BAE cuts 1,000 ahead of carrier contract

BAE Systems raised the stakes in its battle to win a £10bn aircraft carrier order yesterday by axing more than 1,000 shipyard jobs because of a shortage of work.

Defence sources and trade unions said the clear implication of the cutbacks in Barrow and on Clydeside was that BAE would shed a lot more jobs if the rival French bidder, Thales, was awarded the carrier contract instead.

However, BAE insisted that the job loss announcement had nothing to do with either the carrier bid or its dispute with the Ministry of Defence about cost overruns on the Nimrod surveillance aircraft and nuclear-powered Astute attack submarine.

"If the MoD awarded us the carrier contract today it would not change things one jot," a spokesman said. He added that production work on the carriers was several years away and would not bridge the gap in its shipyard order book.

The Cabinet is expected to discuss the carrier contract at its weekly meeting tomorrow although an announcement on the winning bidder is not due until next week. Bill Morris, the general secretary of the Transport and General Workers Union, said it was the "moment of truth" for the Government. "They must demonstrate their committed support to UK manufacturing and their inherent bias for skilled UK workers," he added.

Yesterday's cutbacks will fall mainly on BAE's Barrow-in-Furness yard in Cumbria, where there will be 700 job losses. BAE is cutting a further 265 jobs at its shipyards on the Clyde, 50 at its underwater systems division at Waterlooville, Hampshire and 30 at the company's Farnborough headquarters.

BAE also said that it had decided to concentrate production of Type 45 destroyers on Clydeside while Cumbria would specialise in submarine programmes. The original plan had been to build at least one of the six Type 45s at Barrow.

Meanwhile as the carrier battle continued to build to a climax there were fresh suggestions of a "dirty tricks" campaign after it emerged that Thales is being sued in Paris over claims that it stole its name off a South African company.

The South African firm, Thales Advanced Engineering, claims it suffered considerable damage after the French defence contractor subsequently become embroiled in bribery allegations relating to £3bn worth of military contracts awarded by South African government officials. The South African company has hired a UK law firm and a UK public relations company to publicise its case.

Thales categorically denied the allegations of bribery. A spokesman added that it had been aware that a company with the same name operated in South Africa when it changed its own name from Thomson CSF. But he argued that the engineering company had only patented the name in South Africa, a country where Thales operates under the name ADS.