Harland and Wolff, owner of the Belfast shipyard that built the Titanic, is set to enter administration this week after failing to raise new capital, dealing a blow to the British government's hopes of shipbuilding in the city.
The company announced Monday that it had filed for bankruptcy and said it expected to appoint a receiver from Teneo later this week.
The company said an unspecified number of job cuts were inevitable at its listed holding company, Harland & Wolff Group, but added that it hoped the company that runs the shipyards would be acquired. It added that these core businesses would “continue to trade as normal” for now.
In July the company said it employed as many as 1,600 people across its operations, which included shipyards in Devon and Scotland, a planned gas storage project in Northern Ireland and a now-defunct ferry service between the Isles of Scilly.
It's the latest in a long series of crises for Belfast Dockyard, which has declined from its heyday when it employed up to 20,000 people. The city's skyline is still dominated by the twin yellow Samson and Goliath cranes that were installed in the 1970s. Belfast Dockyard built the infamous passenger liner Titanic, which sank on its maiden voyage in 1912.
The administration has raised serious questions about the British government, which had promised to build three warships at its Belfast shipyards in an attempt to diversify work beyond the two major British shipbuilders, BAE Systems and Babcock International.
This came after months of difficult negotiations that saw Harland and Wolff scrambling to find funding to upgrade the shipyard because the company wanted the shipyard to do work on fleet supply ships (FSS), which transport vital supplies such as ammunition and food to aircraft carriers.
Harland & Wolff said all of its shareholders would likely lose money. But people familiar with the talks said as many as 20 companies had expressed interest in buying parts of the business in a sale process being led by investment bank Rothschild & Co. Sky News reported over the weekend that London Stock Exchange-listed defence contractor Babcock was considering a bid.
Matt Roberts, national officer for the GMB union, said: “Workers, their families and whole communities are facing life in disarray due to the chronic failure of industrial strategy and corporate mismanagement.
“The government must act now to ensure that private companies cannot arbitrarily pick and choose which pieces to keep in terms of which shipyards and contracts they want to keep.”
The shipyard's future has been uncertain for months after government officials expressed concerns that a £200 million export guarantee could result in taxpayer losses. Business Secretary Jonathan Reynolds last month ruled out implementing the loan guarantees initially announced by the previous Conservative government.
One of Harland & Wolff's existing investors, U.S. private equity lender Riverstone Credit Management, has injected more capital to help the company hang on for a few more weeks, but bankruptcy was seen as increasingly likely by people close to the company given its debt and rapidly dwindling cash reserves.
Accountant Russell Downs, who was appointed interim managing director in July, said: “The group has been going through an extremely challenging period following a series of record losses and an inability to secure long-term funding. There has been significant progress in terms of the market testing investor demand. The board has reluctantly concluded that the company's future as an AIM-listed company is likely to end in the near future, however the core businesses carried out by the four shipyards and Island Magee will continue to trade as normal.”
“This is extremely distressing news for our employees who are directly affected and it is important to recognise that it will also impact many others within the group. We will strive to support our employees during this transition period. Unfortunately, we have had to take a very difficult decision in order to safeguard the future of our four shipyards.”
If the administrators are appointed, it will be the second time in five years that the owners of the Belfast shipyard have collapsed. Oil services company Infrastrata bought the yard from administrators in 2019 and has since sought to rebrand it as a shipbuilding company, adopting the historic Harland & Wolff name.
A Department for Business and Trade spokesman said: “We have worked closely with all stakeholders to find an outcome that allows Harland and Wolff to continue its shipbuilding and manufacturing operations across the UK and protects jobs.”
“After a thorough review of the company's financial position, it is clear that the market is currently best placed to address these challenges and providing government funding would have represented a significant risk of losing taxpayers' money.”
“We understand this is a worrying time for workers and we strongly encourage all parties to consult with trade unions before taking any further decisions.”
