BAE Systems warns of US flood disruption

DEFENCE giant BAE Systems, which recently announced 3,000 job losses in the UK, has warned flood damage and defence budget cuts in the US could disrupt its business.

DEFENCE giant BAE Systems, which recently announced 3,000 job losses in the UK, has warned flood damage and defence budget cuts in the US could disrupt its business.

The British manufacturer said it was assessing the implications of serious flood damage at its Johnson City, New York, electronics base following severe weather along the US east coast.

Elsewhere, BAE warned there was “significant uncertainty“ over the level of future defence spending in the US as politicians mull over options for slashing the country’s huge budget deficit.

BAE, which saw overall trading in the three months to October 11 meet expectations, last month signalled the end of production at its factory in Brough, Yorkshire, which currently employs 1,300 workers, and announced further cutbacks at sites across Britain.

Its two Tyneside factories are not affected by the latest round of cuts, but it has said it was cutting 217 of the 650 jobs in Newcastle, and it added another 100 would be cut once it moves work from Tyneside to Telford, Shropshire.

The 200 staff in Birtley, Gateshead, will also be shifted early next year to Washington.

BAE said the flood damage in the US may see some sales deferred to 2012 but should not materially impact full year earnings.

Despite US budget cuts, BAE said it had won £286m contract to participate in a 24-month technology development phase of the US Army’s ground combat vehicle programme.

Shares were broadly flat at 280.9p after today’s update.

 
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