Ferguson Marine secures contract with BAE Systems to build parts for Royal Navy's HMS Birmingham

Troubled nationalised shipyard Ferguson Marine has signed a contract to build parts for a Royal Navy warship.

The deal with defence contractor BAE Systems will see the Port Glasgow yard fabricate three structural parts for HMS Birmingham – part of the Type 26 programme.

Chiefs at the Scottish Government-owned shipyard said the contract is “an important development” as it aims to secure new work.

Ferguson’s reputation has been marred by repeated failings including major delays and cost overruns to two ferries being built for CalMac.

Alan Quinn and David Dishon Muckle Media

The BAE contract will see steel cutting on the three components expected to commence imminently with the shipyard ready to begin manufacturing.

The Type 26 programme, currently being delivered by BAE Systems, will provide the Royal Navy with “the most advanced anti-submarine warfare capability available”.

Construction is under way for the first five of eight Type 26 frigates with the ships at various stages of build.

Type 26 frigate HMS Cardiff leaving the Govan yards STV News

Each ship consists of nearly 60 structural units which are integrated at BAE Systems’ Govan shipyard before entering the water and moving to the Scotstoun shipyard for systems testing and commissioning.

Graeme Thomson, CEO of Ferguson Marine, said: “This contract is a significant step for Ferguson Marine and will enable us to play a role in enhancing the UK’s world class maritime capability.

“In recent years Ferguson Marine has been working with BAE Systems, and as the last commercial shipbuilder on the Clyde, we are uniquely positioned to act as an extension of the important work happening under the Type 26 programme.

“As we seek to add to our book of orders, this proves the ability of our skilled workforce to secure new business. We are committed to expanding our experience, with this representing an important opportunity to grow the skill of the younger members of our workforce, to win future commercial contracts in this and related markets.”

It comes after a parliamentary report warned urgent investment is needed to secure Ferguson Marine shipyard’s future.

Holyrood’s Public Audit Committee highlighted multiple and repeated failings at the Port Glasgow site, including leadership and board instability, inadequate internal audits, serious weaknesses in contractor oversight, and governance failures around exit packages for senior staff.

MSPs found these issues, along with delays and extremely high-cost overruns in the building of Glen Sannox and Glen Rosa, have caused significant reputational damage to the yard.

Glasgow, Scotland - Side view of the progress on a ship at a BAE Systems shipbuilding yard located in Govan on the River Clyde. — Glasgow, Scotland – Side view of the progress on a ship at a BAE Systems shipbuilding yard located in Govan on the River Clyde. iStock

The building of the ferries has run years behind schedule and multiple times over budget.

The two ships, which were meant to be delivered in 2018, will now cost an estimated £460m – up from the original price tag of £97m.

In April, the shipyard’s financial officer David Dishon told ministers that a ten-year business strategy will be set out to plot its course for the future.

In the meantime, Ferguson Marine said it is “committed to continuing to develop its workforce and maintaining Clyde built skills” through its apprenticeship programme while progressing the delivery of Glen Rosa.

Chiefs also confirmed plans to invest £14.2m in capital upgrades using Scottish Government funding to modernise infrastructure and equipment.

Simon Lister, Managing Director of BAE Systems’ Naval Ships Business said: “BAE Systems has a productive relationship with Ferguson Marine, who are a key supplier of structural steelwork on the Clyde and have built two units for the Type 26 programme.

“This award strengthens our relationship and their continued involvement in the programme.”

Deputy First Minister Kate Forbes said: “This contract award is a positive demonstration of the shipyard’s capabilities, skills and ability to win work in a commercial playing field, and most importantly, the workers at Ferguson Marine.

“The Scottish Government’s decision to take Ferguson Marine into public ownership saved the last commercial shipyard on the Clyde and we continue to ensure the long-term future of the Yard and the workforce, with investment of up to £14.2m in the yard over the next two years in order to help it modernise and secure further future business.

“Securing new business for the Ferguson Marine Yard has always been vital for the Scottish Government, which is why this contract is so welcome. I sincerely hope that the business’s future commercial strategy, which is being spearheaded by a new CEO, will enable Ferguson Marine to win new business in its target markets.”