If India misses deal deadline then 200 BAE staff will lose their jobs
200 BAE staff to lose jobs if India misses deal deadline
£434m order for field guns must be completed today or workers will be laid off at UK plant
Dean Nelson By Dean Nelson, in New Delhi9:30PM BST 14 Oct 2013Follow CommentsComments
BAE Systems will lay off around 200 staff at its Barrow-in-Furness plant later this week if the Indian government fails to meet a deadline today to complete a £434m deal to buy its M777 Howitzer field guns.
Sources close to the defence manufacturer told the Telegraph it would begin the redundancy process on Thursday and close its M777 production line at the Cumbria plant to halt growing losses on the project. It has spent an estimated £31m to continue producing the titanium guns in the hope that India would conclude the deal but there is no immediate prospect of agreement.
The job losses would be a major blow to the town where BAE Systems and its forerunners have built artillery guns, ships and submarines since the late 19th century. The company employs several thousand workers at its shipyard and more than 400 at its artillery plant.
The factory is controlled by BAE Systems’ American subsidiary, which is one of the US Defence Department’s top six suppliers, and its staff had been hoping a US government deal to supply 155mm Howitzers to the Indian Army would keep the Barrow factory in work for several years. The guns are assembled at a BAE plant in the United States but designed, engineered and built at Barrow by titanium specialists.
The company has become increasingly frustrated at the Indian government’s delays, despite confirming the agreement in principle earlier this year. Defence deals in India have been tarnished in recent years by a series of corruption scandals which have made officials reluctant to make decisions.
The Indian Army has not replaced its 155mm Howitzers since allegations of corruption in a deal to buy Bofors artillery guns led to the defeat of the Congress government in 1989.
“No one will make a decision,” said a source close to the discussions.
Under the deal, which was first proposed four years ago, the United States government agreed to sell 145 BAE Systems M777 light artillery guns, which would be mainly produced in Barrow. The guns are known as the world’s “largest sniper rifles” for their range and accuracy – they are said to be able to hit a window from 25 miles away.
India’s armed forces want the guns to replace their ageing artillery on its mountainous borders with Pakistan and China but procurement officials have delayed concluding the deal in the hope of better terms.
Sources close to the company said the Barrow plant has been without M777 orders for some months and cannot keep the production line and supply chain running without new income.
In August, the United States’ Defence Security Co-operation Agency set a deadline of October 15 for the deal to be completed at the agreed price, after which India would have to pay up to £553m.
Jobs at the plant had been secured by an earlier deal to supply M777s to Australia but that order was fulfilled earlier this year and no new orders have been confirmed since.
A BAE Systems spokesman said it continued to “support the discussions between the governments of India and the United States” and remained “committed to supply and sustain the next-generation lightweight artillery system the Indian Army requires”.