Fresh concerns have been raised about Scotland’s ambition to be the Saudi Arabia of renewables with a wind farm jobs bonanza – as fears rise over the future of another key taxpayer-supported company.
It has been confirmed that South Korean-owned CS Wind, Britain’s only UK facility for manufacturing onshore and offshore wind towers is now down to just one full-time member of staff at its factory in Machrihanish, Argyllshire and has no orders.
The Scottish Government’s economic and community development agency Highlands and Islands Enterprise (HIE) which has ploughed nearly £3m into the company has instigated legal proceedings to “protect its investment” and has admitted its concerns about the state of the company.
Unions have called on the Scottish Government to intervene.
It comes as another part of Scotland’s wind farm revolution, state-backed renewables manufacturer Burntisland Fabrications (BiFab) remains on the cusp of a financial meltdown.
The Herald on Sunday revealed that Canadian firm DF Barnes and parent company JV Driver took over BiFab for just £1 as ministers ploughed in tens of millions.
The Scottish Government injected over £37.4m in loans to support BiFab and gained a third of the firm. A further loan facility of £15 million was also provided to support working capital.
But their stake in BiFab would be worthless if it goes into liquidation.
The issues arose after ministers decided to do a U-turn after new legal advice felt that providing key support for the ailing company at the centre of a wind farm jobs row would be seen as illegal state aid under European Union regulations.
The CS Wind development comes as concerns were raised that Scotland’s forecast of a jobs bonanza from the offshore wind farm revolution are “a pipe dream” as it emerged it has created just 6% of the 28,000 direct jobs predicted by this year.
The Scottish Government’s low carbon strategy published in 2010 described the large scale development of offshore wind as representing the “biggest opportunity for sustainable economic growth in Scotland for a generation” with Scotland having an estimated 25% of Europe’s offshore wind potential. It said there was a potential for the creation of 28,000 direct jobs and £7.1 billion investment by 2020.
Eleven years ago the potential wind and marine energy power in the Pentland Firth – where the north-east Atlantic meets the North Sea – led the then Scotland’s First Minister Alex Salmond to dub it the “Saudi Arabia of Renewables” with BiFab at the time making turbines for offshore wind farms.
Concerns have persisted Scots green jobs going abroad despite a ministerial summit promising action last year to end the “scandal”.
Pat Rafferty, the Scottish secretary of the union Unite said that there have been concerns about the direction of CS wind for a year.
“In a similar situation to BiFab, several contracts were lost due to the uncertainty which shrouded the factory. We now have the outrageous position whereby the Korean owners are acting like absentee feudal landlords refusing to work with us, the Scottish Government and Highlands and Islands Enterprise to find a positive solution which ensures we get the factory up and running again to compete for contracts.
“We welcomed the moves to ensure that the factory’s machinery and others assets were protected through an interim interdict. There should be legal avenues explored by the Scottish Government to challenge this situation instead of what they have form for doing which is to hide behind legal frameworks such as EU state aid rules, which by the end of the year will not even be applicable.
“It’s vital that politicians and the public understand that the onshore and offshore wind sector in Scotland is on life support, and the stark reality is we may even be beyond this. BiFab yards lie dormant and CS Wind in Campbeltown sits idle. Scotland now lacks any meaningful manufacturing capacity to complete for any contracts. This is all in the context that 10 years ago the Scottish Government claimed that developing a low-carbon economy would create up to 28,000 direct jobs in the offshore wind sector by 202. Less than 2,000 jobs have been created. There is no green jobs revolution and it is a national scandal.”
An interim interdict was granted to the HIE at the end of December last year blocking the removal of equipment and served by sheriffs’ officers.
Another interim interdict was agreed in early February by Court of Session judge Lord Ericht.
That stops CS Wind’s officers, employees and agents from removing plant or equipment from the factory out of the Highlands and Islands. It was amended to allow the company to deliver items manufactured to satisfy customer orders.
An appeal against the court action was rejected by the Court of Session.
Last week in a new hearing which continued a debate over the interdict, David Thomson QC for HIE spelt out the concerns of the Scottish Government agency, saying that there had been no trading for some time.
“So far as the pursuer is concerned, there is an ongoing failure on the defenders’ part to provide August 2020 management accounts which are considered to be of importance in relation to the issue about using plant and equipment.
“There are certain other matters that have been drawn to my attention concerning breaches of the lease and the like.
“Taken all that together there is a fair amount that has to ge done by way of updating the position since December of last year.”
Scott Manson QC for CS Wind said there was “not much function or purpose in my setting out the defenders’ stall in connection with the disputed issue of fact”.
A procedural hearing is expected in January.
CS Wind has received £3m in taxpayer-funded grants from HIE most of which was to create the UK’s first offshore wind tower factory.
The agency says conditions attached to the funding require the company to maintain business operations at the plant linked to the purposes for which the funding was awarded. That obligation period ran till March next year.
HIE offloaded a 19% stake in Argyll-based firm Wind Towers (Scotland) that once owned the factory, to CS Wind which took over operations in April, 2016.
HIE and Scottish energy firm SSE, which sold its entire 81% stake in WTS said at the time that CS Wind planned to invest up to £14m in Scotland which would safeguard 130 skilled jobs and create up to 70 new jobs in rural Argyll.
Minutes of an HIE board meeting from February, 2017 reveal that just ten months after the CS Wind takeover they were told that 63 jobs were at risk.
And in 2018, HIE said a £2.8m extension and alteration of the factory leased to CS Wind “will increase the company’s competitiveness when bidding for offshore wind contracts”.
Yun-Cheol Kim, the executive director CS Wind did not believe there was any outstanding court actions.
He said: “As you may know, we didn’t move out any facility so far, it means that there is not any breaches in my perspective.
“In addition, there is a full time employee in the factory, not part-time. It is the way to reduce expense until we get a commercial order and re-start operation. It was shared with HIE already.
“Also, we had meeting with Scottish government a month ago in order to get support and make good sales pipeline. We will keep in touch with government continuously.”
HIE said: “We remain concerned at the ongoing situation with CS Wind UK at Machrihanish.
“We are in regular contact with the company over their plans for the site. We have measures in place to make sure plant and equipment remain on site so that any new contracts secured can be completed.
“This week’s preliminary hearing was about process and timescales. We will continue to do all we can to work with CS Wind with a view to resolving the situation as quickly as possible.
“In the meantime, we continue to explore new opportunities for inward investment to Kintyre, that will help create new jobs and strengthen community resilience.”
Court papers in relation to the interim interdict action showed that despite indications to the contrary, CS Wind “has expressed doubts as to the sustainability of its operations” after announcing the redundancy of three-quarters of its workforce.
HIE fought CS Wind’s move to ensure that the plant was capable of continuing to operate and to “protect its investment”.
Unions concerns echo worries raised in Canada about the mothballing of a factory after the wind turbine manufacturer opened in Windsor in 2011 as part of a multi-million dollar deal with Ontario’s Feed-In Tariff program for renewable energy sources. CS Wind was expected to hire around 400 people when it first opened. As of 2015, it employed 482 people and as of last year, it there was no activity on site.
It started winding down production six years after promising jobs and economic investment with $10-million publicly funded incentives.
CS Wind used to have 134 staff at its Scottish base jobs have been lost as the company recorded pre-tax profits of £7.1 million in 2018.
Elected representatives of the Kintyre area, including four councillors, the MP and the MSP joined forces with Unite the Union at national and local level in August to issue an open letter to CS Wind urging them to seek orders for the plant or let others take over the facility.
In December, the First Minister was urged to intervene amid concerns Scotland is missing out on a wind farm jobs boom, as CS Wind lost out on a key contract.
CS Wind were involved in the Beinn an Tuirc wind farm project on the Kintyre peninsula believed to consist of 18 turbines.
In November, ScottishPower Renewables, announced that it had begun work on the Amazon backed project which was to see 50MW of green energy, enough each year to power the equivalent of 46,000 homes.
ScottishPower had then stated the project would be powered by turbines supplied by Danish-owned Vestas, with the towers for the wind turbines being supplied by CS Wind.
Up to a hundred new jobs were expected to be created at the site over the lifetime of the project and it was announced CS Wind were on board.
Unite believe CS Wind lost the Beinn an Tuirc contract due to the uncertainty surrounding the factory. It was believed the contract would have provided the factory with a two months of work until other contracts could be secured.
Paul Wheelhouse, minister for energy, connectivity & the islands, said: “I last spoke to CS Wind management on October 7, 2020, when I made it clear once again, that the company should be pursuing every available opportunity in our onshore and offshore wind markets.
“I have requested a further meeting with the Korean owners for this month, to establish what progress has been made to identify a viable route to reactivating the Machrihanish facility and return much needed employment to the local community.”
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