|
All these companies have made large
investments in the U.K. at the behest of the MoD. Selex in
particular has spent millions buying out its stake in AMS;
how safe will these investments be? We have already suggested
in previous issues that BAE may have to write down the value
of its AlvisVickers purchase, could other companies follow
suit or exit the U.K.?
It looks very much as if Competitive Procurement has been
confined to
the dustbin and another strategy formulated by Drayson and
his team
following the McCain Report. As we have discussed in the past
the ultimate
aim of all these changes is the progressive rundown of the
U.K.’s
defence industry to suit the Government’s overall, de-industrialisation
of
the U.K. to replace it with Tony’s luvvies, now less
keen that in 1997,
in the media industry. One of these luvvies was extolling
the evil of
the U.K. defence industry on the Jonathon Ross show today.
One can only
wonder if he would be saying something different if a relative
of his
had been killed by sub-standard imported equipment in Iraq.
The fact
that the U.K. retains a high defence spend protects our soldiers
with new
technologies, when the Government chooses to buy them! It
was noticed
that Lord Drayson made no mention of our boys in Iraq and
Afghanistan
and the clear need to supply them with more equipment.
We wonder what the backlash will be from industry to this
announcement,
but, given the turmoil of Tony and his cronies and the cash
for
peerages questions, perhaps it will be sooner rather than
later that the next
Government will announce another U-turn to keep us in wordage
for
another few years on Procurement issues. But one thing was
clear when the
lights went out and Drayson continued using Francis Tusa’s
torch that he
is a man on a mission and does not want to be stopped by anyone
including Mike Turner!
Ex Tory Transport Minister Steve Norris was also present at
the
announcement. BATTLESPACE asked him his thoughts and he stated
that for any
Minister is was dangerous to intrude into an industry he had
no in-depth
knowledge of an industry; quite clearly pharmaceuticals and
defence are
as far apart as could be in strategies.
19 Jul 06. ABRO today announced its fourth year Trading Fund
results
with profits before interest of £4.9m and a return on
capital employed of
6.8% against an agreed target of 3.5%.
In the year to 31st March the organisation maintained a strong
order
book. Sales were £137m, the majority in support of MoD
customers. Over
£17.2m came from either military original equipment
manufacturers in
support of defence contracts or non-military customers. Profit
after
interest was £4.5M and a dividend of £12m was
paid to the owner, the Ministry
of Defence (MoD).
Equipment output finished the year very strongly after a
slow first
half and against a background of reducing customer budgets.
All major
programmes were delivered and a significant number of urgent
operational
requirements were undertaken in support of Forces for combat
and
deployment both to Iraq and Afghanistan. The challenge to
deliver all planned
programmes whilst being able to support these requirements
helped
underpin ABRO’s market position and establish the value
and capability of the
organisation to its major shareholders.
The balance sheet was considerably strengthened from improvements
in
materials management. These released excessive accruals for
goods
received of £3.7m and released value from stock disposals.
The revaluation of
fixed assets and the disposal of the Warminster site as part
of a sale
and lease back arrangement contributed to the loss on asset
disposals
of £1.2m. The net effect of these ‘one off’
adjustments was a £2.9m
enhancement to profits.
In July, ABRO announced the intention to proceed with a two
phase
rationalisation programme. Under phase one and during the
period, 283.5
staff were released. Phase two proposals for rationalisation
of the Land
and wheeled vehicle business were confirmed, with implementation
beginning in 2006/07. However, the decision by the MoD customer
to upgrade its
armoured vehicles meant that the original proposals for rationalisation
of ABRO’s armoured vehicle and related business units
had to be
re-examined. As a consequence the armoured vehicle work, currently
undertaken
at ABRO Donnington remains for the foreseeable future.
Further progress has been made in restructuring the business
to improve
efficiency and provide greater strategic focus. The executive
management board has slimmed, the procurement function strengthened
and a
significant investment in a new business system made to aid
stock and control
materials management and workshop planning.
The year saw key partnerships develop and a significant number
of
contracts placed with a variety of original equipment manufactures
for the
provision of engineering support and fleet management services.
These
were predominantly for the defence industry but did include
fleet
services contracts for BAA Plc’s Edinburgh Airport and
the City of York;
delivered under the ABRO Fleet Services brand.
Peter Moore, ABRO’s Chief Executive said “The
demands on our business
created by the need to respond to the modernisation of logistic
support
to the front line, created a difficult and volatile trading
environment. Our first priority was to deliver the required
ouptut for the UK
Armed Forces and this we have done. However, traditional MoD
repair
programme activity continues to come under pressure with a
planned reduction
in overall levels. In response to this and to reflect the
downturn in
workload, steps have been taken to increase the efficiency
of our
business, protect our competitive position and modernise our
service delivery
footprint”.
He added “Against this background of uncertainty, the
financial year
ended well with us achieving a profit before interest of £4.5.m
and a
ROCE of 6.8%. The challenges ahead of us remain demanding
and include;
supporting the MoD’s aim of modernising support to our
Armed Forces,
balancing demands for better value and performance, meeting
the obligations
placed upon us in the Defence Industrial Strategy and continuing
to
acquire business in new and overseas markets. Our success
in these areas
will be achieved by working hard as a team and continuing
to deliver a
first class service to our Customers”.
Comment: ABRO’s development strategy spearheaded by
Peter Moore
ex-Malta shipyard supreme is clearly paying off. Not only
has the company been
slimmed down to a manageable size (with less agro than Peter
received
at Malta!), it is also paying a dividend to its owner. This
restructuring success appears to have taken ABRO itself by
surprise in its
effectiveness in such a short period of time. The company
and its key
executives are now gearing up for the next phase. At a dinner
this week ABRO
Chief Executive Peter Moore confirmed that not only is the
company seeking
to establish itself as a centre of excellence for armoured
vehicles in
the U.K. it is also looking overseas to establish relationships
with
other contractors and countries to offer its expertise.
ABRO is well placed in the U.K. to benefit from both the
Warrior
Upgrade Programme and already has a key position with BAE
on the FV430
Upgrade Programme (See: BATTLESPACE UPDATE Vol.8 ISSUE 22,
02 June 2006, BAE
SYSTEMS AND ABRO SQUARE UP OVER WARRIOR UPGRADE CONTRACT).
Its
engineering expertise in all sectors of vehicles and artillery
is key to a
number of BAE contracts. It is already building Light Guns
for the BAE
Thailand contract at its Sterling works. The Thai requirement
for Scorpion
refurbishment appears to be going the ABRO rather than the
BAE route.
For the moment, ABRO is keen to work with BAE and will soon
announce a
key partnership on the 430 Programme for continuing upgrades.
However, there is a clear divide in the strategy of both
companies. BAE
is reported to have called in an executive from UDLP to rationalise
its
stated loss making U.K. armoured vehicles business. Sources
at
Farnborough suggested that Andrew Davies, BAE’s Land
Systems supremo is looking
to retreat the whole operation to one site at its Newcastle
works
rather than Telford. However Telford is reputed to be fighting
back using
its excellence in FRES as a key factor. Newcastle would suit
the
Corporate model as it is close to Sedgefield (a point that
may not carry so
much weight soon) whilst Telford stresses that its costs per
hour is
cheaper than Newcastle. Sources suggest that Newcastle will
have to close in
2009 with no new orders; with the WLIP turret requirement
delayed again
for a down select, new business is now key to its survival.
But ABRO
has a lower cost base than both BAE sites thus it may emerge
the winner.
A revitalised ABRO with the support of the MoD and new confidence
could
well emerge as the centre of excellence for armoured vehicle
manufacturer and repai in the U.K. with BAE taking a management
lead for Whole
Fleet Management. That is where the difference lies, BAE has
concentrated
on Support activities whilst ABRO remains dedicated to engineering
success; perhaps that’s why it was left out of the BAE
desire to take it
over in the DIS? Quite clearly in two or three years there
will be a
queue of companies looking at this revitalised ABRO, LockMart,
BAE, Thales,
GD and DRS are a few that come instantly to mind.
Page | 1 | 2
| 3 | 4
| 5 | 6
| 7 | 8
| 9 | 10
| 11
| 12 |
13 | Previous
Page
USA & Canada News
|
