Unions call for £1bn aid package

Engineers and union leaders have called on the government to provide aid to the crisis-hit aerospace industry following the announcement of heavy job losses at Rolls-Royce.

The aero-engine giant announced last week it was cutting 5,000 jobs by March 2002 – 3,800 of them in the UK – after reviewing the effects of September 11 on its business.The company expects deliveries of civil engines to drop by 30% in 2002, as struggling airlines delay orders for new aircraft and ground planes, reducing demand for spare parts and servicing. Sales at its main civil aerospace unit could fall by as much as £1bn, it predicted.

Unions have called for a £1bn aid package for the aviation industry. Danny Carrigan, Scottish regional secretary of the AEEU says the government must now realise the pivotal position manufacturing has within the UK economy, and offer its support to industry during a crisis that is not of its own making.

Tidal wave

‘These are not poorly-run companies being hit by the inevitable effects of their own mismanagement, but solid firms hit by a tidal wave of short-term demand collapse after 11 September,’ he said. ‘We all need to pull together and look to the longer term, and the Department of Trade and Industry and Regional Development Agencies need to be actively involved.’

While manufacturing contributes around 20% to the UK’s GDP, it has had little support from the government during very difficult times, said Carrigan. In contrast, farming contributes only 1% to the UK’s GDP, but has received £30bn in subsidies during the past four years alone. ‘That is an average of £7.3bn a year, the equivalent of £15,000 of taxpayers’ money per agricultural employee,’ he said. ‘There needs to be a more sensible approach in the relative support the government gives to manufacturing and farming.’

Just under half of the 3,800 job losses at Rolls-Royce are likely to be at the company’s Derby base, while its sites at Bristol, East Kilbride and Glasgow may also be affected. On top of the 5,000 permanent staff to lose their jobs, short-term contracts for a further 1,000 employees will not be renewed. The redundancies will replace a three-year cost-reduction programme announced earlier in the year, in which 2,000 jobs are to be cut.

Mark Tittley, stress engineer and union representative at Rolls-Royce’s Derby base, said engineers at the plant are continuing to work in a professional manner, but with ‘a heavy heart’. ‘Engineers will not be able to walk into other work unless something is done to support the industry. There are not the jobs out there – people will probably have to move away to find employment. But we want to retain the high-tech skills base in the area.’

Strong future

Rolls-Royce has been working with unions to reduce the impact of the job losses, said Tittley, but the company is in a tough trading position. ‘We are not looking for handouts, but for government support in a very difficult time. We are not talking about a lame-duck industry – this is a high-tech industry with a strong future.’Aircraft manufacturer Airbus has reduced its delivery forecasts for 2002 from 413 to 315 aircraft, and said the shock of the current crisis is worse than during the Gulf War.

The MSF has called for the creation of an aerospace taskforce, including representatives from the government, employers and unions, to examine the damage caused by the terrorist attacks, and to prepare any aid needed to secure the industry’s leading position within UK manufacturing.

But companies will not rush to seek financial aid, said Tony Lancelot, aerospace analyst at Old Mutual. ‘Any industry player will be reluctant to take handouts from the government, because that would start to rock the boat. It would just become a fight over who is the best politician, and that is not what Rolls-Royce is about.’

A spokesman for Rolls-Royce reported that it would be weeks before there are full details of which sites will be affected by the job losses, and the exact numbers involved. But he said the company would not be joining union calls for the government to offer subsidies to the crisis-hit industry.

‘We are responding to events as we did during the Gulf War, by taking business decisions and sorting this out for ourselves in the same way as GE and Pratt & Whitney have done. Our future is in our own hands.’