Fife jobs at risk as Babcock says cuts are in the pipeline

Fife jobs are at risk under plans by defence firm Babcock to cut 1,000 staff.

Babcock is one of the major employers in Fife with a workforce of around 1,700 based in Rosyth.

The group warned there would be job losses as it revealed writedowns of £1.7 billion. It also plans to sell off a raft of its businesses.

The company said it did not know how many jobs in Fife would be lost as the process gets under way.

Around 850 of the job cuts will be in the UK.

Babcock operates from a 300-acre site at Rosyth.

In recent years it has assembled two aircraft carriers for the Royal Navy.

It will also build the Royal Navy’s newest class of warships, with each Type 31 frigate constructed at a cost of £250 million.

The firm said the job cuts were a result of changing its operating model to create a business “more efficient and effective”.

In an update to investors, Babcock said: “We are reducing layers of management within the business to form a simpler, flatter structure.

“The changes will result in approximately 1,000 employees leaving the group within the next 12 months with an approximate restructuring cost of £40m, most of which are cash costs.”

Babcock hopes to raise at least £400m from the sale of assets over the next year. It also warned that annual profits will be around £30m lower each year. This reduction is smaller than first feared.

A £55m investment programme is under way at Rosyth. A total of £100m has been invested over the last decade.

It will initially be used for the delivery of five Type 31 Frigates for the Royal Navy.

At the time, Babcock said it would ensure Rosyth’s shipbuilding capability and capacity can be optimised to support further opportunities.

The group also plans to add 40 apprentices this year at Rosyth.

Shares surged by more than a third with relief that the firm will not launch a rights issue.

Chief executive David Lockwood said: “Through self-help actions, we aim to return Babcock to strength without the need for an equity issue.

“We are creating a more effective and efficient company through our new operating model.

“Through our new operating model, the future Babcock will be a better place to work, a better partner to our customers and will be well placed to capture the many opportunities ahead of us.”

Babcock said it wants to focus on being an international aerospace, defence and security company, alongside its naval business.

WARNING: Defence firm Babcock has a workforce of around 1,700 based in Rosyth. Picture by Steve Brown.