The cuts and wider shake-up represent the first move by Charles Woodburn, BAE’s new chief executive, to stamp his mark on Britain’s biggest defence company © AFP
BAE Systems is streamlining management and cutting almost 2,000 aerospace and maritime jobs as part of a sweeping restructuring to adapt to a dearth of fighter jet orders and rising competition.
The UK defence company was facing a barrage of criticism even before unveiling the job cuts.
Unions on Monday called on the government to take action to save the jobs, even before the cuts were publicly announced. One senior official from Unite, one of BAE’s biggest unions, said the possibility of industrial action was being discussed.
The job losses mark a significant blow to UK manufacturing as the government seeks to promote a new industrial strategy to spread prosperity beyond London to the rest of the country.
At 1,950 job losses, this represents 6 per cent of BAE’s 33,000 UK employees, one of the biggest industrial workforces in the country. The restructuring will not affect BAE’s second biggest operating country, the US.
The cuts and wider shake-up represent the first move by Charles Woodburn, BAE’s new chief executive, to stamp his mark on Britain’s biggest defence company.
As part of the restructuring, country-based business units will be abolished in favour of three streamlined divisions — air, land and sea — each reporting directly to Mr Woodburn.
In effect, the UK — BAE’s biggest market — will no longer be a standalone division and that management layer will be stripped out.
The former oil services executive also hopes to sharpen the group’s focus on new technologies and innovation by appointing a chief technology officer to the executive board.
Nigel Whitehead, the highly regarded head of UK programmes, will take on that role.
Mr Woodburn said the management and organisational changes would give the company “a sharper competitive edge and a renewed focus on technology”.
The job cuts were unfortunate but necessary to “align workforce capacity with near-term demand and to enhance our competitive position to secure new business”, he said.
However, the restructuring has raised concerns over Britain’s future capability in combat air programmes. Some 1,400 of the job cuts will fall on BAE’s aerospace sites in Lancashire, where the Eurofighter Typhoon is assembled, and in Yorkshire.
Once the current backlog of Eurofighter jets is delivered by 2019, there is no new fighter jet programme to maintain the UK’s skills in this area.
“Ministers should be under no illusion,” said Steve Turner, Unite assistant general secretary, on Monday night after news of the job losses emerged.
“Once these jobs are gone, they are gone for a generation and with them the skills and ability to control our own defence and manufacture the next generation of fighter jets and other defence equipment in the UK.”
BAE insisted on Tuesday that the cuts would not deprive it of the ability to develop a new generation fighter. People with knowledge of the plans said that no engineers would be lost.
However, the company acknowledged that the scale of the jobs reduction had been driven by readjustment of expectations on orders for the Eurofighter Typhoon, and the lack of a new generation combat aircraft programme.
BAE is also under pressure, like most aerospace and defence groups, to site production in customer countries in return for winning orders.
Roughly 13 per cent of the 11,000-strong military air workforce will be cut.
In maritime services some 375 jobs will be cut, while the applied intelligence and cyber division would also suffer 150 job losses.
Mr Woodburn said applied intelligence would be streamlined to focus on fewer markets where the group had leading positions in a bid to boost profitability.
The company refused to give details about cost savings it expected to make from the restructuring. Nor would it specify the costs it would incur in the redundancy programme.
However, the process is expected to be drawn out, with people expected to leave over a one- to three-year period. There would be no compulsory redundancies, the group said.
The changes will take effect from January next year.