Last updated: March 20, 2014 5:30 pm

Italian defence group Finmeccanica warns on Scottish vote

A Finmeccanica stand at the Farnborough International Air Show in July 2012©Bloomberg

The future of the Scottish arm of defence group Finmeccanica will depend on decisions to be made by the UK Ministry of Defence if Scotland votes for independence this year, according to the Italian conglomerate.

In Finmeccanica’s first comments on Scottish independence, Alessandro Pansa, chief executive, told the Financial Times that the implications of a Yes vote in the September 18 referendum were “not yet clearly understood”.

The Italian group’s defence electronics arm Selex ES is one of Scotland’s most important defence employers, with more than 1,900 staff at a plant in Edinburgh that manufactures airborne radar, advanced laser and electro-optic systems.

Mr Pansa’s comments may increase pressure on the UK defence ministry to clarify how it would respond to Scottish independence, although pro-union campaigners will see them as a reminder of the risks to industry of a nationalist victory.

Whitehall officials have warned that backing independence could be disastrous for the £1.8bn defence sector in Scotland, which would have a much smaller defence budget and might lose access to UK preferential procurement policies.

Scotland’s government says the defence ministry of the remaining UK could continue to place orders with contractors in Scotland after independence.

Mr Pansa said the impact of Scottish independence would depend greatly on what approach London will take.

“It will be for the UK MoD to decide whether it will continue to sustain advanced defence systems development . . . at our facility in Scotland, or whether it will require that these activities be conducted within the new boundary of the UK,” Mr Pansa said. “Clearly, these decisions would have important implications for our investment in Scotland.”

Defence companies have previously been reticent about the possible effects of Scottish independence, despite pressure from senior MoD figures who have pushed them to speak out about the possible implications.

The defence industry supports more than 15,000 Scottish jobs directly and indirectly through prime contractors such as BAE Systems, Raytheon, Rolls-Royce, Thales and Babcock Marine.

In depth

Future of the union

A Saltire flag

Scotland will decide in a referendum to be held on September 18 2014 whether or not to end the 306-year-old union with England

Mr Pansa stressed he was not trying to tell Scots whether it would be right or wrong to seek independence.

But referring to other “secessionist dreams” in Europe – including a movement backed by rightwing parties in northeast Italy for an independent state with Venice as its capital – he said he was for a “more unified Europe, not a decentralising Europe”.

Finmeccanica’s comments were echoed by BAE Systems, the UK defence group, which said in its annual report on Thursday that staying within the UK offered “greater certainty and stability” for its operations in Scotland.

BAE Systems gave no details of how leaving the UK would affect its operations in Scotland, which under current plans will host all of its warship-building facilities.

“In the event that Scotland voted to become independent, we would need to discuss the way forward with the Ministry of Defence and UK government, and work with them to deliver the best solution in those circumstances,” the company said in its annual report.

The Scottish Government said companies in Scotland would be able to bid for any MoD contracts that were put out to competitive tender.

“Defence companies are used to working within changing international parameters, and will continue to do so within an independent Scotland.”

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