MoD deal boost for North East BAE site

Aug 21 2008 by Graeme King, The Journal

THE historic BAE Systems munitions factory at Birtley is to be demolished and replaced with a new facility as part of a deal with the Ministry of Defence which could be worth up to £3bn.

The 15-year partnership deal between BAE and the MoD will see massive investment in the company’s three main sites around the UK.

The Birtley site, with 325 staff, will get £28m ploughed into it, while the BAE facility in Glascoed in Wales will get £34m investment and Radway Green in Staffordshire gets £40m.

BAE says the deal with the MoD is vital in securing the future of its munitions business which has been starved of long-term investment as the company has not previously enjoyed such a long term order book.

Now the Birtley factory, which dates from the days of the First World War and has seen relatively little updating in the intervening decades, is set for demolition once BAE has its replacement up and running – currently scheduled for 2011.

The new building will house a new forge, a machining centre, and heat and surface treatment plants for 155 and 105mm artillery ammunition.

A spokesman for BAE said: “This brings an end to rationalisation and consolidation. It allows us to invest and provide for growth in the future – the first time we’ve been able to make major, long-term investments.”

The MoD has chosen to sign up with BAE after a procurement exercise found there was not a viable alternative supplier.

To try to ensure the company performs as required, the 15-year deal with BAE contains numerous performance criteria and incentives to invest and deliver on time. Under the arrangement, the firm will supply around 80% of the ammunition used by the military for operations and training, from 5.56mm bullets for the SA80 rifle to mortar rounds and artillery shells.

Bob Ainsworth, Minister for the Armed Forces, said: “This partnering agreement secures the long-term supply of ammunitions to our Armed Forces.

“The 15-year programme will ensure that the UK has a modernised, sustainable munitions industry which will support British jobs and protect our capacity to produce ammunition.

“It is absolutely essential to the conduct of operations and training that we have a guaranteed UK-based high quality source of ammunition. This contract provides precisely that.”

Charlie Blakemore, managing director of BAE Systems Land Systems Munitions, said some of the machinery at the factories dated from the Second World War. He said: “You can imagine that the rate of production that we are now at, it’s been some achievement to keep that going in that period to make sure that we deliver on time.”

BAE hopes the modernisation programme will give the UK a “world-class” production capability, which could lead to export opportunities.

As part of the new contract, the company has an arrangement with the MoD to share the proceeds of export contracts.

This partnering agreement secures the long-term supply of ammunitions to our Forces