BAE Systems fell this morning after a late bid for the British army's next generation Scout armoured vehicle was launched.
The bid is seen as a last throw of the dice for BAE after the Ministry of defense chose General Dynamics to build an initial batch of vehicles worth £1bn whilst delaying plans to upgrade BAE's Warrior.
BAE have offered to cancel 400 redundancies, and create 400 additional jobs as part of the deal.
"We want the Army to have the best kit and we want to protect vital skills in the UK. To achieve this we are proposing to transfer work to Newcastle. This will create or sustain 800 skilled jobs." said BAE's business director.
A spokesman for BAE also commented:
"We thought we were sufficiently far ahead technically that the MoD could only accept our bid ... it seems we were wrong,"
"If we're not successful in this competition, we will have to make further redundancies and we will not have the skills to update our existing fleet," the spokesman said.
General Dynamics, the current leader in the bidding, is a US defence company that employs approximately 91,700 people worldwide.
It is the third largest supplier to the MoD employing 1,600 and spending roughly £200 million a year on British suppliers.