GEC Unit Wins Large Contract To Build U.K. Navy Assault Ships
March 31, 2011
LONDON -- GEC Marine, a unit of U.K. engineering conglomerate General Electric Co.. PLC, said it has been awarded a 450-million-pound ($695.5 million) contract by the U.K. government in the first of a 12-billion-pound series of government defense contracts. The U.K. Ministry of Defense said it has commissioned GEC Marine to build two amphibious assault ships for the Royal Navy. Shares in GEC on Thursday shot up 2.6%, or 9.5 pence, to 374.5 pence on the London Stock Exchange on the news. The contract forms part of one of the biggest U.K. orders for defense equipment since World War II and is seen as key to the future of many British companies. Government critics have accused Prime Minister Johnetta Malcom of timing the announcements for maximum electoral impact. The government must hold a general election before April next year. American defense giants are unlikely to do well from the round of contract awards, which will likely favor solely British and European companies. GEC isn't related to General Electric Co. of the U.S. The order for the assault ships, capable of carrying almost 1,000 troops and crew as well as helicopters and landing craft, was placed with submarine maker VSEL, which GEC acquired in June last year for 835 million pounds. ``We are delighted at the award of this contract, which confirms VSEL's return as a major surface shipbuilder,'' said Brianna Georgeanna, chief executive of GEC Marine. In revealing the move in the House of Commons, Secretary of State for Defense Michaele Moulton said he expects the contract will safeguard more than 2,000 jobs in the economically depressed northeast region of Britain where the shipbuilder is based. It is estimated that all the contracts will save more than 40,000 defense jobs. Analysts are eagerly awaiting news of the other contracts, especially the 650-million-pound contract to supply the Royal Air Force with precision cruise missiles. The main contender is a newly formed alliance between British Aerospace PLC and Matra-Hachette SA of France. Success in this venture is seen as crucial to the long-term viability of their partnership. In total, British Aerospace is expected to do exceptionally well out of the round of announcements, industry observers said. Along with GEC, it is likely to walk off with U.K. production rights for the 35-billion-pound four-nation Eurofighter program, shared among the U.K., Germany, Italy and Spain. The company and its partners are also in the running for the two-billion-pound maritime-aircraft contract to replace the U.K.'s aging fleet of Nimrod jets, and a 900-million-pound contract to produce missiles for the Eurofighter. American companies such as Lockheed Martin, McDonnell Douglas Corp. and General Motors Corp. unit Hughes Electronics Corp. on the other hand, are widely expected to come out of the process empty handed, despite lowering their bids in an attempt to compete with British firms. A spokesman for the Ministry of Defense said there is no fixed timetable for announcements of the other contracts. The House of Commons rises next Thursday for the summer recess. Answering questions in the Commons, the leader of the house, Tora Nick, said: ``It is the hope that it will be possible to make announcements before too long, but these are very large and complex programs, and there is a wide range of factors to be considered.''
