Harland & Wolff to enter administration this week, and cutting jobs
Newsflash: UK shipbuilder Harland & Wolff is preparing to fall into administration this week.
The company, which owns the Belfast shipyard that once built the Titanic, has warned shareholders that its Board has concluded that the Company is insolvent on a balance sheet basis (where a company’s liabilities outweigh its assets).
Accordingly, contingency planning for the making of an administration order and appointment of administrators from Teneo is underway, Harland & Wolff explains.
That process is likely to start this week.
Trading update from Harland & Wolff, confirms the company “is insolvent on a balance sheet basis”, with preparations underway for the appointment of administrators from Teneo. “This process will likely commence this week.”
— Ryan McAleer (@RyanMcAleerbiz) September 16, 2024
Staff at Harland & Wolff have been told today that jobs are being cut in “non-core and certain central support areas”.
The company warns that “a further reduction in headcount in our core activities may be necessary”.
Harland & Wolff’s future has been uncertain since the UK government decided in July that it would not provide a £200m loan guarantee to the company.
In July the company hired Rothschild & Co to assess strategic options.
Today, it says that “a number of parties” have expressed an interest in buying some of Harland & Wolff’s assets, with a deadline for first-round bids due soon.
The key issue for the company is a major Royal Navy contract, called the Fleet Solid Support (FSS) programme, which Harland & Wolff hopes to hold onto.
Harland & Wolff says it believes it still has a “credible pathway” to continuing core operations built around a four-yard operation delivering the FSS contract.
Key events
Closing post
Time for a recap:
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 an unspecified number of redundancies at the listed holding company, Harland & Wolff Group, were inevitable, but added that it was hopeful the companies operating its shipyards would be bought. Those core operations would “continue to trade as usual” for now, it added.
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.
Unions have urged the government to help.
In other news today…
Next budget is crucial. I hope this report and Lords’ Economic affairs committee one will persuade HMT that we need more investment .Markets will not be scared by dropping nonsensical rule that debt ratio must fall in year 5 irrespective of what happens in years 1-4. https://t.co/0Zk1CVrKFM
— Gus O’Donnell (@Gus_ODonnell) September 16, 2024
Over on Wall Street, the Dow Jones industrial average share index has hit a new alltime high.
The Dow, which contains 30 large US companies, is up 173 points or 0.4% at 41,567 points today.
Chipmaker Intel is leading the risers, up 2.2%, following reports that it will win up to$3.5bn of federal grants to manufacture semiconductors for the US government.
Hopes that the US Federal Reserve might announce a steep cut to US interest rates on Wednesday is also cheering traders in New York.
The UK government does not sound keen to step in and rescue Harland & Wolff’s shipyards, despite pressures from unions today to help.
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.”
Ministers could have helped the company two months ago, when it asked the government to act as a guarantor for a £200m loan from a consortium of UK banks. They declined, though.
Ulster Unionist Andy Allen, a member of the Legislative Assembly of Northern Ireland, said it is “crucial” the government supports Harland & Wolff in finding a new owner for its Belfast shipyard, as the company moves towards administration.
He said:
“While this outcome may have seemed increasingly likely in recent months, we must find a solution that not only keeps this historic shipyard in east Belfast, but allows it to grow and thrive.
“The yard is more than just a historic landmark; it has a vital role to play in our national defence, particularly in shipbuilding and maintenance.
“Given its strategic importance to our defence infrastructure, the Government must act quickly and decisively to secure its future.
“The workforce’s skills and expertise are invaluable, not just to the yard itself but to our broader economy and defence capabilities.”
Allen added:
“I will continue to work with colleagues, both here and in Westminster, to ensure every support is given to finding a new owner that will make a clear commitment to building on Harland and Wolff’s historic success.
“The Government must actively engage with all interested parties and prioritise this issue.
“We must ensure the yard and its workforce have a viable and sustainable future.”
Unite: Government may need to intervene to protect shipyards
The Unite union is demanding that urgent action is taken to preserve the future of the workforce at Harland & Wolff’s yards in Northern Ireland, Scotland and England.
Unite hopes that a company with a history of shipbuilding will emerge as a buyer for Harland & Wolff’s four UK shipyards, following the news this morning that it will soon enter administration.
Unite Irish regional secretary Susan Fitzgerald says:
“Harland and Wolff is of huge strategic importance and it is essential that all measures are taken to protect the workforce to preserve skills and ensure continuity of employment.
“Unite has been regularly meeting the government and management to ensure the long-term future of the company’s yards and facilities. It is vital that the right buyer is found, failing that the government should be prepared to intervene
“Workers at Harland & Wolff should be in no doubt that Unite has their back and will leave no stone unturned in securing a long-term viable future for the workforce.”
Unite also reports that over 20 companies have shown an interest in either purchasing all or part of the company or providing an injection of investment, through the process being run by Rothschilds.
Manufacturing activity expands in New York region for first time in almost a year
Manufacturing activity has expanded in the New York region for first time in almost a year, which may calm fears that the US economy was faltering.
September’s Empire State Manufacturing Survey, produced by the New York Federal Reserve, reports that business conditions in New York state are improving.
The headline general business conditions index rose sixteen points to 11.5, up from -4.7 points in June.
The survey aso found that delivery times and supply availability were steady, and inventories levelled off.
However, the region’s labor market conditions “remained soft”, with employment falling again.
Looking ahead, firms grew more optimistic that conditions would improve in the months ahead, though the capital spending index dipped below zero for the first time since 2020.
BP to sell its US onshore wind business
Energy giant BP is looking for a buyer for its US onshore wind business.
Wind Energy currently has interests in ten onshore wind farms in seven US states – Indiana, Kansas, South Dakota, Colorado, Pennsylvania, Hawaii and Idaho.
In total, they can generate 1.7GW and are already providing power.
BP is selling up as it focuses on Lightsource, the solar power developer it took full ownership of last year. It plans to develop Lightsource as a developer of “cost-competitive, utility-scale renewable power assets worldwide” for solar and onshore wind.
William Lin, executive vice president for gas & low carbon energy at BP, says:
“Renewables are an important part of our strategy as bp transitions to an integrated energy company.
“bp Wind Energy’s assets are high-quality and grid-connected but are not aligned with our plans for growth in Lightsource bp. So we believe the business is likely to be of greater value for another owner. This planned divestment is part of our strategy of continuing to simplify our portfolio and focus on value.“
Deloitte UK equalises paid parenting leave
Accountancy giant Deloitte UK is to equalise its maternity and paternity leave allowance.
It means that from the start of 2025, new fathers at Deloitte UK will get 26 weeks of fully paid leave, the same as new mothers.
Currently, fathers can only take four weeks off with full pay after the birth of their child.
Richard Houston, Deloitte Senior Partner and CEO, says:
“I’m proud of the changes we’re announcing today – they demonstrate both the significance and value we place on looking after our people during some of the most important moments in their lives, as well as our added commitment to equality.”
Deloitte has also told its staff that it would give 12 weeks’ paid leave to staff whose newborn requires neonatal care, while those with long-term caregiving roles for a relative or friend will be given an extra five days of annual leave. Women undergoing fertility treatment will also be given paid leave while they do so.
Ofcom cracks down on telcos mis-selling full-fibre broadband
Mark Sweney
The UK’s media regulator is to begin cracking down on telecoms operators misleading consumers with contracts and online information that claims they are buying the fastest broadband service available, full fibre, when they are actually signing up for a slower technology.
Ofcom is to begin enforcing new rules from today that will only allow internet service providers to use terms like “fibre” and “full-fibre” on their websites and in contracts if customers will actually receive fibre optic cables all the way to their home.
The regulator said that companies have used the term fibre “inconsistently” when in fact the so-called “last mile” of technology to consumers’ homes could involve some copper wiring, or wireless connectivity, meaning a significantly slower and less reliable service than customers’ have signed up for.
Ofcom says:
“From today, broadband providers will need to be clear and unambiguous about whether the network they use is a new ‘full-fibre’ network – with fibre all the way to the customer’s home – or a ‘part-fibre’, ‘copper’, or ‘cable’ network.”
“Providers will no longer be able to use the term ‘fibre’ on its own.”
The way telecoms companies market their broadband services in their ad campaigns is covered by the Advertising Standards Authority, the UK ad watchdog.
With the explosive growth in popularity of digital services such as video streaming, bandwidth-hungry online gaming and the advent of artificial intelligence consumers are increasingly looking for the fastest broadband available.
As of January, 18.7m UK homes have the ability to sign up for full-fibre broadband, about 62% of all homes.
However, to date only around 5m homes have upgraded to take a full fibre connection.
The interim executive chairman of Harland & Wolff, Russell Down, has acknowledged that the move into administration will be “extremely difficult” news for its staff, some of whom will be losing their jobs.
Down also points out that shareholders will also suffer losses – the company’s shares have been suspended at the start of July, and will be cancalled when it enters administration.
Down says:
“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.
“This will clearly be very unwelcome news for shareholders who have shown significant commitment to the business over the last five years.
“The Board, the senior management and rest of the team are committed to deliver the best outcome for the four yards and communities they serve to ensure their continued operation into the long term under new ownership.”
GMB: Government must provide support for Harland & Wolff yards
The GMB union is urging the government to help save Harland & Wolff’s four shipyards, and the jobs created by them.
Matt Roberts, GMB national officer, says:
“Workers, their families and whole communities now face their lives being thrown into chaos due to chronic failures in industrial strategy and corporate mismanagement.
“All the four Harland & Wolff yards are needed for our future sovereign capabilities in sectors like renewables and shipbuilding.
“The Government must now act to ensure no private company is allowed to cherry pick what parts are retained, in terms of which yards or contracts they wish to save.
“Leaving these vital yards – and the crucial FSS contract with all its promises for UK shipbuilding – to the mercy of the market is not good enough. The Government must provide support and oversight to get the market to the solution we need.”
Harland & Wolff are aiming to refocus on its “core operations”, which it defines as its four shipbuilding yards and the Islandmagee Gas Storage project.
This means:
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In Belfast, the company is in discussions with Spanish shipmaker Navantia on a possible plan to resume work on the FSS programme to build three support ships for the Royal Navy.
Significant activity has been undertaken on the Sea Rose FPSO mid life extension work and this is nearly concluded.
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In Appledore, Devon, work is continuing on the M55 Project (where Harland & Wolff is converting the HMS Quorn/Atherstone for the Lithuanian Navy).
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The Group’s shipyards in Scotland, at Arnish and Methil, have continued to construct barges for recycling company Cory, to be used to ship recyclable and non-recyclable waste on the Thames
Yesterday, the Sunday Times reported that Harland & Wolff’s finance chief Arun Raman, who quit abruptly last week, is weighing up suing the company for constructive dismissal and racial discrimination.
Last week, Harland & Wolff announced that Raman has tendered his resignation and steps down from the board with immediate effect.
You can read this morning’s announcement from Harland & Wolff here.
