Tank cuts loom at Vickers, despite order hopes

VICKERS, THE engineering and defence group, is next week expected to confirm plans to cut back its tank manufacturing facilities, even though hopes are rising that it has clinched a pounds 1bn order from Greece for up to 300 Challenger tanks.

The group, which warned recently that it may have to run down its operations unless it won new export business, has two tank factories in Newcastle and Leeds employing 1,400. They are finishing off the Challenger 2 order for the British Army.

Indications that one of them has been targeted for run-down is expected next Thursday when the group unveils its first half results.

Newcastle plant is thought to be the one most at risk. Run-down would be a bitter blow for the region, following the closure of the Siemens and Fujitsu silicon chip plants.

But a frisson ran around the Leeds factory yesterday after a visit by senior management. A spokeswoman dismissed local reports that "crisis talks" had been held about the Leeds factory or that any impending closure announcement was imminent.

However, one executive added: "The only firms that will survive in this industry in the future are those which are lean and mean."

The cutback in the military division will form part of a radical corporate restructuring by Vickers' new chief executive, Paul Buysse, who joined the group six months ago.

Vickers has already sold the luxury car maker, Rolls-Royce, to Volkswagen of Germany for pounds 480m and returned almost pounds 300m of the proceeds to shareholders.

Mr Buysse is expected to set out a new strategy for Vickers built around its burgeoning naval propulsion business. Surgery in the defence division was always likely following Vickers' loss of a pounds 2bn "battlefield taxi" order for the British and German armies to a consortium featuring GKN.

At the time analysts said it would prove the catalyst for a reshaping of the UK's land fighting vehicles industry.