Belfast shipyard starts MoD contracts

MoD order was lifeline to Harland and Wolff

Financially troubled Belfast shipyard Harland and Wolff has said it has finalised contracts to build two Ministry of Defence ferries.

It won the contracts to build two roll-on roll-off ferries for the MoD Strategic Sealift Programme in October last year.

The company said on Friday that work could begin on the vessels almost immediately.

The MoD contract is a lifeline for Harlands, which made half of its 1,200 strong workforce redundant last September because of a lack of work. The two vessels are scheduled for delivery in October 2002 and January 2003.

Harland and Wolff chief executive Brynjulv Mugaas said: "We are delighted that this contract has today been finalised, following on from the announcement of Preferred Bidder status to the AWSR Ltd consortium in October 2000.

Order book hopes

"The RoRos provide a platform upon which we shall seek to expand and extend our order book.

"There is no doubt that significant niche market opportunities exist for efficient and competitive European shipbuilders."

The ferries are part of a six-vessel order which a consortium including the east Belfast yard won from the MoD.

Two of the ships will be built by Harlands and the remainder will be constructed in a German shipyard.

However, the Belgast yard said the full impact of the order would not be felt in its main production areas until the summer.

The company said it was in advanced negotiations with a number of potential customers which it hoped would lead to firm contracts for structural steelwork to cover the interim period.

Negotiations

Mr Mugaas added: "After the extremely difficult experiences of the last two years, caused by the ongoing dispute with Global Marine, Harland and Wolff has today been offered a singular opportunity to rebuild and revitalise shipbuilding in Belfast.

"It is an opportunity which we fully intend to grasp."

The shipyard lost more than £26m last year according to figures from its parent company, Olsen Energy.

The Norwegian firm said most of it related to redundancy costs in cutting the workforce and in restructuring a company operating well below full capacity.

Damaging court case

The yard's position was further weakened in November last year when the High Court in London ruled against Harlands in a dispute with its customer, the US oil giant Global Marine, in which the Belfast yard said a final payment of £20m should be paid on a drillship contract.

Olsen Energy also said it had given Harlands financial support totalling almost £90m.

In February, Harlands sold leases for land it currently uses for shipbuilding to its parent company.

In the deal Olsen Energy took over the property interests in an area of the Titanic Quarter which is to be developed as a business park.

The proceeds of the deal, worth £46m to Harlands, was used to reduce its debts to its parent company and its bankers.