The Italian-owned helicopter-maker Leonardo has said it may reconsider a proposed £1bn investment into UK manufacturing if the government does not choose it to deliver a replacement for the Royal Air Force’s Puma fleet. The Ministry of Defence announced in the spring that it wanted to replace the Puma and eventually three other models. The RAF has used the Puma since the 1970s, and upgraded versions have been used extensively to carry troops in wars including the Falklands, Iraq and Afghanistan. Leonardo is vying with Airbus, the European aerospace conglomerate, to build a new mid-sized helicopter by about 2025. The Italian company owns the UK’s only helicopter factory, at Yeovil in Somerset, employing 3,000 workers, but Airbus this week pledged to create 400 jobs in a new helicopter production line at its factory in Broughton, north Wales, if it wins the government contract. Nick Whitney, the managing director of Leonardo Helicopters UK, said his company’s existing facility would be able to deliver its AW149 aircraft more quickly, and the contract would unlock a previously unreported foreign direct investment from the Rome-headquartered manufacturer, including more than £500m into Yeovil. “If the UK government doesn’t show confidence in the home rotary wing company in the UK, it has to question why our parent company would have to invest in the same volumes,” Whitney told the Guardian. He was speaking at Defence and Security Equipment International, a controversial arms fair held in London. The Yeovil plant is one of the UK’s oldest aerospace facilities, dating to 1915 when the Westland Aircraft Works was established to make planes to fight in the first world war. The factory’s fate has long been politically sensitive. In 1986 it was the object of a power struggle between the then prime minister, Margaret Thatcher, and her defence secretary, Michael Heseltine, over whether it should be sold to European or American buyers. Any threat to the Yeovil plant could be difficult for the government, at a time when helping poorer regions of the UK is a purported priority for Boris Johnson. Whitney said there was not a direct jobs threat to the Yeovil plant, but the order for new craft would help to maintain it. The Leonardo chief executive, Alessandro Profumo, has previously discussed the £1bn potential investment with Graham Stuart, the UK’s minister for exports until this week’s reshuffle. The company has highlighted its importance to the local economy, as well as the attraction of a large foreign direct investment as the post-Brexit UK tries to portray itself as “Global Britain”. The MoD has not yet released the desired specifications for the new helicopter, but Airbus has argued that the government should run an open competition for the work. Airbus would assemble H175M, a new military version of an existing model, at the Broughton facility, which makes wings for commercial planes such as the A320 and A350. “We’d like the opportunity to compete,” said Colin James, the managing director of Airbus Helicopters UK. “The UK helicopter industry today is a little bit in the doldrums. It doesn’t generate exports. Why wouldn’t you have a competition when you have such a strong aerospace company such as Airbus wanting to invest in the UK?” James told the Guardian that Airbus would be focused on exporting the helicopters, as well as meeting the UK’s military needs. He argued that the investment in Broughton could help to develop the British helicopter industry as Nato countries start designing the next generation of rotary wing aircraft in the coming decade.