Ritika Janiya
Harland & Wolff, the famous shipbuilding company that built the Titanic, has plunged into administration. For the second time in five years, the company is set to face the survival decision. Yet how did the iconic Belfast-based shipbuilder, which once was a giant in the industry, slip into this situation?
Well, Harland & Wolff was actually founded by Edward Harland, a Yorkshire man, and his German business partner, Gustav Wolff in 1861. It turned out, within a few short years, to be one of the world’s finest shipbuilders. The early years of the 1900s saw it become the destination to which the world’s largest ocean-liners were coming to be constructed, including the legendary RMS Titanic.
The Titanic had left from Southampton on April 10, 1912, and we all know what eventually happened to that ship during that maiden voyage. And still, the Harland & Wolff Co remained one of the major players for years that witnessed the aftermath of that disaster. However, the winds of change were also upon them as they came to pass with change in shipbuilding, too.
Hard Times Ahead
Fast-forward to today, and Harland & Wolff is indeed facing serious hard times. The company has been placed into administration, a legal process where a business is unable to pay its debts. This is not the closure of the firm but an important step along the way to potential total closure.
The operations are affecting only the holding company, Harland & Wolff Group Holdings plc which owns the yards. But the actual yards which are going to be involved in shipbuilding and repairing are still open for the time being. These are actually located in Belfast, Appledore in England, and Methil and Arnish in Scotland. The executive chairman of the firm, Russell Downs has said reportedly that he is optimistic about finding a new buyer which will save the yards.
Reduction of Jobs
Unfortunately, not all of them will be able to hold their current jobs. As for now, the holding company has a number of 59 employees. However, administrators- Gavin Park and Matt Cowlishaw of Teneo Financial Advisory, have declared that layoffs are more than certain. Some will lose their jobs, but the rest are kept on in order to carry out fundamental functions without which the company’s operations would fall apart during its current time of ordeal.
Harland & Wolff also warned shareholders that its investments would be totally wiped out. Which means anyone having its shares in the company will lose money. That is a pretty harsh situation for everyone involved.
A History of Troubles
It is not the first time Harland & Wolff has tumbled into financial troubles. The company plunged into administration last year when Norwegian owners withdrew their support. The shipyard hadn’t built a single new ship in some time, and once it lost the necessary financing, the business folded. A small London-based energy company called Infrastrata saved Harland & Wolff by buying the shipyard out of administration.
Infrastrata wasn’t a marine engineering company either, but it took over the shipyard. They changed the name of the company to Harland & Wolff and hoped this new name would revive the good name of the company. Things were getting brighter after all when, in 2022, the company won a large contract from the Royal Navy. Harland & Wolff formed part of the consortium led by the Spanish state-owned shipbuilder Navantia to construct vessels for the Navy.
Financial Difficulties Intensify
Although it had signed an agreement, the financial problems at Harland & Wolff started accruing immediately. In 2021, the firm experienced over a loss of £25 million. The following year, it incurred a loss of £70 million. It was in 2023 that it incurred another loss of £43 million. Such losses were too high to be compensated by the company.
Because of such financial hardships, the company was forced to obtain funds from a U.S. financier named Riverstone. The loans that he and his companies had taken went bad because they carried very high interest rates. It made it even harder for the company to try to turn things around. The company hoped for a loan guarantee from the government, which would help the company set up more manageable loans from regular banks. However, in July, the government refused and stated that there was too much risk of losing taxpayers’ money.
An Uncertain Future
Restructuring expert Russell Downs, who has been working with advisors from the Rothschild Bank to find how to save Harland & Wolff, feels optimistic that a new owner will come in and buy the shipyards to keep the business alive. Yet again, nothing is certain, and as of now, the future of the company is hanging by a thread.
It would be a sad loss to any company with the kind of history that Harland & Wolff brings. From building the Titanic to taking an active role in world shipbuilding, Harland & Wolff has been a symbol of Belfast’s industrial past for nearly 160 years. But in this tough economic climate, legendary companies like this are not exempt from financial woes.
What’s next for Harland & Wolff?
That is, of course, a very big question now: what happens next? Will someone step in to save Harland & Wolff? Or the shipyards that are so recently opened in Belfast, Appledore, Methil and Arnish stay open or will they be closed altogether?
For now, the company trades on, and the employees hope for a new start. The coming months will mark a determining test on whether this once-great shipyard can survive and continue to carry on the glorious history of her old days.
