BUSINESS ANALYSIS: Defence Industry Jobs at Risk after Equipment Overhaul ; Reid Warns of 'Pain' as New Strategy Spells End to UK Production of Manned Fighter Planes

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Thousands of jobs in traditional defence industries are under long-term threat after yesterday's announcement by the Government of the biggest shake-up in UK military procurement in the past 50 years.

The overhaul envisages an end to the building of manned fighter aircraft in Britain, a reduction in the number of surface warship yards, big cuts in missile capacity and the rationalisation of BAE Systems' Royal Ordnance division, the main munitions supplier to the armed forces.

In addition, Britain could end up buying more helicopters abroad and rely on overseas companies to help meet part of its requirement for armoured fighting vehicles.

On the plus side, a big expansion of the UK's capability to develop and build unmanned aerial combat vehicles is planned and increased prominence will be given to being self-sufficient in chemical, biological, radiological and nuclear protection and counter-terrorist technology.

The blueprint for the next 15 to 30 years is set out in the Government's long-awaited Defence Industrial Strategy, presented yesterday to the Commons by John Reid, the Secretary of State for Defence. Mr Reid conceded it would involve 'pain' for certain parts of the defence industry and regions of the UK dependent on traditional military hardware such as fighter jets. 'Change is painful but survival also requires change,' he told a briefing.

The biggest change will be an end to the design and production of manned fighter aircraft for the Royal Air Force once the Eurofighter Typhoon and the Joint Combat Aircraft reach the end of their lives in 30 years. 'This threatens the continued viability of existing UK design, development and manufacturing capability to support MoD's needs,' is the review's stark conclusion. The effects will be felt hardest in the North-west where BAE Systems employs about 9,500 staff at Warton, Samlesbury and Woodford " the main production sites for the Eurofighter Typhoon, Nimrod, Hawk and Joint Combat Aircraft.

Lord Drayson, the Defence Procurement minister, insisted, however, that the review was not about cutting back Britain's 40,000- strong defence industry workforce and claimed it would result in 'zero job losses' as production switched to new equipment such as unmanned or 'uninhabited' combat aircraft. Mike Turner, the chief executive of BAE Systems, which has a UK defence workforce of 35,000 also played down the prospect of big job cuts in the near term.

Mr Reid announced that 'tens of millions' of pounds were being pumped into a technology demonstrator programme to develop UAVs (unmanned aerial vehicles). BAE, which will be the main beneficiary of the new funding, has been conducting secret trials with UAVs for some time and this year flew its HERTI-1A unmanned aircraft on a test flight from Campbeltown airfield in Scotland.

Mr Turner said BAE could now look to the future with 'considerable confidence' as a result of the review and the Ministry of Defence's agreement to end fixed-price equipment contracts, which had pushed its UK programmes division into heavy losses. 'Without those two things, it is very difficult to see how BAE Systems could have stayed in this country,' he said. …