Birds of prey circle around BAE management posts
10 October 2014 -
Defence contractor announces series of potential job losses, with the majority set to occur at the firm’s Lancashire base
Some 440 managerial roles are under threat at British defence and security firm BAE Systems, as the contractor quests for efficiency. The “potential” cuts are likely to occur in the firm’s Military Air & Information (MAI) business. The brunt of the job losses have been lined up for the company’s Samlesbury and Warton base in Lancashire. There, up to 286 jobs are likely to be removed, with other cuts set for RAF Coningsby in Lincolnshire (22), Frimley in Surrey (22), Christchurch in Dorset (18) and East Riding of Yorkshire (16). Other UK and overseas locations will soak up the rest.
The multinational corporation, which employs around 11,000 people across the UK, has vowed to relocate executives to other sites to keep hold of talented staff, amid an ongoing drive to cut costs. A recent review of BAE’s management structure determined there would have to be a reduction in the firm’s 1,700 executive roles.
BAE Systems MAI managing director Chris Boardman said: “It is always regrettable when you have to announce potential job losses. However, we believe that by implementing changes to our management structure, we will become a more efficient and effective business, and be better placed to meet the needs of current and potential customers in what is an increasingly competitive market.”
BAE says it has generated £7.9 billion in commissions over the first three quarters of the year – a third of which came from markets outside of its main revenue sources of the US and the UK. Boardman explained: “We have a strong order book with Hawk, Typhoon and F-35 in production across our business and this, aligned with our extensive and growing in-service support work with the Royal Air Force and our overseas customers, provides a strong foundation for a long-term sustainable business.”
He added: “We understand that this is a time of uncertainty for our employees, and we are committed to working with them and their representatives to explore ways of avoiding and mitigating potential job losses.”
Although recent tension between Russia and the US and troubles in the Middle East could have a positive effect on BAE Systems’ business in the long term, uncertainty over Germany’s economy and potential US spending cuts has forced the contractor to show its hand.
Writing on The Motley Fool, specialist finance and markets reporter Royston Wild commented: “I have previously argued that the recent financial troubles in North America and Britain which prompted military spending scalebacks and lumpy contract timings would pass as the economic recoveries in these regions clicked through the gears.
“But with signs that extreme financial difficulties are once again rearing their head in the Eurozone – regional powerhouse Germany is now on the brink of recession – and economic cooling continuing on the world’s shop floor of China, the implications of these problems on the US and UK could seriously jeopardise the long-term sales outlook for the likes of BAE Systems.”
While BAE streamlines its managerial divisions, job cuts to the British military have left the Royal Navy so short of engineers it has had to borrow them from the US Coastguard – currently running at a surplus. A team of US engineers will start work later this month as engineering technicians onboard Type 23 frigates in Portsmouth’s naval dockyard, a project that is planned for completion by the end of 2016.
The trial partnership will begin this month with four personnel initially, but the plan is for another 16 American engineers to follow in 2015 and 16 more in 2016, bringing the total to 36. The navy says it is bringing the engineers to the city because of cuts to staff numbers in the government's 2010 Strategic Defence and Security Review.
Former naval officer Mike Critchley – publisher of maritime book Warship World – said the move shows the British military’s desperation for manpower. “Having to borrow engineers is hugely embarrassing,” he told the Mirror. “It is fortunate the US Coastguard has excess personnel at the moment, after they have paid off some ships that were very manpower intensive. You can’t just recruit guys off the street and train them - the Royal Navy is looking for experience. But I'm sure these guys will do a great job and keep ships at sea.”
However, former Royal Navy head Admiral Lord Alan West argued that the move made sense, given the lack of British engineers available. “There is a national shortage of engineers in this country,” he said, “and that is obviously going to affect the military as well. I have served with a lot of Americans and they fit in extremely well. This seems to me a good temporary measure but there does come a stage where we need more people in the Navy.”
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