therefore be no interventions or interruptions.
14:25
I have a statement on the announcement last Friday, 15 August, of the appointment of an administrator to Ferguson Shipbuilders Ltd. Some 70 workers have been directly affected by immediate redundancy announcements. Our thoughts are with those individuals and their families as they go through this period of significant uncertainty. The Scottish Government’s immediate response to the news was to ensure that we are doing all that we can to support the workers who have been affected by the announcement.
Following the announcement on Friday, we immediately offered individual tailored support to each of those employees through our partnership action for continuing employment initiative, and we will work with KPMG, as the administrator, and with the trade unions to ensure that we deliver the best, most practical and most personal support that we can deliver.
We have also established a task force, with the aims of retaining a functioning shipyard and employing as many of the Ferguson staff as possible.
I chaired the first meeting of the task force yesterday. In attendance were the Minister for Transport and Veterans; representatives from Inverclyde Council, including the leader of the council and its chief executive; the administrator, which is KPMG; PACE; the Department for Work and Pensions; Scottish Enterprise; the Scottish Government; the Confederation of Shipbuilding and Engineering Unions; local shop stewards from Ferguson’s shipyard; and local members of the Scottish Parliament.
We discussed the immediate and practical assistance that could be made available for those who are facing redundancy, as well as the potential for maximising the opportunities for long-term employment in shipbuilding on the lower Clyde. However, the task force has unanimously agreed that there will be a concerted and coherent effort to do everything in our collective and combined powers to secure a new owner for the yard: we are determined to see shipbuilding continue on the lower Clyde.
We will continue to work together to ensure that we see the best possible outcome for Port Glasgow. The next meeting of the task force will be on Monday coming, and we will continue to meet for as long as it takes to achieve the aims of the task force.
Members are well aware of the long and proud heritage of shipbuilding on the River Clyde. For Ferguson’s specifically, that heritage dates back some 103 years, to when four brothers established the yard. At one point, the yard employed up to 200 people. More recently, following a difficult period in the early 2000s, we have witnessed the yard look to the future with the cutting-edge delivery of the world’s first sea-going roll-on, roll-off diesel-electric hybrid ferries.
Since 2007, any contract that Ferguson’s has had the capability and capacity to bid for, it has been successful in winning. Specifically, we awarded to Ferguson’s the contract for two hybrid ferries in October 2011, procured by Caledonian Maritime Assets Ltd and funded by Transport Scotland. Those contracts have provided more than £20 million of work for Ferguson’s, which has accounted for a substantial part of the yard’s recent work.
The Scottish Government, through the vessel owners CMAL, worked very closely with the owners and management of Ferguson Shipbuilders to ensure delivery of those vessels. At the time of that award, it was understood that the work would enable the company to remain competitive and, it was hoped, would give it a unique capability and foundation for further orders. That has proved not to be the case.
Since January 2014, Ferguson’s has been working with CMAL, Transport Scotland and Scottish Enterprise to review its financial position. With the support of CMAL, the final payment on the second hybrid ferry to Ferguson’s was split into staged payments in order to ease cash-flow pressures.
Scottish Enterprise at that stage provided grant support for a financial health check to establish the business’s financial position and short-term funding requirements. That was followed up in February 2014 with financial readiness support to review the business strategically and to prepare it for investment, which was again provided by Scottish Enterprise. In March 2014, further grant support was delivered to provide information that would help Ferguson’s to consider the medium-term needs of the business, including new investment or ownership to reshape the business.
There continues to be work at Ferguson’s—partly funded by £2 million from the Scottish Government and the European fisheries fund—that needs to be finished. That work will be important to any new owner in the early days of a takeover, and it is obviously important to the customer that they take delivery of a vessel in which they have already invested a great amount for completion. We will do whatever we can within the rules to pay grant claims to the vessel owner very quickly, once work recommences.
I firmly believe that there is a viable future for shipbuilding on the lower Clyde. Our aspiration for future ferry orders remains, and I have allocated significant capital funds to Transport Scotland to deliver that. The Scottish ferries plan sets out a series of vessel procurements over the next decade; 12 current CalMac Ferries vessels are to be replaced at an estimated cost of up to £250 million. Half those vessels are of similar size to the two hybrid ferries that Ferguson recently built. CalMac, CMAL and Transport Scotland are currently completing long-term plans for that procurement programme. There will certainly be construction work for a new owner of Ferguson to compete for, as well as regular repair and maintenance work from CalMac.
Through CalMac and CMAL, the Scottish Government is investing significant sums in the design, construction and maintenance of vessels. There is sufficient work to sustain Ferguson under a new owner that has the vision and commitment to invest in the shipyard and its workforce. We would work closely with any new owner to support it in building a sustainable business, although we recognise that that cannot happen overnight.
I must return to the most important aspect of recent events; 70 livelihoods are directly at stake. In Port Glasgow, we have a highly skilled workforce, and it is essential that those skills be put to productive use. That commitment must be delivered with real urgency.
The administrator has made it clear that Friday’s announcement has generated significant interest in Ferguson’s assets and capabilities. There is a challenge for all of us to work together to secure the shipyard’s long-term future. Our goal continues to be to secure the long-term future of Scotland’s vital shipbuilding industry; the Government will do all that it can to work with others to secure the future of shipbuilding on the lower Clyde.
We move to questions, for which I intend to allow around 20 minutes.
I thank the cabinet secretary for his statement and for early sight of it.
The descent into administration of Ferguson, which is our last commercial shipyard, is a blow to an iconic industry, to which we must respond with every resource at our disposal. The hardest blow, of course, is to the workforce and their families. I very much associate Labour members with the cabinet secretary’s assurances that our thoughts are with them, first and foremost.
Although the yard is more than a century old, the jobs are not old-fashioned. The work is highly skilled, and the products of the yard are technically advanced, innovative and cutting edge. As we heard, the last two vessels that Ferguson produced were groundbreaking and award-winning hybrid ferries. We can all agree that those jobs should be jobs of the future, not of the past; we must ensure that that is so.
The cabinet secretary was very clear: we have a yard, a skilled and proven workforce, a customer in CMAL, 12 vessels to be built, and £250 million to be invested. We surely must find a way to ensure that that investment supports jobs here, rather than somewhere else.
What assurances can the cabinet secretary give potential new owners that orders for Ferguson will be forthcoming quickly?
I welcome the substance of Iain Gray’s remarks and agree entirely that the jobs at Ferguson represent jobs of the future, especially given its innovation in recent years in building the hybrid vessels. Those vessels contribute significantly, of course, not only in terms of new technology, but in addressing carbon reduction issues that all Administrations around the world will have to address. Ferguson is in a leading position in being able to influence that consideration by a variety of countries.
On the prospects of future orders, I set out in my statement the extent of the investment in the ferry fleet in the next few years, which has an estimated cost of up to £250 million across 12 CalMac vessels.
About half those vessels equate in size to the hybrid vessels that Ferguson’s has just completed. As I said, Ferguson’s has a strong track record of successfully securing the orders for which it is equipped to bid, given the yard’s size and focus.
I assure Parliament that the Government is putting in place the resources to ensure that there is an on-going and sustained investment programme in the CalMac fleet, and that the Government will commit to making orders available for the fleet’s renewal at the appropriate times, given its commitments to operating lifeline ferry services and to ensuring that the services are provided by vessels that are of a quality and strength that are appropriate to the task.
I, too, thank the cabinet secretary for advance sight of his statement. I also thank him for convening the task force; I was very pleased to attend its meeting yesterday in Greenock. I echo the deep concerns, which are shared by everyone, about the events that have engulfed Ferguson’s and their consequences for the workforce.
I welcome the cabinet secretary’s commitment to shipbuilding continuing on the lower Clyde. In the interests of finding a new purchaser, which I think everyone agrees is the best way forward, has the Scottish Government had any communication with the United Kingdom Government to see whether it can help? Has it had any communication with the Shipbuilders and Shiprepairers Association, simply to ensure that every purchase possibility is being investigated?
This morning, I spoke to the Secretary of State for Scotland. He made it clear that if there is anything that the United Kingdom Government could do, it would do so. He relayed the view that all steps that could be taken at this stage are being taken.
On new investors, the Scottish Government will talk to any serious bidder in the process. The primary responsibility for that dialogue lies with the administrator, given its statutory functions. However, I take the opportunity that is presented by Ms Goldie’s question to make the point that we believe that the way forward is through new ownership and investment. Over the next few days, those are the supremely urgent priorities, because without securing them, the danger is that the workforce—what I consider to be Ferguson’s crucial asset—will start to dissipate as individuals, quite understandably, in order to try to secure alternative opportunities to support their families. I assure Parliament that the identification of new owners is the Government’s absolute and immediate priority. This morning, I discussed those issues with the administrators.
I welcome the statement, the speed of action and the collegiate approach that has been taken thus far through the establishment of the task force.
What support can the Scottish Government provide to prospective buyers for diversifying the yard? That diversification does not appear to have been capitalised on fully to date.
As I indicated, the Government, through the work of Transport Scotland, CMAL and Scottish Enterprise, has been heavily involved in supporting development at Ferguson’s yard. The hybrid ferry contract is a significant example of diversification, with the deployment of an entirely new technology and its application in a challenging environment. Last week, I was on the MV Lochinvar and I can testify to the beauty of Ferguson’s work—it is absolutely fantastic.
There is evidence of diversification. The hybrid ferry contract represents an opportunity to market an innovation from Scotland to jurisdictions around the world. That is a significant and attractive opportunity for any new buyer to invest in the yard.
I thank the cabinet secretary for his statement and, indeed, I support much of the sentiment in it. Obviously, as the constituency MSP for the area concerned and having been with the Ferguson’s workforce, I turn to harder questions that they wish me to ask. They ask why promises of further CalMac orders were not delivered, why the yard was allowed to close and whether the closure could have been prevented.
The cabinet secretary’s statement confirms that the Scottish Government has been working with the employers on the perilous financial situation for eight months. As the cabinet secretary will know, the workforce is very angry about being kept in the dark about that situation. Will he give an assurance today that all talks with potential employers will lead to the continuation of manufacturing and shipbuilding at the Ferguson yard and that it will not be used for any other purpose? Can he give a guarantee that there will be a new openness, with the involvement of the trade unions and the workforce with any potential future new owners?
I would like to make three points to Mr McNeil.
Obviously, I understand the raw sensitivity on this issue in the Port Glasgow community. I addressed that on my visit to the yard yesterday and in my discussions with the workforce and subsequently with the shop stewards. I am sure that that point was also discussed when the First Minister met the shop stewards earlier today.
The Government and its agencies have been involved in trying to address what I described at the task force yesterday as the precarious financial position of Ferguson’s for some time. That is what the Government does for companies all the time, and we invariably do not disclose to Parliament or to anybody that we are having those discussions because to disclose them would be to destabilise many of the companies that we are trying to support by addressing their problems. That is therefore not something that I am going to apologise to Parliament for.
I think that Parliament would be horrified if the Government was not involved in private discussions with companies to try to remedy their precarious financial situation. That is what Government—certainly this Government—is here to do. How employers then deal with that with employees is another matter.
That is the second point that Mr McNeil raised that I want to address. In my experience of situations in which we are involved in discussions with companies about their precarious financial position, the situation is much improved when the workforce are taken into the loop because that is where many of the good solutions come from. I can think of numerous examples that have never hit the headlines where hundreds of jobs have been saved. They have never been in a newspaper in the country because of the private discussions involving trade unions, the workforce, the management and the Government to resolve the issues. It would be better if that type of discussion was going on. Frankly, the key point that emerged from the review that Mr Mather undertook yesterday is that workforce and management discussions are a tremendous asset in resolving challenges within companies.
My final point is on the issue of the future role of the Ferguson shipyard. I was crystal clear yesterday and I am crystal clear today that my priority is to secure a future for Ferguson’s as a shipbuilding concern in the years to come. That is the focus of our discussions. We do not have control over that issue, because an administrator is now in control of the site, but the Government’s intervention and approach will be to secure the future for Ferguson’s as a shipbuilding concern in the years to come.
I, too, thank the cabinet secretary for his statement. I represent an island community, and I understand that there have been discussions since at least November 2012 on the designs to replace ferries on the Brodick to Ardrossan route over the next few years. Can the cabinet secretary tell us when those new orders are actually going to be placed? Clearly, any new buyer wants to know not only that there is the likelihood of new orders but when new orders can be placed.
What I can say to Mr Gibson is that there is an on-going programme in the ferries plan that sets out the routes that will require replacement vessels. Those priorities will be worked through as they are set out in the ferries plan. Of course, we are shortly to take delivery of the MV Loch Seaforth for the Stornoway to Ullapool route, and further contracts will follow in the wake of the Loch Seaforth. They are all set out in the ferries plan and the Government will provide the support that is envisaged in the plan to ensure that they can be realised.
I thank the cabinet secretary for the advance copy of his statement.
Earlier this year, the Deputy First Minister said:
“We would have preferred to see a private company buy Prestwick Airport but the strategic and economic importance of Prestwick Airport is such that we weren’t prepared to see Prestwick close.”
If the alternative is closure, will the Government buy Ferguson’s?
The situation that we find ourselves in is that Ferguson’s is in administration. It is now for the administrator to take forward that responsibility.
In response to Willie Rennie’s question, the best thing that I can say is that the Government is not prepared to rule out anything at this stage. We want shipbuilding to continue on the Clyde and at the Ferguson yard. We will do all that we can to secure new ownership, but we will keep an open mind on all options that are available to the Government at this time.
I thank the cabinet secretary for making sure that the priority is to secure a new owner for the shipyard. We have had several conversations about how there can be diversification at the yard.
Can the cabinet secretary confirm that Dales Engineering Services in Peterhead has taken over some of the apprentices, so that they can complete their apprenticeships?
I am afraid that I do not have that detail in front of me, but I know that there are six apprentices at Ferguson’s and that shop stewards left our discussions yesterday to help them make arrangements to complete their apprenticeships. I have not had an update on the final destinations that have been arrived at, but all efforts have been made by the shop stewards and PACE to make sure that the apprentices are in a position to complete their apprenticeships.
The cabinet secretary has made it clear that ferry procurement is a potential source of orders for Ferguson’s. Will he undertake to examine whether that procurement could be brought forward to provide that opportunity for the Ferguson yard sooner?
We certainly will explore how we can ensure that there is a credible flow of work that Ferguson’s can access under the process of competitive tender, and we will take all steps—as we have done over recent years, with the two vessels that have been secured by Ferguson’s—to ensure that there is every opportunity for the yard to complete contracts of that nature.
What support will be given to those workers in Ferguson’s who were approaching retirement and are facing redundancy?
The purpose of the intervention of PACE, working collaboratively with the DWP, is to ensure that every individual, at whatever stage in their working life, is able to obtain the necessary support and advice to equip them to deal with those challenges.
In response to Maureen Watt I indicated that specific support was being made available to the apprentices; in relation to Joan McAlpine’s question I say that advice for workers who are near retirement will be tailored to meet their circumstances and assist them in a way that meets their requirements and priorities.
I bring to the chamber’s attention my entry in the register of members’ interests: I am a member of the GMB union.
In the wake of last week’s announcement, Jim Moohan, GMB Scotland senior organiser and chairman of the Confederation of Shipbuilding and Engineering Unions, said:
“The first minister can, we believe, directly intervene and tender for commercial work within Europe to allow this yard to remain open. All governments have got the right to make bold decisions to save an industry.”
He also said that a failure to intervene would be an
“utter betrayal”.
Does the cabinet secretary agree?
We can always rely on Michael McMahon to go with the flow of cross-party working on such questions.
I think that I have made it pretty clear to the Parliament today that the Government will do everything that it can do to secure the future of the Ferguson shipyard as an on-going shipyard concern and that we will do everything that we can do to secure the future of the workforce. That is exactly what I am concentrating on. I am not concentrating on political point scoring, as Mr McMahon is doing.
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