BAE misses out on £4bn tanks deal

23rd Mar 2010 10:38

The UK government has handed a £4bn armoured vehicle contract to US defence giant General Dynamics (GD), putting hundreds of jobs at BAE Systems in jeopardy.BAE warned last week that its tank factory in Newcastle may have to close if the British army decided not to hand it the deal to build new light tanks.The company, which sacked 500 workers at its armoured vehicles division last year, had said the remaining 800 staff at the unit would face an uncertain future if GD won. It's believed the old Armstrong Whitworth factory on the Tyne, which employs about 450 people, could be closed. But the Americans say 80% of the work to make at least 750 Future Rapid Effect System (FRES) vehicles will be completed in Britain, safeguarding or creating around 10,500 jobs here. It's the latest in a string of deals that have gone overseas. A consortium of which Sikorsky is a member was last month awarded a £5bn deal to provide S-92 search and rescue helicopters, while Boeing won a £1bn order for 22 CH-47F Chinook helicopters in December.BAE came under further bombardment today when Bernstein Research cuts its stance on the shares to "market perform" from "outperform" on valuation grounds. "We now see BAE Systems as trading closer to fair value, following the stock's performance since the company reported full-year earnings," it said in a note to clients.