Update on BiFab
Statement to Parliament by Economy Secretary Keith Brown
April 17, 2018
Presiding Officer, Parliament will recall that on the 22 November 2017 I gave a statement on the circumstances surrounding the future of Burntisland Fabrications (or BiFab as it is known). Several months have since past and I want to take this opportunity to return to the chamber to provide an update on the progress we have made and the commitment this government gave to support the company to fulfil the BOWL contract and to try to identify a long term future for the BiFab yards.
Operating over three sites across Scotland – Burntisland and Methil in Fife and Arnish on the Isle of Lewis in the Outer Hebrides, in November BiFab had a permanent workforce of around 250 staff with a further 1100 employed via agencies to support specific contracts.
However, as you will all recall, in November, the company filed a Notice of Intention to Appoint Administrators, which triggered a period of intense discussion. Urgent discussions led to a number of financial commitments being made that gave BiFab the comfort they needed to delay a decision to place the company into Administration immediately and to continue toward the completion of the contract they held for the Beatrice Offshore Windfarm Limited (BOWL).
All those involved in these discussions: SSE, the partners in the BOWL Project, Siemens, Seaway Heavy Lifting, BiFab themselves and Trade Unions, Unite and the GMB specifically, should be given credit for having a proactive attitude they took to achieving a solution.
As an added security, the Scottish Government committed to make available, if necessary, a commercial loan to BiFab.
Presiding Officer, this collective approach not only provided an opportunity for the continuation of the BOWL contract but also created space for ongoing work to secure third party investment.
At the time both myself and the First Minister made clear that we would do everything we could to identify a way of bringing in new investment and of giving BiFab the best possible chance of winning new orders and securing a long term future for the company.
I am delighted to say that goal has been achieved.
Earlier today one of Canada’s largest independently owned construction companies JV Driver acquired BiFab through its subsidiary, DF Barnes.
In a deal, brokered by the Scottish Government, DF Barnes will combine their financial backing and project expertise with the international profile and skilled workforce of BiFab to secure fabrication and construction contracts in the offshore renewables, marine and wider energy sectors.
DF Barnes has been a consistent employer in the oil and gas, fabrication and marine industries for over 80 years. It has expressed an interest in global expansion and recognises the opportunities that there are in the Scottish market.
As part of the agreement, the Scottish Government will expand the loan facility made available to BiFab for the completion of the BOWL contract and convert that loan to a minority equity stake in the new company. That loan facility has been made on a fully commercial basis.
The extent of that shareholding will be determined by the extent to which the loan facility is utilised in completing the BOWL contract. The shareholding will not exceed 38%.
While by its nature elements of the agreement are commercially confidential, in the interests of transparency we have shared the details of the loan facility with the finance committee and I am happy to provide the committee with any further information it requires.
I want to take this opportunity to pay tribute to the workforce on all three sites – Burntisland, Methil and Arnish. Our focus was and remains on the workers, their families and the surrounding communities. We acknowledge that the past few months have been an anxious time for them, their families and the communities involved. But I appreciate their support throughout this process and the contribution the trade unions – the GMB and Unite - have made to securing this agreement.
The First Minister and I met with the new owners, the existing management and the unions earlier today at Methil and everyone there is committed to building a successful future for these yards.
Presiding Officer, although we are positive about today’s announcement, the work doesn’t stop here.
Offshore renewable energy and the offshore energy industry in general is a key strategic opportunity for Scotland’s economy.
Renewable energy is already providing significant levels of skilled employment – often in relatively rural or remote areas. However all of us want the supply chain to develop and grow further.
If you look at Scotland’s oil and gas supply chain, that sector’s success wasn’t immediate – it took time to build the supply chain, but it is now globally renowned. It employs more than 100,000 people in Scotland, and it exports that expertise to countries across the world.
We now want to create – as rapidly as possible – a similar success story for offshore renewable energy.
That’s why we’re investing in infrastructure, supporting ambitious companies, promoting research and development, and ensuring that people have the right skills. We want Scotland’s renewable resources to provide skilled employment, as well as sustainable energy, for communities across the country.
There are also some real opportunities for the Scottish supply chain, including BiFab, from a number of consented wind projects, for example, Kincardine, Moray East, Neart na Gaoithe (NNG), Inch Cape – which was discussed in parliament earlier and Seagreen. Plus opportunities further south for example, Hornsea 2, East Anglia 3 and Dogger Bank.
While these are commercial decisions for the developers, our aim is to secure as much work on as many of these projects for Scotland as possible.
To help achieve that we will combine our efforts, and those of our enterprise and skills agencies – with pressure on the UK government to recognise the sector in developing their Industrial Strategy.
Scotland has the competitive advantage and the building blocks that are critical to more expansion in the renewables sector via the skills of the Scottish workforce – one of the main drivers of DF Barnes interest in BiFab – our existing port infrastructure and location and our innovative academic community.
With a relatively new industry, it is not always going to be straightforward and we will not win every contract. But as today’s announcement shows, perseverance can achieve results.
Presiding Officer, today’s agreement gives the workforce, the company and the government the best possible chance of securing a vibrant future for these yards.
The Scottish Government believes BiFab can be a thriving business, supporting Scotland’s offshore renewables and oil and gas industry as well as competing internationally for work and we will continue to work with the company to achieve that success.
As the current contract, BOWL, comes to an end, and while efforts go into winning new work there will continue to be difficult times for the yard and for the workforce but I am confident this agreement, which will see the Scottish Government become a minority shareholder in the company, will deliver for BiFab’s future in Fife and the Western Isles.