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BAE SYSTEMS ANNOUNCES JOB LOSSES

BAE SYSTEMS ANNOUNCES JOB LOSSES IN ITS AIRCRAFT-RELATED BUSINESSES

18 Mar 03. BAE Systems PLC said on Tuesday that it plans to cut 1,005 jobs in its U.K. aircraft operations, mainly due to delays to a patrol plane program.

The bulk of the job losses stem from February’s agreement with the U.K. MoD delaying production of upgraded Nimrod maritime patrol planes following cost overruns in the design and development stage. Other jobs will go due to the general downturn in the civil aviation market. BAE Systems’ U.K. plants at Chadderton, Prestwick, Warton and Woodford will be hit with the cutbacks that should largely occur this year. BAE Systems employs nearly 100,000 people worldwide including its joint ventures.

“The full impact on the Nimrod workforce is now known. The controlled production stop results in a more than two-year period of significantly reduced work levels in the Nimrod program,” BAE Systems said in a statement.

The job losses weren’t unexpected. “It’s a continuing attrition,” said Zafar Khan, an analyst with SG Securities.

Among the re-structured programme provisions are:
§ that production work would stop on the last 15 of the 18 Nimrod aircraft to be
modified from MR2 to MRA4
§ that work on the 3 Development Aircraft would continue to completion in order to mature the design, thus reducing risk
§ that production work would only resume once the design and development work had reached a maturity that pricing for production was possible with surety

BAE SYSTEMS said there were going to be job losses as a result of this change. The full impact on the Nimrod workforce is now known. This controlled production stop results in a more than 2-year period of significantly reduced work levels in the Nimrod programme.

Of the job losses at Prestwick, 136 are Air Systems employees directly working on Nimrod. Additional losses occur in Aerostructures due to the downturn in the civil aircraft market. Losses also result from the reduction of work for the Regional Aircraft Operations and Engineering function at Woodford as a consequence of the Nimrod work reduction and the upcoming completion of a number of projects later this year. Similarly, the delay in Nimrod production causes a postponement in the Ground Maintenance and Training Package (GMTP) project resulting in the losses shown at Customer Solutions & Support.

BAE SYSTEMS is now in consultation with employee representatives to try to mitigate these job losses, the majority of which are expected to take place by the end of 2003. The jobs retained on the Nimrod programme are to ensure the Nimrod Development Aircraft are prepared for full ground and flight testing.

Steve Mogford, Chief Operating Officer, Programmes, said, “It is always regrettable when job losses become necessary. We will work very diligently to mitigate the impact of these losses for our workforce. The Nimrod programme is a very important project for us, and the capability it will bring to the MoD is second to none in the world. But, we must take into consideration the time it will take to get sufficient design and development maturity to allow for decisions about pricing and location for production.”

Comment: The final structure and In Service Date of the Nimrod MR4 aircraft now looks as far away as ever. The dismantling of the Nimrod workforce and related support workers can only cause further delays due to loss of intellectual property and expertise in the company. Will Nimrod ever come to fruition or is the cancellation announced by BAE and the Mod a good excuse to ditch a requirement for 15 maritime submarine hunters at a time when there a no hostile submarines around? The three remaining test-bed aircraft may be test beds for a final aircraft which could be based on a Boeing 737 airframe given Boeing’s involvement in the Nimrod programme and obvious claim for contract cancellation for the 21 mission systems already ordered. Other companies affected

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