Those who have followed Harland & Wolff’s travails in recent months will be unsurprised by the news that the iconic shipyard, famous for building the Titanic, is to enter administration.
A happy ending to a long-running debacle had looked increasingly unlikely since the government declined to guarantee a vital £200m UK Export Finance loan earlier in July.
As ever, it is the employees and shareholders who will suffer the most. Redundancies are set to follow across the group’s 1,500-strong workforce and Monday’s announcement made clear shareholders’ investments would be wiped out.
Lessons must be learned from this mess.
Harland’s demise raises important questions about business leadership and government decision making. In the space of a few months, the crisis has forced out CEO John Wood, CFO Arun Raman, Chairman Malcolm Groat and two non-executive directors.
The former boss had long been controversial among shareholders but it has now been revealed the company is investigating the “misapplication” of more than £25m in corporate funds, an allegation he refutes.
Both the Conservatives and Labour may also embark on some soul searching. Labour was elected on the promise of creating jobs and jump-starting Britain’s industrial sector. Yet two key decisions at both Harland & Wolff and Port Talbot have failed to prevent considerable job losses in recent weeks. When it comes to supporting British industry, political promises are cheap.
The new government was not helped by the Conservative administration, which oversaw months of uncertainty as the shipyard’s situation began to unravel. Perhaps they felt the writing was on the wall.
Ultimately, this corporate mess (which is also a personal tragedy for those who will lose their jobs) speaks to the state of the UK’s once-revered shipbuilding industry. Harland & Wolff resonates not just because of its role in building the Titanic but also HMS Belfast, the Canberra and the Pendennis Castle. Its two giant yellow cranes, Samson and Goliath, have been a feature of Belfast’s skyline for half a century.
Yet British shipyards have been in terminal decline for well over a century. The UK’s global share of shipbuilding fell from over 80 per cent in the 1890s to nigh-on zero by the end of the 1980s, and a number of shipyards have been shut in recent decades.
Harland & Wolff’s troubles risk further undermining the sector, not least since it remains responsible for building Royal Navy warships via a major £1.6bn Ministry of Defence contract. There is a distinct possibility those ships could now be built in Spain, by Harland & Wolff’s contract partner, Navantia. All those who had a hand in this disaster should reflect on how it came to pass.