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Ex-CEO says BAE's British future 'in doubt'

Also: Eurofighter development far from complete

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The just-retired chief executive of BAE Systems plc has once again suggested that the company will move to America if it doesn't get what it wants from the British Ministry of Defence. Mike Turner also admitted that the controversial Eurofighter superjet is far from fully developed, calling on the MoD to "finish the job" and sink extra billions into completing it.

At an evidence session held yesterday morning by Parliament's defence committee, Turner made several blunt remarks. Much of the discussion hinged on the Defence Industrial Strategy (DIS) laid out by the former military procurement minister, Lord Drayson, in 2005.

Almost since the DIS policy document was published, there has been a lot of doubt as to whether the government would or could stand by it. These doubts have been strengthened by Drayson's subsequent angry resignation from the MoD, and the lengthy delays in production of a promised DIS update - the so-called DIS 2.

James Arbuthnot MP, chairman of the committee, seeking to sum up Turner's - and his industry colleagues' - views, said: "The DIS is not funded?"

"Correct," replied Turner.

"The DIS is dead?" asked Arbuthnot later.

"On hold," said Turner. "I remember when it came out, we said [at a BAE board meeting] 'At last we have a future in the UK' ... now that is in doubt".

Turner is no longer CEO of BAE Systems, of course, having been replaced by Ian King this September. Nonetheless his remarks have significance.

In theory, BAE is not free to move its headquarters to America or place itself under a non-British CEO unless HM government approves. However, the so-called "golden share" held by the government might well turn out to be worthless in the event. A similar arrangement in the case of the airports firm, BAA, was overturned by the European courts - though in that case the national-security case was not so strong as it would be with BAE.

In general, though, the prevailing view is that if BAE wants to move to America it probably can. Indeed, it more or less already has. During Mr Turner's tenure as CEO the company let go thousands of UK employees, sold off its share of Airbus and bought its way into the US, to the point where it has substantially more American employees than it does Brits.

During the evidence session, Turner also lamented that Europe had failed to come together on armoured vehicles the way it did with the Eurofighter, so weakening the British armour industry. Current low-intensity wars have seen heavy purchasing of armoured and protected vehicles intended to safeguard Western troops from ambushes and mines, but little of that business has come to Britain.

"That would have been a great opportunity, but we didn't achieve it" said Turner.

Arbuthnot suggested that perhaps only Turner could have achieved it - alluding to the fact that BAE might have chosen to buy up European armoured-vehicle firms rather than ones in America as it actually did. BAE's US acquisitions have made a lot of money selling armour to the Pentagon, but the British tank industry is effectively moribund and that of Europe fragmented.

"We looked at buying in the EU," said Turner. "In the end, it wasn't in our economic interest to do so".

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