This article is taken from the November 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

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By the banks of the River Lagan, not far from the centre of Belfast, stands a modernist structure that looks from some angles like the hull of a massive ship. Opened in 2012, the Titanic Experience is one of Northern Ireland’s biggest tourist attractions: a museum dedicated to the story of the world’s most infamous passenger liner. Inside, visitors mill around the cavernous galleries, peering at mock-ups of the doomed ship’s lavish interior, CGI films of the sinking and maquettes of the shipyard that built the mighty vessel. On a patch of quayside just beyond are the remains of the slipway where the construction work was done.

The so-called Titanic Quarter was once a bustling shipyard owned by the company that built her, Harland & Wolff. The province’s biggest industrial employer, H&W constructed more than 1,700 ships over the course of its existence, including 174 for the Royal Navy and almost all the liners for RMS Titanic’s owner, the fabled White Star Line. The company’s name still looms large over this part of Belfast; its two giant yellow cranes — nicknamed Samson and Goliath — dominate the harbour skyline.

But the yards they serve have long been withering. After completing its last liner, the Canberra, in 1960, H&W spent decades drifting in and out of state ownership, slowly shedding labour and the capacity to build ships. Its last commercial vessel slid into the water in 2003, the year the company’s then owner, the Norwegian shipping group Fred Olsen, sold off 70 per cent of the shipyards to property developers, including the land on which the Titanic Experience now stands. In 2019, when Olsen finally pulled out, H&W almost closed for good. It was only rescued after a sit-in at the yard by the last 60 workers.

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Today, its future is again uncertain. In July, the trade secretary Jonathan Reynolds rejected its application for taxpayer guarantees worth £200 million that were crucial to securing future shipbuilding work, snuffing out an apparent revival under its chief executive, a Scottish entrepreneur called John Wood. The government had identified “a very substantial risk that taxpayer money would be lost”, Reynolds said.

This damning decision reverberated around the city. Since rescuing the company in 2019, Wood had become a sort of local hero, promising to revive shipbuilding in Belfast and increase the local workforce more than tenfoeld to around 650. These grandiose dreams received official endorsement two years ago, when the Ministry of Defence placed an order for three large naval supply ships to be partly built in the Ulster dockyard.

But that order’s future is now up in the air, as is that of the whole company, which entered administration in September and is now up for sale. The accountants PWC have been asked to investigate the possible “misapplication” by management of £25 million of company money. The administration process seems set to delay delivery of the supply ships, which are vital to the operation of the Royal Navy’s two aircraft carriers.

Few falls from grace have been more sweeping and more sudden. As for the “levelling up” showcase that Belfast was once promised, perhaps the world’s most storied yard now threatens to become no less of a museum than the Titanic Experience up the road.

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“The mistake people make is they think Harland & Wolff today is the same as the company that built the Titanic, but that’s total rubbish,” says Kevan Jones, a former Labour MP and defence minister under Gordon Brown. By 2019, H&W’s infrastructure was clapped out, the workforce mostly gone, and those that remained were on the cusp of retirement. Jones recalls visiting the Belfast yard about 10 years ago. “It was pretty much an industrial wasteland then; just to retool it all so it could make ships again would have cost tens of millions,” he says.

Infrastrata, the quoted company Wood ran, wasn’t the obvious saviour. A speculative penny stock spun out of an oil exploration company, it wasn’t even in the shipbuilding business. It had just one asset: a revenue-less gas storage project at Islandmagee near Larne on the Antrim coast. After a decade, this had yet to receive planning permission. Each year, Infrastrata’s auditors flagged up the possibility that investors might never recover the £10 million they had sunk into it. And each year the share price sunk further. By 2019 it had fallen by 99 per cent, and the company’s share capital was worth just £7 million.

The moment Infrastrata acquired H&W, Wood’s interest in gas storage seemed to dissipate. He renamed the company Harland & Wolff and unveiled grand plans to diversify into shipbuilding and the fabrication of energy infrastructure. “Our goal is to be a £500 million turnover company within five years,” Wood told the shareholders in the 2021 accounts.

The main obstacle was finance. Whilst he’d bought H&W for peanuts, restoring the yards and training up skilled labour would cost serious money, and the company didn’t have any. Wood charmed some cash out of the shareholders, who were dazzled by his talk of massive contracts just around the corner. But loans were much harder to come by. By 2022, H&W had managed to borrow just £2 million at a penal interest rate — and that by pledging all of the company’s assets to the creditors against the risk of default.

The lenders had good reasons for their caution. H&W had no obvious viable business model: it could only win orders by bidding prices that would likely generate a loss, making repayment hazardous. There was also the matter of Wood’s somewhat hazy business CV. This glossed over his time as a director of a ship-fitting business in Southampton, MSC Europe, which collapsed in 2007 leaving many creditors (including employees) unpaid. Wood and his longtime business partner Chris Rogers claimed they’d been forced out of business when a customer failed to make payments on a large contract. The pair then enraged those left out of pocket by buying the company out of administration themselves and (briefly) continuing trading. Rogers was jailed in 2015 for an unrelated fraud.

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Wood might have just bumbled along, doing repair work and the odd loss-making fabrication contract, but his timing was propitious. He acquired H&W just as Boris Johnson’s government turned its attention to the shipbuilding sector. A few years earlier, David Cameron’s government had published a National Shipbuilding Strategy that aimed to use government orders to revitalise the industry. There was boosterish talk of a British “shipbuilding renaissance” to construct all this tonnage.

In the summer of 2020, Wood extended his own empire, purchasing a defunct naval yard at Appledore in Devon for £7 million, and Johnson came down to cut the ribbon at its reopening. Photographed alongside Wood, both in bright red H&W jumpsuits, the prime minister declared the yard had “a great future” and promised “a good enough stream of contracts coming through to drive jobs and growth here in Devon”.

The biggest opportunity out there was the Fleet Solid Support (FSS) ship contract, 39,000-tonne supply ships for the Royal Fleet Auxiliary, of which three were needed to service the UK’s two new aircraft carriers. (The previous store ship fleet was by then totally clapped out, and the last vessel, RFA Fort Victoria, was finally laid up last month.)

Budgets and timetables were tight, and the admirals found this a cumbersome way to do business

The FSS contract had already exposed tensions within the naval hierarchy. The National Shipbuilding Strategy required the MoD to dish out warship contracts to UK yards on a “Buggins’s Turn” basis — the idea being that by knowing how much work they’d get in future, the shipbuilders would invest in modernising their often antiquated facilities. But budgets and timetables were tight, and the admirals found this a cumbersome way to do business. British yards were so often late and over budget! They wanted to treat the FSS ships like commercial vessels, put the order out to competitive tender, and open the opportunity to efficient foreign yards.

The modern method of shipbuilding is that a prime contractor is awarded a contract, and then places work for “blocks”— ship sections — with other yards. A competition might have been possible if the two main British shipbuilding “primes”, Babcock and BAE Systems, had bid against one another. Instead they teamed up as “Team UK” to share the work. The MoD looked more widely and lighted on the Spanish state-owned shipbuilder Navantia, which was keen to enter what it saw as the lucrative UK defence market.

Navantia was willing to bid aggressively, even if it had to promise to dole out some work to less efficient British yards such as H&W. That fitted well with Johnson’s half-baked levelling up agenda and his desire to safeguard the union by doing something for Northern Ireland’s Unionist community, still bruised by his Brexit deal. It would right a historic wrong, which had left the Province with defence spending of £97 a head against the UK average of £370. Team Resolute was born.

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Under the Resolute plan, the Spanish would lead the £1.6 billion deal, deliver the ships for a fixed price whilst doing much of the manufacturing at their efficient yards in Cadiz. But some blocks would be fabricated at H&W in Belfast and Appledore, with Ulster hosting the final assembly.

Sharp-eyed observers noted the contract’s structure gave the Spanish little incentive to hand over more than the minimum of work to H&W. When Team Resolute was unveiled as the preferred bidder in late 2022, there was an outcry. It also emerged that Team UK’s bid had been judged “non-compliant” by the MoD and the work seemingly handed to Navantia and Team Resolute on a plate.

There was however a more pressing issue for Wood and H&W. How on earth could they get Belfast into a fit state to make 39,000-tonne ships? The contract earmarked £77 million (about 11 per cent of H&W’s notional workshare of £700 million) for capital investment, but these were staged payments, and cash would be needed upfront. It looked like the perfect chicken and egg problem.

Fortunately, the MoD seemed keen to lend a helping hand. In the summer of 2022, the ministry shepherded a £55 million contract to regenerate an old Royal Navy minesweeper it was transferring to the Lithuanian Navy into H&W’s hands — a big win for a group that had sales of just £18m the year before.

By then Wood had finally found a lender prepared to swallow their doubts. Riverstone, a New York credit fund specialising in high-risk loans, would take a punt — advancing $70 million, later expanded to $115 million — on the understanding it would be repaid as soon as the money from the order book started flowing.

To speed things along, the terms were eye-watering: Riverstone not only demanded security over all of H&W’s assets; it set an interest rate of 14 per cent. Repayment moreover depended on yet another Whitehall helping hand: the idea was that UK Export Finance, a government agency underwritten by the Treasury, would guarantee £200 million of H&W’s debts (notionally to support an almost non-existent export business), which would allow the Riverstone loan to be refinanced elsewhere at lower cost.

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The result was an implausible Jenga tower of finance that depended on no piece coming loose. Critically, it required Wood to stay focused and deliver on the key contracts he’d signed. The snag was that he was well outside his comfort zone, running a shipyard operation far larger and more complex than any he’d ever handled. “It wasn’t very easy working for John,” says Seena Shah, who once headed up PR at the firm and recalls his angry tirades at subordinates.

These became more frequent, and the company ran through seven general managers at its Belfast yard in 18 months. According to insiders, the pressure also encouraged Wood’s “magpie” tendencies, picking up new projects to try to keep the share price up. He bought two more shipyards, this time in Scotland, with the promise to bring in big contracts to fabricate wind turbine masts. But a deal with Saipem, an Italian company, ended up with the contract being terminated early.

Perhaps the weirdest diversion was into the ferry business. Despite H&W having not built a commercial ship for decades, Wood bid to construct two ferries to renew the Isles of Scilly Steamship Group’s ageing fleet. The contract came with tied government support: £50 million from the Levelling Up fund so long as the ferries were built in Britain.

When in the autumn of 2023 ISSG rejected H&W’s tender and decided to build the ships in France and Vietnam, Wood was furious. He threatened first to make a bid for ISSG and then to launch a rival ferry service, a move that made no sense and seemed designed only to undermine the investment case for ISSG’s new ferries. “John can be a bit childlike in the way he flies off the handle,” said one employee.

H&W opened offices in the Scilly Isles, set design teams to work on the new ferries with the apparent support of Grant Shapps, the defence secretary, who raised eyebrows by writing to Robert Francis, chairman of the Isles of Scilly council, ticking off ISSG for not picking a British shipbuilder. In the end the idea of building ferries foundered, and H&W leased one from Barcelona, dressing it up in the firm’s colours. “Even that was a mess; they had to paint the ship twice because the first coat flaked off,” said the employee. By the time the project was scrapped in August, H&W had spent a huge amount of time and money on a service that never carried a single paying passenger.

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When I visited Belfast in September, I went to look over H&W’s fence. A giant offshore oil production vessel, the Sea Rose, was in dry dock undergoing repairs. The yard seemed quiet, though my taxi driver told me the ship had been overrun all summer with highly paid contractors. “Everyone has been talking about how much these guys are getting, welders on £200 a day,” he said. “They give them free taxis — we’re picking them up at the gates all hours — free food and free lodgings.” For all the talk about H&W training up a workforce, the word in Belfast was that the company often bussed in skilled contractors.

Insiders expect PWC’s investigation to focus on the huge sums spent on recruitment. “I imagine they will want to see the contracts and figure out where the money went,” says one ex-employee. Meanwhile, staff were left scratching their heads over what seemed increasingly eccentric business decisions: H&W bought another small Scottish boatyard at Mallaig “at the arse end of nowhere” at the turn of the year, apparently to get into the business of servicing small ferries in the Highlands.

By then, however, the Jenga tower was tottering. Insiders report the company was short of cash and struggling to pay suppliers from late last year. However, government support remained steadfast. In December, H&W issued an upbeat stock market announcement that stated it “had obtained permission from ministers to advance negotiations in relation to the £200 million guaranteed loan facility with UK Export Finance”.

Granted, the precise meaning of this word salad wasn’t immediately obvious. Which ministers? What permission? (In a LinkedIn post last month, a defiant Wood claimed H&W “had signed approval” for the announcement “from Number 10”.) But it remains a mystery precisely why politicians and officials continued to regard H&W as a counterparty that could be trusted with the FSS work in the face of a positive thicket of red flags.

Perhaps they felt trapped by their own prior statements. Vice Admiral Paul Marshall assured MPs in 2022 that H&W had been thoroughly vetted for the FSS deal, adding it was “in no one’s interest for us to be placing contracts in unviable yards”. Others such as then defence secretaries Ben Wallace and Grant Shapps continued to bang the drum. It was only when the Treasury started looking at the risk it was assuming that the first bleats of opposition were heard.

Even then, the grounds cited were merely bureaucratic: there were doubts whether the guarantee would be legal due to Northern Ireland still being in the European Single Market. It was possible it could therefore constitute improper state aid.

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In September, the company’s new chief executive Russell Downs, whose most notable previous business role was liquidating parts of Lehman Brothers, announced his verdict on the mess he’d inherited. “My main aim now is to maximise future employment in the yards,” he told disappointed shareholders. The most likely outcome is the sale of some or all the facilities to Navantia, whose FSS contract specifies the ships must be assembled in the UK. The Spanish were annointed preferred bidders last month.

Quite what can be salvaged from the Wood years is uncertain. The company has already laid off 60 workers and paused the apprenticeship scheme at Appledore. The future for the rest of the employees is uncertain. There has been talk of moving the UK leg of the FSS work to Cammell Laird near Liverpool, which could cut H&W out of FSS entirely. “There’s a certain logic,” says Trevor Taylor, a defence management expert at the Royal United Services Institute. “Cammells have the workforce, an actual order book, and some experience of construction: they built the [Antarctic survey ship] Sir David Attenborough.”

Some former ministers maintain that H&W was a good company brought down by nit-picking bureaucracy. But the facts invite a different interpretation: opportunist politicians pursued an inane industrial policy with a business that had neither the resources nor the skills to deliver.

Yet, with the collapse there also comes a sense of missed opportunity. For if the Royal Navy does grow in size, as governments still claim to want, H&W’s capacity may be sorely needed. The Belfast yards have some of the biggest building docks and fabrication sheds in Britain.

“There are not a lot of places you can build large ships in the UK,” says Pete Sandeman of the website Navy Lookout, who points out that the navy has a lot of big ship orders, such as the Multi Role Ocean Surveillance Ship (MROSS) project and strategic lift cargo vessels in the pipeline. “If we get rid of Belfast, these could end up being built in foreign yards.”