GE jet division to shed 5,000 staff

THE JET engine division of the US General Electric Company plans to cut production yet again next month in the face of slumping demand for aircraft, sacking as many as 5,000 more employees.

With the redundancies, employment at the division has fallen by a quarter from the high of 34,000 set during the boom in commercial aircraft sales two years ago. While Boeing and McDonnell Douglas, GE's two most important customers, are cautiously optimistic about a recovery in aircraft demand, GE believes the contraction in their order books - their backlogs have fallen 50 per cent - has not ended.

GE's aircraft engine division, based in Cincinnati, Ohio, remains profitable, but officials say no turnaround is in sight. A spokeswoman, Paula Colestead, said that, from market intelligence, 'we know that employment will continue to decrease'.

The division's sales, dollars 7.4bn last year, are likely to decline to dollars 5bn by next year. Its strong 1992 profit, dollars 1.3bn, may well disappear if the gloom in the industry persists into the new year, Wall Street analysts say.

While competition remains fierce, with rivals like Pratt & Whitney and Rolls-Royce, all manufacturers have suffered. Pratt & Whitney has cut its engine-building workforce by one-third. By the end of next year, it will employ about 30,000 people.

This week, Northwest and Continental became the latest big airlines to announce they were abandoning routes and cancelling orders for new aircraft.

But analysts say the industry can expect new demand from the Middle East and Asia. Boeing and McDonnell Douglas are reportedly on the verge of winning an order from Saudi Arabia that may be worth up to dollars 7bn.