There are hopes that Plymouth’s Devonport Dockyard will avoid large scale redundancies after operator Babcock International Group announced 1,000 redundancies.
The defence and aerospace giant said it is restructuring the company as its wrestles with a £30million annual dip in profits and will make 850 job losses in the UK and 150 internationally.
Babcock, which has had to write-off £1.7billion on its balance sheet in impairments and charges, will be slimming down its management structure - but union chiefs are hopeful Plymouth can avoid many of the planned job losses.
Babcock’s oil and gas, aviation and emergency rescue divisions have been hit badly by the Covid pandemic and its consequent effect on aerospace. So unions expect that is where the job losses will be heaviest, not in the Devonport-based marine division.
The company has yet to give details of where the axe may fall but in an update to investors said that although the £1.7billion loss is a one-off, it is expected to result in an ongoing reduction in group underlying operating profit of about £30million each year.
The company therefore must change its operating model to simplify the business, with a one-off cost of about £40 million expected to deliver annual savings of about £40million.
However, this move to an operating model which is “more efficient and effective” will mean reducing layers of management which will “unfortunately result in headcount reductions”. The statement said that about 1,000 employees will be leaving the group within the next 12 months.
Matt Roberts, from the GMB Union in Plymouth, said: "Unions are currently in discussions with Babcock regarding the announcement both at a local and national level.
“We understand this will mainly impact on the oil and gas, aviation, and aerial emergency parts of the business, which do not have any real presence in Plymouth.
“The wider restructuring is likely to be mainly management and support function roles. At this stage, we are hopeful that the effect on Devonport and the craft and industrial workforce will be very limited."
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Unite the Union said its members at Devonport Dockyard were not affected. The white-collar union Prospect is checking to see how its member may be affected.
Mike Clancy, Prospect general secretary, said: “Prospect is engaged with Babcock at both local and Group level to ensure the best outcome for our members.
“The scope and level of the impact on members at Devonport is still being determined but we will do everything we can to avoid any compulsory redundancies.”
Aside from the redundancies Babcock also plans to rationalise the group's portfolio by selling certain businesses, generating at least £400million over the next 12 months
Draft unaudited results show full-year 2021 underlying revenue of £4.69billion, down from 2020’s £4.872billion, with underlying operating profit of £307million, down from 2020’s £524million.
David Lockwood, Babcock chief executive, said: "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".
