Burntisland Fabrications: minister's statement

Following on from the written update provided to members at the end of last week on the circumstances surrounding the future of Burntisland Fabrications (or BiFab as it is known), I wanted to take this opportunity to brief the chamber on the outcome of discussions that continued last week and came to a conclusion at the weekend and on the commitment this Government has made to support BiFab in the future.

Firstly, a little background on the company. BiFab is a major fabrication supplier to the oil and gas sector; offshore renewables and wider infrastructure industries. It operates three sites across Scotland – Burntisland and Methil in Fife and Arnish on the Isle of Lewis in the Outer Hebrides. It has a permanent workforce of around 250 staff with a further 1100 employed via agencies to support specific contracts.

On Thursday 9 November, Ministers and officials were informed that BiFab was in some financial difficulty. The company contacted my colleague, the Minister for Business, Innovation and Energy, to inform him that they were about to file a Notice of Intention to Appoint Administrators the following day to protect the company. That Notice created a ten day period during which BiFab could seek a solution to their financial difficulties.

From that initial contact the Minister for Business, Innovation and Energy and I engaged in extensive discussions with the company, trade unions, key commercial stakeholders and their advisors, and the UK Government over the course of last week.

Through these discussions we were able to provide enough comfort to the BiFab Board to delay a decision to place the company into Administration immediately, and to secure the space for negotiations to continue and a positive solution to be found.

These discussions with SSE, the partners in the Beatrice Project, Siemens, Seaway Heavy Lifting, BiFab themselves and Trade Unions, Unite and the GMB, also provided us with a clearer picture of the nature of the financial position BiFab was in and the dispute that lay behind their financial difficulties.

Throughout this time the First Minister was kept fully up to date on all aspects of the situation, raising the matter with the Prime Minister, and engaging directly with SSE and Seaway Heavy Lifting whilst she was in Bonn for a major international climate change event.

This engagement continued on Thursday and culminated in two days of discussions on Friday and Saturday last week led by the First Minister with all key companies. These discussions helped to broker a commercial agreement with the parties involved that would relieve the financial pressure on BiFab and ensure the continuation of the contract for the construction of jackets for the Beatrice Offshore Windfarm project.

Throughout this period I also met with the GMB and Unite, and ensured the unions were informed of the progress of discussions, with the First Minister and BiFab meeting with the unions on Saturday shortly before the agreement was signed. This morning the First Minister and the Minister for Business, Innovation and Energy visited BiFab's Methil site to meet the workforce and see some of the work being undertaken. The First Minister continues to be impressed by the commitment of the workforce and expressed to them her determination to identify ways to secure the long term future of BiFab. I am pleased to say that I will also visit BiFab's Arnish site next week to meet with management and the workforce and see the great work being carried out.

The agreement reached on 18 November lifted the threat of administration and stated that BiFab would receive payments to alleviate their immediate cash flow issues at the beginning of this week and I am pleased to be able to report that those payments have indeed been made.

The agreement also ensures that the contract for the Beatrice project is now fully funded. As an added security the Scottish Government has committed to make available, if necessary, on a commercial basis a loan to BiFab.

That loan in part reflects our belief that there is a long term viable future for BiFab and we will work with the company to support its future prospects. Employees are back at work and being paid and money has been made available to BiFab this week allowing them to get on and fulfil the contract.

Work has not stopped there - additional support to the company is being set up, including from the Scottish Manufacturing Advice Service (SMAS), and the Scottish Government will have ongoing engagement with the BiFab management.

I pledge today that we will continue to work with BiFab, the unions and commercial partners to identify ways to secure the long term future of renewables manufacturing on these sites.

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. This must have been an anxious time for the workers, their families and the communities involved. However, since news broke that the company could possibly go into Administration, the workforce has handled the situation with great poise – and great tenacity. The workers agreed at the beginning of last week to continue working on the current order even though they might not be paid. I met with worker representatives on Thursday during the rally outside the Scottish Parliament. They were determined to see a resolution and determined to see themselves as part of the solution. I would like to pay tribute to their perseverance.

Only two months ago the First Minister set out our Programme for Government (PfG) which pledged our continued commitment to maintain Scotland's world leading position as the place for low carbon and renewable energy development and deployment. This sector has already positioned itself as a key part of the Scottish economy.

In 2015, the low carbon and renewable energy economy:

• supported 58,500 jobs in Scotland – this accounts for 14% of the total UK employment in this sector (higher than population share)
• generated £10.5 billion in turnover - 14% of the total UK turnover in this sector (again higher than our population share)
• counted 20,000 companies in Scotland active in the sector
• saw nearly £1 billion in capital investment in renewable power
• generated nearly £225 million in exports

We want to continue to build on this and maximise the benefits for Scotland. There are also some real opportunities for the Scottish supply chain, including BiFab, from a number of consented wind projects, for example, NNG and Moray East.

We also remain committed to pressing the UK Government, in developing their Industrial Strategy, to enable the Scottish supply chain to take advantage of growth within the sector.

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, our existing port infrastructure and location and our innovative academic community.

We have and will continue to demonstrate our commitment and support for projects that show an innovative and world-leading approach to low carbon energy and local energy solutions – such as those supported by the Low Carbon Infrastructure Transition Programme. The PfG announced a further £60 million to be made available for accelerating innovative low carbon project delivery by 2020, supported by EU funding. This builds on the Low Carbon Infrastructure Transition Programme (LCITP) which has already allocated around £50 million to 15 low carbon capital projects. This funding represents one of the most significant direct energy investments in the last 10 years.

This has been a highly stressful and troubling time for the company and the workforce. I would like to pay credit to both the workforce and the company, and to all commercial partners in helping to find a solution that - at the very least - sees the contract of the Beatrice Offshore Windfarm project to completion. And we will continue to pursue a longer term solution that benefits both the firm and the workforce.