DEFENCE and transport electronics company Joyce-Loebl has landed a £500,000 deal with tank builder Vickers Defence Systems.

The contract is for the design and development of a sophisticated engine and gearbox control computer to be known as VICS (Vickers Integrated Control System).

It will be used on the company's world-beating main battle tank, Challenger 2, as well as on the Titan and Trojan engineering vehicles currently being developed by Vickers in Newcastle.

The contract, which includes the manufacture of pre-production standard units for trials, was won against stiff international competition and reinforces Joyce-Loebl's continuing commitment to the defence market.

Joyce-Loebl has re-established a specialist engineering team of seven on the strength of the new work.

Trevor Grugan, director of Joyce-Loebl's defence systems division, said: "This is a major opportunity for our company and it's great for the local economy that this contract has been placed by Vickers in the North-East."

Vickers has already developed an experimental prototype system and will be designing software for use in the Joyce-Loebl units.

Once the equipment has undergone trials, a multi-million pound contract for the manufacture of several hundred units is anticipated, and Joyce-Loebl is hopeful that experience gained in the development phase will place the firm in pole position to win it.

Joyce-Loebl employs about 125 people on two sites on the Team Valley, Gateshead.

It has hit the headlines with a number of major contracts, mostly in the public transport sector, in line with its strategy of diversifying away from military work.

Its public transport customers include train builders Bombardier and ALSTOM Transport, with end users including Virgin Trains and Belgian state railways.

The swords-to-plough-shares strategy has helped the company expand in the past two years.

Joyce-Loebl is 75 per cent owned by 3i, the leading European venture capital institution, and 25 per cent owned by its management.