Apache maker takes £32m grant to protect jobs – then lays off 375

AgustaWestland, the maker of Apache, Merlin and Lynx military helicopters, has become the latest victim of the Government's defence spending cuts, announcing up to 375 layoffs in the UK.

Barely two months ago, the Business Secretary Vince Cable visited its factory in Yeovil, Somerset, to announce a £32m investment in the company that would both safeguard and create jobs.

Yesterday it embarked upon a major restructuring that could see more than 10 per cent of its 3,600-strong British workforce losing their jobs.

AgustaWestland blamed the job cuts – which will mainly fall at its headquarters in Farnborough, Hampshire, – on huge reductions in defence spending by the UK and governments around the world. The company expects demand to keep falling. Ray Edwards, managing director, said: "Revenues from the Ministry of Defence are declining and shifting towards longer-term support services, while export orders that have slipped in the near time are projected to grow over time."

The redundancies are a blow to the Government's pledge to help Britain manufacture its way out of the slump.

They were announced less than a fortnight after BAE Systems said it would cut 3,000 UK jobs – mostly in its military aircraft division – with about 132 of the redundancies coming from its operation in Yeovil.

The next day Smiths Group, the maker of X-ray scanners at airports and weapons detection devices, warned it would also have to cut jobs. Both companies blamed spending cuts overseas and in the UK – which has reduced its annual defence budget by 8 per cent to about £34bn.

David Laws, MP for Yeovil, said the redundancies at AgustaWestland "are a particular worry for me", coming on the back of around 250 recent job losses in the area at BAE Systems and the RNAS Yeovilton navy airfield.

Although the Anglo-Italian AgustaWestland is suffering from the economic downturn, it has a plan. The bulk of the helicopters made by the company's UK division have been sold to defence ministries around the world, but some models have also been bought by companies for civilian use, such as air ambulances.

The company recently unveiled its first purely civilian helicopter in more than 30 years – the AW 169 – as it seeks to address what looks set to be a prolonged decline in military sales.

The AW 169, which will be available from 2015, received its first two orders from Warwickshire and Northamptonshire which want to use it as an air ambulance. Bond Aviation Group, which operates helicopters that transport people to and from offshore oil and gas rigs, has also put in an order.

With the price of oil hovering around $100 a barrel – and likely to rise in the coming years – AgustaWestland is hopeful that the increasing attractiveness of hydrocarbon production will stimulate further sales of the 169 for offshore drilling purposes.

Was Cable traduced?

On 21 July, Vince Cable, travelled to AgustaWestland's Yeovil plant to unveil a £32m investment in the company. As he presented the details, Mr Cable declared that it had "opened the next chapter" in Britain's "long history of aircraft production". Yesterday, gone was the "game-changing" talk, with Mr Cable instead saying the Department for Business "is working with the company to help secure a long-term future for the site by helping them to move in on civil helicopter work".