LONDON - BAE Systems is dismantling one of its major United Kingdom-based businesses by moving the bulk of the activities to other parts of its Programmes & Support group and selling off the remainder.
Europe's biggest defense contractor told employees at its Integrated System Technologies (Insyte) division on May 7 that the main parts of the business were being divided between its maritime and air sectors.
An air traffic control and electronic warfare training center at Cwmbran in Wales and a printed circuit board and module assembly production operation at Hillend, Scotland, will be sold off, a company spokeswoman confirmed.
At the same time, as part of an internal restructuring, the company is reorganizing its naval activities, bringing the surface warships, nuclear submarine and the naval elements of Insyte into a single U.K. maritime business as part of the wider Programmes & Support operation here.
The individual operations like BAE Surface Ships and Submarine Solutions remain in place. The maritime reorganization follows BAE's purchase last year of VT Group's share of the BVT Surface Ships joint venture.
Together, the Maritime group operations will have an order book in excess of 8 billion pounds ($11.8 billion) with annual revenues of 2.2 billion pounds.
Insyte's break-up follows a months-long strategic review of the division, which last year recorded a turnover of 582 million pounds and an order book of 1.8 billion pounds. Insyte cut 642 jobs in November, citing a weakening workload, leaving more than 3,500 employees.
No further job losses have so far been announced as a result of the reshuffle of business at the Frimley, England-based Insyte operation.
Under the new plan, the naval elements of Insyte become part of the new maritime grouping, with BAE's Military Air Solutions business taking on the air and land intelligence surveillance, target acquisition and reconnaissance (ISTAR) activities.
The naval business of Insyte covers radars, torpedoes, command-and-control gear and other products. A production and systems integration site at Broad Oak, Portsmouth, will also move into the new maritime operation.
The realigned ISTAR business now coming under the wing of Military Air Solutions is currently part of Insyte's joint command and information systems activities.
A small simulation and training engineering activity at the Hillend site will remain part of BAE when the manufacturing operations are sold off.
The changes are expected to be complete by the end of the year.
Insyte was formed in 2005 following the break-up of the BAE/Finmeccanica joint venture AMS.
Meanwhile, just down the road from BAE's Broad Oak operations, defense industry rival Lockheed Martin UK is also experiencing problems as a result of workload. Lockheed has laid off more than 10 percent of its workers at the headquarters of its integrated systems operation based in Havant. Lockheed officials cut 34 of 300 jobs after losing a bid to provide the British government with a search-and-rescue helicopter service; they also cited competitiveness issues.
The Havant operation also laid off 15 people in the second half of last year.
"An extensive review of the workload for Lockheed Martin UK Integrated Systems has necessitated a reduction to its workforce. Following the recent SAR-H announcement and other business drivers, we determined that a reduction of 34 positions was required. This reduction is necessary at this time to balance the needs of the business with our competitiveness in the marketplace," a company spokesman said.
The job cuts are a reminder that business conditions are tightening here ahead of expected defense budget cuts. Starting in 2011, the 300,000-strong defense industry workforce could begin a steady decline over the next few years.