GKN owner Melrose in job cuts warning

The turnaround specialist said revenue fell 27 per cent after a “steep decline” in the second quarter as lockdowns shuttered its factories.

However, there was a rebound in June as measures were eased and adjusted operating profits were break-even, and Melrose said it expected to post a small first-half operating profit.

GKN, which was taken over by Melrose in 2018, has a wheels and structures plant at the Hadley Castle Works in Telford as well as other factories dotted around the Midlands, with about 1,000 workers.

Melrose said: "It is also necessary to adapt the businesses for the new economic environment, which means that there has to be an even stronger focus on cost reduction throughout the group with some inevitable impact on employee numbers."

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The company expects cost savings of about £100 million in 2021 after assuming the scheduled withdrawal of worldwide government support schemes and furlough.

Operating in the pandemic-battered aerospace, automotive and industrial sectors, Melrose said it could reduce inventories by another £150 million as most of its markets have been hit by lockdowns and a fall in demand.

Aerospace sales in the six months to June 30 fell 18 per cent and were unlikely to recover in the second half, and were expected to fall by around 25 to 30 per cent for the full year, it said.

Trading in China in automotive and powder metallurgy was ahead of last year, trading in the US was forecast over the summer to be within 10 per cent of last year and there were some signs of improving European demand.

Melrose's takeover of GKN in 2018 drew intense union and political anger.

Its victory brought to a close a bitter battle that had raged for months, with unions and MPs warning over job cuts, asset-stripping and national security concerns throughout the takeover saga.