Harland & Wolff, the troubled shipyard firm, has announced its insolvency and warned that its status as a London-listed company is likely to end soon, leading to job losses across its UK sites. The Aim-listed company, which employs 1,500 people at its sites in Belfast, Devon and Scotland, said it was now taking steps to reduce staff in its “non-core” operations and certain “central support areas,” a move that was announced to employees earlier today.
Administrators from Teneo are expected to be appointed this week, while advisers Rothschild and Co are exploring strategic options amid interest from several potential buyers. Reports suggest that Babcock, Spain’s Navantia, and former CEO John Wood may be considering bids, as reported by City AM.
The board informed markets that shareholders are likely to receive “no return” from the administration process, which is set to begin this week. The group’s core operations and its Islandmagee Gas Storage project will continue as usual, but several of its non-core subsidiaries are being wound down.
This announcement puts the future of a crucial £1.6bn Ministry of Defence contract to build warships for the Royal Navy at risk, raising serious concerns about the future of the UK’s shipbuilding industry. It could result in British Royal Navy warships being built overseas, potentially in Spain.
Despite this, Harland & Wolff stated it sees a “credible pathway” to delivering the contract and expects bids for its four yards “shortly.”
Interim chair Russell Downs commented: “The group faces a very challenging time given the overhang of significant historic losses and its failure to secure long term financing. Good progress has been made to test the market for investor appetite.”
“The Board has reluctantly concluded that the Company’s own future as an AIM-listed company will likely come to an end in the near future, but that the core operations undertaken by the four yards and Islandmagee will continue to trade as usual.”
He further added: “It is important to recognise that this is extremely difficult news for the Company’s staff directly affected and will impact many others within group. We will work to support our staff through this transition. Unfortunately, extremely difficult decisions have had to be taken to preserve the future of our four yards.”
“This will clearly be very unwelcome news for shareholders who have shown significant commitment to the business over the last five years.”
Matt Roberts, the GMB Union’s national officer, stated: “Workers, their families and whole communities now face their lives being thrown into chaos due to chronic failures in industrial strategy and corporate mismanagement.”
“All the four Harland & Wolff yards are needed for our future sovereign capabilities in sectors like renewables and shipbuilding.”
“The government must now act to ensure no private company is allowed to cherry pick what parts are retained, in terms of which yards or contracts they wish to save.”
A government representative commented: “While we know this will be a concerning time for those affected, Harland & Wolff has been clear this process will in no way affect jobs at its shipyards or core operations such as delivering its contracts for the Ministry of Defence.”
“We are clear that following a thorough review of the company’s financial situation, at present the market is best-placed to address these challenges, and providing government funding would have meant a significant risk of losing taxpayer money.”
“We are continuing to work extensively with all parties to find an outcome for Harland and Wolff that delivers shipbuilding and manufacturing in Belfast, Scotland and across the rest of the UK and protects jobs.”