Leonardo Warns of Factory Closure Amid UK Defence Contract Delays

The chief executive of defence group Leonardo has issued a stark warning regarding the future of its Somerset helicopter facility, citing the ongoing delay over the Ministry of Defence’s New Medium Helicopter contract. Roberto Cingolani communicated to Defence Secretary John Healey that absence of a timely decision on the £1 billion project could prompt a full review of Leonardo’s UK investment, including potential closure of the Yeovil factory and a reassessment of the company’s broader British operations.

The Yeovil plant is currently the United Kingdom’s last facility with the expertise to design and manufacture helicopters from start to finish. It employs around 3,000 people directly, with an additional 9,000 jobs supported indirectly through the supply chain. Despite its significance, the site has not secured a government contract for new aircraft in nearly two decades. Mr Cingolani’s correspondence describes the New Medium Helicopter contract as pivotal to Leonardo’s future strategy in the UK, indicating that further delays or cancellation would place both helicopter production and the development of drones at risk.

This warning arrives amid frustration in the defence sector at the lack of substantial contracts awarded to British industry. Leonardo has been the sole bidder for the contract since mid 2024, following the withdrawal of its competitors, yet a final government decision has not been forthcoming. Defence ministers have previously pledged to increase military spending in response to heightened security concerns, but industry leaders argue this rhetoric has not translated into concrete action.

Industry association Make UK has urged ministers not to repeat what it calls a historic mistake, noting the urgency to renew the army’s ageing helicopter fleet and emphasising the necessity of domestic production. The association’s chief executive, Stephen Phipson, criticised the protracted discussions, warning of significant economic consequences should the contract be awarded overseas or delayed further.

Current contract indecision is reportedly linked to deadlock between the Treasury and the Ministry of Defence, compounded by wider budgetary pressures. Simultaneously, the government has postponed release of its much-anticipated defence investment plan, heightening concern within the defence industry over long-term strategic commitments.

The government maintains that the New Medium Helicopter programme is ongoing and states that a final procurement decision will be published in due course. However, industry insiders attest that despite international deals with British manufacturers, including Type 26 frigates for Norway and Typhoon jets for Turkey, the lack of new domestic orders is a pressing issue undermining confidence and future planning in the sector. Leonardo has stated that, if successful, it will centre AW101 and AW149 helicopter production at Yeovil, bringing benefit from both domestic and international orders. Foreign stakeholders, including Norway, are monitoring developments closely as they consider options for their own military procurement.