Harland & Wolff shipyard, Belfast, is known for building the Titanic. It was the largest passenger vessel of its day before it struck an iceberg during its maiden voyage over the Atlantic. Things have changed since 1912. Samson, the yellow gantry crane that dominates Belfast’s skyline and is one of two that are visible, was recently seen straddling an oil processing vessel.
H&W is upgrading the SeaRose owned by Canada in a deal worth over £90m. SeaRose weighs 150,000 tons, which is larger than Titanic. Belfast’s former glory as a world-class shipbuilding centre is recalled by the sight of a huge ship docked in its harbour. H&W was placed into administration by the British government in 2019. But now, the shipyard has been re-established as the heart of British efforts to restore the past glory of the industry.
H&W is now waiting for Keir Starmer to make a decision on whether or not to go ahead with the controversial £1.6bn deal, which would see a small Aim-listed Aim company receive a £200m guarantee loan that was fully underwritten by UK taxpayers. It has six month to replace old debts.
H&W’s struggles illustrate the gap between UK’s claims to be a major power in the military industry and reality. H&W, despite its herculean efforts, is a mere minnow. Its shares, which were suspended after the company failed to submit its accounts in time, were only worth £14.5m.
The UK once had the largest navy in the World, but it was built for empire-building rather than defence. During the Falklands War in 1982, the country could only muster 17 destroyers and frigates plus two aircraft carrier. Although the days of British naval dominance are gone the UK still has a strong military, including a nuclear arsenal and a seat on the UN Security Council.
Grant Shapps (who was the UK’s defence secretary from the general elections to May) hailed the “new golden age” of British shipbuilding, announcing that six new warships would be built there, and another 22 were already on order.
The majority of the ships are being built by two major naval shipbuilders in the UK. Type 31 frigates will be made by Babcock International near Edinburgh, and Type 26 frigates by BAE Systems at Govan and Scotstoun. BAE also produces submarines for Royal Navy in Barrow-in-Furness, Cumbria.
The programme includes three “fleet-solid support” ships that carry ammunition and supplies to aircraft carrier. The PS1.6bn contract was awarded to a consortium consisting of H&W and Spain’s state owned shipbuilder Navantia. It also includes British design firm BMT. The government claimed that the contract would result in 900 jobs at Belfast’s shipyard, and another 300 at Appledore in Devon which was purchased by H&W owner InfraStrata in 2020, after it closed down in 2019.
Belfast will benefit from hundreds of new jobs, but it is still a long way off from its former glory.
Belfast’s industrial growth in the 19th century was comparable to that of northern England’s industrial cities. Graham Brownlow is a senior lecturer at Queen’s University Belfast. He says that the population of Belfast grew from 75,000 people in 1841, to 387,000 by 1911. By 1914, H&W employed 14,000 workers. He says that this rapid growth was an early example what we now call industrial strategy. The city’s Harbour Commission had reclaimed land to build docks.
John Parker is the veteran industrialist, who chairs Laing O’Rourke today, and joined H&W in the late 50s as an apprentice. At the time, it was the world’s largest shipyard, with 19 slipways.
Parker, who became chief executive between 1983 and 1993, said that the operation was “amazing training ground” and “the most massive”. From the late 1960s onwards, the international competition grew and the Troubles in Northern Ireland sapped the energy of the city.
UN statistics show that 94% of world’s merchant ships are built in South Korea.
Brownlow said that the collapse of UK shipbuilding was not due to a lack in local production of tons. It was because tonnage fell as the rest caught up.
It’s unlikely that the UK ( , which did not contribute any new ships to merchant fleet in 2023 ) will win many commercial shipbuilding contracts – unless perhaps there is a new technology that dramatically lowers emissions. Any revival of British shipbuilding will be based on warships, plus contracts for maintenance and repairs that smaller yards can handle.
Labour has committed to a strategic review of defence within the first year before setting its spending priorities. The party has made firm commitments about how it will spend 2.5% GDP on defence. This includes adhering closely to the Conservatives plan of building four new nuclear subs.
A party source confirmed that the review would examine each large contract in detail, including fleet solid support vessels. It will take some time, because opposition politicians and the public are only able to see the minimum amount of information regarding any defence deal due to security classifications.
John Wood, the chief executive of H&W, claimed on social media in May that the general elections would not slow down the deal.
The company has called off a strike after reaching a wage agreement with its workers. But if the guarantee of loan is not provided, H&W may be in serious trouble.
The company released unaudited numbers showing that it lost £43m by 2022. The company also stated: “Should any delays be experienced in securing the facility after the general elections, the ability of the company to execute large and new contracts will be negatively affected.”
H&W has massive liabilities. There are $115m in loans (£91m), agreed with Riverstone Credit Management from March 2022, a US private lender that charges interest rates of over 14% per year. H&W reported that it has made debt repayments and reported debt costs for 2023 of £18m. The loan must be paid back by the 31st December.
H&W’s £77m capital investment budget, which includes new robotic welding machines and a larger fabrication hall, would be impacted by further delays in the UK loan guarantee.
Riverstone has charge over H&W’s main properties. This includes Appledore, Scotland’s largest shipyard, and its leases for smaller yards in Methil, Arnish, as well as land off the coast of Northern Ireland related to a project for gas storage. If H&W defaults, then the yards will fall into the hands of the lender.
H&W’s spokesperson stated: “Our top priority is to invest in our yards and employees so that we can take advantage of the opportunities before us, such as the historic fleet solid support contract. We are working with financing partners who are supportive and we are developing alternative solutions better suited for the long-term development of our business.
The turnover has increased significantly with the completion and implementation of several projects. Market forecasts project a revenue of £200m for this financial year.
H&W’s struggles, whatever their fate, illustrate the difficulties of expanding warship construction beyond the large Scottish yards. MPs are concerned that Navantia may build most of the warships in its yard in Cadiz in Spain and only do superficial work in Belfast and North Devon.
Trevor Taylor, professorial Fellow at the Royal United Services Institute, believes it is technically possible to distribute some warships work to other UK yard – as Parker recommended in a report 2016 for government. This is because modern ships are constructed in blocks, and then assembled.
The Navy’s Queen Elizabeth-class aircraft carriers were constructed in seven-yard blocks across Britain, before being floated along the coast to Rosyth north of Edinburgh for assembly.
Taylor cautioned that the “risks of delivery” are matched by the political appeal of revitalising Belfast due to the need for financing. If H&W dropped out, one possibility would be to bring the rejected consortium led jointly by BAE and Birkenhead’s Cammell-Laird shipyard back.
Taylor and Parker both said that the industry has deteriorated to the point where companies like H&W will struggle to find workers with the necessary skills. H&W responded that this was “categorically false” and it had already grown its workforce from 46 employees to nearly 1,600.
Emma Evans, defence adviser at ADS – a lobbying group for UK defence industry – said that the government should change its “feast or famine” approach to contracting. This leads to a loss of skills and makes it difficult for industries to invest in training and retain skilled workers.
Parker believes that the economic value of billions in pounds spread throughout the UK is well worth it. He said that this could be a source of great economic growth. “Belfast needs this type of opportunity for highly skilled jobs.”
H&W is primarily focused on shipbuilding but the company, and in particular its CEO, have an extensive history of undertaking unorthodox marine projects.
H&W used to be called InfraStrata before it bought the shipyard from administration in 2019. 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).
The project then shifted to a plan for storing natural gas in salt caves near Islandmagee on the east coast of Northern Ireland. H&W was dealt a serious blow when the Belfast court of appeal ruled last month that government approval for the project was not lawful. The company has said that it is considering taking its case to Supreme Court.
Wood joined InfraStrata as a director in 2018. He was previously a director at MSC Europe in Southampton, a ship refitter which collapsed in 2007 and owed suppliers £3m. The company stated that Wood has since “delivered contracts worth billions of dollars and managed businesses to deliver major programmes”. He worked for consulting firms after a stint at BAE Systems managing ship repairs. In December 2019, he led a £3.3m acquisition of the Belfast Shipyard.
H&W has a new marine venture: a ferry service that will compete with the 28-mile journey from Penzance, in rough seas, to the Isles of Scilly.
Project delays have been caused by the inability to procure a vessel that is usable. The company planned to build the Appledore ferry and applied for government funding. The company abandoned this idea and bought a boat in Spain. The company blames heavy rain in Portsmouth on delays with the yellow paint job of the new ferry. It will be named the Atlantic Wolff.
Customers have reported that the company takes bookings but they are fulfilled by a rigid inflatable boat with 12 passengers and, in some cases, a helicopter.
Social media complaints tell of Scilly Ferries’ failure to communicate when the ferry would be operational, especially after they missed their promises of starting by June and “mid-June”. H&W says it “commits maximum resources seven days a weeks” but adds that it is still working on some “important regulatory issues”, such as a passenger certificate from Maritime and Coastguard Agency.
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