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BAE Systems, suppliers warn of fallout from Bradley shutdown

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(Globalpost/GlobalPost)

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Executives from Britain's BAE Systems <BAES.L> and dozens of companies that build parts for BAE's Bradley Fighting Vehicle rallied in Washington this week to lobby for U.S. Army orders they say are needed to keep the Bradley production line open.

The companies argue that the Army's plan to temporarily shut down the production line in York, Pennsylvania could cost nearly as much -- or more -- than maintaining the line by upgrading older Bradley vehicles to a newer configuration.

Pressure on the Army has mounted after across-the-board cuts known as sequestration took effect in March that will force the Pentagon to cut its proposed fiscal 2013 spending by another $42 billion.

"We're not advocating to build equipment or vehicles that are not needed," said Alice Conner, director of manufacturing integration and deployment for BAE Systems.

"But there are critical skills that are very unique to the defence industry. Once they go away, it will not be easy to reconstitute. There is a price to pay."

BAE and other large weapons makers have argued for maintaining the capacity to build large combat vehicles, noting that the industrial base is fragile. Shuttering the Bradley line could drive many suppliers out of business or into other sectors, they say.

Conner said the Bradley line, which accounts for 60 percent to 80 percent of the work done at the York facility, would begin to shut down in mid-2014 unless the Army accelerated its plans to convert some older Bradleys to newer configurations.

Congress has added $140 million to the Army's fiscal 2013 budget to pay for the work, but the Army -- which faces a big shortfall in operating expenses -- does not plan to begin work on those Bradley upgrades until fiscal 2015 and 2016.

BAE estimates that restarting the plant could cost up to $750 million.

In the meantime, BAE has consolidated facilities and laid off workers, while scrambling to secure foreign orders and other work for the plant. Conner said "a little bit of latitude" in the Army's plans would help secure 1,200 jobs at the plant, where BAE is already building next-generation prototypes.

Will Donnellan, vice president of a family-owned business in Massachusetts that builds cables for the Bradley vehicles, said his firm had already laid off 30 people, cutting its staff to 80, but further job losses were likely unless the Army acted.

(Editing by Edwina Gibbs)

http://www.globalpost.com/dispatch/news/thomson-reuters/130423/bae-systems-suppliers-warn-fallout-bradley-shutdown