Harland & Wolff, the historic Belfast shipyard famous for building the Titanic, is on the brink of government, putting a £1.6 billion contract to build three Royal Navy warships at risk.
The troubled shipyard, which is expected to file for administration as early as Monday, is facing a cash shortage at the end of this month, raising fears that the Fleet Solid Support (FSS) ships will end up being built abroad – a first for the Royal Navy warships.
The government crisis threatens to void Harland & Wolff’s contract to assemble the ships, which are crucial to supporting Britain’s aircraft carriers on global deployments. Although company bosses claim that putting Harland & Wolff Holdings Plc into administration will not affect the operation of the yards, there are concerns that the contract may have to be retendered.
Industry experts warn that the situation could force the Ministry of Defense (MoD) to rely on Navantia, the Madrid-based main contractor that partnered with Harland & Wolff, to complete the work in Spain. This would mark a significant departure from Britain’s tradition of building its warships domestically.
Harland & Wolff planned to share the manufacture of the ships’ hulls with Navantia, with final assembly in Belfast. However, insiders say the government could see Navantia take over Harland & Wolff’s Belfast yard, potentially abandoning its other sites in Appledore, Devon and Arnish and Methil in Scotland – a move that unions fear could lead to significant could lead to job losses.
The GMB union has urged the government not to allow potential buyers to ‘cherry pick’ Harland & Wolff’s assets, arguing that all four sites play a vital role in the UK’s defense and renewable energy sector. GMB national officer Matt Roberts warned that losing the contract would be “one of the biggest betrayals in Northern Ireland’s industrial history”.
Russell Downs, the restructuring expert recently appointed as executive chairman of Harland & Wolff, insists that all four sites remain viable and that the company is still able to fulfill its part of the Navy contract. However, the uncertainty has led to calls for alternative arrangements, such as a deal involving other British shipyard operators such as BAE Systems and Babcock, which were previously in the running for the contract.
Francis Tusa, an independent defense consultant, criticized the Defense Department’s decision to award the contract to Harland & Wolff and Navantia in 2022, noting that Harland & Wolff had not built a large ship in about two decades. He expressed doubts about the yard’s ability to handle such an important project and described the decision as overly optimistic.
Labor peer Lord Beamish has urged ministers to come up with a rescue plan for the FSS programme, stressing the importance of adhering to the National Shipbuilding Strategy and ensuring the ships are built in Britain to boost recovery of domestic shipbuilding. He emphasized the crucial role of the support ships for the Royal Navy, calling them ‘vital’.
Harland & Wolff’s financial problems worsened after Business Secretary Jonathan Reynolds refused to back a £200m refinancing request in July, citing the high risk of losing taxpayers’ money. To complicate the situation further, the company recently revealed it is investigating a possible “misapplication” of £25 million of company funds under former management. Former CEO John Wood, who was ousted in July, dismissed the accusation as “ridiculous.”
The government has stated that it is working intensively with all parties to find a solution that preserves the British shipbuilding industry and protects jobs. However, she continues to maintain that the market is best positioned to resolve the crisis and that government financing would entail a significant risk of financial losses. A government spokesperson encouraged all parties to engage with unions before making further decisions, acknowledging workers’ concerns amid the ongoing uncertainty.
With the future of Harland & Wolff at stake, the potential consequences extend beyond job losses, with significant implications for the UK’s defense capabilities and industrial strategy. The crisis underlines the challenges of sustaining domestic shipbuilding in a competitive global market, and the need for a coordinated response to safeguard the industry’s legacy and future.