As the battle for control of GKN, Britain’s largest and oldest engineering firm, whose products have ranged from cannonballs to Spitfires, reaches a climax (shareholders will vote on Thursday), Business Secretary Greg Clark has finally spoken. The government has been silent on the matter ever since Melrose, the corporate raider cum asset stripper, launched a £7 billion bid for GKN back in January, and hedge fund managers have piled in buying up shares in the expectation that they can make a killing. Melrose boss Simon Peckham will himself share in a £285 million bonus if the deal goes through. If the potential damage to Britain’s engineering and aerospace sector, and to our national security, of GKN being broken up and sold off were not clear enough, Tom Williams of Airbus, GKN’s largest customer, has warned that future orders would be in jeopardy if it could no longer rely on GKN’s commitment to ‘long-term investment and strategic vision’, a commitment which is only possible under stable ownership.
But at last, the Business Secretary has acted. In a letter to Melrose, he has demanded ‘binding commitments’ concerning GKN’s workforce, research and development, and pension schemes. There should be ‘a commitment to continuity of ownership and strategic investment’. And he has raised ‘concerns’ over national security given GKN’s role in supplying the UK armed forces. Melrose has been only too happy to oblige. Mr Peckham has promised a range of commitments – he will not sell the aerospace division, he will keep GKN listed on the London Stock Exchange, and he will devote 2.2 per cent of sales revenues to research and development – all of that until 2023. In other words, he will be free to sell off the rest of GKN’s divisions piecemeal, and aerospace in 2023.
We have seen these worthless commitments before, most notoriously with Cadburys. But the fate of GKN seems sealed and it will join the likes of ICI, P & O Ferries, BAA, Thames Water, Powergen, Boots, O2, Jaguar, Pilkington, Cadburys and, perhaps most significantly for our future, the crucial Cambridge semiconductor and software design company ARM Holdings, which the Japanese snapped up for £23 billion in 2016.
What, then, of Mrs May’s commitment to bolster Britain’s ‘world-leading industries’ through ‘a new industrial strategy’, a strategy that would underpin our post-Brexit future as ‘a great global trading nation’? Answer: there isn’t one. It’s business as usual, which means flogging off our assets to the highest bidder with scant regard for the national interest.
None of this bodes well for Brexit. But perhaps Mrs May has other plans.[pullquote]
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