Jobs at AgustaWestland and its supply chain in the West could be at risk following the Indian government's desire to terminate a scandal-hit deal for VIP helicopters.
The Indian Ministry of Defence has given notice of termination of the £450 million 12-aircraft deal following months of speculation. The contract was suspended in February after the then-chief executive of Finmeccanica, the parent company of AgustaWestland, was arrested for allegedly paying bribes to secure the deal.
Yeovil-based AgustaWestland denies the allegations and still hopes to retrieve the contract through arbitration. Three helicopters have already been delivered and are being operated by the Indian Air Force. The other nine were due to be dispatched by the middle of this year. In a statement immediately after the termination of the contract was announced Finmeccanica said its post-termination mitigation plan includes a reduction to the workforce.
Yesterday the firm stressed: "AgustaWestland is taking all actions required to mitigate the effects of the Indian AW101 contract termination and will make all efforts to reallocate employees at its facilities located in the UK, Italy and Poland, however, this uncertainty cannot exclude consequences on employment or for the supply chain."
AgustaWestland employs 12,000 across all three sites, of whom, 3,200 are employed at Yeovil. Earlier this month Business Secretary Vince Cable visited the plant to celebrate the announcement of a £1billion order for 16 all-weather search and rescue AW101s for Norway.
Unite union national officer for aerospace Ian Waddell said yesterday: "We want to hold talks with the management to seek clarification on the implications of this cancellation for employees. This is a dedicated and skilled workforce, and we need to get assurances about job security going into 2014."
The termination and its impacts will now go to arbitration, but the company says it remains committed to working with the Indian government.
Yeovil MP David Laws said: "In my view it would have been preferable to give time to establish the veracity of the allegations which have been made before taking any action.
"AgustaWestland has over many years demonstrated its resilience, based on the outstanding quality of the helicopters which it makes.
"I expect the company to go on selling its products all over the world and to show that this setback can be overcome."
Former Finmeccanica chief executive, Giuseppe Orsi, is one of the defendants in a corruption trial ongoing in Italy.