BAE Systems looks East for suppliers

BAE Systems is looking for new fastener suppliers as part of a move to cut costs which could result in a complete shake-up of small parts suppliers worldwide.

BAE, formed from last year’s merger between British Aerospace and Marconi Electronic Systems, is reviewing its list of suppliers for over $100m (£60m) of bolts, nuts, rivets and other fasteners. Companies in the Far East, Eastern Europe and India are being sought in particular.

Before the merger, British Aerospace’s policy was to cut the number of its suppliers and build partnerships rather than simply demanding ever lower bids. A spokesman denied the search for suppliers in lower-cost countries was a change in policy.

`Both the defence and commercial divisions have been exploring new sources of supply, which certainly include the Far East,’ he said.

Following the fastener review, BAE is expected to start looking at the rest of its list of small parts suppliers. It said more of the small components it produces in-house will be outsourced. This is likely to have a greater effect on the defence division than the Airbus business, which already outsources around 70% of the value of a typical A340 wing.

Tony Lancelot, engineering sector analyst at Albert E Sharp, said: `BAE already manages a whole stream of suppliers, for example as prime contractor on the Eurofighter and other projects. On fixed-price contracts such as this, any cost savings they can make they can keep.’

BAE’s move away from manufacturing may mirror what is happening in the motor industry, according to Lancelot.