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MPs grill Melrose bosses

Unite gives evidence against GKN takeover
Hajera Blagg, Tuesday, March 6th, 2018

MPs grilled Melrose executives today (March 6) over their takeover bid of engineering giant GKN at a business select committee hearing, where Unite representatives also gave evidence.


The hearing comes as Unite is lobbying the government to block the debt-fuelled takeover bid by Melrose, which specialises in buying and selling companies to maximise shareholder value at the expense of the long-term health of their businesses.


GKN finance chief Jos Sclater explained how his company’s business model was totally at odds with Melrose’s short-term approach.


“It’s short-term capitalism versus long-term capitalism,” he said. “You are investing for your grandchildren, that’s what we’ve been doing and that’s what we want to carry on doing.”



Committee chair Rachel Reeves asked Melrose chief executive Simon Peckham why the company was unwilling to give any assurances to the workforce even as he claimed Melrose had their long-term interests at heart.


“You said earlier you were going to sack the board and empower the people who work in the business to make decisions because they are the people who best understand it,” Reeves said. “I find it a little surprising that you haven’t met with the people who represent those workers, their trade union Unite.”


Peckham said only that they were “getting closer” to the appropriate time to meet with Unite – Reeves then pressured him until he committed to meeting with the union this month.


Melrose executives refused to make any further commitments, responding to questions about their intentions over the long-term future of the business by imploring MPs to “look at our record.”


But as Unite assistant general secretary Tony Burke later highlighted at the hearing, Melrose’s record speaks volumes. He pointed to a series of companies that Melrose bought only to start selling off parts of each business within a year or two.


“That is their record,” Burke said.


Unite assistant general secretary Steve Turner highlighted the poor industrial relations Unite has with Melrose at Brush Turbogenerators, a company bought by Melrose in 2008.


“When they assumed control there were 1200 employees and in a very short period of time that was reduced to 600 employees. And on the day of their proposed [GKN] bid being released they decided to halve that by another 50 per cent and offshored jobs to eastern Europe,” he told MPs.


National security

Turner highlighted the various defence products and programmes in which GKN is involved, such as the Apache, the Black Hawk, the Typhoon Eurofighter and others, as he made the case for the Melrose bid to be blocked on national security grounds.


“National security works over a 15 to 20 year development period – let alone the manufacturing process which will go on for 30 or 40 years in service,” Turner noted, pointing to the fact that GKN has invested for these long-term cycles whereas Melrose buys and sells companies in the short-term.


Turner slammed Melrose’s business model saying that it was only about “maximising shareholder value and trousering a lot of money.”


Indeed, earlier in the hearing Melrose executives were forced to admit their millions of pounds in bonuses operated under a scheme that only incentivised shareholder value.


“If you can get away with it great but it’s not very good for UK plc,” Turner said of their business model. “And we’ll oppose it every step of the way.”


Burke added that the voices of the 6,000-strong GKN workforce must be heard and their concerns addressed.


“At the end of the day this is about people – this is about workers,” he said. “Workers have been with this company for many, many years. They’ve invested their lives and skills in GKN.”


The committee demanded that Melrose write to MPs later in the week outlining the company’s specific intentions if the takeover were to go ahead.


Block the bid

The hearing comes as a group of 16 MPs – led by Labour MP Jack Dromey and Tory MP Rachel Maclean – called on the business secretary Greg Clark to block the bid.


The cross-party MPs wrote to Clark arguing what Unite has said from the beginning – that allowing the bid to go through would threaten UK national security interests as well as thousands of highly skilled jobs.


The Pensions Regulator has also written to the Work and Pensions Committee expressing fears over pensions should Melrose take over GKN.


“From the outset we have been concerned that the increased leverage involved in the proposed takeover by Melrose is likely to have a detrimental impact on [the ability of Melrose to fulfil its pensions obligations],” the letter read.


Solidarity demo

Meanwhile, Unite members from Jaguar Land Rover and other carmakers are set to join GKN Driveline workers in a show of solidarity tomorrow (March 7) to urge the government to block the Melrose bid in the national interest.


Unite acting automotive national officer Carol Tallentire said GKN’s Driveline business is “at the heart of the UK automotive industry and a major employer in Birmingham and the West Midlands.


“In Melrose’s hands, all that would be put at risk and ministers’ plans for the UK to be a leader in electric vehicles could be left in tatters,” she said.


“GKN will be saddled with over £1.3 billion of debt if Melrose succeeds, while its advisors would pocket upwards of £140 million in fees,” Tallentire added. “Workers are fearful that they will pay for this debt fuelled payday with their livelihoods with technology and jobs shipped abroad.


“Melrose’s debt-fuelled bid would not happen in France or Germany. Theresa May has said she will act in the national interest. It’s time she did and saved British jobs by ensuring her government stopped the GKN takeover.”


You can watch today’s full hearing on Parliament.tv.

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