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...Request free trial
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.”
Unite, which has tens of thousands of members in the UK’s
defence industries, is strongly supporting GKN in its bid to fight
off Melrose’s bid.
