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Finmeccanica Pulls Trigger On 2,500 Selex ES Cuts

Apr. 14, 2013 - 03:39PM   |  
By TOM KINGTON   |   Comments
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ROME — After streamlining operations at its Alenia Aeronautica unit, Italy’s Finmeccanica is continuing its restructuring mission by preparing to cut more than 2,500 jobs at its Selex ES electronics unit, which employs 17,000.

The streamlining, details of which were given April 7, has been in the works for months and is a sign of continuity between the management of former chairman and CEO Giuseppe Orsi, who was arrested in February as part of a probe into alleged corruption in an Indian helicopter deal in 2010, and new CEO Alessandro Pansa. Orsi has denied wrongdoing.

Pansa, Finmeccanica’s former chief financial officer, has put off announcing the company’s 2012 results from March 15 to April 23 as he assesses the fallout from the probe, while the Italian government, which holds a controlling share in the firm, may yet appoint a new chairman to work alongside him.

But that decision will likely be delayed until Rome has a new government. Elections in February produced a stalemate and talks are still underway to thrash out a coalition, leaving the Cabinet of outgoing Prime Minister Mario Monti still in charge.

Meanwhile, Finmeccanica managers will meet union officials this month to discuss the planned cuts at Selex, which follow 650 cuts made last year. Selex ES is a new grouping of the units Selex Sistemi Integrati, Selex Galileo and Selex Communications, which itself recently merged with fellow unit Datamat.

Company sources said 810 Italian staff members had already agreed to take furloughs, while 120 Italian managers have agreed to leave the company. In the U.K., where Selex units were acquired from BAE Systems, a maximum of around 500 staff members — 10 percent of the U.K. workforce — will be cut.

The firm aims to cut a total of 2,529 jobs, so it still has another 1,000 cuts to achieve,and staff in Genoa went on a one-hour protest strike April 8. But Mario Ghini, the national secretary of union UILM, said a deal could be struck.

“We hope the numbers will drop, but we understand the restructuring is linked to the downturn and the need to merge units,” he said.

Details also have emerged about Selex’s plan to cut sites. Six of 10 will be closed in the U.K., mainly where other sites exist. Basildon, Southampton and Portsmouth will each lose one of their two sites, while the Bristol area will lose two of its four sites. Christchurch also is due to close.

In Italy, the number of Selex sites will drop from 48 to 26.

“These plans are still being discussed, so things could change,” a company source said.

Selex has also said it will cut its product portfolio from 550 to 350 as it focuses on money-making lines.

CEO Fabrizio Giulianini declined to give details on products being dropped, but pointed to a new focus on the civil and security market, which he hopes will balance out downturns in defense spending.

“We are aiming to bring nondefense work up to 50 percent from 30 within five years to resist market cycles,” he said.

Giulianini said an exception to the defense slump was the Middle East, adding that he saw Saudi Arabia becoming a new “home market” for Selex. The firm is working on Tornado and Eurofighter Typhoon aircraft in the kingdom and wants to ramp up communications, electronic warfare, space and intelligence work. Saudi Arabia is partnering on active electronically scanned array (AESA) radar technology and is interested in investing in a radar for the Typhoon, he said.

The country has signed two fly-by-the-hour contracts for Saudi Arabia to use Selex’s Falco UAV, which has already been sold to Pakistan and two other Middle East customers who do not buy U.S. or Israeli products.

Falcos have been sold with Selex’s Picosar AESA radar, which also has been sold to mount on two other UAV types. Selex’s mechanically scanned Gabbiano has been sold for mounting on two other UAV types, including a sale in South America.

Giulianini said he expected sales of UAV systems to grow by 50 percent in five years, and is banking on the firm’s new SkyIstar mission system for UAVs, which has been tested on a Predator alongside Selex’s AESA Seaspray radar.

The system is also being tested on the P.1HH Hammerhead, a UAV based on Piaggio’s manned P180 Avanti, which is due to fly this year.

Giulianini was less hopeful for the prospects of a European medium-altitude, long-endurance UAV, which has been the subject of stop-start talks among Germany, the U.K., France and Italy.

“The idea is fading since nations now have assets, and attention is turning to [combat UAV] programs,” he said.

That means the Neuron combat UAV program, in which France, Italy and Sweden are partnered, “could become the center of attention,” he added.

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