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Harland & Wolff was in talks with unions on Tuesday after workers voted to strike in a pay dispute that risks paralysing the Belfast shipbuilder behind the Titanic, just as it prepares to take on a crucial UK defence contract.
The walkout threat added to the woes of the lossmaking company, which has faced weeks of uncertainty over a £200mn government loan guarantee, without which chief executive John Wood has said it will be forced to “change strategy”.
Unions and management met on Tuesday in the hope that a long overdue pay deal could be struck, according to one person with knowledge of Monday’s strike ballot. Another person familiar with the process said H&W had put forward an offer and that negotiations were continuing.
Union leaders say the last pay deal expired in December and there has been no agreement on a new one, which would have to be backdated to January. H&W and the GMB and Unite unions had no immediate comment.
Wood told the Financial Times on a visit to the Belfast yard last week that he remained hopeful of clinching the export development guarantee before the July 4 general election, despite splits among ministers last month.
“The brutal reality is that, without Harland & Wolff . . . the UK can’t deliver its commitment to defence,” he said in an interview.
Wood said the company, which has three other operations in Britain, was “a strategic asset for whichever political parties form the next government”. But he rejected the idea that the guarantee was needed to secure funding for pay rises as H&W faces a looming debt repayment.
The Belfast yard, which has not built a ship for two decades, is being revitalised by a £1.6bn Royal Navy contract, which it won in 2022 as part of a consortium led by Spain’s Navantia. It expects to cut steel in July 2025 and to complete the first ship in June 2029.
Wood said the Aim-listed company was “pushing” the government to “get on with” granting the guarantee to give certainty to the business.
H&W is hiring apprentices and preparing for the three-ship naval contract by expanding its fabrication yard into an automated facility that it says will make it the most advanced UK shipyard, well placed to win future contracts.
“All the commercial banks are lined up ready and waiting to go and I see no reason why a decision can’t be made fairly soon,” Wood said.
H&W has scotched talk that failure to secure the guarantee, under discussion for two years, would be the death knell for the 163-year-old company.
Wood bought it out of administration in 2019, but it faces a repayment in December on a $100mn loan from Riverstone Credit Partners in New York. Neither party would say how much is due.
H&W’s auditors last year warned of “material uncertainty” unless the shipbuilder could source fresh financing and win extra work. MPs have questioned using taxpayers’ money to guarantee lending given its financial position.
Wood said he remained “fairly optimistic” but that if the guarantee was not granted, “what you have to do is change your strategy and instead of the growth projection you want for export projects you have to look at what you can do for the various funding lines”.
In December, H&W said it had “sufficient funds” to meet its working capital needs “until the new loan facility is completed”. But its shares, trading on Tuesday around 10p, remain roughly a quarter of their level when UK energy firm InfraStrata, led by Wood, bought the company for £6mn.
H&W’s most recent annual accounts, to the end of 2022, showed revenues of £27mn but losses of £70mn. Net debt stood at £82.5mn, in part thanks to high interest payments on the Riverstone debt.
“We do have a year-end deadline for the debt repayment, but you know, everything’s negotiable. If we aren’t there by then [December], then we have to go and renegotiate, but I hope we are there by then,” Wood said.
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