Norwegian missile manufacturer Kongsberg will cut the equivalent of 120 jobs by the end of June to offset the cost of delays in its Naval Strike Missile (NSM) programme, now a year behind schedule.

Chief executive Jan Erik Korssjøen says: "The missile has not been flying as intended, so we have had to perform more test flights. "A test in February was aborted when the launcher unexpectedly shut down during the launch sequence, he says. This and other setbacks mean that the test programme is now a year behind schedule.

Because the NSM programme is a fixed-price contract with the Norwegian defence ministry, there will be no extra funds to cover the expense of additional test flights, Korssjøen says, but there will be no more job losses in the defence division: "The manpower cuts we have made will be enough for the defence side."

Kongsberg's established Penguin anti-ship missile, used by the Norwegian navy and air force, the US Navy and others, has also been underperforming. Korrsjøen says that" owing to the lack of new orders for Penguins and NSMs...I am not satisfied with our financial result thus far". Existing customers have been failing to order more Penguins, and Kongsberg is looking "mainly to new customers" to repair its missile business.

In the longer term, Korssjøen says, Kongsberg will have to look outside the anti-ship market to keep its missile business going. "I still believe NSM will be a technical success. It has potential beyond being a naval missile, such as for land attack or air-launched versions, but there are no firm programmes in these areas yet...there has been concrete interest from other countries. You shouldn't see us only in terms of our present missiles," he says.

Kongsberg's defence revenues fell by 14% to NKr627 million ($91 million) in the three months to 31 March, with an operating profit of NKr3 million before interest, tax and amortisation. The company warned that "missiles will continue to represent a risk in 2004 due to the order situation for Penguins and the NSM programme".



Source: Flight International