Defence cuts will force us to lay off staff too, says Smiths Group

Smiths Group has warned that its key medical, weapons detection and military communications divisions are all being squeezed by spending cuts, in the latest instance of government austerity measures around the world hitting British manufacturers.

A day after the aerospace and defence giant BAE Systems confirmed it would shed 3,000 workers in the UK, Smiths said it would cut jobs and close plants in its detection unit as it seeks to slash its annual costs by £40m by 2014.

The detection unit, which makes a range of equipment from X-ray scanners at airports to biological weapon and drug detection devices, employs 2,500 people globally, with about 200 staff in the UK at its plant in Watford.

The company would not give further details about where the job cuts and site closures would occur. Philip Bowman, its chief executive, outlined the planned cost savings as the group announced a 12 per cent rise in pre-tax profit to £486m for the year to 31 July, on the back of a 3 per cent increase in sales to £2.8bn.

However, Mr Bowman said the public spending squeeze in the US, the UK and much of Europe meant the outlook was tough.

"The economic outlook remains uncertain and continued pressures on government spending, which particularly impacted Smiths Detection, Medical and Interconnect [military communications division] are likely to continue to constrain revenue opportunities," he said.

Mr Bowman said Libya presented Smiths with a great business opportunity, as the rebel-led Transitional National Council (TNC) consolidates its grip on the country. Smiths, which has carried out a handful of oil and gas projects in Libya through a local agent in the past, is in discussions with several parties in search of contracts.

"We see good opportunities and are actively pursuing those leads. We are reviewing whether to put our own presence in Libya for the first time," Mr Bowman said.

Mr Bowman expects the bulk of its work in Libya to come from rebuilding damaged oil production infrastructure and installing detection equipment across the country.

Smiths' John Crane oil and gas unit services the industry and manufactures a range of equipment, such as mechanical seals for use in pumps and compressors. The unit was Smiths' best performer last year, with underlying sales jumping by 13 per cent to account for nearly a third of the group's total revenues.

The strong performance – which Mr Bowman expects to continue for at least the next six to eight months -– helped to offset a 13 per cent slump in underlying sales at its detection unit, which was hit by delays in large orders as government agencies look to cut public spending.

The difficulties being experienced by BAE and Smiths are fuelling concerns that the Government's plan to boost the economy through manufacturing growth made be flawed.

A CBI survey last week revealed a larger-than-expected fall in factory orders this month, as the worsening global economy reduces demand for exports.

Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
The Etihad Stadium, home of Manchester City
premier leaguePlus all the build-up to Man City vs Chelsea and Everton vs Palace
Polly Borgen at the Tribeca Film Festival in 2012
peopleThe Emmy award-winner starred in Cape Fear, the Sopranos and Desperate House Wives
people'I hated him during those times'
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam