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BAe shake-up threatens 700 jobs: Rationalisation at home as joint venture with Taiwan remains in balance

THOUSANDS of British Aerospace jobs were on the line last night as the company announced a large-scale rationalisation of its turboprop division in Scotland and battled to salvage its pounds 300m joint venture with Taiwan to manufacture regional jets.

Unions meeting BAe at the company's headquarters in London last night were braced for up to 700 job losses among the 3,500-strong workforce employed in its Jetstream and Advanced Turboprop aircraft business at Prestwick, Ayrshire.

Meanwhile, Taiwan's economics minister, Chiang Pin-kung, appeared to hammer another nail into BAe's proposed tie-up with the Taiwanese Aerospace Corporation to produce a new range of regional jets by telling parliament that the deal was 'not proceeding'.

If the deal collapses it will put 3,000 jobs at risk at BAe's regional aircraft factories in Woodford and Chadderton, near Manchester, and punch a large hole in the pounds 1bn restructuring of its loss-making commercial aircraft activities announced by John Cahill, chairman, last year.

BAe said later, however, that it was still hopeful that the joint venture would go ahead, adding that the minister's statement had changed nothing.

'Speaking to various people in Taiwan we don't feel anything has changed,' a BAe spokesman said. 'There is nothing new in this (government) statement.

'I think you will recognise that the minister was speaking in response to a question from the opposition . . . We don't believe anything has changed and the Taiwan government still wants the joint venture.'

The fate of the joint venture company, set up in January to manufacture the BAe 146 and successor aircraft in both Britain and Taiwan, now appears to hinge on whether the TAC board votes to abandon the project or continue negotiations when it meets next Tuesday.

But BAe said it still believed it had more than a few days to rescue the deal, which has foundered on a dispute over the amount of technology that should be exported from Britain to Taiwan. Mr Cahill is preparing to fly to Taiwan in the near future to resume negotiations, although no firm date has yet been fixed.

Last month BAe's chief executive, Dick Evans, warned that the Jetstream business was 'not sustainable' at its current level of losses. It lost pounds 60m in the first half of the year.

BAe is speaking to a number of other turboprop manufacturers in Europe, including Saab of Sweden and the French-Italian consortium ATR, with a view to securing a tie- up and cutting overcapacity.