Ferguson shipyard to cut a quarter of its workforce
Work on the second of two long-delayed CalMac ferries is drawing to a close at the state-owned yard in Port Glasgow.
Ferguson Shipyard to Reduce Workforce by a Quarter Amidst Order Uncertainty
Scotland's state-owned Ferguson Marine shipyard is set to cut nearly a quarter of its staff as it awaits confirmation of new orders. The Port Glasgow firm, which currently employs 283 individuals including 34 apprentices, anticipates shedding 70 positions through a voluntary redundancy program. This move comes as construction on the second of two significantly delayed CalMac ferries nears completion.
The Scottish government has pledged to directly award the yard contracts for four smaller vessels. However, ministers state they are still conducting "due diligence" on the plan, leaving the shipyard with an order gap despite these promises.
Ferguson Marine, the last commercial shipyard on the Clyde, was nationalized in 2019 following a protracted dispute between its former owner and Caledonian Maritime Assets Ltd (CMAL), the government-owned ferries agency. The disagreement centered on claims for additional costs related to two dual-fuel CalMac ferries.
The first of these, MV Glen Sannox, was finally delivered in November 2024, with MV Glen Rosa slated for completion by the end of this year. The shipyard recently finished sub-contracting work for BAE Systems on new Type 26 frigates but currently lacks any confirmed future orders.
Graeme Thomson, CEO of Ferguson Marine, stated that the immediate priority is the handover of Glen Rosa before year-end. He acknowledged the "inevitable gap in workload" as the vessel nears completion, emphasizing the need to work with the Scottish government to prepare for contract negotiations. Thomson added that while such changes are difficult, proactive action is crucial to protect the yard's long-term viability, ensuring it remains "lean, modern, and ready to cut steel on the new fleet as quickly as possible."
The latest intake of 10 apprentices recently toured the yard with their parents before commencing their first year of college.
In March, prior to the Holyrood election, the Scottish government announced intentions to directly award the shipyard contracts for four future vessels: two small CalMac ferries, a fisheries research ship, and a marine protection vessel. These were presented as a "bridge to the future" for the yard. Then-Economy Secretary Kate Forbes indicated that significant preparatory work, including legal advice, had been undertaken, but noted that engagement with the Competition and Markets Authority would be necessary. Since then, none of these contracts have been confirmed, with ministers citing ongoing "due diligence."
MV Glen Rosa has now been relocated downriver to Inchgreen for final fitting out and commissioning, leaving the main Port Glasgow yard without a ship under construction for the first time in 12 years.
Stephen Flynn, Economy, Tourism and Transport Secretary, described the redundancy scheme as part of efforts to modernize the shipyard and enhance its competitiveness. He affirmed that the actions taken by Ferguson Marine's leadership are "necessary to help secure a viable future for the yard, and that of commercial shipbuilding on the Clyde." Flynn also assured that the reduced workforce would not impact the construction of MV Glen Rosa. He reiterated the government's intention to directly award four vessels, stating that the process is undergoing full due diligence, with next steps to be announced to parliament.
Even with an imminent contract award, at least a year of design work would be required before the yard could begin cutting steel. However, the promised new orders, though unconfirmed, have allowed the firm to update its business plan, potentially unlocking £14.2 million in modernization funds initially announced over two years ago. Ground investigation work is underway to install new equipment and software aimed at boosting productivity. The shipyard's apprentice program remains unaffected in the short term, with 34 young workers currently in training and a new cohort of 10 trainees about to start college.
Since its founding by four brothers in 1903, Ferguson's has successfully built over 360 ships. However, its reputation has been tarnished by the controversy surrounding the significantly delayed and over-budget ferries, MV Glen Sannox and MV Glen Rosa. The construction of these first-of-their-kind liquefied natural gas (LNG) vessels in the UK was plagued by design challenges and disputes over additional cost claims. While there is broad agreement that the workforce was not at fault, the controversy may have made potential customers hesitant to place new orders.
The shipyard also faces broader challenges common to all UK shipbuilders, including competing on cost with overseas firms, particularly those in Eastern Europe and the Far East. The Society of Maritime Industries reports that foreign yards can typically undercut UK-based shipbuilders by 10-20% due to a combination of cheaper labor and superior state support.
Two years ago, Ferguson's missed out on an order for seven small CalMac ships, a contract widely seen as ideal for rebuilding the firm's reputation. Despite praise for the quality of its bid, CMAL awarded the deal to a Polish firm due to lower construction costs. Ferguson's management has repeatedly advocated for "social value" to be incorporated into such evaluations, recognizing the broader economic benefits of building ships in Scotland rather than solely focusing on the headline price. However, CMAL claims it is restricted in its ability to score bids for social value because Scotland's pre-Brexit procurement rules mandate equal treatment for all bidders.
Last summer, Ferguson's CEO Graeme Thomson called for the direct award of another CalMac ship, a replacement for MV Lord of the Isles, describing it as a "target contract" and warning that sustaining workforce numbers would be "very difficult" without securing the work. Ministers rejected his appeal, and the contract went out to tender earlier this year. Ferguson's was unable to bid for the work because CMAL set pre-qualification criteria that, according to Ferguson's management, no UK-based commercial shipbuilder could fulfill. A shortlist of bidders has been drawn up, but CMAL has declined to reveal the firms or their locations, citing potential harm to competition. The winning bidder will be announced early next year.