Harland & Wolff, the owner of the Belfast shipyard that built the Titanic, will enter into administration this week after failing to find new funding, in a blow to UK government hopes of shipbuilding in the city.
The company said on Monday said that it was insolvent and would appoint administrators from Teneo this week.
It said that an unspecified number of redundancies at the listed holding company, Harland & Wolff Group, were inevitable, but added that it was hopeful that the companies operating its shipyards will be bought. Those core operations will “continue to trade as usual” for now, it added.
In July the company said that as many as 1,600 people were working across its businesses, which also included shipyards in Devon and Scotland, a proposed gas storage operation in Northern Ireland, and a now discontinued ferry service serving the Isles of Scilly.
It is the latest in a long line of crises for the Belfast yards, which have declined from their heyday when they employed as many as 20,000 people. The city’s skyline is still dominated by the twin yellow Samson and Goliath cranes, which were installed in the 1970s. The yard built the Titanic liner, which infamously sank on its maiden voyage in 1912.
The administration raises serious questions for the UK government, which had promised to build three warships at the Belfast yard in an attempt to spread work beyond the two dominant British shipbuilders, BAE Systems and Babcock International.
It comes after months of fraught negotiations as Harland & Wolff scrambled to find funding to upgrade the shipyards, where it had hoped to carry out the work on the fleet solid support (FSS) warships that transport crucial supplies such as ammunition and food to aircraft carriers.
All shareholders in Harland & Wolff are likely to lose their money, the company said. However, as many as 20 companies have expressed interest in buying parts of the business in a sales process carried out by Rothschild, an investment bank, according to a person with knowledge of the talks. Sky News reported at the weekend that Babcock, a London-listed defence contractor, was considering a bid.
Matt Roberts, a national officer at the GMB union, said: “Workers, their families and whole communities now face their lives being thrown into chaos due to chronic failures in industrial strategy and corporate mismanagement.
“The government must now act to ensure no private company is allowed to cherrypick what parts are retained, in terms of which yards or contracts they wish save.”
The future of the shipyards had been in doubt for months as government officials raised concerns that a £200m export guarantee could result in taxpayer losses. The business secretary, Jonathan Reynolds, last month ruled out giving the loan guarantee, which had initially been announced by the previous Conservative government.
One of Harland & Wolff’s existing investors, the US private equity creditor Riverstone Credit Management, injected more money to see it through for another few weeks, but the administration was seen as increasingly likely by people close to the company given its debts and its rapidly declining cash reserves.
Russell Downs, an accountant who was appointed as interim boss in July, said: “The group faces a very challenging time given the overhang of significant historic losses and its failure to secure long term financing. Good progress has been made to test the market for investor appetite. The board has reluctantly concluded that the company’s own future as an Aim-listed company will likely come to an end in the near future, but that the core operations undertaken by the four yards and Islandmagee will continue to trade as usual.
“It is important to recognise that this is extremely difficult news for the company’s staff directly affected and will impact many others within group. We will work to support our staff through this transition. Unfortunately, extremely difficult decisions have had to be taken to preserve the future of our four yards.”
When administrators are appointed, it will represent the second time in five years that the owner of the Belfast yards has gone under. The oil services company InfraStrata bought the yards out of administration in 2019, before adopting the historic Harland & Wolff name and attempting to reinvent itself as a shipbuilder.
A spokesperson for the Department for Business and Trade said: “We have been working extensively with all parties to find an outcome for Harland & Wolff that delivers shipbuilding and manufacturing across the UK and protects jobs.
“We are clear that following a thorough review of the company’s financial situation, at present the market is best placed to address these challenges, and providing government funding would have meant a significant risk of losing taxpayer money.
“We know this will be a concerning time for workers, and we strongly encourage all parties to engage with the trade unions before making any further decisions.”