Unite representatives to quiz Melrose bosses on debt-fuelled takeover bid
- Monday 19 March 2018
Melrose bosses will come under further pressure to provide concrete plans for jobs and investment today (Monday 19 March) when they meet with representatives of Britain’s largest union, Unite to discuss their hostile takeover bid for GKN.
Representing workers across GKN and the engineering firm’s major customers including Airbus, Jaguar Land Rover, Ford and Toyota, Unite will be demanding clarity on 31 points ranging from financing, debt levels and investment, to jobs, pensions and discussions with GKN customers (see notes).
Today’s meeting follows warnings from GKN’s biggest customer Airbus that it would be ‘practically impossible’ for it to give GKN any new work should Melrose succeed with its debt laden takeover bid because of the uncertainty generated by its short-term approach.
Commenting Unite assistant general secretary for aerospace Steve Turner said: “Melrose’s bosses have been far from clear about the detail of their true intentions for GKN beyond vague platitudes and soundbites.
“Question marks remain around the levels of debt Melrose will pile on the company and what it means for jobs, long-term investment and product development.
“GKN’s highly skilled UK workforce fear they will end up being sold off piecemeal, with their jobs either axed or shipped overseas to fund a debt-fuelled pay day if Melrose gets its way.
“That concern over Melrose’s short-termism extends to major GKN customers such as Airbus too, which relies on a long-term relationship with GKN to develop the wings of the future.
“If Airbus or other major customers take their business elsewhere it would blow a hole in revenues and destroy jobs and innovation.
“With so many questions unanswered and serious concerns remaining over the UK’s future national security and defence capabilities, the business secretary Greg Clark should intervene now and call this unwanted, short-term, profit motivated and debt-laden bid in, to protect our UK defence interests as well as those of our allies.”
Unite assistant general secretary for manufacturing Tony Burke added: “Melrose has a failed to convince workers and customers that they have the capability and expertise to manage a company the size of GKN.
“There’s been a lot of talk about Melrose’s financial engineering expertise, but little on the real engineering needed to ensure a secure stable future for GKN and its workforce who are central to the success of the government’s industrial strategy.
“There is little in Melrose’s bid to suggest it would be good business or UK manufacturing over the long-term or GKN workers who are the wealth creators of a great British company.
“We hope to secure clarity from Melrose when we meet them, but remain unconvinced they will give the assurances that workers need to be confident about their future under Melrose ownership.”
For further information please contact the Unite press office on 020 3371 2065 or Unite head of media and campaigns Alex Flynn on 020 3371 2066 or 07967 665869.
Notes to editors
Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.
The 31 points Unite is seeking clarity from Melrose on:
UNDERSTANDING THE MELROSE BID, VISION AND PLAN
1. Based on your history of previous acquisitions, along with the company logo 'Buy, Improve, Sell' what assurances can you give the workforce that you have a long-term strategy, vision and plan for GKN?
2. Did Melrose present a business plan to the banks who underwrote your financing facilities for the purpose of the acquisition and if yes, can we have access to it?
3. When will the debt secured as part of the purchase finance have to be refinanced and how is this likely to occur?
4. Based on required design, engineering and investment cycles for new aircraft, can Melrose produce a 15-year plan for investment in R&D, design and engineering for GKN’s aerospace division?
5. With a 3-5-year ownership model, how can Melrose demonstrate their future on-going commitment to the company’s 'wing of the future' programme, a programme that GKN invested a further £30m in during 2017?
6. What commitments and guarantees are Melrose prepared to give to future and on-going investment supporting automation and the development of ‘E-Drive’ alongside other long-term R&D projects supporting innovative design, engineering and manufacturing in the Driveline division of GKN?
7. What are the key innovations and developments driving research and innovation in the aerospace and automotive industries that will drive the long-term development of both divisions of the company and what level of investment over the coming 5-10 years will this require?
8. How much of this investment do you believe will have to be financed up front by GKN and where will the capital come from?
9. Can you demonstrate how the level of financial leverage post acquisition will not limit your capacity to invest in key programs across all divisions of the company including, Driveline, Powder Metallurgy and Aerospace?
10. The future success of GKN and its workforce depends on long-term relationships and a partnership with major customers based on shared investment and trust. What meetings conversations have you had with Airbus and other major customers such as Boeing, Lockheed Martin, Northrup Grumman, JLR, Ford and Toyota and what assurances have you given them on continuity of supply and security of intellectual property (IP), future ownership models and protections in the case of any future sale?
11. If Melrose ‘sack the board’ as stated in your recent evidence to the BEIS Select Committee, can you name the senior executives with experience in automotive, aerospace and defence procurement with national security implications, you will seek to bring into the business?
12. Can Melrose outline how you would off-set the business synergies which would be lost by separating the automotive and aerospace divisions?
13. Regards Melrose plans to sell the businesses separately, would you see a better pick than Dana for GKN Driveline?
14. Do you see any potential buyers in the UK for GKN Aerospace?
15. Why do you consider that Powder Metallurgy must be sold?
16. Will GKN businesses pay management fees to Melrose (new entity) and if so, how are they likely to be structured?
17. Does Melrose have a separate strategy for withdrawing from countries (particularly China) or will you try to sell GKN by division or parts there of?
18. What is your view on GKN Wheels and Structures (the business not to be acquired by Dana)?
19. Have you approached any ratings agencies to get an indication of how they would rate your business model and what has been the response?
20. What is your view on the metrics of Project Boost (amount of expected savings), and is this in line with your own expectations?
21. What are your projections on increased shareholder value over the next 3-5-years and how much do you expect to pay out to directors in bonuses over this period as a consequence?
ASSURANCES SOUGHT FOR BOTH THE CURRENT AND FUTURE WORKFORCE
22. What are your projected assumptions in terms of FTE headcount reductions over the coming 3-5-years?
23. Is Melrose be prepared to enter into a legally binding ‘Job Security and Future Investment Agreement’, including a protection clause for the workforce from any future compulsory redundancies?
24. Will Melrose provide written assurances that production will not be offshored or relocated from the UK?
25. Will Melrose commit to maintaining existing collective bargaining arrangements, including agreements, structures and machinery across GKN divisions and further, to full, proper and meaningful consultation and negotiation prior to any proposals to restructure, relocate or ‘rationalise’ any part of the business?
26. What guarantees are you able to provide in respect of current and future apprenticeships; including numbers and funding?
27. Will Melrose outline the long-term plan for securing the pension provisions of the existing GKN workforce, whilst still maintaining current benefits?
28. What are the key areas covered by your current discussions with the pension trustees?
29. You have criticized the plan presented by GKN in relation to the reduction of the deficit of GKN Aerospace’s pension’s scheme. Should we understand that it is not your intention to revise downward the entitlements of the members of the scheme?
30. Does Melrose offer any share and/or bonus incentive schemes for its UK workforces?
31. If you do acquire GKN, would members of the Melrose board participate in the GKN European Works Council (EWC) and what future assurances are you prepared to give regarding the EWC and European wide information, consultation and negotiation post Brexit, including for UK plant representatives?