THE proposed merger of BAE Systems with EADS is fundamentally anti- competitive and would be bad for the British taxpayer and bad for British jobs – a recipe for the winding down and export of what's left of Britain's defence manufacturing capability ("BAE in talks over merger", The Herald, September 13).

The tie-up won't work because the stagnation at BAE Systems is neither down to lack of critical mass nor falling defence spending but due to a woeful failure in corporate strategy at BAE Systems. Comparison of BAE's performance against that of Rolls-Royce is ample demonstration of this.

Since its formation 12 years ago from the mega-merger of British Aerospace and Marconi Electronic Systems, BAE Systems has thrived on a culture of procrastination, non-delivery, under-performance and cost overruns on pretty much all its UK defence projects. It has repeatedly held the UK Government to ransom on ordinary workers' jobs, while executing an unimaginative and unrelenting stream of job losses, closures and meaningless reorganisations. It failed to diversify into non-military markets and divested itself of its few commercial operations (such as its share in Airbus), so that it is now boxed-in on all sides by reduced defence spending on both sides of the Atlantic. All at the expense of the UK taxpayer who has had to shovel endless sums at failing defence projects managed by BAE.

The functional synergies promised at the time of its formation have long since been realised, and BAE Systems' UK and US operations essentially comprise a series of disparate and comparatively lean business units, cemented together by a bloated and costly tier of middle managers.

The European political meddling and interference that would arise from a merger with EADS will place such heavy constraints on the company that turning it into a lean, adaptive and innovative business be will be nigh on impossible.

The solution for BAE Systems lies not in yet another mega-merger but in a de-merger, to transform it from an under-performing behemoth into four separate, lean, pan-Atlantic companies (electronics and weapons systems, military aircraft, surface ships, and submarines/armaments /land systems). The result would be four strong Anglo-American companies, stripped of the stifling burden of bureaucratic and excessive middle management, that could compete as world leaders in their own right and which, if individually snapped up by overseas defence giants, would not harm competition in UK defence procurement.

This approach would finally bring reward for long-suffering BAE Systems shareholders, who have endured a 10-year stagnation in the value of their shares in the face of uninspired management.

Mark Campbell-Roddis,

1 Pont Crescent, Dunblane.

Your report of the proposed merger between BAE Systems and EADS lends another dimension of doubt to the already worrying situation of shipbuilding on the Clyde but might also offer an opportunity.

It is generally agreed that the level of orders placed in the latter stages of the late Labour Government was unsustainable. It follows that, at best, there would be substantial reductions in activity as these contracts neared their end.

We are not at best. The UK defence budget is under great pressure, which can only get worse. The present orders were supposed to be followed by the Type 26/27 frigates, but no start date for that work is possible, since it can only be squeezed in if another country can be found to split the order, and hence share the costs. All the previous customers have refused to order. As a result it is not possible to complete the design. We face the prospect of a gap of some years with no significant Royal Navy orders on the Clyde.

BAE Systems has no involvement in civil work, but EADS is largely and successfully involved in this field, though not in shipbuilding. Unlike the warship market, the market for civil shipbuilding is busy. Ships and other structures for offshore oil and gas, and for renewables, are in great demand.

Is it possible that the proposed merger could enable the Clyde yards to diversify to competing sucessfully in the civil market, thus having a much-enlarged and more varied customer base?

John Smart,

38A Kinneddar Street, Lossiemouth.