Arnish – delivering more than promised

Infrastrata, as it was initially known, had picked up four yards that were closed, as in the case of Arnish, or had gone through administration. The group soon consisted of Belfast, Appledore in Devon, Methil in Fife and Arnish, the latter two having been part of the doomed BiFab venture.

The geographic spread of these yards was unplanned since it had first depended on them going bust. But happenstance quickly came to be seen as an opportunity. Whatever their previous difficulties, each was strategically placed to benefit from a forthcoming renewables boom and also to forge synergies with each other.

Two years in, the strategy is working for Arnish. Instead of empty dereliction, there are 96 people working there – well beyond the promised number at this stage. There are 14 apprentices, three of them female. There is a healthy wage rate, trade union recognition and an overwhelmingly local workforce.

Orders have been fought for, won and delivered to a high standard. The sheer range of work undertaken at Arnish reflects a work-hungry strategy which is not restricted to any one sector. The first big delivery was last August when the yard, completed the first phase of an order for Hinkley nuclear power station, sub-contracted from the Global Energy Group at Nigg.

For work currently being undertaken at Arnish the customers range geographically from the Stornoway Pier and Harbour deep water development next door to a mining company in Greenland. There is more work in the pipeline. To put it mildly, none of this could have been predicted with confidence two years ago.

If the Harland & Wolff concept continues to develop along current lines, it will be one of the great achievements of 21st century British entrepreneurship to date. To take four moribund yards and mould them into a successful business in a highly competitive industry would be an extraordinary achievement.

It would certainly exonerate the vision of one man, John Wood, who was in Lewis this week to mark the second anniversary of the Arnish re-opening. The son of a Pittenweem fisherman, he has been involved all his working life with the maritime industries. When the fishing dried up, he joined the merchant navy and became a chief engineer. He got into ship repair in Australia and rose to General Manger for BAeSystems.

After another couple of big jobs, he returned to the UK with a firm idea of what he wanted to create. The key lesson he had learned was not to be wholly dependent on any one sector, like oil and gas which could be subject to boom and bust. He found a shell company to reverse into, Infrastrata, and looked around for yards that were doing little or nothing, starting in Belfast.

To run the Arnish yard, he recruited Albert Allan as general manager, a respected industry professional (and one-time Ross County footballer) whose previous roles had been with Mott Macdonald and the Oman Construction Company. Albert came with a commitment that Arnish would have the autonomy to go out looking for its own orders as well as receiving work from within the group – something it never had as part of BiFab or indeed from its inception.

Iain Macleod led the Action for Arnish campaign which, before the Harland & Wolff takeover of the lease, focused attention on the fact that islanders were being forced to work away from home or leave the island, while its prime industrial asset lay idle. It was a campaign which did no harm at all in focusing the minds of Highlands and Islands Enterprise, as owners of Arnish, on the need to find a new tenant.

Now Iain works at Arnish and is the GMB union representative. He says: “So far, it has been all positive. The range of work they are bidding for is incredible. Instead of over-promising and under-delivering which is what we were used to, they have actually delivered more than they said at the outset, by this stage.

“At first, it was hard for men who had been working away since BiFab closed, to decide whether it would last, and if it was worth coming back. But most of them now have and the management have also gone out and recruited with the offer of training. Having 14 apprentices is something else that hasn’t happened here for a long time”.

John Wood maintains there is far greater potential ahead for the Arnish yard. “When you look at the skills and equipment in this yard”, he says, “they set it apart. To get this place cooking on gas, we want to get up to three to four hundred people working here”.

Last year, Harland & Wolff pulled off their biggest coup to date as part of a consortium which won the £1.6 billion FSS (Fleet Solid Support) warship programme for the Ministry of Defence. Last week, they signed off their £7-800 million share of the work over seven years.

It was an extraordinary vote of confidence in a company that was barely a couple of years old when the Secretary of State for Defence, Ben Wallace, went to Harland & Wolff in Belfast to make the announcement. The bulk of the work will be carried out at Belfast and Appledore, starting in 2025.

Will any of it come to Arnish? ‘Absolutely”, says John Wood. “Bending and rolling is the bit we don’t have in any other yard in the group. You will get that work from the other yards coming here. Look at the rolling that will be required in some of the shell plates – why not keep it in-house?”

He continues: “The longer-term goal is that we have our own tug and barges to transport between our facilities”. It sounds like an ambitious concept and would certainly be transformational for Arnish. But when you think about it … why not? It follows the logic of where the yards are located and the different functions they fulfil within the overall picture.

One area of potential work which these locations are particularly well suited to is the boom in offshore windfarms which is in prospect over the next decade and beyond. This is one subject on which John has very strong views – none of them particularly welcome to the Scottish Government.

He believes there is a real danger of the “once in a lifetime opportunity” passing Scotland by unless there is a far greater effort made to ensure that developers deliver on commitments to use the domestic supply chain. He points out that this was the basis on which the ScotWind licences were issued – far more cheaply than in England but with higher expectations in terms of supply chain.

Now he sees little signs of these commitments being delivered on. “We have a small window of opportunity”, he says, “but there is a lack of ambition on the part of government to force local content. There are 18 to 24 months to turn that around.

“When the licenses were awarded, they ticked the boxes – yes, yes, yes – but there’s nothing tangible coming out of that. All sorts of promises are made but nobody follows up on whether they are delivered”.

With so much investment going into offshore wind, there will certainly be work available to yards like Arnish. John Wood points out, for example, that over 200 crew transfer vessels will be required. But that’s small change. It’s the prospect of again missing out on the big industrial opportunities that worries him.

He believes government has to share the cost of infrastructure if the vast bulk of that work is not to go abroad – just as it did with onshore wind but on a much bigger scale. John says: “When you look at investment in fabrication and yards, there is only so much business is prepared to put in, without certainty that work will follow”.

Then he throws out a real challenge: “Imagine if the Scottish Government and UK Government and all of us got together and worked on this. Imagine what the art of the possible might be”.

It is not difficult to see why Harland & Wolff have a strong interest in encouraging that to happen. There are offshore wind developments in prospect all down the west side of Britain – the Scottish coast from Lewis to Islay; then into the north of England and down to the Celtic Sea bordered by south Wales, south-west Ireland and the counties of Devon and Cornwall.

Arnish, Belfast and Appledore are in prime positions to take advantage of the offshore wind industry and to make the most of the synergies shared by these yards. But it is not going to happen if the bulk of the work goes abroad or if governments fail to support the investment required, while the big energy companies quietly make other arrangements in Europe and Asia.

The Harland & Wolff share price spiked after the big MoD order was announced with a large number of small investors taking a punt. Since then it has fallen back, even when the sub-contract was finally signed off last week. Does this reflect continuing doubts in the financial markets about John Wood’s ability to pull off the four yard trick?

He says that it is not something which worries him. They are working to a five year plan and by that point there is every prospect that big institutional investors will have pitched in. Meantime, the priority is to generate profitable work in all the sectors the group has targeted and build the reputation for the work it produces.

His confidence that the progress made over the past two years can be maintained and built upon is infectious. Nowhere has a bigger stake in Harland & Wolff succeeding than Arnish and the Isle of Lewis. The entirely understandable scepticism of two years ago has been replaced by optimism and sense of shared purpose.

It is an amazing story so far and there is a long way for it go, in many possible directions. John Wood’s views on the need for government to invest in infrastructure before work can be won also prompts a question. If the Arnish yard had not been created almost 50 years ago, would there be any possibility of the same thing happening today? We owe a lot to the past.