You're Fired!

Supergun firm is staring down a barrel

The company that made the barrels of the Iraqi supergun in the late 1980s, Sheffield Forgemasters, has warned that it is in danger of going bust as economic conditions continue to make life difficult for UK manufacturing industries.

The company's directors were exonerated by the Scott inquiry after the devastating scandal of 1990, when it was discovered that several UK firms were making parts for a 100-centimetre gun intended for export to Iraq, just months before it attacked Kuwait.

Sheffield Forgemasters was bought by US engineering company Atchison Casting Corp in 1998. It has since invested $64m (£39m) in improving technology and equipment. Late last year, however, Atchison warned in documents filed with the US Securities and Exchange Commission that Sheffield Forgemasters was not within the terms of its debt, and that if its creditors were not supportive, it faced liquidation proceedings in the UK.

However, Hugh Aiken, chief executive of Atchison, claimed the situation was stable and said he hoped creditors would keep the faith. He said all UK manufacturers were suffering because of the strong pound and the difficulty in competing with developing countries.

He added that because countries like Romania and China paid staff low wages and had fewer safety and environmental requirements for their operations, there was no level playing field on costs. "We probably pay more for safety equipment than they do on wages alone," he said.

Sheffield Forgemasters employs around 900 staff in Yorkshire and Scotland. Insiders say it wants to consign the supergun affair to history. It had thought the large barrels destined for Iraq were intended for a petrochemical refinery.

The scandal, which intensified in 1996 when the Scott report criticised the government's involvement in the sale of arms-related equipment to Iraq, contributed to the fall of the last Conservative administration.