Return of ‘cowboy capitalism’

Unite is redoubling its efforts to fight off a hostile takeover of engineering giant GKN by private equity firm Melrose as the union launched a new campaign page yesterday (January 30) and continues talks with cross-party MPs and management.

In the last two weeks, Melrose has attempted to sway shareholders with the promise of a “an exceptional dividend” through a £7bn bid — but Unite and others have argued that this will be funded by debt that workers ultimately will have to shoulder through cost-cutting that would risk jobs.

That GKN is a huge player in aerospace and hardwired into the UK’s defence would mean that any takeover by an equity firm interested in only short-term payouts to shareholders — rather than the long-term health of the company — would risk the UK’s national security as well.

Unite is calling on the government to intervene — and despite the UK’s notoriously lax takeover rules, there are laws in place for prime minister Theresa May to review the takeover even without immediate reform, as professor David Bailey and Labour MP Jack Dromey highlighted yesterday (January 30).

“Given GKN’s involvement in aerospace for military use, we’d argue the public interest test can apply here under the national security element of Section 58 and the UK government does, in this case, have the power to consider the takeover and whether it is in the public interest,” they noted in a joint comment piece in the Birmingham Post.

“Given that a great British engineering firm is in play and at risk of being dismembered and sold on by Melrose, are you at least going to examine the takeover under the national security provision, Mrs May? After all, actions speak louder than words.”

The case for fighting off a hostile takeover bid was further bolstered earlier this week (January 29) as GKN warned that a shortfall in its pension risks being made even larger if Melrose takes over the company.

And last week, boosted sales forecasts for GKN’s electric car parts also added to the case against a takeover.

Unite convenor at GKN Driveline in Birmingham Mike Forbes reiterated Unite’s commitment to fending off the takeover.

“GKN is performing strongly, across both driveline and aerospace divisions,” he said. “There is no need for either a takeover or a risky restructure which sacrifices jobs to keep shareholders happy. What we need is a long term commitment, backed up by investment, and Unite is prepared to fight for it.”

Unite Convenor at GKN Aerospace in Filton John Sweeney agreed.

World class
“The future of the business cannot be gambled just to give shareholders a bonanza pay day,” he said. “We are aware of the problems that the aerospace division have had to face, but by any measure our performance has been world class. That cannot be put at risk along with investment commitments in future technology in the aerospace industry. We must fight this takeover and prepare ourselves to face down whatever follows it.”

Unite reps have met with both shadow chancellor John McDonnell and shadow business secretary Rebecca Long-Bailey among other Labour MPs and have pressed their case to them as they continue to fight Melrose’s takeover.

Unite assistant general secretary Tony Burke said Unite would not give up the fight.  “Just as the collapse of Carillion was a watershed moment for the public sector, this hostile takeover is a watershed moment for the private sector,” he said. “If Melrose are allowed to get away with shouldering GKN with billions of pounds of debt just to give the share price an artificial boost then we’ll return to the 1980s days of cowboy capitalism.

“GKN’s aerospace contracts clearly raise the issue of national security, while the driveshaft division’s development of electric vehicle components is pioneering,” Burke added. “Losing either would seriously damage the UK’s manufacturing capability, ending serious hopes of an industrial strategy.

“Unite is pulling out all the stops to oppose this bid, but we are also seeking concrete assurances from the current management. We will not allow two sets of management to compete for the affections of shareholders by promising faster and deeper cuts. For Unite defending jobs always comes first.”

Be sure to contact your MP and tell them to intervene in this hostile takeover that threatens UK jobs. Find out more on our campaign page here.