BAE Systems, the UK’s largest defence contractor, is to shed almost 1,000 jobs, deepening fears across an industry bracing itself for government budget cuts.
Union leaders reacted with shock at the layoffs, which will affect manufacturing jobs largely in northern England and also in the south-east.
Hugh Scullion, general secretary of the Confederation of Shipbuilding and Engineering Unions, said unions would oppose compulsory redundancies. “Employers in the defence industry who try to pre-empt the outcome of the defence review risk making the situation worse,” he said.
But BAE said the cuts – 740 of which will come from the company’s military aircraft division and the rest from Insyte, its integrated technology unit – were a necessary part of streamlining the business because several lines of its aircraft, including Harriers and Nimrod MR2s, were either being reduced in number or retired.
Industry insiders believe the UK government will cut up to 15 per cent of its defence budget and scale back big procurement programmes such as aircraft carriers, also manufactured by BAE.
But the UK is far from alone in needing to shrink its defence budget because of the economic downturn. The US, whose military spending dwarfs that of all other countries, is seeking cost reductions of about 10 per cent.
Boeing this week announced it would shed jobs in a restructuring of its military aircraft division. The announcement was swiftly followed by Lockheed Martin saying that more than 600, or 25 per cent, of its executives had agreed to buy-out packages.
BAE employs 39,200 people in the UK and almost 107,000 globally. BAE’s shares fell 1.3 per cent on Thursday to close at 319.10p.
Additional reporting by Luke Sampson