The parent company of Belfast's troubled shipyard Harland & Wolff has warned that the yard could face a "controlled closedown" if it fails in its bid to recoup £23 million sterling (€37.6 million) from its US customer Global Marine.
An arbitration hearing between the two companies got under way in London yesterday but is not expected to end until the end of this week. A statement from Norwegian-based Fred Olsen Energy said the company had agreed to fund H & W on an interim basis until the completion of the hearing. This short-term funding is believed to amount to about £21.5 million in addition to a £50 million guarantee put up by Fred Olsen for a loan taken out by the yard with HSBC bank.
Should Harland & Wolff fail, however, to recoup at least a "substantial part" of the disputed £23 million, it would lack the necessary funding to stay in operation, the statement continued. "In these circumstances, one alternative would be a controlled close down of the yard, the cost of which would be in the order of £15 million [sterling]."
A spokesman for Harland & Wolff would not comment yesterday on the statement by the parent company but said the Belfast shipyard was "confident" the arbitration ruling would go in its favour. If Harland & Wolff succeeds in recouping the £23 million, it would also trigger the release of some £5 million British government aid.
A spokesman for Global Marine yesterday refused to comment while the hearing was in progress. The president of the Confederation of Shipbuilding and Engineering Unions, Mr Bobby Carson, described the situation as "very serious" and said Fred Olsen's statement was the first clear indication of a complete closure of Harland & Wolff.
"In the short term, it depends on the outcome of the arbitration hearing whether Harland & Wolff can soldier on. But really, this is a `drip-feed of doom'," he told The Irish Times.
The dispute between the two companies centres on the completion date for a deepwater drilling ship. In early August, Global Marine won the right in the London High Court to take away the vessel from the yard without paying the final instalment of £23 million. Harland & Wolff said it had repeatedly offered the ship to the US company from July 24th onwards but had been told it had not been completed to Global's satisfaction. The court ordered Global to put up a £70 million bond but said it could not rule on the details of the case.
There have already been several hundred redundancies at the Belfast shipyard since 90-day protective redundancy notices were issued to the 1,800 workers in March. Further redundancies appear inevitable, although numbers in the short term will depend on the outcome of the arbitration hearing. There is currently little work at the yard, with a £300 million contract for four ferries yet to be confirmed and a letter of intent concerning the building of two cruise liners for Luxus Holdings yet to be turned into a firm order.
A further dispute between Harland & Wolff and Global Marine over another £133 million which the shipyard says it is owed by Global for extra work on two drilling ships is not due to be heard until next year.
