BAE job cuts will ripple through local economies
THE 3,000 job cuts at BAE will have a huge knock on effect to local communities as well as manufacturer confidence, business leaders have said.
The defence group announced the cuts yesterday, including 1,400 at its two military aircraft manufacturing sites in Lancashire, saying they were in response to “changes in key programmes” and the need to maintain competitiveness.
Chris Ratten a corporate recovery expert in the Manchester office of RSM Tenon, said the cuts would have a ripple effect, impacting not just the immediate supply chain but wider local economies.
He said: “The ripple effect is three fold. The number of highly skilled employees now looking for work will increase. Unfortunately these workers will be surplus to requirements as there aren’t many other skilled jobs out there meaning that as a country we will lose our skilled workers.
“The effect of this also means an increase cost to the tax payer as more people are forced to ‘sign on’. The supplier base to BAE will be impacted as lower demand in the sector for materials and other parts ripples through the market causing shrinkage in demand.
“This means that the knock on effect can be felt by companies six or seven times removed from BAE and the local economies are bound to lose out. With over three quarters of the jobs losses set to go in North West England, the knock on effect to these areas will be disastrous right down to the sandwich van that gets its business in the company’s car parks.”
He added that although the announcement is not surprising, given government defence cut announcements, it will impact greatly on confidence in the sector as a whole.
He said: “The slowdown of contracts, such as the £125m Euro fighter Typhoon jet, means that BAE simply doesn’t have an option.
“For businesses to bounce back they have to cut costs, and unfortunately, while it’s not good news for UK plc, there isn’t an alternative for BAE. In my experience, I’ve never seen a sales led recovery of a business, recovery comes through careful management of the cost base.”
Martin Wright, chief executive of the Northwest Aerospace Alliance, said the news was “a step backwards” for the rebalancing of the UK economy towards high technology and advanced manufacturing.
He added: “The loss of these jobs in Lancashire and Yorkshire will be devastating for the families involved and will significantly impact the wealth of the regions. These advanced engineering jobs create real value through research and development and manufacturing technologies.”
Mr Wright also said that whilst there is a period of uncertainty for the supply chain following the announcement, the civil side of the aerospace market is seeing significant growth with some of the largest aircraft orders ever having been announced in 2011.
Meanwhile, the GMB union said it will meet with BAE next week to discuss alternative work that could be done to save jobs, and way’s to mitigate any compulsory job losses.
