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BAE Systems to cut 1,900 jobs as new boss rings in the changes

Iain Withers
Typhoon jets - COPYRIGHT : JULIAN SIMMONDS

The new boss of Britain's biggest defence contractor BAE Systems has wasted no time in wielding the axe with plans for more than 1,900 redundancies, double what had been anticipated.

Charles Woodburn, who took the helm as chief executive three months ago, told The Telegraph it was “the nature of exports” to have to deal with volatile orders, leading to cuts across the firm's air, sea and cyber defence divisions.

The job losses will be phased over the next three years and equate to almost 6pc of BAE's 34,600 UK workforce.

The largest cuts are planned in BAE's factories in Lancashire - where up to 750 jobs will go - due to a slowdown in Typhoon fighter jet orders.

The firm had been hoping for a large Typhoon deal with Saudi Arabia - which ordered 72 of the aircraft 10 years ago - but this has so far failed to materialise, and smaller existing contracts with other Gulf nations are not enough to keep up full production.

It is understood conversations between BAE and Saudi Arabia over a possible further order are still ongoing, despite the British firm agreeing a statement of intent with the Kingdom's arch rival Qatar for an order of 24 of the aircraft last month, sparking concerns this could jeapordise talks with the Saudis.

BAE redundancies

BAE's Typhoon factories in Warton and Samlesbury in Lancashire will be slowed down while they fulfill smaller orders for Oman and Kuwait.

Mr Woodburn said he was “confident that there will be orders but the timing is uncertain”.

He said BAE’s work on the US’s F35 fighter jet programme - which the firm has previously said will support up to 25,000 jobs in Britain - would “support our revenues” as it “ramps up over the next five years”.

He dismissed criticism of the UK government for not supporting the British defence industry, saying: “We have close to £4bn this year (of UK government work) and they remain a very important customer to us.”

But an accompanying BAE trading statement, which gave a bullish outlook for its US business, where there will be no job losses, provided a contrasting picture to its home market.

Analysts said the job losses were not a surprise, adding that they were encouraged BAE’s earnings guidance was unchanged.

Another 650 redundancies will come from slowdowns in orders for Hawk jets and support jobs for the RAF's Tornado fleet, which is being taken out of active service in 2019.

BAE Systems share price

In the maritime division 375 roles are being lost, while cyber defence will see around 150 redundancies.

The Government was urged by unions and MPs in Parliament to step in to prevent job losses.

But business minister Claire Perry told the Commons it "would be wrong for the Government to interfere in the company's restructuring".

Ms Perry said the Government was “reviewing what support we can lend the company”, insisting job losses were "not related to any UK defence spending decisions".

BAE will enter a 30-day consultation period with its workers, with the Government looking to help keep compulsory redundancies to a minimum. Ms Perry said it was “incredibly important” that the BAE workforce’s skills “are retained in the UK as far as possible”.

Union Unite pledged to fight what it called a “devastatingly short-sighted” move and is considering its options, including potential industrial action.

Mr Woodburn said BAE would be working “very closely” with the unions, adding: “We believe a good proportion of jobs will be voluntary redundancy.”

He added: “Whilst sympathetic to the workers we have made this decision to ensure we are competing as efficiently as possible to ensure the tens of thousands of workers on the production lines will still have a future.”

Mr Woodburn has quickly stamped his authority on BAE, announcing a restructure that also strips out levels of regional management in order to consolidate reporting lines into air, land and sea.

BAE has also appointed a chief technology officer to the board, promoting Nigel Whitehead, who was previously head of programmes in the UK.

Mr Woodburn took over from long-standing chief executive Ian King after spending just over a year as chief operating officer. Before BAE he held a string of senior roles in the oil and gas industry.