Fife job fears as defence giant Babcock takes axes to 1,000 posts
Babcock International, the defence giant employing hundreds of workers at the Rosyth dockyard in Fife, is to slash around 1,000 jobs amid a sweeping restructuring of the business.
The plans to cut jobs came as the group revealed mammoth writedowns of £1.7 billion and outlined proposals to sell off a raft of its businesses.
The firm, which is the Ministry of Defence’s second largest contractor, said about 850 of the job cuts would be made across its UK operations, with the remainder overseas.
It came as Babcock said a turnaround plan would see it simplify the business and raise at least £400 million from the sale of assets over the next year.
In an update on the group-wide review launched in January, Babcock laid bare its balance sheet woes as it booked £1.7bn in impairments and charges. It added that group profits are also likely to be around £30m lower each year, though it said this is smaller than first feared.
Chief executive David Lockwood, who took the helm last year, said he hopes that for workers affected by the review, the group will be able to find a “place where people can flourish” through the sale of assets to new owners.
Globally, Babcock employs about 30,000 staff. Details of where the cuts are likely to fall and which parts of the group might be divested have still to be laid out.
Lockwood told investors: “We announced a series of reviews in January and promised to report back on our strategic direction, a new operating model and a new financial baseline at our full-year results.
“The early results from our reviews show significant write offs and a smaller ongoing reduction in the profitability of the group.
“Through self-help actions, we aim to return Babcock to strength without the need for an equity issue. We are creating a more effective and efficient company through our new operating model and, in line with our new strategic direction, will rationalise the group’s portfolio to help strengthen our balance sheet.
“Through our new operating model, the future Babcock will be a better place to work, a better partner to our customers and will be well placed to capture the many opportunities ahead of us.”
Industry expert and commentator Howard Wheeldon, of Wheeldon Strategic Advisory, said: “This is a very different Babcock International to the one that we have seen in the past, one that is determined to deliver and that accepts change is the order of the day.
“While it would be wrong to ignore the many successes achieved by the company over the past two years let no one be in any doubt that CEO David Lockwood and his senior management teams is determined not only to strengthen the company and position it well within a clearly defined strategy but also to create much needed transparency.
“From a balance sheet perspective, the company has made a clear statement that it intends to return the business to strength without the need for equity issue.”