By David Fowler
CK Chow, GKN chief executive, has dismissed suggestions GKN could sell its armoured vehicles division.
In an interview with The Engineer, Chow said the multi-role armoured vehicle (MRAV) contract for which it is bidding in a consortium with Germany’s Rheinmatell and Krauss Maffei, and France’s Giat, could form ‘a platform for consolidation’.
The Government has called on the UK defence industry to come forward with proposals for consolidation by 31 March, in response to the creation in the US of defence giants such as Lockheed Martin.
Chow said: ‘We certainly support the Government promotion of defence industry consolidation. But in every product area consolidation will have to hang on the commercial drivers.’ Alliances, he said, must widen the market, use development funding more efficiently, improve productivity, and increase value for shareholders.
‘The key thing is it must make commercial sense. Whatever new programme or entity is created must be a more productive and competitive entity than the previous one,’ said Chow.
Although it has been suggested the armoured vehicle division lacks synergy with other operations, Chow said: ‘We have no plans for major disposals and no natural disposal candidates.’ The armoured vehicles division is ‘a very good business unit’.
However, ‘consolidation drivers for armoured vehicles are quite strong in the sense that there is more capacity than demand. A logical consequence of that is that if we win MRAV then we already have a European consortium where consolidation can occur. If there is a consolidation trend then the MRAV will provide a good platform.’
A decision on MRAV is expected next month.
Chow’s plan, page 18