Nationalised Ferguson Marine under £2800-a-day chief fails to win any orders in over two years

Records show that as of March 31, Ferguson Marine which runs the last remaining shipyard on the lower Clyde, had won no contracts since being taken over by the Scottish Government at the end of 2019.

Former Ferguson Marine chief, tycoon Jim McColl has said projects that were lost were "almost without exception" initiatives that promised "considerable growth and long-term revenue not only for the shipyard but for the River Clyde, the local communities and the Scottish economy".

Mr Hair, who was tasked by ministers with implementing a major transformation programme for the troubled shipyard in August 2019 and prepare it for a sustainable future earned over £1.3m for 454 days' work before he left in February.

The Herald on Sunday can reveal that the nationalised shipyard failed to get over the first hurdle in trying to win a £105m contract for new lifeline ships for Islay even though ministers again proposed the taxpayer foot the bill for a mandatory builder's refund guarantee.

Minister-controlled ferry fleet owners Caledonian Maritime Assets Ltd (CMAL) gave the contract to Turkish shipyard Cemre Marin Endustri in March, while Ferguson Marine was rejected at the initial pre-qualification questionnaire stage, failing to even be considered as preferred bidder.

The Herald on Sunday has previously revealed that the firm under Mr McColl had won the controversial ferry fiasco contract without such guarantees, after providing a £106m taxpayer-backed special incentive to ensure that the contract could go to Ferguson marine through without the normal financial safeguards.

The public money loan with special provisos to CMAL to protect them as it raised concerns about the yard being unable to provide the guarantees.

It came with a crucial pledge that they would not have to repay anything until after the vessels had been delivered.

And they promised other public funding to cover other performance risks to ensure it did not lose out and further money to meet any debts to ensure CMAL remained in existence.

The £82.5m that had been drawn down from the loan became a taxpayer loss as CMAL says it was "eliminated" after Ferguson Marine went into insolvency before being taken into public ownership. CMAL would normally have been expected to pay off the loan over 25 years using revenue it collects from fees.

Nationalised Ferguson Marine records seen by the Herald on Sunday reveal that in the questionnaire, bosses had said that it would seek to issue a guarantee from a first-class bank such as Royal Bank of Scotland "which would be underpinned by our ultimate parent company, the Scottish Government".

Ferguson Marine confirmed that "as sole shareholder of Ferguson Marine, the Scottish Government has agreed in principle to act as builder's guarantor, subject to due diligence..."

It said that Ferguson Marine had provided guarantees in the past in support of contracts when required.

Papers also show that as of March 31, Ferguson Marine which runs the last remaining shipyard on the lower Clyde, won no contracts since being taken over by the Scottish Government at the end of 2019 under the stewardship of Mr Hair.

The nationalised shipyard is still sitting on two unseaworthy and incomplete lifeline ferries which are are delayed by at least five years and whose costs of soared by at least two-and-a-half times the original £97m contract.

A Holyrood probe last year into the construction of the ferries - Glen Sannox and Hull 802 - branded the management process a "catastrophic failure".

The contracts failure has been described by previous Ferguson Marine managers as "scandalous".

John Morgan, the former director of business development at Ferguson Marine for five years had warned about the dangers of shutting down innovation and business development and concentrating only on the poisonous ferry contract before he was asked to leave by Mr Hair.

Mr Morgan who is shocked at the millions in potential orders that has been lost by the nationalised firm including a share of a £1.25bn contract to build five Type 31 frigates secured by international aerospace and defence firm Babcock. The first of the vessels started construction in April.

The Babcock bid initially included Ferguson Marine within a consortium, but then the shipyard pulled out.

When defence secretary Michael Fallon visited Ferguson Marine in 2017, he spoke about the opportunity for the Clyde yard to build the new frigates.

He said: “With our cutting-edge Type 26 frigates already being built on the Clyde, I know Scottish skilled engineers will relish the chance to compete to build a brand new class of warships for the growing Royal Navy. We want to make the most of the renaissance in UK shipbuilding, delivering the latest ships that will help protect our nation and our interests across the world.”

The previous yard estimated that could have seen the Port Glasgow yard with naval work for at least the next seven to eight years providing a steady core workforce of at least 400 people, until nationalisation.

Mr Morgan said: I gave Mr Hair the presentation to show what we were doing. I did a 20 minute long presentation of all the orders. He said we don't need business development, we don't need innovation, and we don't need you. All these things projects died.

"If there ever there was a clear indication of where Ferguson Marine was headed, then it was there.

"We would have built sections of the frigates. That was there 110%. We took two years to get to that point. We even had the defence minister visiting the yard.

"What has happened is scandalous.

"Without nationalisation we would have had this. These contracts would have been fantastic."

Also lost were project to build a fishing boat factory for Scotland at Riskend, adjacent to Inchgreen where vessels could be built.

Depending on the initial investment this would allow for the production of up to 12 vessels at any one time.

Also ditched was a key involvement in Hyseas III which was trying to deliver the first seagoing vehicle and passenger ferry which will be fuelled entirely by hydrogen.

The Hyseas consortium was jointly led by FMEL and St Andrews University, and included partners from around Europe.

At the global GreenTech Awards 2019 in Berlin, the consortium represented by Ferguson Marine won the Innovation of the Year award for its work on a hydrogen propulsion system. After receiving this award management say the firm was inundated with enquiries about its hydrogen technology.

At £250m per vessel, the Type 31 will be expected to undertake a variety of operational roles, including interception and disruption of illegal activity at sea, intelligence gathering and defence engagement.

They will replace the five general-purpose Type-23 frigates currently in service with the Royal Navy.

Babcock has indicated that there are huge export opportunities for the Type 31 frigate.

It has already secured two export contracts for Arrowhead 140 - a Type 31 export variant - design licences to Indonesia and Poland.

Mr McColl said the Type 31 frigate contract and the potential for export would "almost certainly have secured the long-term future of Ferguson Marine and a vastly increased workforce on the Lower Clyde for decades, if not, generations."

The Port Glasgow shipyard first went into administration in 2014, more than a century after it was founded by the four Ferguson brothers, before being taken over by Mr McColl.

Within weeks a deal was brokered by then First Minister Alex Salmond, following discussions with the self-made entrepreneur, who made his fortune transforming the ailing Clyde Blowers into a portfolio of engineering investment companies.

Early work came in the shape of publicly owner ferry operator CalMac's desire or a small diesel/electric hybrid ferry.

The £12m MV Catriona, which carries 150 passengers, 23 cars or two HGVs was the third ferry built for the fleet to rely on a low-carbon hybrid system of traditional diesel power and electric lithium-ion battery power. It was the first to be delivered by Mr McColl's firm, and CMAL said it was delivered six weeks ahead of schedule and on budget.

But in August, 2019, Ferguson Marine went into administration and was nationalised as the subsequent contract for two lifeline ferries was plagued by design changes, delays and disputes over cost, with the yard’s management and CMAL blaming each other.

A Scottish Government spokesman said: "Significant progress has been made at Ferguson Marine and the yard is back to being a serious contender for future vessel contracts. This builds on the delivery of three smaller vessels - Hull 803, a 22 metre workboat for the Scottish aquaculture industry, Hull 804, an air-cushioned barge for the oil industry in the Caspian Sea and Hull 805, a 26m specialised fish welfare vessel also for the Scottish aquaculture industry.

"A robust transformation plan has addressed a range of complex issues and delivered improvements across the business. The yard is now in a stronger position and solid footing for the new CEO to lead the shipyard to future growth and commercial success.

"As part of ongoing work to support the yard to secure these future opportunities, and in line with recommendations in the Audit Scotland report, the Scottish Government has commissioned work to evaluate what possible improvements can be made for the yard to be more efficient, competitive and to win contracts on merit.”