Melrose is preparing to commit up to $100 million (£73.4 million) to compensate residents and businesses affected by a chemical incident at its GKN Aerospace facility in California, underscoring the financial and operational fallout from the disruption.
The FTSE 100 engineering group said the compensation programme would open within weeks and remain available into 2027. It will cover costs linked to an evacuation order issued in Garden Grove in May, including hotel accommodation, meals, transport and lost wages.
The incident involved an overheating chemical tank at GKN Aerospace’s Garden Grove site, prompting an emergency response and the evacuation of parts of the surrounding area.
Melrose said the Orange County District Attorney’s Office had closed its criminal investigation and would bring no criminal charges. Claims from emergency services and potential civil enforcement penalties will be dealt with separately.
The company plans to restore the Californian plant to full manufacturing capacity on September 28, although the disruption is already weighing on its financial performance.
Melrose warned last month that the incident would generate £25 million to £30 million of additional costs in the second half of 2026, alongside the impact of running the facility below capacity. It has also suspended a £175 million share buyback while it assesses the consequences.
The episode reduced first-half revenue by £16 million and adjusted operating profit by £9 million, despite Melrose reporting an 18 per cent increase in adjusted earnings and a 10 per cent rise in sales for the period.
GKN Aerospace supplies components for fighter aircraft, military helicopters and commercial planes, making the California disruption significant beyond its immediate local impact.
Melrose said GKN had co-operated fully with the investigations and had permanently decommissioned the chemical tank involved. The company has also invested in additional safety measures ahead of the restart.
Its insurance position remains under review, leaving the eventual cost to Melrose uncertain.
The compensation programme nevertheless represents a substantial financial commitment as the group attempts to draw a line under an incident that has disrupted production, suspended shareholder returns and imposed millions of pounds in additional costs.
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