Select Committee on Trade and Industry Minutes of Evidence

Supplementary memorandum submitted by BAE SYSTEMS following questions raised during the oral evidence session on Tuesday 23 January 2001

1.  The figures for the proportion of the Company's total aerostructures manufacturing represented by offset and offload work.

  This question, asked by the Hon Lindsay Hoyle MP, was specifically related to the Samlesbury and Warton sites. In a recent briefing to the national trade union officers, they were told that some 900 manufacturing jobs had been put out to sub-contract from the Warton unit, of which 60 had been placed overseas.

2.  The Company's approach on managing the environmental impact of the industry and its view on the Climate Change Levy.

  BAE SYSTEMS recognises that protection of the environment requires industrial activity to be conducted in a sustainable manner. With increasing environmental legislation and a growing culture of environmental care, we recognise that having sound environmental management systems is a priority.

  BAE SYSTEMS has chosen the international environmental standard ISO 14001 as its benchmark for environmental practice throughout the organisation. The Company is currently three years into a programme which aims to see all of the Company's UK sites achieve this management standard. The programme is currently on target with some 10 sites achieving certification in 2000.

  The Company has also developed a "Cleaner Performance" strategy aimed at achieving financial and environmental savings by reducing energy consumption, minimising waste and encouraging more efficient use of materials and resources.

  The Company's environmental initiatives are well supported by its employees and it is recognised that without their participation many of the improvements could not be made. Through this employee involvement there has been an eagerness by many members of staff to support local environmental projects. A Company focus has now been achieved by engaging the Community Service Volunteers (CSV) to help identify and co-ordinate local projects for our employees to tackle.

  In terms of product environmental policy, a corporate policy has been argued which states "The environmental impact of BAE SYSTEMS products shall be as low as reasonably practicable throughout their life-cycle".

  A framework document has been agreed and is now being rolled out into the businesses. Its purpose is to ensure that appropriate reviews are conducted at each stage of the product life-cycle to assess the environmental impacts, and to ensure that appropriate controls are implemented.

3.  Climate Change Levy

  Although the theory is that the Climate Change Levy process will be revenue neutral, the impact on competitiveness, growth and jobs has not, in the Company's view, been adequately addressed nor have the cost benefits of the programme yet been adequately identified.

    —  The Company has doubts as to whether fiscal measures are likely to have an overall effect on energy consumption.

    —  There is probably a need to develop a longer-term policy framework beyond 2010, linked to a coherent plan based upon a hierarchy of least cost options, thus allowing industry to make the long term planning and achieve investment in value adding schemes.

    —  There is a need for Government to establish a long-term Sustainable Energy Policy. Combined Heat and Power (CHP) schemes may offer a long-term potential, but at the moment in the main, for the aerospace industry, these are not viable. Further incentives may be needed in order to enhance these alternative technologies.

    —  There will also be a need for more attention to be paid to the promotion of renewable energy sources therefore making them more widely available to industry as an alternative to fossil fuels.

  Overall, the Company believes that a climate change agreement should be opened up to as many industries as possible including the aerospace industry. The restriction of needing to be included in the IPPC (Integrated Pollution Prevention Control) framework is, it is believed, restrictive.

4.  The Hon Lindsay Hoyle MP said that apprentice turn out, presumably in the Preston area, had fallen over the last few years and that in the toolroom at BAE SYSTEMS Samlesbury, toolmakers had reduced from 140 to 65.

  The total number of young people recruited into the Warton unit, which includes the Warton and Samlesbury sites, over the past 10 years is 1,571 plus the graduates in 1990-95. The total number of technicians, craft and business apprentices and graduates recruited in the Warton unit, which includes Samlesbury, for the years 1990-2000 are as follows:

199093 These figures exclude Graduate recruitment (1990 to 1995)
199150These figures exclude Graduate recruitment (1990 to 1995)
199249These figures exclude Graduate recruitment (1990 to 1995)
199350These figures exclude Graduate recruitment (1990 to 1995)
199461These figures exclude Graduate recruitment (1990 to 1995)

  In the year 2000 we recruited more craft apprentices than in any other year since 1990.

  Over the period 1998 to 2000, the Company has recruited nearly 3,000 young people into the business. It intends to continue to invest heavily in bringing new blood into the Company with a planned intake of over 1,000 young people for 2001 across the whole of the UK BAE SYSTEMS activity.

  The Company's Technician and Craft Apprentice schemes continue to play a major part in the recruitment figures with over 300 per year across the business, confirming our commitment to Manufacturing and the development of Manufacturing Skills. It is also worth pointing out that the young people on our sites have access to Open Learning Centres, allowing them to enhance their skills on an on-going basis.

5.  Toolmakers at Salmesbury

  The Hon Lindsay Hoyle MP stated that the number of toolmakers at Salmesbury had been reduced from 140-65. The actual figures are as follows:

  In early 1998, the number of toolmakers was 75. This had grown to 111 by June 2000 through apprentice completions and external and internal recruitment in response to increases in the Eurofighter workload. Planned reduction (detailed below), coupled with the further intake of apprentices, means that the year 2001 planned and actual headcount is 69. The numbers were reduced due to the following reasons.

    1.  There was a shortfall in strategic work for the toolmakers.

    2.  The customer demanded cost reductions in tool manufacture.

    3.  There was a shortage of skilled workers for Eurofighter Assembly.

    4.  There was a severe shortage of engineers, a traditional route for toolmakers' progression.

  All the toolmakers have been redeployed within the Warton Unit or, in a small number of cases, have left on voluntary redundancy terms.

  Mr Hoyle also asked about the Company's business in Poland and Romania in the context of offset work.

  As far as Poland is concerned, the Company is marketing the Gripen and Hawk aircraft, as well as upgrade work on current Polish equipment. In Romania, the Company has sold military equipment with other contracts in prospect. In his evidence, Mr Weston explained the rationale for this offset work.

9 February 2001

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