More than 500 jobs will be created in the defence vehicles market after the Government formally signed the development agreement for the pan-European multi-role armoured vehicle (MRAV).
The so-called `battlefield taxi’ will be produced by Artel, a joint-venture be-tween Alvis and two German manufacturers, Krauss-Maffei, owned by telecoms group Mannesmann, and MaK System, a subsidiary of industrial group Rheinmetall.
The development contract is worth about £70m and contains a production option for an initial purchase of 600 vehicles.
If production goes ahead, deliveries will begin in 2006. The vehicle has a projected service life of 30 years.
Britain, which has signed an option for an initial order of 300 MRAVs, is expected to be one of the largest customers and could order more than 1,000, at a cost of over £1bn.
Alvis, which could eventually reap as much as £2bn from the production programme, said the agreement safeguarded the jobs of 500 people employed at its main plant and would lead to another 200 new positions at the factory.
There would also be an estimated 300 new jobs at component suppliers in and around Telford.
Nick Prest, Alvis chairman and chief executive, said the MRAV project will be the largest European armoured vehicle programme in the next 10 years.
The venture with Krauss-Maffei and MaK will provide an axis for further business development in Europe, he added.
The City reacted cautiously to the news. Shares in Alvis edged up 3.5p to close at 144.5p on Friday.
The shares have yet to recover from the half-year results in September, when Prest warned that there was little prospect of large Middle East export orders for Piranha and Tactica armoured vehicles contributing to profits next year.