Ferguson shipyard seeks lifeline as ferry fiasco and lost contracts threaten future

The Ferguson shipyard in Port Glasgow is pressing the Scottish government for a new order and access to promised investment after a decade-long saga over delayed, over-budget ferries and a recent run of lost contracts left the yard’s future uncertain.

State-owned since 2019, Ferguson Marine has one major vessel under construction — the MV Glen Rosa, due to be completed in the second quarter of 2026 — and no confirmed follow-up orders. Chief executive Graeme Thomson has urged ministers to make a direct award for the next major CalMac ferry, a replacement for MV Lord of the Isles, saying the yard needs work "basically now" to retain staff and apprentices and to move beyond the reputational damage from the ferry programme that has dominated headlines.

The controversy centres on two vessels, Glen Sannox and Glen Rosa, ordered in 2015 and originally scheduled to enter service in 2018. The first of the pair did not enter service until November 2024 and the second is now forecast for completion in mid-2026. The total cost of the two ships has been reported as at least four times the original £97 million contract price, drawing sustained scrutiny from ministers, the ferries agency CMAL and industry observers.

Accountability for the overruns has been contested. CMAL, the publicly owned procurement body for CalMac, has blamed managerial failures during the period when private entrepreneur Jim McColl owned the yard. McColl, who rescued the yard from administration in 2014, has countered that CMAL’s pre-contract design choices and repeated specification changes left the ships effectively unbuildable. Thomson described the problems as the product of multiple factors — an innovative fuel system, constrained harbour dimensions, Covid, Brexit, management change and poor decisions — but stressed that shopfloor workers were not to blame.

Ferguson’s workforce of roughly 300 has retained skills that Thomson says match other shipyards in the UK and abroad, but the yard faces immediate commercial pressure. In March it lost a competitive tender to build seven small electric ferries to Poland’s Remontowa, despite previously delivering similar vessels on time and on budget. Weeks later a separate private order from Western Ferries for two replacement vessels was awarded to Cammell Laird on Merseyside. Those defeats came on top of a broader decline in regional manufacturing opportunities and the withdrawal of several employers from Inverclyde, which has compounded the local economic impact.

Thomson’s request for a direct award of the Lord of the Isles replacement raises procurement and legal challenges. Scottish ministers rejected a direct award approach for the small ferries earlier this year, citing concerns that bypassing open competition could breach UK-wide subsidy rules and invite legal challenge. Ministers are now considering whether a direct award or greater weighting for "social value" in procurement scoring would justify giving Ferguson the work.

The concept of social value — taking account of local employment, supply-chain effects and community benefits alongside price and technical quality — is enshrined in UK and Scottish procurement guidance. The UK’s Procurement Act 2023 instructs public bodies to consider social, economic and environmental benefits, while the pre-Brexit Scottish Procurement Reform (Scotland) Act 2014 requires equal treatment for continental suppliers in many contracts. CMAL told BBC journalists that it is governed by the older Scottish rules and therefore was not covered by the Westminster act when it awarded the small ferries contract.

Industry figures and Ferguson’s management argue that international shipyards typically undercut UK competitors by 10–20% because of more favourable state support, tax regimes and lower labour costs. That dynamic has historical precedent: in the mid-2000s the yard lost substantial work to Gdansk-based Remontowa, prompting public appeals from then-owner Alan Dunnet and political criticism at Holyrood.

Ferguson’s is not a fully modernised shipyard. Successive owners invested in improvements — Jim McColl injected some £28 million after 2014 — but the yard still lacks automated cutting machines, semi-automated production lines and integrated digital systems that drive productivity. The Scottish government pledged £14.2 million for transformation work last year, but employers at the yard say only a small portion — understood to be about £600,000 — has been released so far, in part because ministers expect the yard to secure a new order before releasing larger sums.

That standoff has prompted criticism inside the industry. With long lead times for purchasing and installing heavy machinery, yard managers and trade unions say postponing capital investment until after a contract is won risks perpetuating low productivity and higher unit costs. Ferguson currently sustains some activity through subcontracts from larger yards, including work on units for the Type 26 frigates being built upriver by BAE Systems and a small order assembled for HMS Birmingham.

The broader shipbuilding market is changing. Defence rearmament in Europe has generated large naval orders and a renewed appetite for domestic capability. Some naval planners favour smaller, more numerous vessels — including ships to monitor undersea cables, protect offshore infrastructure and support renewable energy — areas where Ferguson’s size and experience could match demand. There are also potential opportunities in continued CalMac fleet renewal, fisheries protection, border vessels and offshore-wind support craft, provided the yard can address reputational and productivity issues.

Workers at Ferguson’s emphasise the human effects of the decisions now being taken. Alex Logan, a plater who started a 47-year career at the yard as an apprentice at 16, said the operation provides careers in a region that has lost thousands of private-sector posts in recent years. Wages at the yard typically range between £14 and £17 an hour, and union representatives have campaigned to protect jobs and apprenticeships through repeated changes of ownership and management. The yard’s workforce has at times pushed back against costly consultancy arrangements: a turnaround director employed after nationalisation reportedly billed nearly £2 million over 595 days at a daily rate of more than £2,500.

Decisions expected from ministers in the coming weeks will test the balance between two policy aims: securing value for taxpayers through open competition and preserving regional industrial capacity and skilled jobs. Scottish ministers must weigh legal advice, procurement rules and political considerations as they decide whether to route the next major CalMac order to Ferguson’s, include social value more heavily in scoring, or let the open market run its course.

For Ferguson’s, the stakes are immediate. The yard’s management says that without work and without faster access to transformation funds, experienced staff may leave and apprenticeships could be jeopardised, making future competitiveness harder to restore. For workers and local leaders in Inverclyde, the outcome will determine whether a 122-year shipbuilding legacy can be stabilised and modernised or whether the region will see another step in a long industrial decline.