British aerospace industry suffers further job losses

The British aerospace industry has been rocked by the news that Smiths Aerospace are to cut another 1200 jobs.

The company, which employs 13,000 people in the UK, has stated that the cuts will result in the closure of their Basingstoke electronics plant.

Only last year, the company made 1600 lays offs while posting pre-tax profits down £26 million from £200 million for the last half-year.

The company said the recent jobs losses are part of a rationalisation programme which will see over 3000 jobs in total being axed.

Staff have been told to expect changes throughout the UK's 50-60 Smiths' sites and Finance Director, Alan Thomson, said that most of the other cuts would come from its aerospace and industrial sealings sectors.

Union leaders reacted angrily to the job losses and said they would be seeking urgent meetings with the company. A union spokesman said that Smiths military aerospace arm was still profitable and those facing redundancy would be offered transfers to the arm.

Workers at the Southampton plant, however, will be heartened by the news that the company to supply Boeing with hose and refuelling systems from its production line. Potentially, the contract could be worth £714 million in sales.

The outlook does not look bright for the aerospace industry, which has pointed to the effects of the September 11 terrorist attacks for the deflated passenger market. Across the Atlantic, the US government's Federal Aviation Administration (FAA) has said that, despite some positive signs, there would be no recovery in the industry until 2003. However, the FAA predicted that an annual growth rise of 4.2 per cent should be expected from 2004.

The situation is less bright in the UK and EU where many states have not been financing under-performing airlines in the way that the US government has done. Since September 11, it has subsidised state airlines to the tune of £15 billion and there is now the threat of a trade war between the US and EU over state-funded airline operators.

The EU transport commission are currently considering proposals to impose tariffs on airlines receiving "unfair" state subsidies flying to the EU. Some operators believe that in the name of greater competition, penalties could include including airport duties and landing rights restrictions for such airlines.

The prospect of a trade war raises further questions marks over the fate of British aerospace jobs.

(GMcG)