The Harland & Wolff (H&W) shipyard in Belfast is famous for having built the Titanic, the largest passenger ship of its time before it hit an iceberg on its maiden voyage across the Atlantic. But things have moved on since 1912. In recent weeks Samson, one of the two yellow gantry cranes that dominate Belfast’s skyline, has been straddling a giant oil processing vessel.
This is the Canadian-owned SeaRose, which is being upgraded by H&W in a contract worth more than £90m. The SeaRose is even larger than the Titanic, weighing in at 150,000 tonnes. The sight of a massive ship in Belfast harbour recalls the city’s glory days as a shipbuilding superpower. H&W collapsed into administration in 2019, but now the shipyard is back at the centre of British hopes to restore something of the industry’s past glories.
Those hopes now appear to be under threat as H&W waits for Keir Starmer’s government to decide whether to proceed with a controversial £1.6bn deal that would see the small, Aim-listed company given a £200m loan guarantee completely underwritten by the UK taxpayer. It has six months to find new money to replace previous debts.
The yard’s travails illustrate the gap between the UK’s pretensions to be a major military power and the reality in the industry. For all its Herculean endeavours, H&W is a minnow, valued at only £14.5m before its shares were suspended last week after it failed to file accounts on time.
Britain once had the most powerful navy in the world – albeit one built to sustain an empire rather than for defence – and even during the Falklands war in 1982 it could muster 23 destroyers and frigates (it now has 17) plus two aircraft carriers. The days of naval supremacy are long gone, but the UK is still a mid-ranking military power, with a nuclear arsenal, a permanent seat on the UN security council and a pledge to spend 2.5% of GDP on defence.
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In May, Grant Shapps, who was defence secretary until the general election, hailed a “new golden age for British shipbuilding”, with six new warships to be built in the UK, with another 22 military vessels already in the pipeline.
Most of the ships will be built by the UK’s two dominant naval shipbuilders, with Type 26 frigates being made by BAE Systems in Govan and Scotstoun near Glasgow, and Type 31 frigates by Babcock International at Rosyth near Edinburgh. BAE also builds submarines for the Royal Navy at Barrow-in-Furness in Cumbria.
However, the programme also includes three “fleet solid support” ships, which carry ammunition and other supplies to aircraft carriers. That £1.6bn contract has been awarded to a consortium of H&W, Spain’s state-owned shipbuilder Navantia, and British design firm BMT. The government said the contract would create 900 shipyard jobs in Belfast, plus another 300 at a yard in Appledore, Devon, bought by H&W’s owner, InfraStrata, in 2020 after it closed in 2019.
Made in Belfast
Hundreds of new jobs will provide a huge morale boost for Belfast, but the city will still be a long way from reliving its former glories.
In the 19th century, Belfast’s growth matched anything seen in England’s northern industrial cities. According to Graham Brownlow, senior lecturer in economics at Queen’s University Belfast, the city’s population rose from 75,000 in 1841 to 387,000 in 1911, and by 1914 H&W had 14,000 employees. This rapid growth was, he says, an early example of what is now known as industrial strategy, with the city’s Harbour Commission reclaiming land to build docks.
John Parker, the veteran industrialist who now chairs builder Laing O’Rourke, joined H&W as an apprentice in the late 1950s, when it ran the largest single shipyard in the world, building on 19 slipways at a time.
“It was just the most massive operation” and “an amazing training ground”, said Parker, who went on to become chief executive from 1983-93. Yet from the late 1960s, international competition surged and Northern Ireland’s Troubles took a lot of energy out of the city.
The ship now under the Belfast cranes, the SeaRose, was built in South Korea which, together with China and Japan, dominates global non-military shipbuilding, making 94% of the world’s merchant fleet, according to UN figures.
“The collapse of UK shipbuilding wasn’t because of a lack of local tonnage being produced,” said Brownlow. “It was because the share of tonnage was falling as the rest of the world caught up.”
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There’s very little chance of the UK (which contributed no new ships to the merchant fleet in 2023) winning many commercial shipbuilding orders – barring perhaps a dramatic new technology to lower emissions. So any British shipbuilding revival will have to rely on warships – plus perhaps contracts for maintenance, repairs and upgrades that can be handled by smaller yards.
Labour has promised a strategic defence review within its first year, before it sets its spending priorities. The party has already made some firm commitments on how it will spend the equivalent of 2.5% of GDP on defence, including sticking closely to the Conservatives’ plan to build four new nuclear submarines.
The review would look in detail at every large contract, including the fleet solid support ships, a party source said. This will take time because security classifications mean opposition politicians, like the general public, see only the bare minimum of information about any defence deal.
None of that augurs well for the quick turnaround of the H&W loan guarantee expected by chief executive John Wood, who claimed in May on social media that the general election would not delay the deal.
Financial troubles
![Harland and Wolff workers sit beneath a large banner saying Save Our Shipyard](https://i.guim.co.uk/img/media/4f7394510d69b536870395421f019da816e32c85/0_219_3500_2100/master/3500.jpg?width=445&dpr=1&s=none)
A threatened strike has been called off after the company reached a pay agreement with workers. But if the loan guarantee is not given, H&W could be in trouble.
Last Monday, the company blamed its share suspension on a dispute with auditors over when it could recognise revenues from future years, and released unaudited figures showing it lost £43m in 2022. It also said: “Should there be any material delays to securing the facility post the general election, the company’s ability to execute new and large contracts would be adversely affected.”
The situation is urgent because H&W is carrying massive liabilities. These include $115m (£91m) in loans agreed from March 2022 with Riverstone Credit Management, a private US lender, which is charging it interest of more than 14% a year. H&W said it had made repayments, and reported debt costs of £18m for 2023. The loan must be repaid by 31 December.
Significant further delays to the UK loan guarantee would probably eat into the £77m H&W earmarked for capital investments, including new robotic welding machines and an expanded fabrication hall.
Riverstone holds charges over H&W’s key properties, including Appledore, the main shipyard, its leases of other yards bought from a collapsed company in Methil and Arnish in Scotland, plus land off Northern Ireland’s coast related to a gas storage project. This means that if H&W defaults on its loans, the yards could fall into the lender’s hands.
An H&W spokesperson said: “Our number one priority is investing in our yards and people so that we can capitalise on the significant opportunities facing us, including the landmark fleet solid support contract. We have supportive financing partners and are progressing alternative solutions that are better suited to the long-term growth of our business.
“Turnover has increased substantially with the completion of multiple projects and market forecasts are projecting a revenue line of £200m this financial year.”
Whatever H&W’s fate, its struggles illustrate the difficulty of spreading warship construction work beyond the big Scottish yards. MPs have raised concerns that much of the building may be carried out in Navantia’s yard in Cádiz, Spain, with only superficial work being done in Belfast and north Devon.
Trevor Taylor, professorial fellow at the Royal United Services Institute thinktank, said he believed it was technically feasible to spread some warship work to other UK yards – as recommended by Parker in a 2016 report for government – because modern ships are built in blocks and then joined together.
The Navy’s two Queen Elizabeth- class aircraft carriers were built in blocks at seven yards across Britain before being floated around the coast for assembly at Rosyth, north of Edinburgh.
However, Taylor warned that the political attraction of revitalising Belfast is matched by “risks in delivery” because of the need for funding. If H&W were to drop out, one option would be to bring back the previously rejected consortium led by BAE and Birkenhead’s Cammell Laird shipyard.
Both Taylor and Parker said the industry had withered to such an extent that companies such as H&W would struggle to build a workforce with the right skills. H&W said this was “categorically not true” and that it had already increased its workforce from 46 to almost 1,600.
Emma Evans, defence policy adviser at ADS, a lobby group for the UK defence industry, said the government could change a “feast and famine approach to contracting, which leads to a drain of skills, and makes it very difficult for industry to train, invest, and retain skilled workers”.
For Parker, the prize of billions of pounds of economic value being spread across the UK is worth it. “This can be a great source of economic growth,” he said. “Belfast certainly needs that type of opportunity to create highly skilled jobs.”
Marine adventures
While H&W’s main focus is now on shipbuilding, the company and its chief executive have a history of unorthodox marine projects.
Before buying the shipyard out of administration in 2019 and taking its famous name, H&W was called InfraStrata. It emerged out of a gas drilling company in 2008, and tried to frack for gas in Northern Ireland (drawing the ire of Avengers-star-cum-campaigner Mark Ruffalo in the process).
It then pivoted to a project for storing gas in salt caverns at Islandmagee, on Northern Ireland’s east coast. H&W suffered a severe blow last month when Belfast’s court of appeal ruled that government approval of the project had not been lawful. The company said it was considering whether it could take its case to the supreme court.
Wood joined InfraStrata in 2018, having previously been a director of MSC Europe, a Southampton ship refitter that collapsed in 2007, reportedly owing suppliers £3m. (The company said that Wood had since then “delivered multibillion contracts and run businesses delivering major programmes”.) After a stint managing ship repairs at BAE Systems, and then working for consultancies, he led the £3.3m purchase of the Belfast shipyard in December 2019.
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But aside from building ships, H&W is now involved in a different marine adventure: setting up a rival to the ferry service from Penzance to the Isles of Scilly, a 28-mile crossing in often-rough seas.
The project has been hit by delays in procuring a usable vessel. The company had planned to build the ferry in Appledore, and put in a bid for government levelling-up funding. It abandoned that idea after the government withdrew the funding and sourced a boat from Spain instead. It has blamed heavy rain at the dry dock in Portsmouth for delays to a yellow paint job on the new ferry, which to be called the Atlantic Wolff.
The company is taking bookings, but customers have said these are being fulfilled by a 12-passenger rigid inflatable boat, and in some cases a helicopter.
Complaints on social media tell of a lack of communication from Scilly Ferries about when the ferry will be in service, after it missed promises to start by June, and then by “mid-June”. H&W it is “committing maximum resources, seven days a week” but added that it was still working on “some important regulatory issues”, including a crucial passenger certificate from the Maritime and Coastguard Agency.