Critic says council drydock plan will ‘not be financially viable’

By JOHN ROBERTSON

A council plan to create a major ship repair centre in Shetland has been criticised by the man behind the islands’ last big drydock, which the council’s development trust got rid of four years ago despite interest from local engine­ering firms.

Councillors on the development committee have agreed to hire a specialist consultant at unspecified cost to gauge whether a council-backed drydock or shiplift could operate successfully in Shetland and how it might be brought about. The project was first revealed by The Shetland Times in 2007 as a major council priority for the future as it seeks to expand the local economy.

Initial research by the SIC economic development unit has found widespread support in local engineering and marine circles because a capable dock would save sending the bigger Shetland-based vessels to the mainland for work and it could bring contracts to Shetland for maintenance and repairs to all kinds of shipping, including supply ships and other oil-related craft. It is thought customers might come from as far as Iceland, Faroe and Norway. All Shetland’s big fishing boats currently go abroad for their work.

The council would be the main user with its 12 ferries and five Sullom Voe tugs, most of which have to go as far as Hull for drydocking at huge expense. The council has calculated that each ferry sent south costs over £53,000 in fees, crewmen’s overtime, fuel and other charges, not including the actual drydocking charge, whereas ferries going on the slip at Malakoff in Lerwick cost a fraction at nearly £15,000 per boat. From those sort of figures the potential savings from having a suitable local drydock or shiplift seem obvious.

Possible locations include Sella Ness, Lerwick, Scalloway and, if a tunnel was to be built soon, Bressay. Water up to 10 metres deep is needed and there has to be land available to site workshops, warehouses, offices and accommodation.

The main stumbling block identified so far by the council is a lack of specialised workers locally, including welders and painters. Unless local companies can expand and diversify their workforces the expertise might have to be flown in when required, adding delays and extra costs which might kill off the whole enterprise. SIC development officer Tommy Coutts told councillors last Thursday there would have to be “serious” diversification and expansion by local firms in order to provide the required expertise.

Ironically, all the local shipping which might use the proposed drydock could have been handled with ease by the one the council and its development trust allowed to be towed out the sooth mooth in 2005 in return for just £200,000.

Allan Gould, former manager of Malakoff & Moore, which had brought the dock to Lerwick, warned that the council’s idea sounded like it might cost four or five million pounds, which would not be commercially viable.

It was Mr Gould’s plan in 1996 to replace a small drydock in Lerwick with a larger one to avoid losing the trade of the pelagic fishing boats, which were mushrooming in size. But financial backing proved hard to raise and it took until 2002 to fulfil the plan and get the drydock into operation. Mr Gould was gone by then and the £1m project ran into unforeseen problems which led to it overshooting its budget by nearly half as much again, playing a major part in driving Malakoff & Moore out of business in 2003 before it had managed to get the dock into full operation.

The structure, moored at the Bressay side of the harbour, had been acquired with the help of a £750,000 loan from the development trust and it assumed ownership when the receiver was unable to find a buyer. Mr Gould had returned to the Malakoff when the company was resurrected and it was part of a local consortium which tried to rent the dock back, but the trust ruled it not a viable proposition.

“They said it wasn’t going to be viable and that was it,” he said this week. “They let the dock go for a ridiculously small sum of money. The scrap value was greater.” It took the trust until 2005 to offload it to a company in Norway.

Mr Gould said the council had been told then that if the dock was lost it would cost the local authority a lot more money having to send its boats down south for work plus it would mean the loss of business and skilled employees from Shetland. “We told them all that but they didn’t consider that was important then.”

He said the council had failed to back the drydock idea then and back in the 1990s and he could not see how it could now contemplate what would undoubtedly be a far more expensive dock.

“If they turned down our project because it wasn’t viable, for them to bring a brand new facility here it will not be financially viable. They won’t have sufficient work to pay back the capital cost of it which will be very much higher than the facility we looked at.”

During a short debate on the issue at last Thursday’s meeting of the development committee, councillor Betty Fullerton supported the in-depth study, saying it would be great for Shetland to have the concept looked into properly. Chairman Josie Simpson, who has been involved in driving the idea forward, said a drydock was greatly needed because so much trade was being lost because boats went elsewhere. Minutes earlier the councillors had told the local agriculture industry it would have to pay half the cost of a study into the state of the Shetland Livestock Marketing Group, prompting councillor Jim Budge to ask whether the marine industries were going to be asked to foot half the cost of the drydock study. Mr Coutts replied that the issue of who pays had yet to be decided.

A note of caution was sounded by councillor Allan Wishart, who was involved with the Malakoff’s drydocks during his days as chief executive of Lerwick Port Authority. He said the result of studies over the years was that the economics of such a project “could never stack up”, partly because skilled workers required for big jobs were needed all at the same time. In places on the Scottish mainland these workers were sourced through an agency in Glasgow as and when required.

Mr Coutts agreed that establishing the base would be “an onerous piece of work” and it would have to be operated properly from the start otherwise a customer would never send his ships there a second time.

There is of course also the possibility that the large amount of public money to be spent bringing about a drydock will cause it to be blocked by the EU under state aid rules due to the unfair competition it could pose to unsubsidised yards in other countries.