Vickers closure `no political fix'

VICKERS FURIOUSLY denied claims of a "political fix" after announcing yesterday 1,100 job losses and the closure of its Challenger 2 tank factory in Leeds rather than a similar facility in Newcastle, close to Tony Blair's Sedgefield constituency.

The cutbacks were offset by two big job-creation announcements in service industries. Morrison's, the Bradford-based supermarket group, is creating 2,500 jobs at 100 new stores, while Bank One International of America is locating its European headquarters in Cardiff Bay, creating 1,000 jobs.

The Leeds closure will cost 450 jobs, but there will also be 200 redundancies at the Newcastle tank factory and 40 at the Vickers Bridging plant in Wolverhampton, which makes portable bridges and pontoons. A further 450 jobs will be shed from Vickers marine propulsion and turbine divisions.

Sir Colin Chandler, Vickers' chairman, said that he had spoken to Jonathan Powell, the Prime Minister's chief-of-staff, about the impending closure, but he denied any political pressure had been brought to bear.

Vickers said the Newcastle plant cost pounds 1m a year less to run and was more productive than the Leeds factory, which was bought from the government in the Eighties.

A senior Vickers executive added that the Leeds plant still had a "civil service mentality" and was staffed by "lots of Geoffrey Boycott-type sullen Yorkshiremen".

Although the Newcastle plant draws some of its workforce from Mr Blair's Sedgefield constituency, the Leeds closure will affect three ministerial constituencies - those of the Industry minister John Battle, the Foreign Office minister Derek Fatchett, and Nick Brown, the Minister.of Agriculture, Fisheries and Food.

The two factories were completing a pounds 1.5bn order for Challenger 2 tanks from the Army.

Leeds will close at the end of next year, while the long-term future of the Newcastle plant will depend on Vickers success in attracting some of the pounds 5bn in export orders.

The cutbacks follow Vickers' failure to win a pounds 3bn "battlefield taxi" order from the British, German and French governments. GKN, which won the order, is merging its armoured vehicles business with Alvis, which was a member of the Vickers consortium.

Union sources claimed that there had been pressure from Downing Street to limit the job losses in the North-east, where 24 hours earlier Mr Blair faced some of the 600 workers who are being made redundant in his own constituency by Fujitsu.

But Labour MPs in the Leeds area discounted the claims. George Mudie, a junior education minister, said: "The idea that Number 10 and the DTI intervened is an outrageous suggestion. It's the conspiracy theory gone mad."

John Redwood, Tory industry spokesman, blamed government policies and warned that there could be more job losses. "It is the Government's explosive mix of high sterling, high taxes and high interests rates that has driven so many factories to the wall," he said.