A GOVERNMENT decision on a £400 million missile order is a blow for Bolton's MBDA factory at Lostock.

MBDA and Lockheed Martin in America are disappointed not to have been selected by the UK Ministry of Defence to supply Kestrel, their Next Generation Light Anti-Armour Weapon programme.

Kestrel, which is based on the Predator weapon now in service with the US Marine Corps, lost out to a rival system produced by Saab Bofors Dynamics of Sweden.

It will now be supplied to the British and Swedish armies.

Development work will be carried out mainly in Sweden and final assembly will take place at Thales Air Defence Ltd in Belfast, Northern Ireland.

MBDA says Kestrel would have provided an unrivalled opportunity for transatlantic co-operation at military, government and industrial levels and would have led to the first US procurement of production quantities of guided weapons from the UK in a joint production programme.

An MBDA spokeswoman said no-one at Lostock was going to lose their jobs as a result of the decision.

But she added: "Plans for expansion at the site will be put on hold for the time being. It is not the end of the world because we have a very strong order book still."

A company statement said: "MBDA and Lockheed Martin would like to thank the US Marine Corps and the US government and the extensive list of British suppliers for their support to the Kestrel programme.

"Both companies believe that Kestrel has helped to develop a better understanding at all levels of transatlantic programmes and intend to pursue the good relationships generated on this programme into other areas of co-operation." MBDA is waiting to see whether it will succeed with other bids.

The company is bidding with Boeing against another American company, Raytheon, to provide the RAF with a modified JDAM (joint direct attack munition) or "smart bomb". A decision is expected at the end of 2002 or early next year.

Also, MBDA is working with Israeli company Rafael on Gill Spike, a portable weapon system to be used by highly-mobile soldiers, including the SAS. The decision could be made in September.