How Titantic shipbuilder Harland & Wolff stumbled to the brink

Samson and Goliath, Harland & Wolff’s two huge yellow gantry cranes, have dominated the Belfast skyline for half a century. “You know you’re home when you see them,” said Ernie Morrison, who worked for the Titanic shipyard between 1959 and 2000, over a pint of lager in a nearby working men’s club.
There is a rich irony in the nicknames given to the two cranes — so emblematic of the famous yard now standing on the brink of financial disaster. Both are named after fabled strongmen with inherent weaknesses that led to their demise. Where Samson was doomed by his hair, and Goliath by his arrogance, Harland & Wolff’s crisis has been brought on by a complex mix of external events, strategic blunders and murky allegations.
The Sunday Times reported this weekend that the company is days away from bankruptcy — putting 1,300 jobs at risk.
In a fresh twist, it can be revealed that its finance chief Arun Raman, who quit abruptly last week, is weighing up suing the company for constructive dismissal and racial discrimination.
The latest travails of Harland & Wolff are likely to evoke little more than a shrug of the shoulders from many of those living in east Belfast.
Locals will tell you that the shipyard has been on the financial precipice for decades. Even when it employed 20,000 people or more in the 1940s, the workforce often waxed and waned, and was regularly one failed contract away from extinction.
After all, Harland & Wolff’s most recent flirtation with failure came only five years ago. In 2019, the board had to call in administrators after its then owner, Norway’s Dolphin Drilling, filed for bankruptcy. At that point, Harland & Wolff had shrunk its headcount to just 130.
A rescue came from InfraStrata, a London-based energy firm run by veteran engineer John Wood. InfraStrata’s flagship asset was the Islandmagee underground gas storage plant off the coast of County Antrim. Paying £6 million to step in, Wood planned to retain about 80 members of staff and then grow the workforce to several hundred, targeting hoped-for demand for wind turbines and other big engineering projects supporting the green energy transition.
Two years later, InfraStrata changed its name to Harland & Wolff — a shrewd PR move just weeks before Boris Johnson announced a national shipbuilding strategy. Chief executive Wood realised there was an opportunity to capitalise on the then prime minister’s desire to strengthen the Royal Navy through British-built vessels.
His plan was to break the stranglehold of BAE Systems and Babcock. Substantial funding would be required, however. Harland & Wolff had borrowed $35 million from New York fund Riverstone in 2021, but needed more.
Wood’s blueprint appeared to be playing out successfully in November 2022 upon being selected as preferred bidder for a £1.6 billion contract to build three fleet solid support vessels (FSS). “It is time for the taxpayer to be getting value for money,” Wood said at the time.
And matters seemed to be falling neatly into place when Harland & Wolff announced it had agreed a £100 million refinancing of the Riverstone loan with Astra Asset Management, a London-based hedge fund weeks later.
By that December, the company was saying it was in talks to increase the debt facility to £200 million, and that it expected to sign the deal in the first three months of 2023. This would be backed by a UK Export Finance guarantee (UKEF). In March 2023, the company said the refinancing would “close in early Q2 2023”. In June 2023, it revealed it had made significant progress on its group refinancing and now envisaged that the transaction would “close in early autumn”.
In September, Harland & Wolff told investors that talks were at an “advanced stage” and would be concluded by the end of 2023.
On December 28, 2023, Wood and his team finally toasted a breakthrough. A stock market announcement was published stating that Harland & Wolff had “sought and obtained permission from ministers” to advance negotiations.
Flanked by the company’s financial advisers from Deloitte, accountancy firm EY was drafted in to conduct a review, ahead of what Wood thought would be a rubber-stamping of the deal in the spring of 2024 — an agreement nearly 18 months in the making.
However, as the weeks and months dragged on, fears grew of Whitehall backsliding. Such fears became reality as officials and ministers signalled that they could not bless a deal that put UK taxpayers’ money at risk during the final throes of the Conservative government.
Then came the hammer blow, when the new Labour government said in July that it an export guarantee would not be forthcoming after all.
With money now running out, Wood was forced out as a condition of Riverstone injecting a further $25 million into the business. The US fund is now owed $175 million (£133 million). Russell Downs, a turnaround expert who oversaw parts of the Lehman Brothers bankruptcy while at the professional services firm PwC, was parachuted in as interim chairman at Harland & Wolff. He also brought in Alan Fort, another turnaround expert and former PwC partner, to assist with saving the business.
Accounts vary as to what happened next. Those close to the new board say that they were alerted to how payments from customers had been spent.
As with any construction project, customers make staged payments to assist with the upfront cost of materials for projects. While it is unclear whether any of this money was ring-fenced, the concern among Harland & Wolff’s current board is that such funds were not solely being used to fund specific project costs. “It’s a bit like giving my son some money to pay for his Netflix, and he spends it all on Mars bars,” said one person familiar with the situation.
Those close to Wood and finance chief Raman dispute any claims of alleged wrongdoing. Wood’s allies say that his exit from Harland & Wolff in July was part of a long-orchestrated “loan-to-own” plan by Riverstone.
The New York hedge fund did not comment, but sources close to the board underlined that Harland & Wolff’s primary lender had been supportive of the business for several years and had been prepared to inject fresh capital into the business when other options had failed.
Raman resigned last week, having initially been put on an absence of leave in mid-August when PwC and law firm Simmons & Simmons commenced a forensic inquiry into customer payments being “misapplied”. Raman is now weighing up a legal claim relating to his resignation on grounds of constructive dismissal and racial discrimination. He and the company declined to comment on the prospect of legal action.
The former finance chief said that he has not been contacted to provide any evidence for the review of funds. Those close to Wood, meanwhile, claim that the review is a distraction to what they say is the mismanagement of the company under its turnaround directors.
Either way, Downs and Fort are pressing ahead with a rescue plan. This week, administrators from Teneo are expected to be appointed at Harland & Wolff’s parent company.
The hope is that this will provide protection from creditors while the business and assets can be sold.
City sources said several parties have registered interest in the auction, which is being overseen by investment bankers from Rothschild.
Spanish shipbuilder Navantia, with which Harland & Wolff had teamed up to deliver the Royal Navy’s FSS contract, is believed to be a frontrunner. Sky News on Saturday reported that Babcock was also in the running to buy chunks of the business. Others could yet spring a surprise. Sources said that Wood himself is trying to pull together a rival bid to take back control. Meanwhile, industrial turnaround specialists such as Michael Flacks are waiting in the wings.
The prospective administration is a high-stakes move — placing the plc into administration could invalidate the FSS contract. Talks between the company and the Ministry of Defence are ongoing, with Harland & Wolff trying to convince officials of the merits of sticking with the business rather than putting the contract back out to tender.
The government, meanwhile, is tracking the situation closely. A spokesman said that the “market is best placed to address” Harland & Wolff’s financial difficulties. However, he stressed that this was the business department’s position “at present” — hinting that matters could change in the days and weeks to come.
An 11th-hour reprieve could yet emerge, however. Former chief executive John Wood said that Harland & Wolff shareholders were planning to launch an injunction to stop the board from placing the parent company into administration.
The next chapter of what happens to Samson and Goliath is therefore yet to be written.
We know how Samson and Goliath met their end, but the ins and outs at Harland & Wolff could still have a long way to run. As one insider expecting to lose their job this week put it: “One day the truth will come out and will be a hell of a story.”
Additional reporting by Shea Ferguson
1858: Edward James Harland buys the Robert Hickson shipyard, completing its first ship, The Venetian
1862: Harland and draughtsman Gustav Wilhelm Wolff create a partnership to found Harland & Wolff
1911: Ship no 401 is launched, The Titanic
1940s: Produces 140 warships and 500 tanks during the Second World War
1950s: Gains a reputation as a “Protestant closed-shop”, with Catholics excluded
1975: Government buys the company’s shares after financial difficulties amid the rise in air travel
1989: Management buyout
2019: Company files for insolvency amid stiff competition from yards in Asia. Sold to InfraStrata
2024: Bankruptcy looms again