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Tuesday, January 12, 1999 Published at 17:59 GMT

Business: The Company File

Defence groups fire up a deal

Vickers is in the midst of a restructuring

Vickers, the UK defence group, has signed a deal with Giat Industries of France to build armoured military vehicles.

The joint venture will form the first European-wide armoured vehicle business.

The tie-up comes amid moves towards the consolidate of Europe's defence industry which is trying to face up to intense US competition.

Both Vickers and Giat have been forced to cuts jobs in recent months following cuts in European defence budgets.

Step forward

Giat managing director Jacques Loppion said the agreement marked "a significant step forward in the consolidation of the European land defence industry."

However Vickers' Challenger tank and Giat's Leclerc tank, which have struggled to compete on international markets, are not included in the deal.

Vickers is in the process of a far-reaching restructuring, which has involved shutting a tank factory in Leeds with the loss of more than a thousand jobs, and selling off its luxury Rolls-Royce car business and Cosworth engine operation.

State owned Giat Industries is heavily in debt and has already announced plans to cut its workforce to 6,700 from the current 10,350.

Other major defence deals between the largely state-owned French defence industry and the UK have been rumoured for months, including a tie-up between defence electronics giants GEC and Thomson. Also on the table is the plan approved by European defence ministers last year to create a European aerospace company, combining BAe, Germany's DASA and France's Aerospatiale.

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