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Tyneside plant could be under threat

BAE Systems, Britain’s biggest defence company, is reportedly set to cut hundreds of jobs in its UK vehicles business in the coming weeks.

The future of Britain’s last tank-making facility - which employs 500 people in Newcastle - is also in the balance and an announcement could be made as early as this week, according to reports.

The cuts come after BAE lost out on a key armoured vehicle contract to US rival General Dynamics (GD) earlier this year and ahead of the squeeze on military spending that is part of the Government’s deficit reduction plan.

BAE said in February it would “sustain jobs, create hundreds of millions of pounds of future exports for the UK, preserve an industrial base that secures UK sovereignty, and create significant cost savings” if it won the armoured reconnaissance vehicle contract known as FRES Scout, and further work on upgrading the Warrior fighting vehicle.

BAE had offered to create or maintain 800 jobs in Britain, including 500 in Newcastle, the site of Britain’s last tank-making facility. Winning the £4bn Scout contract would keep the factory in the north-east, previously owned by Vickers, open until at least 2020.

According to The Sunday Telegraph, that site is now under threat. It has work building the digging and mine-clearing vehicle Terrier until 2014, but no more production orders after that. The British Army’s Challenger 2 tank, used in the 2003 invasion of Iraq, was built there.

The Ministry of Defence also put off awarding the Warrior contract before the election, and no decision is expected until after the strategic review is completed in October. The MoD has a £35bn spending black hole to plug.

A spokesman for the company said: “We must resize the UK land business to a reduced expected workload and we are working towards this at the moment. As you’d expect, we can’t comment on the nature or timing of any cuts before we have told our own people.”

The previous government’s decision to award to FRES contract to GD only weeks before the general election was attacked at the time as being the work of “a bankrupt shopaholic having one last binge on their way to jail,” by Dr Liam Fox, then the shadow defence secretary and now the Defence Secretary.

This was posted in Bdaily's Members' News section by Ruth Mitchell .