Scottish Daily Mail
Aerial attack on Britain
THE aerospace sector and the technology it generates is a powerhouse of the UK economy. It employs more than 120,000 people, most of them outside London and the south-east.
In normal times, it generates an annual turnover of £35bn, most of which comes from exports.
The toxic combination of the pandemic, which has deeply scarred the aviation industry, and an invasion by overseas (and domestic) bargain hunters threatens to demolish it before our eyes.
Latest in the sights of a foreign predator is Meggitt, which is being stalked by acquisitive US engineering outfit Woodward.
Meggitt has a British heritage which dates back to 1850 when its forerunner developed the altimeter for the world’s first generation of large hot air balloons.
Now it supplies high-tech instruments to civil aviation, and components for America’s cutting edge F-35 Lightning fighter jets made by Lockheed Martin. The pandemic has had a malevolent impact on Meggitt as it has on the whole aerospace sector from Rolls-Royce to Melrose-owned GKN.
Just how serious the crisis has proved is evident from British Airways -owner IAG’s latest financial results showing a £1bn loss in the first quarter. BA is counting on the opening of air routes between London and North America to power recovery.
Winning sectors such as aerospace require not just national champions such as RollsRoyce and BAE but clusters of suppliers and other firms which provide science, technology and components. As a result of shameful neglect by successive governments, the country is in danger of selling the pass. In the last few years, satellite firm Inmarsat has been sold to private equity firms Warburg Pincus and Apax. Flight refuelling pioneer Cobham was sold to another private equity buyer, Advent, in spite of national security concerns. It is currently being dismantled and sold on by the new owners. Private jet group Signature fell to a private consortium headed by Blackstone and including Bill Gates.
GKN went to UK industrial group Melrose where the motto is buy, improve and sell. Covid, and stipulations imposed by government, means there will no sale any time soon. But the eventual destination will be to the highest payer. And with such disposals, when they are eventually completed, goes valuable R&D, intellectual property and a history which includes making Spitfires, a symbol of Britain’s triumph over evil in the Second World War.
When Boris Johnson tore up industrial strategy in favour of ‘building back’, he could not have envisaged the destruction of aerospace manufacturing. If a bid or merger for Meggitt does materialise, it could become the first critical test of the workings of the new National Security & Investment Act which seeks to make sure that offers for strategic assets are properly scrutinised. It may be hard to topple an US buyer on national security grounds given US-UK shared interests. Losing command and control of another aerospace group would nevertheless be a body blow to a strategic, innovative industry.
IT is not just secretive financier Edward Bramson who has egg splattered all over as a result of a vicious campaign to persuade Barclays to pull out of investment banking. Backers of Bramson’s vehicle Sherborne include some of the City’s best names, Aviva and Schroders. Aviva recently sought sainthood by leading criticism of the Deliveroo float.
Bramson argued that investment banking income is less stable than commercial banking. An era of super low interest rates and the pandemic turned that wisdom on its head. Under Jes Staley Barclays has emerged as Europe’s top investment bank, scoring highly in trading, M&A and floats.
Staley’s stay at the top of Barclays has been marred by past association with disgraced US financier Jeffrey Epstein. But he, and successive chairmen John McFarlane and Nigel Higgins for showing him patience, deserve credit and seeing off an unscrupulous boarder.
EMMA Walmsley will need victories if the Glaxosmithkline chief executive is to see off corporate vultures Elliott Partners.
It is encouraging that the European Medicines Agency has begun a rolling review of the effectiveness of VIR-7831 (sotrovimab) a medicine which has shown dramatic results in reducing hospitalisations and deaths from Covid-19.
It is a potential lifesaver in more ways than one.