Battle for BiFab March & Rally

Communities in Fife and Lewis are battling for their jobs and urging the Scottish Government to help the threat to their livelihoods. Workers and their families will march in Edinburgh today urging MSPs to ‘battle for BiFab’ as their trade unions called on energy giant SSE to ‘rein in’ the contractor Seaway Heavy Lifting (SHL) and save 1,400 jobs in Fife and Lewis.

With the threat of administration looming, joint trade union representatives met with the Keith Brown MSP (Cabinet Secretary for Economy, Jobs and Fair Work ) yesterday to press the case for urgent stakeholder intervention to keep BiFab afloat.

BiFab said it had been forced to take the action after being left in a “critical cash position as a result of a challenging situation regarding its ongoing contracts”.

The company, which has a permanent staff base of 251 and which employs a further 1,132 agency workers, has filed a notice of intention to appoint administrators but has not yet transitioned into formal administration.

The move gives BiFab an initial 10-day moratorium period in which to sort out its affairs without any new or existing legal action being taken against it.

Trade unions now believe that SSE, the largest stakeholder in the £2.6 billion Beatrice Windfarm Limited (BOWL) Project, holds the key to resolving the contractual payments dispute between BiFab and SHL.

Unite Scottish Secretary Pat Rafferty said:

“Today the Scottish Government told us they can see a path out of this crisis. But it’s a path blocked by Scotland’s biggest energy company SSE remaining at loggerheads with the main Dutch-owned contractor SHL.

“It’s time that Alistair Phillips-Davies the CEO of SSE came out of the shadows on this crisis used his powers to get this sorted. He needs to rein in SHL and guarantee these jobs and the future of the communities in Fife and Lewis affected by it.

“The dedication and professionalism of our trade union members, who are working for free to defend their futures and their industry, should send a loud and clear message to all stakeholders and politicians – this is a workforce that  must be saved.

“Both trades unions involved in the BiFab crisis welcomed the work which had been done to date to seek a way out of the BiFab crisis by the Scottish Government.”

 

 

GMB Scotland Secretary Gary Smith said:

“This work and this contract will be completed in Scotland if everyone pulls together – there is a way forward here. But the spotlight now needs to be put firmly on SSE which controls the billion pound Beatrice contract, the Dutch contractor SHL at the root of the payments dispute and also the UK Government who have £21 million of taxpayers’ money underwriting this.

“It’s time for everyone to stand up and be counted. Letting these workers and their communities go under is not an option.”

Unions have called a march and rally today from  Johnston Terrace, Edinburgh at 10AM and rally from 11AM at Scottish Parliament.

Comments (31)

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  1. Joe Gibson says:

    If the Scottish Government steps in which I am sure will happen, then the people will do well to remember the team that is on their side come election time.

    1. Richard Wickenden (ex Tory from the mid-ninetys) says:

      I totally agree with you. The SNP should be remembered by all of the Scottish electorate in any future elections and in indyref2. However I cannot see that support increasing by much if past voting actions are taken into account.

    2. e.j. churchill says:

      Joe, if the SG’s insertion/intervention disadvantages SHL (or any other stakeholder, like lenders), SG has become a defendant in a separate suit.

      Governments are usually cautious about intervention, if for no other reason that the cost of the project (taxpayer funds) is increased by double the amount of bonus money.

      ‘Kneejerk’ actions/reactions are rarely wise (but may be popular).

      *Generally* appointing some jawboning ‘taskforce’ who skylarks until the problem resolves itself is more sensible than intervention. see: sausage co., Texas Instruments, knitting mills, steel mill pension plans …

      rgds,

  2. Graeme McCormick says:

    Why is the customer not paying? It would be helpful to our understanding of this if the public knew.

    It would also inform those involved in future contracts

  3. e.j. churchill says:

    Internationally recognised and accepted Commercial (Contract) Law can be so pesky sometimes, but the world works because of it.

    The workers (unions, communities) are NOT ‘stakeholders’ as they are not signators, bound to the T&C of the contract, but, ATP, must depend on the goodwill and beneficial acts of (legal) stakeholders AND/OR potential 800# gorillas who have sufficient standing, who CAN intervene: SSE, SG, UKG.

    In short, the law IS the law, and the workers, communities, unions are roadkill a/o collateral damage a/o mouseburger when paladins disagree.

    rgds,

    1. Willie says:

      Are you for real EJ or are you just Fake Views

      Not quite sure exactly what ” internationally recognised commercial ( contract) law” is. Do you have knowledge of the contract or are you spinning a yarn.

      Neither have I quite heard anyone describe the law applicable to a billion pound contract as being ” pesky”

      The loss of a thousand plus jobs plus the destruction of a first class business is something that most folk would not glibly describe as “pesky”.

      Glib run off at the mouth trolling. One doesn’t need to speaculate the political line spoilers like your good self reflect.

      1. e.j. churchill says:

        Willie, ’tis apparent you read for neither context nor comprehension. I have knowledge of contracts in general, and it is beyond belief workers (and unions) are literal, legal ‘stakeholders.’

        Contracts are ‘pesky’ when they don’t allow/encourage soft-hearted, soft-headed leftists to intervene and (easily, quickly) ameliorate ‘undeserved’ wrongs.

        If – as seems plausible – BiFab short-bid the contract, creating severe internal cash-flow problems, it is going to be a stretch for SG/UKG or SSE to do much that does not add an unpopular billion or so taxpayer cash to the cost of the project.

        The ‘Notification of Administration’ indicates BiFab does NOT have a temporary cash insufficiency – it is *structural. Prepare to see the dole expanded, mightily.

        rgds,

  4. e.j. churchill says:

    I’m sure for weeks, if not months, the *actual* situation is well-known. If BiFab needed Labour Concessions/Arrangements, both Unions were fully aware – and declined. (speculation)

    Looking at it another light, the UNIONS are wanting Dutch workers/families/communities to take a loss and subsidise Scot workers.

    Anybody who opines on the human condition, but is ignorant of Mark Twain’s ~WAR PRAYER~ is dangerous and a naif.

    rgds,

  5. Jamsie says:

    Truly a dreadful situation.
    According to reports I have read Bifab have been paid in accordance with the Contract so questions need to be asked of the management.
    I suspect this will be a NEC Contract and compensation events have not been implemented.
    If SSE have been refusing to pay SHL and they refusing to pay Bifab there will be some contractual reasoning and in the NEC the last line of resolution for a dispute is Adjudication.
    If things were getting sticky Bifab should have launched this as soon as they were aware such a dispute existed.
    Difficult to see what the governments can actually do which does not breach current EU rules.
    Another reason to get out eh?

  6. David Allan says:

    Yet another illustration of Scottish workers in a devolved Scotland (A Govt with no balls) being at the mercy of UK inspired Corporate/Commercial scullduggery.

    A UK rife with industrial sharp-practice increasingly devoid of honesty and integrity.

    An Independent Govt with effective powers would be knocking heads together to bring all of it’s resources to bear on resolving this more effectively .

    The GMB union and it’s members might now reflect on this factor!

    It is of course essential for many reasons that a successful outcome is reached.

    I might be a “soft-headed leftist” ( see E.J.Churchill ) I am one who realises that without collectively controlling our own destiny there will be no means of ensuring an end to this kind of exploitation of Scottish Workers their families and communities.

    A further demonstration of the protection provided by the Uk’s Broad Shoulders. Bollocks in 2014 and Bollocks now!

    1. e.j. churchill says:

      Hi David, FWIW a “gimlet-eyed eeevil Toarrie banker” would be similarly restrained from snatching a £10 note he left on the table by oversight.

      I’d be mightily surprised if the contract is not by Scot law, which is not a fraction of a Tunnock different than Brit commercial law which is not a fraction of a groat different than EU law. The world operates on Contracts and they are the same: tender, acceptance and exchange IS a contract any/every where.

      Who do you think should bail out the BiFab workers, and why? Bail out BiFab, itself, mebbe? why/why not?

      What is your ‘successful outcome’ (above). Minister Brown says there are a lot of deep pocket folks around. Should they choose sides: reward the unions and screw ratepayers?

      rgds,

      1. David Allan says:

        I merely point out the fact that irrespective of which flawed law EU, UK or Scot’s influenced the framing of any contract the Scottish “devolved Govt” can exercise no real control or power to positively influence events or change the pertinent law/s in the future .

        Westminster’s broad shoulders will resolve this. Fluffy will come to our aid Scottish workers can always depend on that!

        1. e.j. churchill says:

          David, I don’t think you’ve thought thru the implications of a lawless oligarchy or theocracy – government completely by fiat.

          When Scotland is dragged out of the EU, it will be interesting what new laws the SG attempts to pass, but I doubt Intervenor-at-Will will be one of them.

          I don’t think we know enough about the situation yet to know who – if anybody – can/will intervene, but BiFab will swallow it’s ass sure seems likely.

          1. David Allan says:

            The point at issue which you persist in avoiding is what will the contribution be from Westminster how will the “broad shoulders” manifest itself.

            When Scotland is dragged out of EU a second opportunity to consider the constitutional question a second referendum will follow . Finally I hope Scots realise their current powerless status as minor partner to ENGLAND should be concluded .

            Future Laws and decisions made in each Country thereafter will reflect the different priorities of each.

            In my opinion had a YES decision been made in 2014 the situation at Bi-Fab would be receiving the full support of a more influential Scottish Government.

          2. e.j. churchill says:

            “The point at issue which you persist in avoiding is what will the contribution be from Westminster how will the “broad shoulders” manifest itself.”

            David, our views are more opposite. I believe governments should stay out of commercial transactions. You believe the government should further indebt the taxpayer/ratepayer by supporting inefficient or incompetent business’ – which BiFab pretty clearly is.

            Why?

            NOTE: The dole is government policy to help the unemployed, so the workers are protected already.

            rgds,

  7. Jamsie says:

    To coin a phrase from a contributor to Bella “this is a lossmaking business without a credit line from a bank”…….and unlike the subject of this chap’s obsession it seems the shareholders and director’s don’t want to invest anymore equity to help save it.
    If that is their position why should the taxpayer?
    Given that the contracts are scheduled to finish soon. one in January and one in March when there will likely be large numbers of the work force made redundant anyway the logic of taxpayer intervention seems at the very least questionable.
    I suspect the Scottish Government is aware that pumping taxpayer funds into such a venture would be an act of folly and a clear breach of their beloved EU rules.
    The same goes for the UK Government.
    The government intervention and discussions then will depend on them being able to persuade SSE and/or SHL to release payment of monies which are disputed under the Contract and which may or may not actually be due to Bifab.
    The Contract as I have mentioned before will most probably be bespoke option from the ECC NEC3 suite of contracts and variations in terms of cost, changes to key dates (milestones) or time for completion can only be made via compensation events.
    It will be managed on behalf of the Employer by a Project Manager ( or team of ) who have a duty in law to act fairly and impartially in administering the Contract.
    Both the Project Manager and the Contractor are obligated under the Contract to advise each other of the potential for change to the Prices ( which under the NEC means the value of the Contract as signed up ) by means of an Early Warning, or to the key dates contained within the Contract including the planned date for completion.
    Not all of these will manifest themselves as compensation events but there will be some that will.
    The main weakness for the Contractor ( in this case Bifab ) is that generally a compensation event which he is entitled to be paid for will be as a result of a change to the Works Information ( this is effectively the scope of the works to be performed under the Contract ) and only the Project Manager can instruct a change to the Works Information.
    If the Project Manager does not agree that the compensation event is likely to occur or indeed has occurred he will not instruct the compensation event and the Contractor will be in a situation where is not paid for work which maybe required or even which has already been carried out.
    Under the Contract the Contractor’s only options are to proceed with the dispute resolution procedures laid out in the document and pursue ( assuming all negotiation and perhaps if the parties agree mediation and conciliation has been exhausted ) Adjudication which would be carried out by independent legal and expert counsel appointed by agreement between the parties or in the event they cannot agree by an overseeing professional body.
    There does not seem to have been any steps taken towards this at least none that have been reported that I have seen.
    In setting up the Contract between SSE and SHL the intention to use Bifab as a sub-contractor would have been submitted to the Project Manager for approval to do so and the contract between SHL and Bifab will most likely have been written “back to back” with the contract between SSE and SHL.
    It is probable then that if the Project Manager administering the contract between SSE and SHL does not consider the event as a compensation event that it will not be a compensation event between SHL and Bifab.
    There maybe some small exceptions to this but generally that is how contracts are written and intended to operate.
    Looking at Bifab and how it operates I was struck by the ratio of temporary or agency workers to permanent – around 5:1.
    Bearing in mind that agency workers typically cost quite a bit more than permanent it occurred to me that perhaps the cost overruns described in the press might have been at least partially as a result of this.
    The press reports also mentioned problems delivering on time and it could be that Bifab have totally underestimated the scope of the work to be undertaken.
    Directors and shareholders need to be looked at and asked to take responsibility and to earn their ( probably not insignificant ) salaries and dividends.
    All in all not a great situation.
    But hardly something governments should be getting involved in except perhaps to facilitate discussion otherwise every “lossmaking business without a credit line from a bank” will be looking for state aid.

    1. Willie says:

      With a fluctuating workload, it is not too difficult to understand why businesses utilise what you describe as agency workers.

      That is exactly what Carillion do and look at the state of them. With their share price over the last year having collapsed from £2.52 to £0.21 on Friday, the UK’s second biggest construction group looks headed for bankruptcy.

      This is despite HMG in Westminster and Whitehall having over recent weeks, despite their now abysmal financial status, awarded Carillion multi billion pounds worth of state work on HS2 packages, Network Rail upgrades and other government funded work.

      So what is that you have against BiFab, Scottish Jobs, and the Scottish Government Jamesie.

      1. Jamsie says:

        Willie
        The ratio of agency to permanent employees in this case was 5:1.
        In all my years in Industry I have never come across anything like this.
        There are rules concerning temporary workers rights and entitlements after 13 weeks in employment and I would be curious to see if they were in fact honoured.
        I don’t have anything against Scottish jobs but I would take exception the state aid to Bifab given their main shareholder is a Swedish unlisted company who are part of a larger group with interest in the contract.
        The groups annual turnover is in excess of £5bn Euros a year and could easily afford to refinance the Bifab operation without UK and Scottish taxpayer aid.
        They take in excess of £1m a year from Bifab in dividend which is most likely tax free given their status.
        Similarly the four executive directors enjoy rewards of circa £1.4m in salary and dividend which in a company with a turnover of £61m and making £3m a year profit seems on the high side.
        So it looks to me as if the fat cats are doing very nicely out of this company and will continue to do so.
        I noted that there only 600 of the originally quoted 1500 jobs saved.

        1. Wille says:

          You are obviously an industry ` expert ‘ Jamsie.

          And what ratios is that you speak of that really render you to say that in all your years In industry you have never seen anything like the ratio at BiFab.

          Have you ever heard of Uber or the millions who are engaged on a contract basis.

          And what is this talk of ECC contracts of which you spout. Is this to give gravitas to the rubbish that you spout in support of Fake Views.

          1,400,jobs at risk. It’s a simple point. 1,400 wages providing support to their families, and the economy, whilst delivering what is a public service.

          Methinks you Jamesie are a technician quantity surveyor with some over the top simplistic notions of economics and a bias against working people.

          But I my be wrong, you could be an absolute Captain of Industry. Don’t think so though.

          1. e.j. churchill says:

            Willie, there is not one thing Jamsie said that was exceptional in any fashion. It was ‘Common Knowlege’ to anybody that pays attention. Your problem is YOURS!

            Heavy industry employs more temps and contractors than ‘ordinary’ business’. The simple facts are that MOST of the temps are time-limited.

            You have a VERY rose-coloured view of the labour markets, duties and responsibilities and you are out of line dogging somebody sharing actual knowledge.

            Stoppit!

          2. Jamsie says:

            Willie
            You are certainly no judge of whether I am an expert or not.
            I never claimed to be but I have forty plus years in Engineering and I know when things go wrong it is people who suffer.
            Mostly when things like this occur it is because of bad management and financial control.
            As for the ECC if you knew anything about contracts in Engineering and Construction you would perhaps have grasped the point.
            You clearly don’t as you did not.

      2. e.j. churchill says:

        Willie: “So what is that you have against BiFab, Scottish Jobs, and the Scottish Government Jamesie.”

        And THAT silly statement was on the basis of Jamsie stating rather conventional economic wisdom? Get a drink & cool water and grip!

        There’s too much about the whole hoo-hah we don’t know, or ‘know’ because of non-discounted propaganda spread by interested parties.

        5 : 1 temp/contract labour ratio IS high, but is not exceptional for specialty markets, and by itself means nothing, however NOT MAKING A PAYROLL *CAN BE* symptomatic of more serious problems than imbalanced cash flow.

        FWIW, how things worked out is how they would have with BiFab in administration (Contract Law), albeit faster and calmer.

        We still don’t know a lot, but Jamsesie is sure not ‘anti-.’

        Sheesh,

  8. e.j. churchill says:

    According to STV, the issue is resolved and BiFab will not go into Administration. The details are sketchy, but the SQ gave BiFab some money.

    1. Jamsie says:

      The SQ?
      Glad it is resolved for the workforce’s sake but serious questions need to be asked of the investors.
      Especially the major shareholder JCE Offshore AB.
      They trade in billions every year.
      Based on 1500 or so employees permanent and temporary the wage bill must be around £1.5m per week.

      1. e.j. churchill says:

        Yup, the thing gets curiouser the more we (don’t) know about it. The SG’s announcement was self-serving (of course) and pretty opaque (of course), but the implication was that money was made available to BiFab and they could make the due (past due) payment? delivery? to SHL that was the basis of all the prospective grief.

        While JCE Offshore is a 51% shareholder, BiFab is NOT a subsidiary and daily management is BiFab’s.

        If BiFab’s issue is structural, Administration is the way to re-org and lose the unions.

        rgds,

        1. David Allan says:

          Surprised ? Government interference makes a positive contribution to a secure a successful outcome.

          And Workers will not face the dole. Had we to depend on you Laisser Faire stance that’s likely what they would be facing.

          As details emerge I doubt they’ll have been much influence from Westminster.

          Now we need secure future work for Bi-fab in a sector which Scotland has yet to fully exploit. Government involvement is entirely necessary here as well.

          e.j. Churchill – I exercise my vote to elect a government that can fully influence events that impact on myself family and wider society.

          1. e.j. churchill says:

            Hi David. I am always surprised and grateful when I see a government doing their job – one important job being to smooth the roads of commerce, but this was a result that would have happened anyhow. Lemme ‘splain.

            The contract was A<B<C (SSE<SHL<BiFab). Under contract law, if C impedes B's ability to deliver, B is obligated to provide 'reasonable' assistance to C to perform, with B's assistance eventually compensated.

            We still don't know what was the basis of the snazzle between SHL & BiFab, but SG did a GOOD JOB convening a meeting of ALL stakeholders and saying, 'Come, let us reason together.'

            Blessed are the peacemakers, etc.

            You vote on a rational basis. CONGRATS!

            rgds,

          2. Jamsie says:

            David
            By the looks of things around 900 are already dole bound.
            I deal with a couple of the agencies involved in supplying labour and they are none too pleased how things have panned out.
            Worse there are suggestions the skilled workers who were dropped last week and before because the agencies could not be paid did not receive the proper notice.
            I wonder if the deal took account of them.
            As far as securing future work goes I think you might find this company now have to rely on state hand out work.
            Contracts of this nature invariably has key dates which must be met.
            If it was me involved in selecting a sub-contractor or supplier which I do virtually on a daily basis I would think very carefully about awarding them contracts.
            They need to be properly re-financed by their shareholders and I would think a bit of slimming down in terms of personnel and salaries and dividends will also be required to bring them back to a viable position.
            They have been reporting profits until now but clearly the costs involved in this contract are greater than they allowed for and consequently they have run out of cash.
            Some structural fiscal adjustment is required to ensure they can continue following completion of the contract and as it does not look like it will be investment it looks as if they will be downsizing.
            Certainly the information held at Co House suggests there might be plans in place to enable this to happen.
            There are several dormant companies and the company which originally owned the yard has just been restored to the register.
            Maybe it is just someone being nostalgic.

  9. Willie says:

    Right glad we all are that it’s not you Jamesie that is selecting a sub-contractor or a supplier.

    We however stand in awe of your over forty years of experience selecting sub-contractors and suppliers on a daily basis.

    Truly you are a captain of industry.

    I defer to your omniscience Sir. You are certainly no donkey led by lions.

    Anyway, good result that the SG stepped in.

    People and jobs are at the heart of our community, our country, and the SG are acutely aware of that, unlike certain others.

  10. Willie says:

    A bigger issue right now is the crisis afflicting Carillion who are the UK’s second biggest construction company.

    With their share price over the fifty two weeks having collapsed from £2.52 to a low of £0.21 on Friday, there is now the very real risk of them falling into bankruptcy.

    And with a pension fund deficit reported at over £600 million, the crisis deepens as Carrilion suspend their pension repair contributions together proposals to cut pension payments, the future looks even more appalling.

    But how has it come this. This is the UK’s second biggest construction company. How can you just suddenly find a billion pound plus hole.

    Has someone had their hand in the till Has someone been fiddling the accounts.

    It certainly seems so. BHS revisited in fact, whilst once again, the fat cats walk free.

  11. David Allan says:

    The new reality Agency Workers supplied by Gang-Masters in suits!

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