23 May 2012

BAE’s £1.6bn Saudi deal reprieves 250 manufacturing jobs

British defence giant BAE Systems secures a £1.6bn deal with Saudi Arabia that will safeguard more than 240 jobs that were under threat at its Yorkshire factory.

The BAE deal with Saudi Arabia includes the manufacture of 22 Hawk trainer jets

But the agreement, to buy Hawk trainer jets and related equipment, will not prevent the eventual loss of manufacturing at the BAE Systems site in Brough, East Yorkshire.

The aircraft, which are destined for the Royal Saudi Air Force, will be built at two Lancashire sites, in Warton and Samlesbury, both near Preston.

However, following negotiations with unions, some related manufacturing work for the order will now be done at Brough, saving 248 of some 900 jobs that were due to go there by 2013 and guaranteeing work for 30 apprentices.

A senior official with the Unite union welcomed the news of the deal, but said: “It makes no difference to the Brough site. This contract was always in the plan, and the announcement has been anticipated for the last year.”

BAE admitted the deal was already in the company’s thinking when it announced proposals to cease manufacturing at Brough last September, as part of a package of 3,000 job cuts triggered by falling orders.

“That is probably fair to say, but we are in negotiation with the trade unions, and have been so for some time. And these proposals that will save those jobs have come out of those negotiations.”

As well as the 22 Hawk trainer jets, BAE has agreed to supply 55 Pilatus PC-21 trainer aircraft, which will be built in Switzerland.

The deal, which follows approval by the UK and Saudi governments, will also provide for simulators, spares and support services.

Manufacturing will still end at Brough, despite the Saudi deal

Workers ‘frightened for their future’

The jobs saved at Brough will mainly involve some preliminary detailed manufacturing and assembly work for the Hawk and some fabrication work for its Typhoon aircraft.

BAE said it would extend the life of manufacturing at Brough to 2015.

Unite’s aerospace officer Ian Waddell said: “We’ve managed to save about 200 jobs at Brough but still have a massive challenge to save the other 650.

“There are other BAE sites across the North West [of England] where workers are also frightened for their future and thousands of jobs are at risk.

“Two hundred jobs saved feels like a drop in the ocean for our members.

“BAE’s strategy of transferring Hawk from the Brough site to Lancashire was predicated on them winning this Saudi order, so it will not save any of the jobs currently under threat.”

An aerospace defence expert said the deal was logical for a company that already had strong business links with Saudi Arabia.

Edward Hunt, a senior consultant at IHS Jane’s, said: “Given that it seems unlikely that a lot of European nations will be buying that many more aircraft in the coming years, it is important for BAE to safeguard [its business].”

He said the agreement was also vindication of BAE’s tried and trusted trainer design in the teeth of more cutting-edge competition.

“It is good news for BAE because they don’t have a replacement design. It’s getting a bit long in the tooth, but it is still highly regarded and [has proved] a good return on investment because people are still buying it.”

BAE Systems has a long history of supplying arms to Saudi Arabia, often in controversial circumstances, with the kingdom’s human rights record often at the centre of the criticism of any deal.

In 2006 the Serious Fraud Office dropped an investigation into a defence deal involving BAE amid warnings that to continue it could damage national security and cause a knock-on effect for other British defence firms.

BAE states on its website: “We expect our suppliers to comply with local legislation and meet the same or equivalent standards as BAE Systems on issues such as ethical conduct … civil liberties and human rights.”