Spanish company could bail out well-known British shipyard famous for building the Titanic

Spain's state-owned shipbuilding company Navantia is in exclusive and "advanced" negotiations with Harland & Wolff

Javier Rodríguez

Cadiz

Tuesday, 15 October 2024, 10:25

The British shipbuilding company Harland & Wolff, founded in 1861 and famous for owning the Belfast shipyard that built the Titanic, could be bought by the Spanish, state-owned shipbuilding company Navantia after The Telegraph newspaper revealed that both companies were in exclusive and "advanced" negotiations.

If Navantia assumes control of the four shipyards that the British group has in Belfast (Northern Ireland), Appledore (England), Arnish and Methil (both in Scotland), a buyout that could happen in November, this would mean the retention of around 1,000 jobs.

Harland & Wolf announced on 16 September that it was filing for bankruptcy after declaring itself insolvent through failing to secure funding to continue trading, which could jeopardise a multi-million dollar project it currently has in partnership with Navantia.

The company's financial problems could jeopardise the £1.6 billion (1.915 billion euros) contract that the UK Ministry of Defence signed with a consortium comprising of Harland & Wolff, the hi-tech ship design company BMT and Navantia for the construction of three military supply vessels for the British Royal Navy.

According to the original plans, Harland & Wolff and Navantia would have manufactured sections of the ships at the Appledore and Cadiz shipyards and then transferred them to Belfast for assembly.

In the face of the Harland & Wolff crisis, British Prime Minister Keir Starmer's government ruled out stepping in to rescue the shipping company, with a spokesman for the Department of Enterprise and Trade saying that "the markets were best placed" to meet the industrial group's funding needs.

This naval contract is vital to Cadiz as the sheet metal-cutting of the three ships will be carried out at the Puerto Real shipyard. This is Navantia's most important international deal, worth almost two billion euros, and an expected workload for 1,600 employees. However, the British shipyards, where assembly of the ships was planned, has filed to go into administration, placing Navantia and its ambitious shipbuilding project in a position of checkmate.

So, what's next? Navantia has confirmed that it is studying alternatives to secure the joint project and meet the deadlines set in the contract. Although it has not disclosed what these moves consist of, the British press has mooted the possible purchase of the British shipbuilder by the Spanish company to safeguard the multi-million dollar contract. The Spanish shipbuilder is the lion's head in this contract with Harland & Wolff as a strategic, but subcontracted, partner. In other words, Navantia's UK subsidiary, Navantia UK, is leading the work and is now in charge of finding a viable solution. It is understood that the Spanish group could take management control of the failing group's four shipyards as of next month in Belfast, Appledore (Devon), Arnish on the Isle of Lewis and Methil (Fife). This information has not yet been confirmed by Navantia.

Shoring up a partner

According to La Voz, a sister newspaper of SUR, Navantia and its UK subsidiary, Navantia UK, have approved the necessary mechanisms to support Harland & Wolff so that the shipyard can continue operations while the companies explore options to ensure compliance with the FSS (Fleet Solid Support) project.

Navantia UK is the prime contractor for the FSS project. Navantia UK and Navantia are strongly committed to the fulfilment of this contract with the UK's Ministry of Defence (MoD). The contract foresees that part of the construction of the vessels and their assembly will be carried out on British soil. Navantia is studying alternatives to enable the HW shipyard in Belfast to fulfil its role in the FSS project, acting in accordance with business criteria and with the advice of independent experts.

These talks come as Harland & Wolff also negotiates with its creditors. The UK company's main lender is US firm Riverstone Holdings, to which Harland & Wolff owes at least 128 million euros (£107 million) in high-interest loans.

In January 2023 Navantia and Harland & Wolff signed a major contract for the construction of three logistics vessels for the Royal Navy. The MoD had awarded the contract for the FSS project - the construction of three supply vessels for the Royal Navy's Royal Fleet Auxiliary - to this consortium of companies named as Team Resolute a year earlier. The project, valued at £1.6 billion, will provide the Royal Navy with a key capability for the provisioning of its fleet, based on BMT's British design and with Shipyard 4.0 technology transfer from Navantia (an industry model for smart shipyards). Alarm bells rang when Harland & Wolff confirmed its financial losses were mounting, according to Economía Digital.

Second bankruptcy

One of Harland & Wolff's shipyards is located in the Northern Ireland city of Belfast and this is where the vessels are planned to be assembled. Construction and assembly of the parts that will make up the ships will be carried out at Harland & Wolff's shipyards in Belfast and Appledore as well as at Navantia's shipyard in Puerto Real (Cadiz). The three FSS vessels will be responsible for supplying essential goods and ammunition to Royal Navy ships deployed on missions. With a total length of 216 metres each, they will be the longest ships in the British fleet, second only to the Queen Elizabeth class of aircraft carriers.

However, Navantia's UK partner has not been able to overcome its financial problems. Harland & Wolff is still in the red and during the last financial year it multiplied that deficit. Note that this shipbuilding company had already gone bankrupt once in August 2019 and was bought out of administration to avoid going under. Dolphin Drilling (HW's Norwegian parent company), which until 2019 had owned the century-old Harland and Wolff, reached an agreement to sell the business to InfraStrata for £6 million. The buyer was a company specialising in energy supply and storage, but not experienced in shipbuilding. InfraStrata's Islandmagee Gas Storage Project is also planned for Belfast.

The FSS project now in play will involve more than 14 million man-hours of work in Spain and the UK. Parts manufacture will start in 2025 and the three ships should be operational by 2032. For the time being, Navantia has confirmed that the start date for the work remains the same.

Team Resolute will contribute to the UK's National Shipbuilding Strategy, first published in 2017, by boosting the modernisation of facilities and the training of the shipyard workers. The consortium will invest £77 million in revitalising shipbuilding infrastructure in the UK and a further £21 million in knowledge and technology transfer from Navantia UK, creating one of the most advanced shipyards in the UK, of great importance for future exports and national shipbuilding.

Top 50

Esta funcionalidad es exclusiva para registrados.

Reporta un error en esta noticia