Bloomberg News

BAE Draws Curtain on Planemaking in Brough as 3,000 Jobs Go

September 27, 2011

(Adds analyst comment in third paragraph, history of Brough site in eighth paragraph.)

Sept. 27 (Bloomberg) -- BAE Systems Plc will cut 3,000 jobs in the U.K. and end a century of aircraft manufacturing at a site in northern England as it slows fighter-jet production.

About 900 jobs will go at Brough, while talks will start about ending manufacturing at the site, London-based BAE said in a statement today. BAE is also cutting more than 1,400 positions at two other facilities in northwestern England.

“These job losses are the unintended consequence of government austerity measures,” said Jason Adams, an analyst at Nomura International with a “neutral” rating on the stock. “The defense industry is in a state of excess capacity, and I’d expect further consolidation and restructuring.”

BAE has cut about 2,500 jobs in each of the last two years as it scales back production to adapt to shrinking defense budgets. Customers are under “huge pressure” over spending, and BAE has had to “significantly” change some programs, Chief Executive Officer Ian King said in the statement today.

Hawk Manufacturing

There isn’t sufficient work on the Hawk Advanced Jet Trainer program to maintain manufacturing at Brough, spokeswoman Leonie Foster said. Deliveries of 28 aircraft for the Royal Air Force are coming to an end, while new contracts, such as in India, require local assembly of the aircraft.

BAE won a 537 million-pound contract to deliver 57 Hawk jets to India in 2010, and will manufacture the jets locally in partnership with Hindustan Aeronautics Ltd. BAE is also competing for a Hawk contract in the U.S., with local production as part of the proposal.

Other planned job cuts include 51 in Christchurch, Dorset, 132 in Yeovil, Somerset, 78 at Farnborough, south of London. BAE said a year ago that it would cut about 740 jobs at the division supplying parts for military aircraft, including Brough in East Yorkshire. Brough also bore the brunt of 450 job losses in 2008 because of reduced workload on some programs.

Military aircraft production at Brough dates to 1916 and specialized in the manufacture of seaplanes before becoming part of Hawker Siddeley Aviation, when it made the Buccaneer fighter, and later British Aerospace, producing the Hawk trainer and vertical-takeoff Harrier jump jets. Brough now employs almost 1,300 people, according to BAE.

Eurofighter, F-35

Manufacturing of the Hawk, F-35 Joint Strike Fighter and Eurofighter Typhoon fighter jets will be maintained across fewer sites. In Brough, BAE aims retain Hawk engineering for structural testing on the Hawk trainer jet, F-35 and Eurofighter, Foster said.

The unite labor union said it will “be doing everything we can to mitigate the impact of these cuts,” Ian Waddell, Unite’s national officer for aerospace said in a statement. “We expect the Ministry of Defense to intervene urgently to protect these jobs.”

BAE, European Aeronautic, Defence & Space Co. and Finmeccanica SpA, the makers of the Eurofighter, need an additional order from partner nations by 2013 to maintain production. Eurofighter now makes 50 fighter jets a year. The U.K., Italy, Germany and Spain agreed to produce fewer combat jets to stretch production and the expected increase in F-35 production rates will be trimmed following pressure on the U.S. defense budget.

The Military Air and Information and Shared Services unit employs about 15,500 people across 28 industrial sites and Royal Air Force bases. It develops, delivers and supports military air platforms and technologies for the Typhoon, F-35 Lightning II, Tornado and Hawk.

--Editors: Benedikt Kammel, Andrew Noel

To contact the reporter on this story: Sabine Pirone in London at spirone@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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