Management wants a pay freeze. Workers say no. So where does that leave the North's biggest employer? Francess McDonnell reports.

Walter Wilson is between a rock and a hard place. On one side he has the management of Bombardier Aerospace in Belfast, Northern Ireland's largest manufacturing employer, and on the other, the vast majority of the 6,000-strong workforce.

As secretary of the corporate trade union committee in Bombardier, Mr Wilson is no stranger to tough negotiations.

His committee represents all the trade unions in the company and he has seen disputes flare between management and workers before, particularly over pay deals. But even he has to admit that relations between workers and management at Bombardier have rarely been as tense as they are now.

Bombardier is a Canadian-based multimillion-dollar corporation whose business interests at one stage spanned airports to Ski-Doo snowmobiles.

Aerospace has always been Bombardier's most important industry and like every other aerospace company in the world, Bombardier has been struggling since the terrorist attacks on New York and Washington on September 11th, 2001.

Bombardier has four aerospace factories in Northern Ireland and is the North's largest manufacturer.

Last year the Montreal-based group reported losses of more than 600 million Canadian dollars (€1,021 million).

Earlier this year Mr Paul Tellier, Bombardier's new chief executive, unveiled sweeping plans to restructure the group.

He outlined an action plan to restore Bombardier's balance sheet that involved selling non-core assets and focusing on its key transportation and aerospace businesses as well as cutting jobs, including more than 1,000 at its Northern Ireland operations, and issuing shares.

One of those non-core assets was Belfast City Airport, which was sold to the Spanish group Ferrovial for £35 million.

In the last few months, Mr Tellier has also managed to off-load part of Bombardier's defence services business to L3, an American IT firm, for £56 million, and secure a Can$1.2 billion rights issue.

Just last week when he announced the group's second-quarter earnings Mr Tellier revealed that Bombardier had also sold its historic leisure division business, which makes the Ski-Doo snowmobile and on which the group was founded, for Can$1.23 billion.

According to Mr Tellier, his action plan to restore the balance sheet is almost complete.

What's clear is that the Bombardier group is going to be very different from the one that bought what was then Short Brothers aircraft company in Belfast for £30 million sterling in 1989.

One of the last outstanding components of Mr Tellier's action plan is Northern Ireland's contribution to it.

Bombardier wants to secure a new pay deal at its operations in the North that will effectively freeze wage agreements for the next four years. It has also introduced different working practices, which has resulted in a new afternoon shift being introduced that replaces a more expensive night shift for the company.

Against the continuing backdrop of the slowdown in the aviation sector, Mr Wilson and his fellow trade union leaders in Belfast recommended the company's proposed pay deal and package of changes to the workforce.

"Our priority was to protect as many jobs as possible at Bombardier in Northern Ireland and that's why we supported the four-year deal. Under normal circumstances things might have been different but we aren't dealing in normal circumstances any more, since September 11th and that's what we have been trying to explain to our people here. Trade unions have had to make sacrifices, jobs are under threat here and we wanted to give our members some security," Mr Wilson said.

But in a completely unexpected move, 60 per cent of the workforce voted to reject the proposed four-year pay agreement backed by the unions.

Subsequent talks aimed at finding some common ground between the management and the workforce ended in disarray after union representatives walked out, claiming that the company was "inflexible".

The talks remain suspended, which has thrown management and union leaders into uncharted waters at Bombardier and could potentially jeopardise more than a thousand jobs.

Management at the aerospace company warned in March that 1,180 jobs were at risk at Bombardier's four sites in Northern Ireland because of the continuing slump in the aviation sector.

Around 600 jobs have been axed this year at its operations in the North and a further 318 are currently under threat. A spokesman for Bombardier in Belfast claims the company has had no choice but make people redundant in a bid to reduce costs and safeguard remaining contracts and jobs in the long term.

"Bombardier is committed to Northern Ireland. We are not threatening to pull out. We have invested £1.1 billion since 1989 in Northern Ireland and we have highly skilled people and craftsmen here but we are operating in very difficult market conditions.

"The fact is there are fewer aircraft orders and there is acute competition for those orders, The aerospace industry is going through a very hard time and Belfast has got to reduce its costs if it is going to compete on price in this industry," he said.

Bombardier's management believes that it must secure a long-term commitment on its wage packet in Northern Ireland to be able to deliver long term commitments on price.

If it fails to get that wage packet commitment then there could be further job losses.

"We need to get to a position where trade unions are actively working with us so that no one else loses their job because of the difficulties in the market place. We have to reduce costs in the current market situation to be competitive and to grow this business," a spokesman for Bombardier said.

But Mr Wilson says the mood among workers is not one for negotiation and there is talk of industrial action.

"The workforce is pretty determined that there will be no negotiation with management over pay. People are worried; they are getting on with their jobs but there is concern about the future. We're taking nothing for granted.

"We need to get back around the negotiating table, but I am pessimistic that we can get a resolution to this problem at this time. We are poles apart," he said.

Sources close to Bombardier management in Belfast say management recognises that there are frustrations among workers over the job losses but any threat of strike action could send a potentially devastating message to the parent owners in Canada - where pay freezes are already in place.

"This dispute has already cost Bombardier's Northern Ireland sites one significant piece of business that could have prevented any further job losses this year. Industrial action is not the way forward - it could only put further jobs at risk," according to a source.