BAE Systems sounds alarm on Scottish independence

THE chief executive of Britain’s largest defence contractor, BAE Systems, said yesterday that continued union between Scotland and the rest of the UK offers “greater certainty and stability” for its business.

BAE Systems chief Ian King said the UK offered  greater stability. Picture: Getty

Writing in the defence firm’s annual report, Ian King said that independence was “a matter for the people of Scotland”, but added that in the event of a Yes vote on 18 September, BAE Systems would embark on talks with the Ministry of Defence (MoD) in London about how to “deliver the best solution in those circumstances”.

But his comments were dismissed by a trade union leader who told The Scotsman that they did “not go far enough” in addressing the concerns of the 12,500 people working in the defence industry in Scotland.

In a letter to The Scotsman, eight trades union conveners have demanded greater clarity from five of the biggest defence companies – including BAE – in response to warnings from Westminster that the MoD may not place contracts in an independent Scotland.

BAE employs around 3,000 workers on the Clyde and is helping to construct two new Royal Navy aircraft carriers. It joins a list of firms including Standard Life, Royal Bank of Scotland, Shell, Lloyds and Barclays in highlighting the risks associated with the referendum.

Mr King said: “BAE Systems has significant interests and employees in Scotland, and it is clear that continued union offers greater certainty and stability for our business.

“In the event that Scotland voted to become independent, we would need to discuss the way forward with the Ministry of Defence and UK government, and work with them to deliver the best solution in those circumstances.”

The company recently agreed to begin advance work on three new Royal Navy offshore patrol vessels (OPVs) after the MoD signed a £20 million parts contract. They will be built at BAE Systems’ two Glasgow shipyards at Govan and Scotstoun.

Union officials are concerned that defence companies are failing to come clean on their views on the independence referendum, despite the industry being a core issue of the campaign.

Scotland is home to a £1.8 billion defence industry involved in activities ranging from warship building and radar to night vision equipment and engines. The wider industry, including aerospace and maritime industries includes 800 companies employing 40,000 workers.

The letter to The Scotsman is signed by conveners from the GMB, Prospect, UCATT and Unite who form the Confederation of Shipbuilding and Engineering Unions (CSEU).

They are worried by warnings about contracts and jobs from Prime Minister David Cameron and Defence Secretary Philip Hammond.

The letter is addressed to Peter Rogers at Babcock; Jean-Bernard Levy at Thales; John Rishton at Rolls-Royce and Fabrizio Giulianini, Selex, as well as Mr King at BAE. It states: “We are concerned that defence industrial sites in Scotland are in a vulnerable position based on the statements that have come from the UK government in relation to Ministry of Defence contracts.”

Eight conveners at the above mentioned plants demanded urgent clarification from their chief executives on what independence means for present and future order books, investment policy in infrastructure, capital projects, technology development, pension schemes, as well as apprenticeships and training.

The conveners add: “It’s imperative that the men and women we represent go to the ballot box with their eyes wide open. It is high time for the senior figures of Scotland’s defence industry to show some leadership and guidance and assist their employees in making an informed choice based on fact rather than speculation.”

Responding to BAE’s intervention, a Better Together spokesman: “This underlines the huge risks involved with leaving the UK. The defence industry employs thousands of people in Scotland because we are part of the UK. If we walk away from the UK then we walk away from the UK investment that sustains the jobs of so many communities throughout Scotland.”

A spokesman for Deputy First Minister, Nicola Sturgeon, said: “The simple fact is that the Clyde, with its hi-tech yards and world-class workforce, is the only credible place in these islands with the capacity to build these ships. Scottish companies will also be able to bid for any MoD contracts that are put out to competitive tender. The MoD places contracts with companies in Korea – so there is no reason that it could not do so with companies in Scotland.”