BAE Sys­tems: from de­fence heavy­weight to “ju­nior part­ner”?

The Week - - City City -

Bri­tain’s largest de­fence sup­plier is ax­ing around 2,000 jobs amid “a slow­down in or­ders for its flag­ship Ty­phoon fighter jet”, said Tom Rees in The Daily Tele­graph. Unions re­acted with hor­ror, but share­hold­ers were un­moved by the news. The job losses – dou­ble the ex­pected num­ber, with the bulk com­ing from BAE’S War­ton plant in Pre­ston, Lan­cashire – are aimed at giv­ing the FTSE 100 com­pany “a sharper com­pet­i­tive edge”, ac­cord­ing to its new boss, Charles Wood­burn. The re­struc­tur­ing won’t af­fect BAE’S sec­ond­biggest op­er­at­ing coun­try, the US.

The lat­est set­back to the Eurofighter Ty­phoon came in Au­gust, when a big “fol­low-up or­der from Saudi Ara­bia” failed to ma­te­ri­alise, said Mar­cus Ler­oux in The Times. Yet the fighter has been steadily los­ing al­ti­tude to ri­vals built by France’s Das­sault Avi­a­tion and Amer­ica’s Lock­heed Martin. The job cuts re­flect the Ty­phoon’s “rel­a­tive ma­tu­rity”, but the Unite union, which is threat­en­ing strike ac­tion, warned that Bri­tain’s ca­pa­bil­ity to make its own fighter jets could be “lost for a gen­er­a­tion”. BAE is also work­ing on Lock­heed Martin’s F-35 jet – but only as a “ju­nior part­ner”.

The threat of mass re­dun­dan­cies at a flag­ship man­u­fac­turer like BAE is “a sig­nif­i­cant blow” to the Govern­ment’s new in­dus­trial strat­egy, said Peggy Hollinger in the FT. It doesn’t say much ei­ther for the Depart­ment for In­ter­na­tional Trade’s ef­forts to drum up ex­port or­ders for the Ty­phoon, said The Guardian – de­spite its “shame­lessly cosy” re­la­tion­ship with BAE and other big de­fence out­fits. Re­cently ob­tained fig­ures show that 15 of the 30 busi­ness ex­ec­u­tives sec­onded to work at the DIT since its found­ing last year have links to the de­fence in­dus­try. When it comes to Bri­tish jobs, they don’t seem to be pulling their weight.

Ty­phoon: sales are los­ing al­ti­tude

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