DOCKYARD OPERATOR TO AXE 1,000 JOBS
THE defence and aerospace giant which runs Devonport Dockyard is to axe 1,000 jobs as its wrestles with a £30million annual dip in profits.
Babcock International Group Plc is making the redundancies in its management teams after having to write-off £1.7billion on its balance sheet in impairments and charges and announce an annual £30million loss of profits from now on.
But union chiefs are hopeful Plymouth can avoid many of the planned job losses, of which 850 will be in the UK.
Babcock’s oil and gas, aviation and emergency rescue divisions have been hit badly by the Covid pandemic and its consequent effect on aerospace.
So unions expect that is where the job losses will be heaviest, not in the Devonport marine division.
The company has yet to give details of where the axe may fall but in an update to investors, said although the £1.7billion loss is a one-off it is expected to result in an ongoing reduction in underlying operating profit of about £30million each year.
The company therefore must change its operating model to simplify the business, which will have a one-off cost of about £40 million but is expected to deliver annual savings of about £40million.
However, this move to an operating model which is “more efficient and effective” will mean reducing layers of management which will “unfortunately result in headcount reductions”.
The statement said that about 1,000 employees will be leaving the group within the next 12 months, but it is hoped in Plymouth that Devonport will not be badly affected.
Matt Roberts, from the GMB Union in Plymouth, said: “Unions are currently in discussions with Babcock regarding the announcement both at a local and national level.
“We understand this will mainly impact on the oil and gas, aviation, and aerial emergency parts of the business, which do not have any real presence in Plymouth.
“The wider restructuring is likely to be mainly management and support function roles. At this stage, we are hopeful that the effect on Devonport and the craft and industrial workforce will be very limited.”
Unite the Union said its members at Devonport Dockyard were not affected.
Aside from the redundancies Babcock also plans to rationalise the group’s portfolio by selling certain businesses, generating at least £400million over the next 12 months.
Draft unaudited results show full-year 2021 underlying revenue of £4.69billion, down from 2020’s £4.872billion, with underlying operating profit of £307million, down from 2020’s £524million.
David Lockwood, Babcock chief executive, 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.”
In its statement to the Stock Exchange the company said that its aims for a “simpler, flatter structure”.
We aim to return Babcock to strength without the need for an equity issue DAVID LOCKWOOD, CEO