BAE Systems warned yesterday that it would shut its Brough factory on Humberside with the loss of thousands of jobs if the Government blocked a multibillion-pound order for 30 Hawk trainer jets. The Treasury is recommending that the order be put out to competitive tender but the Department of Trade and Industry is trying to ensure the deal goes direct to BAE.
After the leak of a Treasury memorandum which argued that the proposals BAE put forward failed the value-for-money test, DTI officials said other considerations needed to be taken into account, including potential job losses at Brough and the cost of running a protracted competition for the order.
Sir Dick Evans, the chairman of BAE, said if the order was put out to tender and went to a rival Italian or Korean bidder, it would be tantamount to British taxpayers subsidising foreign competitors. "It would be complete cream on the cake for these guys," he said.
"British taxpayers would effectively be subsidising their programmes and the British taxpayer should not be in the business of subsidising foreign companies to compete in our home market. I will continue making this case until hell freezes over."
Another BAE executive denied the threat to close Brough was like putting a gun to the Government's head.
"It is simply the fact that we are losing money every day and can't afford to go on," he said. "If the Government wants to run a competition, we won't be in it." BAE has already issued provisional redundancy notices to 470 staff at Brough but there are fears that the entire plant, which employs 2,300 people, may be at risk.
Sir Dick said that if the Government did not order the Hawk, "the prospects of selling it anywhere else in the world would very quickly decline to zero and the industrial consequences would be there for all to see".
BAE believes that if the Ministry of Defence buys the Hawk, that will trigger an order, at last, from India, and that overseas orders for 400 to 500 more are likely in the next decade.
Meanwhile, a task-force of senior industry and Whitehall representatives, urged the Government to commit an extra £1bn to civil aerospace research over the next two decades.
The aerospace innovation and growth team, set up a year ago by the Trade and Industry Secretary Patricia Hewitt and chaired by Sir Dick, said civil R&D support should rise from £20m a year now to £50m a year for the next 20 years. The government support would be matched by industry contributions.
Sir Dick said that unless there was support for aerospace, then an industry which provided half a million jobs could go into serious decline. The task-force said Britain's aim should be to increase its share of the $250bn world aerospace market from 13 per cent now to 15 per cent.Reuse content