GKN job cuts worse than expected
Engineering group GKN, which is closing factories in Aldridge and Great Barr, said today it will axe 3,600 jobs this year – far more than had been expected.
Engineering group GKN, which is closing factories in Aldridge and Great Barr, said today it will axe 3,600 jobs this year – far more than had been expected.
The company, which also announced smaller than expected losses of £8 million in the first half of this year, has already cut 2,500 jobs but said it would be cutting its global workforce by 3,600 this year and next – 1,200 more than previously planned.
GKN, which supplies big names in the motor industry including Jaguar Land Rover, revealed in February it intends to close its Aldridge Driveline factory in the middle next year along with the GKN foundry at Great Barr at the end of this year.
It leaves the 272 workers at Aldridge and the 102 at Hamstead all hoping to be selected for new jobs being created at GKN's remaining factory in Erdington, Birmingham. Jobs are also being axed at GKN's Telford factory.
The moves follow major losses at GKN's car parts business in the wake of the collapse in car and van sales last year.
Today the company also axed its half-year dividend payout to shareholders as it predicted the outlook for its markets was mixed, with some improvement expected in its automotive business in the second half of the year but weaker demand for parts for off-highway vehicles and business jets.
GKN chief executive Sir Kevin Smith said: "The first half trading environment has been very challenging for GKN as the global recession impacted our businesses, initially automotive and powder metallurgy and more recently in off-highway.
"In response, we have aggressively cut costs, with a further 2,500 people leaving the group in the first half of 2009, and conserved cash, by reducing capital expenditure and working capital.
"We continue to pursue opportunities to develop our strong market positions and, with continuing benefits from restructuring, we are well positioned to take full advantage as markets recover."
The £8 million pre-tax loss was barely a third of what analysts had been expecting, but still a dramatic slump from the £132 million profit recorded at the same time last year. Overall sales at GKN were down nine per cent in the first six months of the year, to £2.17 billion. While sales from its automotive arm were down 41 per cent, GKN said the business had returned to profit in June thanks to extensive cost-cutting.
Overall its aerospace business had continued to put in a good performance, with underlying sales up five per cent and a trading profit – including the Airbus wing factory at Filton – of £79 million.
GKN had won more work on the Airbus A350 programme and on the new F-35 Joint Strike Fighter project. But the off-highway arm had seen underlying sales down 34 per cent and reported a £2 million trading loss.
GKN said it had raised £403 million with its share issue in July, which had significantly strengthened its capital structure.
