BAE Systems, a British multinational defence, security and aerospace company, in an update on its business announced a “further headcount reductions” at its Australian shipyard.
Despite Australia’s intention to launch a naval shipbuilding strategy, BAE Systems said that “it is unclear whether this initiative will be sufficient to provide for the viability of the Williamstown, Melbourne shipyard.”
With no near-term prospect of work beyond the LHD programme and Air Warfare Destroyer block manufacture, the company has announced a “further headcount reductions and a consolidation of its operating divisions from 3 to 2 to reduce management costs and remain competitive.” The reduction is the result of a continuing drop off in work as existing projects near completion with no new naval shipbuilding contracts awarded.
The company has also announced that actions were being taken to reduce the production rate for the company’s current Typhoon aircraft for the Kuwait Air Force. As a result, BAE Systems has announced a proposal to reduce the workforce of the Military Air & Information business by up to 371 roles at Wharton and Samlesbury in Lancashire.
This decision was not welcomed by Britain’s workers’ union Unite which warned BAE systems of “cutting too far, too fast”. Commenting the public statement, Unite national officer, Ian Waddell, said:
It is vital that critical skills and capability are maintained by BAE Systems and their supply chain so that the ability to build the Typhoon in the UK is protected. Cutting too far, too fast could led to a skills shortage for when orders pick up.
In the UK, BAE Systems said that budget commitments to defence spending provide greater certainty and stability ahead of the forthcoming 2015 Strategic Defence and Security Review. In the US, the group welcomed the recent Congressional budget approval which is expected to result in defence spend increasing above the previous Budget Control Act caps.
Ian King, Chief Executive BAE Systems plc, commented:
Overall the company is operating in an improving business environment and we continue to win new orders, with good prospects for the future. In the short term, action to extend the production life of Typhoon aircraft by reducing the current production rate and a charge to impair the carrying value of the Williamstown shipyard in Australia will impact the Group’s 2015 results. Including a benefit of some 2 pence from adjustment of certain overseas tax provisions in the light of rulings received, the Group’s underlying earnings per share for 2015 are expected to be around 38 pence.
BAE Systems’ US ship repair business is responding to changes in the profile of its US Navy workload. The company expects reductions in its Norfolk, Virginia, based work load on the Atlantic Coast will occur during 2015/16, with activity increasing subsequently following investment in capital facilities at the Group’s San Diego shipyard on the Pacific Coast.
According to Reuters, the company in looking to sell some of its US manpower and services businesses, however the decision is not yet final.
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