STAR entrepreneur Jim McColl has said one of the keys to improving productivity lies in paying decent wages as he underlined his faith in the potential of the venerable Clyde shipyard he rescued.

One of Scotland’s most successful company builders Mr McColl bought Ferguson out of administration in 2014 after pledging to invest many millions of pounds in the operation.

Read more: Shipyard takeover 'can start revival of the Clyde'

Yesterday he highlighted the progress made with efforts to breathe new life into what is the last commercial shipyard on the Clyde.

He reckons the Port Glasgow business could help lead the transformation of the ferry industry in Scotland after developing expertise in revolutionary clean power systems.

The renamed Ferguson Marine Engineering could also play an important role in harnessing the potential to produce renewable energy off Orkney and Shetland.

“We’ve spent a lot of money modernising that, looking at new technologies” Mr McColl said of the yard at a forum on Scotland’s economic future held by Scottish Council Development and Industry.

“We’ve really focused on green propulsion systems.”

The yard is building two ferries for CalMac that will run on liquefied natural gas under a contract won in 2015.

Read more: Ferguson's shipyard wins £97m ferry contract

But Mr McColl noted Ferguson had recently won a contract from Europe to be the first to produce a ferry powered by a hydrogen fuel cell.

Ferguson now has two such contracts and is working with organisations on Orkney and Shetland in the development process.

“They produce more electricity than they can use (off Orkney), there’s no connector to the mainland so they’ve built an electrolyser and they store hydrogen,” said Mr McColl

“We can get a hydrogen propulsion system on the boat, it tops up with the electricity that’s produced that’s made into hydrogen.”

Mr McColl said as the by-product is water the system offers a completely clean solution. Hydrogen fuel systems could revolutionise the propulsion systems on sea-going vessels.

“We can have a very clean ferry system around the whole of Scotland powered by hydrogen and we could get there very quickly ... if we have the decision to invest in replacing the fleet,” added Mr McColl.

Ferguson forms part of an investment portfolio amassed by Mr McColl’s Clyde Blowers Capital, which also includes firms in the wind and solar energy supply chains.

Mr McColl noted he had started out by investing in businesses that supported coal-fired power generators, such as the original Clyde Blowers.

On boosting productivity, he said companies had to do much more than just invest in research and development.

His experience developing businesses has taught him company leaders need to have a clear idea of where they are going, make sure that is communicated to workers and treat them fairly.

Pay them decent wages as well and “productivity shoots up”, he noted.