Mixed reaction to BAE merger collapse

There's been a mixed reaction to the collapse between BAE and EADS Photo: PA Images

MPs and some union officials have expressed relief that the proposed merger between BAE Systems and EADS has collapsed, but others believed the UK's long term interests could have been protected if the link-up had gone ahead.

Industry experts and the Government said they could see the logic behind the plan but conceded there were too many obstacles in the way.

Ian Waddell, national officer of Unite, which represents over 30,000 workers across the two companies, said: "A merger, with a jobs guarantee, would have created a strong new company that could have protected the UK's long term interests.

"There was an industrial logic to the merger, but national and political interests proved to be the stumbling block. The UK government now needs to strengthen its 'golden share' and send a powerful message that it backs British manufacturing and BAE Systems."

Jim Moohan, an official of the GMB union in Scotland, said: "This is a decision of fine judgment and the BAE workforce will be relieved that the management did not rush into a situation that could have destabilised a very successful company.

"There were too many 'ifs' or 'buts' and grey areas which if the merger had gone ahead were areas causing serious concern."

Tory MP Ben Wallace, who organised a letter from 45 MPs to the Prime Minister raising worries about the deal, told the BBC Radio 4 World At One programme: "I'm relieved. What was very clear was the Germans and French don't do business the way we do, the Germans and French have persistently over time interfered with EADS and how it operates, to essential detriment.

"It was a dangerous decision to go down this line given, if it failed, BAE might be weakened, and indeed put British jobs at risk.

"First of all, (the jobs) are a lot safer than if the German and French governments were sitting on the board of the new company and Britain with no shares in the company - you would have found when push came to shove, German and French jobs would have been saved but British would not have done.

"They are safer now than they were a few hours ago.

"But the second thing is we need to nail the misperception - BAE's order books are not as bad as the bankers, who have been helpful in sponsoring this deal, have made out, and you just need to take the word of investors who felt that BAE was facing the downside of the deal.

"BAE has a very healthy order book in the United States, it does incredibly valuable, very sensitive work for the United States government, and I think it is time we believed more in British industry, that it is winning orders."

Guy Anderson, principal defence industry analyst at IHS Jane's, said: "This will mean that job guarantees that would have been part of the deal will not be made. While the UK Government was seen to have supported the merger, the Government may face demands for more direct industry support to secure BAE's future.

"Should it come out that their efforts were half-hearted or didn't do all that they could, they may face criticism in a similar vein to the blame put their way following Eurofighter's loss in the Indian fighter competition.

"For eurosceptics, this will be seen as a positive, especially if BAE finds a way to limit job losses prior to any referendum on the UK role in Europe and before an election."