Dockyard expects to avoid worst of job cuts

IT is hoped that Plymouth’s Devonport Dockyard will avoid large-scale redundancies, after operator Babcock International Group announced 1,000 redundancies this week.

The defence and aerospace giant said it is restructuring the company as its wrestles with a £30 million annual dip in profits, and will make 850 job losses in the UK and 150 internationally.

Babcock, which has had to write off £1.7 billion on its balance sheet in impairments and charges, will be slimming down its management structure – but union chiefs are hopeful Plymouth can avoid many of the planned job losses.

Babcock’s oil and gas, aviation and emergency rescue divisions have been hit badly by the coronavirus pandemic and its consequent effect on aerospace. Unions therefore expect that is where the job losses will be heaviest, and not in the Devonport-based marine division.

The company has yet to give details of where the axe may fall but an update to investors said that, although the £1.7 billion loss is a one-off, it is expected to result in an ongoing reduction in group underlying operating profit of about £30 million each year. The company therefore aims to change its operating model to simplify the business.

This move to an operating model which is “more efficient and effective” will mean reducing layers of management which will “unfortunately result in head count reductions”. The statement said that about 1,000 employees will be leaving the group within the next 12 months.

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, while the white-collar union Prospect is checking to see how its members may be affected.

Mike Clancy, Prospect general secretary, said: “Prospect is engaged with Babcock at both local and group level to ensure the best outcome for our members. The scope and level of the impact on members at Devonport is still being determined but we will do everything we can to avoid any compulsory redundancies.”

Aside from the redundancies Babcock also plans to rationalise the group’s portfolio by selling some businesses, generating at least £400 million over the next 12 months.

Draft unaudited full-year results show underlying revenue of £4.69 billion, down from 2020’s £4.872 billion, with underlying operating profit of £307 million, down from 2020’s £524 million.

David Lockwood, Babcock chief executive, said: “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 and, in line with our new strategic direction, will rationalise the group’s portfolio to help strengthen our balance sheet.”