Harland & Wolff will take another step towards guaranteeing its long-term future on Monday when shareholders are expected to vote in favour of a restructuring plan designed to ring-fence a potential £133.2 million sterling (€222 million) liability with US firm Global Marine.
The sizeable claim made by Global Marine against Harland & Wolff for extra costs incurred during the completion of two drill ships is under arbitration. If it goes against the company, it could have spelt bankruptcy for the yard.
However, the restructuring plan proposed by the board of Harland & Wolff would establish a new holding company called Harland & Wolff Group plc and replace Harland & Wolff Shipbuilding and Heavy Industries with a new company called Harland & Wolff Heavy Industries.
This will have the effect of ring-fencing the potential liability and enabling the yard to move forward without the threat of closure. Harland & Wolff chief executive, Mr Brynjluv Mugaas, said the new structure would enable the company to compete for and win new offshore contracts.
"The reality is that it is very difficult to accept new orders while the financial situation of the company is hanging in the balance," he said.
Acceptance of the new corporate structure combined with the yard's success this week in winning a £300 million sterling (€514 million) contract to build four passenger ferries for Seamasters International, based in the Bahamas, should ensure the yard's medium-term future.
In addition, a deal soon to be signed between the Harbour Commissioners and Harland & Wolff will free up a 100-acre riverfront site in Belfast for development. This land was previously closed to development due to lease restrictions.
Under the terms of the deal Harland & Wolff and the commissioners will split the revenue on the Titanic Quarter site 50/50, which should net the shipyard millions and put it on a firmer economic footing.
However, despite the better news surrounding Harland & Wolff, there are still a number of issues which concern Mr Mugaas.
Speaking to The Irish Times following a meeting of shipyard workers last week, he said he would like to comment on the large no vote against the management's plans for working conditions at the yard.
He said the wage plan should be seen as a victory for everyone at the shipyard and there would be no losers in the deal. Asked about criticism from workers of "gross mismanagement" at the yard, he said he could not comment unless he knew exactly what the complaints were.
"It is a difficult market. That is why we needed to get the wage deal. We have to get a cost level that is capable of attracting orders," he added. Mr Mugaas said he had tried to introduce a new management style since becoming chief executive but admitted this had not yet been a success. "It's difficult to change people; it is a process which takes time," he added.
He said the wage plan was not in itself the way to make the yard competitive. "We have to turn a number of stones to do that. We have to be much better in management of work and the execution of work. We have to be more efficient in management at the yard," he said.
Mr Mugaas said the strategy of the yard would focus on doing what the yard was good at: building the marine systems of passenger vessels, the hull, steelworking and navigation equipment. He said the yard would continue to sub-contract the finishing work on contracts.
Following the loss of the Queen Mary contract, Mr Mugaas was critical of the lack of British government support, especially in providing financial guarantees. Harland & Wolff must still secure this financing before it can complete its £300 million contract. "If we secure an order, it will be a test case for the government on how far it is committed to shipbuilding," he said.
Sir Reg Empey, Minister for Enterprise, Trade and Investment in the stalled executive, is also critical of the government's commitment to shipbuilding. "The problem is, in the UK, there is an absence of a coherent shipbuilding strategy. It is similar to the policy in the car industry," he said.
"It requires a new coherent policy which I do not believe is there. A local assembly would be more responsive to that, although there could be no 1970s style injection of funding."
Provided the financing and guarantees can be worked out for the £300 million deal with Seamasters International, the future of the yard looks secure in the medium term. Work is due to start on the new contract by the end of the year and will continue until at least mid-2002.
The longer-term future of the yard is less secure and will depend on the success of a new partnership approach being considered by unions and management. However, the economic future for shipbuilding remains buoyant and there are signs of the government becoming more responsive, according to Mr Nick Granger, president of the shipbuilding and ship preparing association.
A new shipbuilding forum has been established by the British Department of Trade and Industry to examine the way the shipbuilding industry is organised in the UK and its prospects for future growth, said Mr Granger.
"There are good long-term prospects for shipbuilding; it is not a sunset industry. Our statistics show there is a requirement for the construction of 2,600 ships every year for the following 10 years," he said.
"There is a huge need to replace old ships and to build new ships which conform to rigorous safety and environmental requirements. All of these pressures mean there will be a big market for shipbuilding."
The British government has also hinted that some Ministry of Defence contracts, due towards the end of the year, are likely to be awarded to British yards. The Belfast skyline is likely to remain dominated by the twin peaks of Sampson and Goliath at least for several years to come.
