Unite calls for halt to US investors' feeding frenzy that risks UK defence jobs and national interest
- Tuesday 17 August 2021
Unite, the UK’s leading union, is calling upon the government to step in to protect critical industry and strategic security assets amid a private equity feeding frenzy which puts at risk the UK’s sovereign defence capability, skills and jobs.
An increasing number of United States based private equity investors are seeking to purchase UK defence companies to boost short-term profits with an army of hanger-on lawyers and associated businesses also in line for a hefty pay day as a result of any sales.
The latest company set to be sold to a US company is Meggitt, which traces its roots in the UK to 1850. It is currently in a bidding war with offers of £6.3 billion and £7 billion from venture capitalists. The company has outlets in Coventry, Dunstable and Stevenage, and supplies wheels and brakes to RAF fighter planes. Its customers also include BAE Systems and Airbus.
In 2020, the previously UK-owned defence company Cobham was sold to US private equity house Advent. In turn Cobham has now bought another UK business, Ultra Electronics, for £2.57 billion.
Unite fears that the push for short-term profits will deter long-term investment and also places the job security of highly skilled workers at risk.
Government intervention needed
The union is calling upon the UK government drop what is has termed `meaningless statements' and instead to use the Enterprise Act to intervene to prevent these sales, fuelled, according to Unite, by the lure of huge, millions-plus fees that bankers, lawyers and PR advisers are able to generate during the takeover process.
Unite assistant general secretary for manufacturing Steve Turner said: “Unite is deeply concerned by this rash of US private equity raids on UK defence companies.
"There is a feeding frenzy going on here with good UK companies on the menu but longer-term stability and investment are at risk.
"But Unite knows all too well from bitter, past experiences that workers will be given only the broken promises by vultures whose main motivation is short-term profit and the disposal of assets.
“We are calling on the government, and in particular business secretary Kwasi Kwarteng, to go beyond meaningless statements like ‘we continue to closely monitor the situation’ to acting positively to protect UK strategic assets, protecting jobs, skills and our national security.
“These sales may have city lawyers, bankers and company board members licking their lips at the prospect of hundreds of millions being paid out in fees, charges and bonuses but it lays bare the lack of strategic thinking the UK government has in defending our vibrant, specialised and world-leading defence companies.
"The government must use the Enterprise Act to stand with UK businesses and workers, and to end the government culture of support for those whose mantra is too often ‘buy it, sweat it, flog it’".
Notes to editors:
For media enquiries ONLY please contact Unite senior communications officer Barckley Sumner on 07802 329235 or 0203 371 2067.
Email: [email protected]
Unite is Britain and Ireland’s largest union with members working across all sectors of the economy. The general secretary is Len McCluskey.