HUNDREDS of Lancashire Royal Ordnance workers have been warned that they could face pay cuts this year because of falling orders.

Company officials have told unions that the munitions manufacturer - which has already announced up to 160 job cuts at its Blackburn site - was suffering "huge losses".

Transport and General Workers Union national official Jack Dromey said owners British Aerospace warned that RO was facing the worst crisis in its history.

The firm has already announced heavy job cuts at its Blackburn site as part of a company wide cost-cutting move. Around 60 staff have so far volunteered for redundancy out of the original job-cut figure of up to 160 by this summer - almost half the 360-strong workforce. The firm also employs just over 300 at its Euxton site near Chorley.

"The company has threatened both a pay freeze for next year and the possibility of pay cuts this year," Mr Dromey said.

Mr Dromey said unions representing RO's 4,000 workers were now calling on BAe to back its loss-making subsidiary, and on the government to intervene.

"The main problem is that our defence ministers are not backing our ordnance factories in the same way as the defence ministers of our European competitors."

The Blackburn site's Amalgamated Engineering and Electrical Union convenor Pete Swindlehurst said workers were "punch drunk" by the events of the past year.

And he backed Mr Dromey's calls for the government to intervene and place orders with RO.

The pay issue this year is more significant than usual because a pensions contributions holidays and profit related pay scheme are soon expected to come to an end, both hitting workers in their pockets.

BAe has been discussing the possibility of setting up a joint venture to merge RO with German firm Rheinmetal, but nothing has been agreed despite several months of talks.

The main problem stems from the fact that the Ministry of Defence has slashed orders from £350 million a year to £150 million since BAe bought the business from the government 10 years ago.

Management at Royal Ordnance were today unavailable for comment. Talks are still going on about the long term future of the Blackburn factory.

The RO factory - owned by British Aerospace - has been one of the most important employers in East Lancashire for more than 50 years.

In 1992 the firm announced 350 redundancies - almost half the then workforce - blaming the cuts on the end of the Cold War.

A year later, former senior civil servant Gordon Foxley was accused of accepting bribes to place orders with rivals of RO across Europe. Foxley was later jailed on corruption charges.

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