BAE cuts 500 jobs as army contracts fall

Europe's biggest military contractor BAE Systems said today it would close three UK sites and cut 500 jobs in response to falling orders and reduced work for the Army.

"The announcement follows the UK decision to postpone the FRES - Future Rapid Effects System - Utility Vehicle acquisition and a downturn in work supporting British Army operations in Iraq and Afghanistan," the British company said in a statement.

BAE said it would close sites in Guildford, Leeds and Telford, resulting in the loss of 330 jobs. It will axe a further 90 posts in Barrow due to slowing production of its M777 lightweight towed howitzer for the United States military.

Further jobs will also be lost in Newcastle and Leicester.

The sites and jobs impacted are all at the company's Global Combat Systems (GCS) Vehicles and Weapons businesses, which currently employ 1,820 people in the UK and have already suffered 200 job cuts announced in November 2008.

"While we clearly regret having to take this step, our forecast UK order intake has reduced and we have to match the size of our business appropriately to the projected nature and volume of workload," GCS Managing Director David Allott said.

Shares in the company, which had been trading flat ahead of the statement, turned positive on the news to trade 1.2 per cent higher at 365.5 pence by 10:24 a.m. British time.