Shorts did business with Dutch firm over 30 years

THINGS could not have been better nine months ago for the Short Brothers marriage to Fokker. In June, the company announced an increase in the Fokker order from 26 wing sets a year to 42.

The increased order contributed to a healthy order book worth £720 million. The Fokker element should have accounted for between £100 million and £140 million of that.

Less than three months after the announcement of the increased order, the first tremors from Amsterdam indicated that Fokker was in trouble. The company recorded massive first half losses (651 million guilders), and by September a request for funds from its major shareholders had been turned down. In October, Fokker shares crashed after rumours that it was seeking creditor protection.

The strong links between the Dutch company and Shorts date back to the mid 1960s, when Shorts was still a state owned company. The risk sharing partnership with Fokker survived the privatisation of Shorts after more than 40 years in state hands.

In 1989, the Belfast aerospace company was bought by the Canadian Bombardier company. The transition involved some job losses, but the majority of Shorts' business remained intact.

Last year Shorts pre tax profits were a healthy £29.2 million, on a turnover of £353 million, up from losses of £47.5 million less than seven years previously. The Fokker business accounted for 20 per cent of that, according to the company's spokesman, Mr Alec McRitchie, although some reports say it is closer to 30 per cent.

Last year Bombardier Aerospace had a turnover of 5.9 billion Canadian dollars and employed 37,000 people worldwide. Shorts hoped that its deep pocketed parent would bail out Fokker, but last month Bombardier said it had no such intention. According to Joe Bowers, president of the Federation of Shipbuilding and Engineering Unions, the company did not have a reputation for risk taking in its investments.

Since privatisation Bombardier has put £200 million into upgrading the Belfast factory, with the result that much of the low grade machining has been contracted out. Last year the company estimated that £39 million worth of machining work and other services had been contracted to local suppliers over the previous two years. These suppliers employ 2,000 people.

The company makes wings for the Fokker 70 and Fokker 100 jets. The 70 jet made its maiden flight in July 1994 and, according to Mr McRitchie, the Fokker order book is healthy. The Fokker 100 made its maiden flight less than 10 years ago.

The global recession in the aerospace industry has lasted since the mid 1980s and has affected manufacturers and servicers of larger aircraft. Recession in many markets hit the profits of its airline clients and aircraft oversupply depressed prices and hit margins. Last October Fokker's majority shareholder, Deutsche Aerospace, announced plans to shed 9,000 jobs by the end of next year.

Both TEAM Aer Lingus and Shannon Aerospace have had to rely on state injections to survive the downturn. However, the market for regional aircraft is more buoyant.

Fokker, a byword for Dutch industrial expertise, folded because of intolerable debts accumulated by making its planes in an area where its costs are incurred in strong Dutch guilders and then sold for dollars. High labour costs and turbulent markets eventually proved too much for one of the great pioneers of aviation.

Fokker's collapse is expected to spark the biggest mass redundancy in Dutch corporate history, with close to 5,000 workers, many of them very highly skilled, losing their jobs.

In Belfast the implications may also be severe. Since the first indications of a financial crisis at Fokker the Belfast wing sets have been sent to Amsterdam on a cash on delivery basis. Less than two weeks ago the production line was still working, in reduced numbers, and a finished wing set awaited delivery. Yesterday that production line ground to a final halt.