Home Business NewsBusiness Melrose bid for GKN ‘a threat to US national security’

Melrose bid for GKN ‘a threat to US national security’

13th Feb 18 8:28 am

Warns Unite

The national security of the United States could be jeopardised if the takeover of UK defence contractor GKN by investment company Melrose goes ahead, Unite, the largest country union, has warned. 

Unite has written to the Committee on Foreign Investment in the United States (CFIUS), the key body on US investment decisions, outlining its concerns, as well as to US defence secretary General James Mattis.

Unite’s intervention comes in the wake of American congressman Neal Dunn writing to CFIUS claiming Melrose’s lack of any background in defence contracting makes it an unfit owner of GKN, given GKN’s involvement  with the F-35 and F-18 fighters and the Chinook and Black Hawk helicopters.

In a letter to CFIUS’ staff chairperson Stephen Hanson, Unite assistant general secretary Steve Turner raised genuine concerns over the future ownership of the company, as well as investment in innovation, research and development, design and engineering capacity’.

Unite assistant general secretary Steve Turner wrote: “Future ownership fears are genuine and should lead to concerns with both prime contractors and governments over the security of defence intellectual property, as well as future capacity to develop the necessary long-term investments, partnerships and innovative engineering design and manufacture capability to support our current – let alone future – national security requirements. 

“Melrose is a self-declared ‘turnaround company’ focused on short-term shareholder value with the objective of disposing of assets within three-five years of acquisition. 

“The proposed offer is based on share value and not industrial strategy, with Melrose levering a healthy GKN balance sheet in order to fund ‘exceptional dividends’ to shareholders.

“The resulting debt burden on GKN will result in a break-up of the company and rapid sale of core divisions essential to growing synergies and innovative engineering solutions in automotive, powder metallurgy and aerospace (including defence). 

“Melrose has no experience of operating tier 1 contracts in defence, aerospace (or indeed automotive), it has no record of fulfilling necessary commitments to the long-term investment necessary to innovate either alone or in alliances and joint ventures with others. 

“In fact, its stated objectives work against the development of any such long-term relationship or investment.

“Trusted relationships, secure long-term alliances and joint ventures that share the costs of investment and innovation are of course central to the design, engineering and manufacture of our defence requirements as well as wider requirements in support of our national security.

“We have genuine concerns over the future of investment in innovation, research and development, design and engineering capacity as well as fundamental concerns over the future ownership and governance structure of a ‘stripped out’ business. We believe you will share these concerns.”

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