Category Archives: National Security

Britain, Business, Defence, Government, National Security

The GKN bid and threat to national security?

MELROSE

THE hostile takeover of the defence giant GKN is to be investigated by MPs amid concern that it could harm national security.

In a rare intervention in a corporate takeover, senior executives from GKN and the predatory bidder Melrose are being called before the business committee.

MPs want answers about the risk to jobs, pensions and the manufacture of key military components if the £7.4billion deal goes ahead.

It came as Defence Secretary Gavin Williamson expressed “serious concerns” about the proposed takeover.

Giving evidence to the defence select committee, Mr Williamson said he had written to Business Secretary Greg Clark about the deal, adding: “There is no clarity as to what the true approach is going to be in terms of the GKN military side of the business.

“We sometimes have to ask tough questions as to whether we should raise concerns about the break-up of large successful important businesses that have a real impact upon our national security. It would have been remiss if I didn’t do that on this occasion.”

Turnaround specialist Melrose’s bid for GKN, which employs 6,000 people in the UK and 58,000 worldwide, is facing close-scrutiny amid concerns over its potential impact.

Redditch-based GKN, which is nearly 260 years old, makes parts for fighter jets including the US-UK F-35, the Eurofighter Typhoon, and the US B-21 stealth bomber. It also produces components for aircraft and car firms including Airbus, Mercedes and Toyota.

The Government is investigating whether it could intervene on national security grounds. The business committee is to hold a hearing into the takeover on March 6.

Committee chairman Rachel Reeves said: “GKN is an important company for the UK and globally. This session will be an opportunity to hear from Unite [the union] and for GKN and Melrose to set out their case for the future of the business.”

GKN’s fate was thrown into doubt last month when Melrose tabled its offer to buy the firm, which was rejected by board members as cheap and opportunistic.

Melrose’s strategy is to sell firms on it has acquired at a profit within three to five years, raising fears that GKN will be broken up piecemeal and sold off around the world.

Melrose suffered a £28million loss last year and has presided over factory closures and hundreds of job cuts.

The firm has said it welcomes the opportunity to appear before the select committee. It also said that while it believes there are no competition or national security issues, it asserts that it will be in the national interest for Melrose to be the guardian of GKN businesses. As a British public company, it says it is fully aware of its ownership responsibilities.

GKN said it was happy to give evidence to the committee.

 

AS MPs launch an inquiry into the hostile bid for Britain’s oldest engineering company, it is a relief that Westminster has at last woken up to this grave threat to our national interest.

Anyone who believes the get-rich-quick asset strippers at Melrose are fit to take over GKN should look closely what happened to FKI, another company that fell into their clutches ten years ago.

After selling off most of the firm’s assets for a huge profit, Melrose kept control of gas turbine manufacturer Brush – which has performed weakly ever since, with the threat of job losses now hanging over it.

Earlier this week, Melrose reported a loss of £28million after writing-off £145million from Brush’s value. Can such City takeover firms, relying on loans for their acquisitions, really be trusted to takeover GKN?

For 260 years, this flagship engineering firm has been vital to our defence, making cannonballs for Waterloo and Spitfires for the Battle of Britain. To this day, it remains a world-beater in the sort of technologies we will need after Brexit, whether building parts for stealth aircraft or driveshafts for new electric cars.

True, GKN needs to improve its efficiency. But it would be madness to let it be broken up and sold to the highest bidders at home and abroad.

As leading industrialist and Government adviser Sir Richard Lapthorne puts it: “The hollowing out of Britain’s industrial base has gone too far. The Germans and French would not even dream of allowing this.”

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Britain, Business, Defence, Government, National Security, Politics, United States

Defence Secretary to be quizzed by MPs over hostile bid for GKN

TAKEOVER BID OF GKN THREATENS NATIONAL SECURITY

GOVERNMENT ministers face a grilling in the House of Commons this week over the hostile £7.4billion takeover bid for engineering giant GKN.

Theresa May is under pressure to intervene amid mounting concern about the impact the buyout could have on industry and national security.

Redditch-based GKN makes parts for the F-35 Anglo-American fighter jet, the Eurofighter Typhoon and the US’s B-21 stealth bomber, as well as car parts such as driveshafts for the automotive industry.

Its future has been thrown into doubt after the City turnaround group Melrose lodged a £7.4billion offer last month. GKN’s board is attempting to fight the deal. Melrose is known for asset stripping which often leads to large numbers of people losing their jobs through restructuring.

It has emerged that the Defence Secretary Gavin Williamson is set to be questioned about the bid when he appears this week before the defence select committee. Its chairman Julian Lewis said: “The committee have had correspondence strongly against and in favour of the hostile takeover bid and I therefore wouldn’t be surprised if the topic came up [during the committee hearing].”

There is growing concern across Whitehall about the impact this aggressive takeover of GKN would have, especially the long-term defence and security implications it may have for the UK.

The takeover already faces the prospect of wider investigations, with the business, energy and industrial strategy committee expected to scrutinise it further after initial questions were raised by chairman Rachel Reeves.

The Department for Business, Energy and Industrial Strategy is understood to be monitoring the situation closely, and a senior civil servant has been appointed to examine the impact of a takeover.

The US’s own committee on foreign investment will also have to examine any takeover, as will the authorities in France and Germany.

GKN dates back nearly 260 years and made cannonballs for the British Army during the Napoleonic Wars.

It now has around 6,000 employees in the UK among 58,000 worldwide. It is a key supplier to aerospace firms including Airbus, with bases in towns including Redditch, Luton and Telford.

Melrose specialises in buying underperforming firms and selling them on at a profit within three to five years. Liberal Democrat leader Sir Vince Cable has urged the Government to block the bid for GKN, calling Melrose an “utterly unsuitable owner”.

Speaking in the Commons earlier this month, the Prime Minister said: “Of course the Business Department will be looking closely at, and has been following closely, the issue. I and the Government as a whole will always act in the UK national interest.”

Concern about a GKN takeover has also been raised in the United States, where Congressman Neal Dunn has written to the committee on foreign investment urging it to block the bid.

He said: “In addition to concerns over who may ultimately acquire GKN, Melrose’s business strategy will undermine long-term investments in research and development and secure supply chains, which are critical to the major defence platforms GKN currently supplies.”

Any takeover would have to be considered by Germany’s federal ministry of economic affairs and energy and the French ministry of economy, according to documents made available by Melrose.

Melrose’s executive officers say that they “welcome any and all opportunities to explain to government why we [Melrose] believe a merger with GKN will create an industrial powerhouse of which the UK can be rightly proud”.

They added: “Melrose builds businesses to long-term health and prosperity and has an impeccable pension track record.”

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Government, National Security, Society

Any new anti-terrorist measures must not be rushed

ANTI-TERRORISM LAWS

Intro: Theresa May has called for a review of the UK’s counter-terrorism strategy but she should be wary of pushing through legislation for the sake of being seen to act.

Amid the reaction to the horrific events over the past few weeks in London and Manchester, it has become apparent that there is no simple answer over how best to respond to the serious terrorist threat the UK is facing.

There have been calls for the general election on Thursday to be postponed, which mercifully have not gained much traction. There was also immediate criticism of MI5 and our intelligence agencies for failing to detect the hiring of a van and the possession of widely-available knives by those who have wreaked havoc on our streets.

As public order is restored and the dust settles, some have reverted to a less fevered analysis by revisiting anti-terrorism measures. New legislation might emerge in dealing with the insidious threat we now face. We have, of course, been here before, with the stand-out example being Tony Blair’s response to the London bombings of 2005. The then prime minister swiftly drew up several new measures to help thwart further attacks, but it barely required the benefit of hindsight to reach the conclusion that most of those measures could be described as a knee-jerk reaction. Some of the proposals were enacted into law, others were never heard of again. Mr Blair’s strategy was largely driven by a desire to be seen to be doing something when strong leadership should have been the imperative and priority. Legislation that is rushed, however, is hardly ever appropriate or even practical.

Theresa May’s verdict following the most recent attacks in London that ‘enough is enough’ is an uncomfortable conclusion, but her call for a review of counter-terrorism strategy is correct. We know to our cost that the measures put in place after 2005, and since then, have given the police extensive new powers but have not been able to stop the three terrorist attacks on the UK in 2017.

The Government should now pause before re-writing the statute book, and act only after thorough consultation on what is required, and what is possible. The time that any new laws or amendments to current legislation would take by using such an approach should not be seen as a frustrating delay, because it must be recognised that the threat we face is changing. There is also not an off-the-shelf strategy to counter it. Whatever measures are introduced must be workable and effective, otherwise they become a waste of time and vital resource.

We have to be sure, too, that existing statutory provisions are being used properly – for example, there have been numerous claims after recent attacks that the authorities were alerted previously to the behaviour of those involved.

At a time when the public is being asked to be increasingly vigilant, and to report any suspicious activity, we have to be confident that this kind of intelligence is being fully utilised. It’s vitally important that it is.

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