Is BAE’s decision to cut short jobs an acceptance of the UK outside of the EU?
Friday 13 October 2017
university; business-law
Dr Jonathan Owens, an expert in operations management from the University of Salford Business School, comments on job losses at BAE Systems.
Dr Owens said: “The recent announcement by BAE Systems, the UK’s largest defence supplier, to reduce its operational workforce by approximately 2000 personnel is significantly damaging to both UK’s manufacturing sector and the government’s industrial and STEM strategies. The actual figure of lost employment will probably be closer to 6000 when taking into consideration the supply and distribution chains closely aligned with the BAE systems sites.
“This decision is interesting when according to the Office for national Statistics (ONS) UK productivity; particularly manufacturing; has been in steady decline during 2017. Therefore, if we are to agree with the ONS figures and correlate these findings to the recent announcement by BAE systems, has the company been slowing down anyway due to potential inefficiencies with their current productivity? Because if this were not the case, then Dr Charles Woodburn; who became BAE’s Chief Executive on 1st July this year very probably would have inherited this decision, rather than it being his first move at a cost cutting programme due the lack of Typhoon Jet orders.
“So BAE’s reasoning to operationally streamline the business with these job losses taking place over the next two year is somewhat of a surprise. It takes considerable time, money and effort to build, maintain and sustain a highly skilled workforce to run an operation such as this, in order to have both the internal and external capability and capacity to meet market demand. Unite; the UK’s largest union called has called it a “devastatingly short-sighted” decision. Subsequently, it is difficult to comprehend why BAE systems would take this course of action purely based on short term demands. Particularly as there is a letter of intent from Qatar for 24 Typhoons and 6 Hawk aircraft, and there is a possibility of another substantial order from Saudi Arabia. The stock market reacted positively to this news last month, with shares in this FTSE 100 listed company rising 3.1 percent; or 18.5p; to a two month high of 614.5p.
“A serious question we must ask ourselves, is this operational streamlining simply an outcome of internal restructuring and normal business practice, or, is it evidence of a major UK company taking the necessary long term precautions on what they think could be a tough Brexit? After all, the multi-purpose Eurofighter Typhoon jet came about from a joint European collaborative partnership in order to both reduce the overall development costs and positively impact sales of the collaborating European nations, namely the UK, Germany, Italy and Spain. As such, the Typhoon became the main flag waver for what was seen at the time successful European defence collaboration.
“However, in recent years there have been numerous disagreements, in particular within the supply chain and equal work share between the collaborating nations. This was a key driver with France going it alone on the aerospace defence route, by involving most of France’s major defence contractors with the development of the Rafale. Subsequently, the France’s new jet has become the Typhoon’s main competitor, at least from European market. The Royal Malaysian Air Force (RMAF) have also strongly hinted at this European competitiveness, when they are looking to replace its ageing fleet of Russian built MiG 29’s. Their defence minister has gone on record that the RMAF will choose either the BAE Systems Typhoon or France’s Rafale by 2020. They have stated that the prime decision being on affordability, however, perhaps the real reason is behind the scenes to wait and see what the deal is for the UK post Brexit in 2019.
“Therefore, we should not lose sight of these two key points, in that the Typhoon is a result of a European collaborative defence project and no-one really knows what the UK will look like post Brexit. Collaboration between the key players was fraught when the all members were part of the EU, it will be very interesting to see how these collaborative relationships fare come April 2019 when the UK will be firmly outside of the EU.”
