GKN's Boeing link to cost 1,000 jobs

The engineering group GKN yesterday announced a link-up with the US aerospace and defence contractor Boeing which will result in nearly 1,000 job losses.

The engineering group GKN yesterday announced a link-up with the US aerospace and defence contractor Boeing which will result in nearly 1,000 job losses.

GKN is to buy one of Boeing's manufacturing plants in St Louis for £44m and close down three of its own facilities in Britain and the US. The restructuring will involve 300 job losses in the UK following the closure of GKN's Avonmouth site in Bristol and a further 600 redundancies in the US - split evenly between Boeing and GKN sites.

The deal with Boeing will create an enlarged aerospace services division for GKN with turnover of £550m and access to some of the American group's key programmes such as the Joint Strike Fighter, C17, Super Hornet and F22 fighter.

GKN said it expected the Boeing business in St Louis to generate $1.8bn (£1.25bn) of revenues over a five-year period, starting with $300m in 2001.

The restructuring will result in exceptional charges for GKN of £68m to cover factory closures and asset write-downs. GKN said the net cash impact would be £37m.

CK Chow, GKN's chief executive, has been keen for some time to expand the group's aerospace business and this is his most significant deal to date. A spokesman added that it would create a stronger tier-one supplier, better placed to compete for big aerostructures contracts.

The new aerospace services division will have seven manufacturing sites compared with 11 previously. Three of these will be in the UK at Portsmouth, Luton and the Isle of Wight, three will be in the US and one will be in Munich.

GKN shares slipped 20p to 710p after the group warned that weakness in the aerostructures business had continued into the third quarter and Dresdner Kleinwort Benson cut its recommendation to hold.