The company that owns Burntisland Fabrications (BiFab) was “shocked” and “incredibly disappointed” when Scottish Government ministers pulled the plug on providing further financial support for the business, MSPs have been told.
Canada-based DF Barnes bought the BiFab business in 2018 but said it was “not an investable company at the time” and it was understood the Scottish Government would be the “primary financiers”.
That was after BiFab, which has yards in Burntisland and Methil in Fife, as well as one on Lewis, had to be rescued by the Scottish Government in 2017.
DF Barnes president Jason Fudge said the firm had been preparing to put up to 500 employees back to work on a contract for turbine jackets for the Neart Na Gaoithe (NnG) offshore wind farm project when it emerged ministers could no longer provide the necessary financial support.
Fudge told MSPs on Holyrood’s Economy, Energy and Fair Work Committee that in September 2020 the company had been told the Scottish Government could not provide further financial support as this would not be compliant with European state aid rules.
He said: “We were shocked by that decision, because we had just signed a letter of intent to enter into a contract for the NnG contract that was going to put 400 or 500 people back to work in Fife.
“That contract had been negotiated for quite some time, it was delayed because of the Covid-19 pandemic but in the face of the pandemic and in the face of a major infrastructure project that was going to put a bunch of people back to work, the financing was withdrawn and the assurance and guarantees were withdrawn.
“And we were shocked.”
He added: “During that time, when there was such a negative impact to employment globally, and there was an opportunity to put 500 people back to work, that was the time it moved from in the Government’s view being compliant to non-compliant.
“Ultimately, in September, we were advised that Scottish ministers would provide no further financial support for BiFab, which was incredibly shocking for us, we had very little if any advance warning and we were about to put 400 or 500 people back to work in Fife.
“And we had worked so hard on that contract, it was pretty disappointing.”
DF Barnes vice-president Sean Power told MSPs that ministers had “understood” the company would not be providing a large amount of cash for BiFab.
He explained: “In the discussions with the Government at the time, it was always understood we would come in and try to restore the company but we wouldn’t be providing a lot of cash.
“The Scottish Government understood that and thought that they would be the primary financiers.”
Economy Secretary Fiona Hyslop MSP insisted the main problem for BiFab was the “unwillingness” of DF Barnes’ parent company JD Driver to provide investment.
She said: “It is not for the Scottish Government to speak for JV Driver as the majority shareholder in BiFab.
“The situation at BiFab is a culmination of a number of issues, the main one being the unwillingness of the parent company and majority shareholder JV Driver to provide the working capital investment or guarantees for the company.”
She stressed Scottish ministers, together with the UK Government, had not been able to find a legally compliant way to support the business.
Meanwhile, Hazel Nolan, of the GMB trade union, has called for legal advice the Scottish Government received on that decision to be released.
The union rep made the plea as she said that Scotland, which has “historically been a world leader in the production of offshore wind” has turned out to be “a world loser in terms of generating jobs for this country”.
She said the union understands the Scottish Government had “made clear” it would provide a guarantee for the NnG contract work, before ministers went on to “pull” this “at the very last minute”.
Nolan said: “Our understanding is that the guarantee was made clear from the Scottish Government.
“So why did it take so long and why did the Scottish Government pull it at the very last minute?”
Nolan added: “We would like the committee to call for the release of that legal advice.
“What we have been told by minister Fiona Hyslop is that the only way we will be given the legal advice that was provided to the Scottish Government is if there were to be a judicial review.”