THE £2bn buyout of a US defence company could provide a jobs boost for the North-East.

BAE Systems has announced the purchase of United Defense Industries (UDI) for £2.01bn. It gives a UK company a foothold in the lucrative US armoured car market for the first time.

But it also paves the way for US vehicles to be produced at BAE's tank factory in the region - the former Alvis Vickers plant, in Newcastle, which employs about 550 workers.

David Bowles, chief executive of Northern Defence Industries (NDI), an organisation that represents companies in the supply chain, said: "We would anticipate nothing but a positive outcome for the North-East and for members of NDI."

BAE bought Alvis Vickers last June for £355m and merged the company with its newly-formed Land Systems division.

The acquisition of UDI means the division could build armoured vehicles on a joint platform for the US and UK markets.

This would also be a boost for the region's smaller companies in the supply chain, upon which about 8,500 jobs rely.

An industry insider said: "This has got major implications for the North-East and is a really positive development for Alvis Vickers.

"There is a real likelihood of common platforms between the US and the UK. There are obviously business opportunities, although it is too early to say what these will be."

BAE Systems hinted that joint platform production was a strong possibility.

A spokesman said: "In the future, there could be some positive developments, given that the British Army and US Army fight side by side.

"However, that would be a long time ahead."

United Defense, which employs about 8,000 staff at 25 sites in the US and Sweden, generated sales of £1.19bn last year.

It designs and develops combat vehicles, artillery systems, naval guns, missile launchers and precision munitions.

In addition, the group repairs and converts ships for the US Navy.

BAE is the UK's largest defence and aerospace group. It owns a stake in Airbus and is involved in the Eurofighter Typhoon project.

It will finance the deal through existing resources, a new £1.56bn debt facility and by placing shares worth about £375m.

Published: 08/03/2005