The billionaire intent on resuscitating shipbuilding in the UK

Posted on 26 Apr 2019 by Jonny Williamson

Nick Peters sits down with Jim McColl, engineer, entrepreneur, passionate Scotsman and the man intent on breathing new life into the UK's shipbuilding industry.

Jim McColl started his career as an apprentice to an engineering company on the Clyde. It was the late 60s, and the beginning of the end for the region that had been the beating heart of the UK’s shipbuilding industry.

Jim McColl - Clyde BlowersLack of investment, union resistance led by the legendary Jimmy Reid, and emerging competition from across the globe meant that shipbuilding all but disappeared from Clydeside.

McColl in the meantime had made a success of his career as an engineer, accountant and then entrepreneur, and in 2014 he bought the ailing Ferguson Marine out of administration.

While his holding company Clyde Blowers has many other big-ticket companies in its portfolio, it is obvious that for McColl, bringing shipbuilding back to the Clyde is something special.

Jim McColl: There was a huge number of yards on the Clyde, and one by one you saw them all disappearing. This (Ferguson Marine) was the last commercial shipyard on the Clyde. It was down to doing the last of the small ferries and that’s what it did before it shut down, and I came in and bought it out of administration.

I love the engineering heritage of the UK and in particular on the Clyde where shipbuilding was huge, and I often wondered why did it have to die? There’s no reason. When we looked at the market opportunity for our ships, it’s significant and there’s no reason why we can’t compete on it.

Ferguson Marine is perhaps the jewel in the crown at Clyde Blowers Capital. Can you give us an idea of your philosophy and what you’re trying to achieve with them?

Well, we’re looking for businesses that have mission-critical products or services and that have a recurring revenue stream from service and spare parts. When those ships go out, they’ll have 25 years of service and they need repeated servicing.

So we’re looking to expand that side of it and then we look for businesses that have an opportunity to go outside their domestic market; engineering focused on industry sectors like oil and gas, and power.

Renewable power is quite important for us, so it’s an area that we understand, and our goal is to buy them. They’re usually under-invested, so we invest in them to grow the businesses and give them a longer-term future to get back on track with where they should be.

Sometimes it takes a bit longer than others, but we persist and we make sure that we have a ‘can do’ attitude to find out what we need to do to improve the business.

So when we sell them, which we eventually do, hopefully we’ve left a business that is much better than it was when we started and it’s got a really good future with continued growth opportunities.

The Manufacturer Podcast Speakers Headphones - stock image courtesy of DepositphotosThis article first appeared in the April issue of The Manufacturer magazine. To subscribe, please click here

This interview was extracted from a conversation Jim McColl had with Nick Peters on The Manufacturer Podcast, available on all major podcast platforms.

Many of your investments are overseas, but some are in the UK, where investment efforts to grow larger engineering companies is hard to come by. We have difficulty growing companies here.

If you’re going to develop much bigger companies in the UK, you need to have an industrial infrastructure to support it. You need patient capital and something that replaces what we used to have from banks. Before the banking crisis, you used to get bank guarantees, which were not classed as core debt on the banks’ balance sheets, so they were not treated the same way as loans.

You would get a bank guarantee, and you might pay a few percent for it. It was never called in, because the guarantees were given to established companies who have a track record, who’ve been able to do what they’re asking the guarantee to cover. It’s very low risk, easy money for the banks.

Because of the banking crisis, that guarantee system has fallen away because they now have to class these guarantees as core debt; it’s all part of the capital structure of the bank now, so the banks don’t do it. Well, they’ll do it, but you have to be able to cover the amount of the guarantee.

So that’s a real challenge, and as I’ve said before, all other European countries have National Investment Banks that step into that space and support the businesses. There is a recognition from this government that there’s a need for a strong industrial policy and I see changes coming, so I’m optimistic that the position that you’ve just suggested – that we can’t build bigger companies in the UK – will get better again.

At 16, you went into Weir Pumps here on Clydeside and then you took various qualifications that enabled you, at an engineering and business level, to get where you are today. What would you say to parents and teachers regarding careers in engineering and manufacturing?

To parents and educators: we’ve focused too much on pushing people into university. We’ve got a real shortage in this country of skilled technical people and we used to have a good system in place to develop those people.

We need to get back on track for developing and giving value to technical and skilled jobs and I’m not seeing successes. You’ve gone to university and you’ve done your degree, that’s to me not the way to drive the economy forward.

You need a good balance of education there and there’s nothing to stop you from doing the technician and skill level qualifications as I did, and then later going on to university. There’s too much focus on pushing people to university.

Then, I suppose engineering in general and the older industries were seen as dying, so you don’t go into that. But I think we’re seeing a revival. The new technologies that we see coming out equally apply to all the businesses.

You just have to make sure you adopt them into the business and move forward and we are seeing a lot of new technology, leading technology in the yard here, which is completely changing the way we work.

Jim McColl and some of the team at Ferguson Marine Engineering Ltd.
Jim McColl and some of the team at Ferguson Marine Engineering Ltd.