Melrose set to make sweeping job cuts at GKN’s aerospace business by Christmas after losses spiralled in first six months of the year due to Covid-19
Melrose Industries is set to make sweeping job cuts at GKN’s aerospace business by Christmas after losses spiralled in the first six months of the year due to Covid-19.
The company is already in talks with unions and staff to make a ‘significant reduction’ to the division’s 18,550-strong worldwide workforce.
The business has not specified how many jobs will go, but said it would provide an update later in the year.
Cutting back: The company is already in talks with unions and staff to make a ‘significant reduction’ to the division’s 18,550-strong worldwide workforce
The warning came as the FTSE 100-listed acquisitions company revealed it sank deeper into the red between January and June, as the Covid crisis also hammered business at its car parts unit.
Losses ballooned to £685m, up from £109m in the first half of 2019, as turnover fell by a quarter to £4.1billion.
The company scrapped its dividend, with bosses saying it is ‘not appropriate’ to hand cash to investors at the moment.
But shares in the group rallied by 12.6 per cent yesterday, as its bosses said trading was picking up in all other parts of the business, including its automotive arm, which makes car parts such as driveshafts. The company’s Nortek division, which makes cooling systems for data centres and ventilation that could help beat the virus, was robust.
In addition to the job cuts, which come two years after it bought GKN in a hostile £8billion takeover, Melrose is cutting costs elsewhere and aims to make savings of around £100m in total.
The aerospace arm at Redditch near Birmingham makes parts for planes and has 4,000 staff. It has struggled as the pandemic has slashed the number of flights worldwide.
Justin Dowley, the chairman, said: ‘These are extraordinary times which we have addressed with rigorous cash management and decisive restructuring actions; recently, and encouragingly, we have started to see trading improving in some key markets.