Jobs axed in pounds 78m Alvis and GKN defence merger

UP TO 200 workers were set to lose their jobs after the combat vehicles maker, Alvis, revealed yesterday that it would close its factory in Coventry following the pounds 78m acquisition of the armoured vehicles unit of GKN, the defence and industrial group.

News of the Alvis redundancies came as Vickers, the defence and engineering group, was preparing to announce up to 600 job losses in its tank division with tomorrow's results. The unit employs around 1,400 people in two factories in Newcastle and Leeds and has been hit by a fall in orders.

UK manufacturing was dealt a further blow when Delta, the electronics group, said yesterday that the strength of the pound and the Asian economic crisis would cause 230 redundancies in its Birmingham and Manchester operations.

Alvis said that the enlarged group, which will be one of Europe's leading armoured vehicles makers with combined sales of over pounds 160m, would operate from one plant in Telford currently owned by GKN. The factory, which employs 500 people, will be boosted by an extra 50 recruits.

The reorganisation will cost up to pounds 9m in 1998 and 1999, which will be paid for through the sale of the Coventry site. The overhaul is expected to produce cost savings of pounds 5m from 2000. Under the terms of yesterday's deal, GKN will inject its armoured vehicles division, maker of the Warrior and Piranha carriers, into Alvis in exchange for a 29.9 per cent stake in the company worth about pounds 63m.

GKN will become the largest shareholder in Alvis and gain a seat on the board but is forbidden from buying and selling shares in the company for the next 18 months. Alvis will also assume around pounds 15m of GKN Defence's liabilities, bringing the total consideration to pounds 78m.

The tie-up leaves Vickers as the only major UK maker of combat vehicles without a strategic partner. Talks between Vickers and GKN Defence broke down last year over price. Analysts yesterday speculated that the defence group could use its pounds 200m cash pile to mount a counter-bid for Alvis. Vickers said it was observing the situation "with interest".

The acquisition of GKN Defence brings Alvis into the pounds 3bn programme to build the Multi-Role Armoured Vehicle (MRAV) - the so-called "battlefield taxi" - whose shape can be changed to suit different defence needs. GKN won the project last year in partnership with German and French companies.

GKN Defence, which last year had sales of pounds 160.3m and profits of pounds 21m, is also in the running for the Anglo-US pounds 1bn Tracer project. Yesterday's deal will see Alvis abandoning a rival consortium to join GKN's group.

The strength of Alvis's short-term order books would also help GKN to bridge a gap in its orders, which were set to decline between now and 2003 when MRAV production is expected to start. Alvis, best known for its Scorpion and Stormer tracked vehicles, has forward orders of pounds 385m.

Executives of both sides hailed the deal as a key step towards consolidation in the European fighting vehicles industry, where more than 20 companies fight for a share of a shrinking market. Nick Prest, the Alvis chairman, said the deal was only "a step" on the road to consolidation and predicted further tie-ups between European manufacturers.

He said the most likely link would be between the enlarged Alvis, Germany's Krauss Maffei, Wegmann and MaK, and France's state-owned contractor GIAT. Shares in GKN fell 19p to 672p. Alvis fell 2.5p to 195p.

Outlook, page 17

Sport
world cup 2014A history of the third-place play-offs
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
PROMOTED VIDEO
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
...and the weight loss industry is rubbing its hands in glee
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Sport
Yaya Touré has defended his posturing over his future at Manchester City
News
Detail of the dress made entirely of loom bands
news
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
beauty
Sport
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Network Engineer (CCNA, CCNP, Linux, OSPF, BGP, Multicast, WAN)

£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice