2,500 jobs at risk in BAe plant closure

BRITISH AEROSPACE is today expected to announce the closure of its regional aircraft plant at Hatfield, Hertfordshire, with the loss of about 2,500 jobs.

The news will be accompanied by details of a huge restructuring of BAe's regional aircraft division, likely to cost up to pounds 750m, and the group's half-year results.

Last night, in advance of the results, BAe announced that it had scrapped plans to sell its corporate jet business - a move which had been expected to raise at least pounds 200m for the ailing defence, aircraft and Rover cars group.

The shake-up in BAe's lossmaking regional aircraft business is also expected to involve a tie-up with the Taiwanese to develop a successor to the BAe146 'whispering jet', which is manufactured at Hatfield and Woodford, Manchester.

The Taiwan Aerospace Corporation could invest up to dollars 250m in the joint venture with BAe injecting a similar amount.

The closure of the Hatfield site, which has been manufacturing aircraft for nearly 50 years, would come as a severe blow to the area.

BAe employs nearly a sixth of the workforce in the Welwyn and Hatfield district. Unemployment in the area is at present running at 8.1 per cent but in some pockets of Hatfield it is as high as 17.5 per cent.

Other factories in the regional aircraft division at Chadderton, also near Manchester and Brough, Humberside, could also be affected by the restructuring.

City analysts fear that if BAe is forced to make provisions of pounds 750m against redundancies and restructuring it will further undermine the finances of the group.

BAe shares ended yesterday 1p higher at 199p, having been 5p up, as the market absorbed the company's decision to abandon the corporate jet business sale and awaited today's interims.

Last night the credit rating agency IBCA indicated that it would downgrade BAe's senior debt from A to BBB.

It cited worries that its distributable reserves, which stood at pounds 553m at the end of last year, might not be sufficient to cover the rationalisation costs and pay even a reduced dividend.

The redundancies to be announced today form part of a strategy by BAe to reduce its workforce by 40,000 at a total cost of more than pounds 1bn.

When the group announced an pounds 81m loss for 1991 earlier this year it warned that it was planning a further 10,000 job losses.

Hatfield, which employed more than 7,500 at its peak, has built 20 different aircraft including the Comet, the Trident and the second world war Mosquito fighter.

But the workforce has been steadily cut back over the past three-and-a-half years to just under 3,000.

In February 1989, 2,000 jobs went from the site with the transfer of its missile work to Stevenage, also in Hertfordshire.

Two years later BAe moved final production of the 146 from Hatfield to Woodford, with the loss of a further 1,470 jobs and in February this year another 830 redundancies were announced.

BAe has now received outline planning permission to develop parts of the Hatfield site for mixed business development and a hotel.

Workers at the site are expected to be told of BAe's plans early today and senior management at Hatfield are due to meet the chief executive of Welwyn and Hatfield District Council, David Riddle, later in the morning.

If a joint venture with Taiwan can be cemented, it would preserve some jobs. BAe wants to develop a twin-engined 125-seater successor to the 146 with a range of more than 2,500 miles.

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