Government Announcement

BAE SYSTEMS PLC
10 July 2001


   BAE SYSTEMS welcomes Government announcement on UK Shipbuilding Strategy


                                 10 July 2001


BAE SYSTEMS welcomes today's announcement by the UK Secretary of State for
Defence accelerating the orders for the Royal Navy's latest class of
destroyers. Three more D class Type 45 destroyers are to be ordered by the UK
Ministry of Defence this year, in addition to the three ships contracted for
in December 2000.

BAE SYSTEMS Marine will assemble and launch the whole class of up to 12 ships,
with a commitment now for the first six ships.

This order will bring significant work to the shipyards at Barrow and at
Scotstoun and Govan on the Clyde. The first of class- H.M.S. Daring - will be
assembled and launched at Scotstoun, with the focus of design support
remaining there for the whole programme. The remaining ships will be assembled
and launched at Barrow. All three BAE SYSTEMS Marine shipyards will make and
outfit substantial sections of each ship and all steelwork for the BAE SYSTEMS
Marine elements will be produced at Govan.

Over recent months, BAE SYSTEMS Marine has been reviewing its current and
potential order book to accurately determine future levels of sustainable
employment. The order for Type 45 will have no significant impact on short
term workload and BAE SYSTEMS is today announcing 1000 redundancies on the
Clyde and 150 redundancies in Barrow, taking effect progressively over the
next six months.

ends