Defense cuts hit home for British workers

LONDON, Sept. 26 (UPI) -- Cuts in defense spending around the world are hitting home in Britain, where BAE Systems appears poised to send thousands of pink slips to workers.

"In order to bridge the gap between current demand and future anticipated export contracts the production rate on the current Typhoon program for the partner nations will be slowed," the company said late Friday.

"BAE Systems recognizes that the long-term future of Typhoon (aircraft) is based on its export potential and therefore we need to ensure we are in the best possible position to secure those opportunities."

The company also said, "BAE Systems has informed staff that we are reviewing our operations across various businesses to make sure the company is performing as effectively and efficiently as possible, both in delivering our commitments to existing customers and ensuring the company is best placed to secure future business."

News reports in Britain said as many as 3,000 jobs could be lost, with traditional manufacturing areas such as Lancashire and East Yorkshire hit hardest. Specifically targeted are BAE's military aircraft business units.

News of impending layoffs follows reports that BAE Systems-UK, the country's largest defense manufacturer, had $1.06 billion in pre-tax profits for the first six months of the year -- a 12 percent drop from the same period last year -- and losses were expected to continue.

Losses have been attributed to the government's earlier cancellation of the Nimrod aircraft program and its scrapping of the military's Harrier aircraft fleet.

More business could be lost as the Ministry of Defense cuts billions in spending by 2015.

Even the program to build two new aircraft carriers could be in jeopardy.

Not helping company prospects any is the fact that half its sales are logged in the United States, where the U.S. Department of Defense is also slashing systems procurement expenditures.

The impeding British job losses are "a devastating blow for Lancashire and Yorkshire and a real knock for U.K. manufacturing" said Jim Murphy, the Labor Party's shadow defense minister. "We need a fast response from ministers with a clear plan of action. At a time when it is so hard to find a new job, this is a dreadful moment to lose the one you have.

"The defense industry is vital to the U.K., supporting both our forces on the frontline and the wider U.K. economy.

"Labor's industrial strategy has been replaced with this (coalition) government's deficit reduction plan and as a result both our industrial base and our equipment program are being hit."

The Typhoon jet fighter program, undertaken by BAE with Europe's EADS Group and Finmeccanica, has orders for 550 aircraft from partner nations Spain, Italy, Germany and Britain but its long-term is will depend on export sales.

Unite, a major British labor union, is seeking urgent talks with BAE over the layoffs.

"These job losses will be a hammer blow to the U.K. defense industry, which is already reeling with the consequences of the government's 'buy off the shelf' policy," said Ian Waddell, Unite's national officer for aerospace.

"We will be seeking urgent talks with BAE Systems to try and clarify where these jobs are under threat and to work with them to avoid compulsory redundancies wherever possible."

The cuts aren't an isolated incident for BA Systems-UK. The company cut 15,000 jobs in 2009 and 2010 as a slowdown loomed in defense system spending.

Given the nosedive in world economies, the impending cuts may not be the last for BAE or for companies in Britain and throughout the world.