Keeping important technologies under British (and Western in general) control

HE117

LE
As one who felt that the privatisation of QinetiQ was compromising, I see the Sheffield Forgemasters buy-up by the government as a positive thing.

I just wish that some of the chipset developers and other similar companies were regarded as being equally as important.
I think the main difference between the two situations is that the core of the chipset design is in the heads of the set of folk doing the design. The process is much more intellectual, although the implementation of the chips themselves needs some fairly fancy hardware..

The important bit of Forgemasters is the plant.. although how to work it is also very much in the formula. If forgemasters fell into foreign hands, there is a danger that the plant would be exported. This is a problem because the source manufacturers of such plant are long gone...
 

Cold_Collation

LE
Book Reviewer
I think the main difference between the two situations is that the core of the chipset design is in the heads of the set of folk doing the design. The process is much more intellectual, although the implementation of the chips themselves needs some fairly fancy hardware..

The important bit of Forgemasters is the plant.. although how to work it is also very much in the formula. If forgemasters fell into foreign hands, there is a danger that the plant would be exported. This is a problem because the source manufacturers of such plant are long gone...
I can think of a number of friends who put together some quite nicky pieces of kit, whose companies were acquired by venture capitalists.

The form seems to be:

"You belong to us now. Your business doesn't conform to any of our accepted business models. 1) You will conform. 2) You will relocate and work from one of our existing large, corporate offices."

The collective responses have generally been: "You've bought the business as it stands. You don't own 'us'. We're now very comfortably off, thank you, and won't be pressed into a corporate mould that doesn't suit the business you've bought. We resign."

Several of those people, with the passage of time/exclusion clauses, are now back doing very well out of servicing the kit that they used to sell - the buyers of the kit having become fed up of trying to deal with the very inflexible large corporations (whose staff don't really understand the kit anyway) who now nominally own the IP.

I just wonder, then, given your observation, why such capital is being made of the sale of chipset specialists to overseas (and potentially hostile) organisations.
 

Yokel

LE
I'm utterly unsurprised.

It's a constant theme of free-market loving tories that profits should be privatised and losses should be socialised.

Not being a Tory I am not sure what you mean. Without regulation, the free market can become a race to the bottom - such as sub prime mortgage selling in the US which led to a worldwide financial crash.

I can think of a number of friends who put together some quite nicky pieces of kit, whose companies were acquired by venture capitalists.

The form seems to be:

"You belong to us now. Your business doesn't conform to any of our accepted business models. 1) You will conform. 2) You will relocate and work from one of our existing large, corporate offices."

The collective responses have generally been: "You've bought the business as it stands. You don't own 'us'. We're now very comfortably off, thank you, and won't be pressed into a corporate mould that doesn't suit the business you've bought. We resign."

Several of those people, with the passage of time/exclusion clauses, are now back doing very well out of servicing the kit that they used to sell - the buyers of the kit having become fed up of trying to deal with the very inflexible large corporations (whose staff don't really understand the kit anyway) who now nominally own the IP.

I just wonder, then, given your observation, why such capital is being made of the sale of chipset specialists to overseas (and potentially hostile) organisations.

This is what it dislike about the venture capitalist vampires.
 

Cold_Collation

LE
Book Reviewer
This is what it dislike about the venture capitalist vampires.
It has been an eye-opener. Something works as is - works because of how it is, in fact. But, because it's not cookie-cutter, it 'has' to change.

One such friend, in addition to their stake in the sold business, is an international-level equestrian with land and a significant horse-related business up in the Midlands. Said friend was told that relocating to High Wycombe was non-negotiable. And so it proved; said friend resigned. So did all the other key personnel.

The venture capital people have been left with the product/IP in name only.

Ridiculously short-sighted.
 
It has been an eye-opener. Something works as is - works because of how it is, in fact. But, because it's not cookie-cutter, it 'has' to change.

One such friend, in addition to their stake in the sold business, is an international-level equestrian with land and a significant horse-related business up in the Midlands. Said friend was told that relocating to High Wycombe was non-negotiable. And so it proved; said friend resigned. So did all the other key personnel.

The venture capital people have been left with the product/IP in name only.

Ridiculously short-sighted.

Lots of acquisitions have earn-out clauses now, in order to get the full payment key people have to stay for X amount of time and do Y amount of business in that time.
 

Yokel

LE
Ultra Electronics has been acquired by a US Private Equity outfit

The regulatory filing says that Cobham “recognises the specific importance of Ultra's contribution to the UK's economy and national security” and has agreed to provide “legally binding and enforceable commitments”.

The two companies will now “engage proactively and collaboratively with HM Government to agree the detailed terms, duration, nature and form of these commitments”.

Key pledges in the commitments include “safeguarding and supporting the UK's national security” with protection for sovereign UK capabilities, and continued supply of technology to the UK forces.


I wonder if if HMG has had capable lawyers to advise on the commitments?
 

Yokel

LE
Kwasi Kwarteng intervenes in takeover bid of UK defence firm Ultra Electronics

The takeover of the British defence firm Ultra Electronics by a US private equity company will be investigated on national security grounds, after the business minister, Kwasi Kwarteng, told the competition regulator to examine the deal.

Warning that foreign investment “must not threaten national security”, Kwarteng tabled an order in parliament preventing Ultra from disclosing “sensitive information” to Cobham, the defence firm behind the £2.6bn takeover bid. He said Ultra would be prevented from passing on details of the “goods or services it provides to HM Government or HM Armed Forces”, while the Competition and Markets Authority (CMA) examined the deal.

The official intervention notice came after pressure from Labour and trade unions to intervene in the takeover bid by Cobham, which is based in Dorset and which was itself bought last year by the US buyout house Advent for £4bn.

Steve Turner, assistant general secretary of the trade union Unite, said: “The government’s action with regards to the sale of Ultra Electronics is significant and is a step in the right direction.” But he said the government must not “just talk tough” but should take steps to stop the sale to “overseas venture capitalists” of Ultra as well as the defence manufacturer Meggitt.

Based in Coventry, Meggitt, which makes wheels and brakes for military fighter jets, is being pursued by two US aerospace companies, Parker Hannifin and TransDigm, and appears to be on the verge of a £7bn sale.
 

endure

GCM
Kwasi Kwarteng intervenes in takeover bid of UK defence firm Ultra Electronics

The takeover of the British defence firm Ultra Electronics by a US private equity company will be investigated on national security grounds, after the business minister, Kwasi Kwarteng, told the competition regulator to examine the deal.

Warning that foreign investment “must not threaten national security”, Kwarteng tabled an order in parliament preventing Ultra from disclosing “sensitive information” to Cobham, the defence firm behind the £2.6bn takeover bid. He said Ultra would be prevented from passing on details of the “goods or services it provides to HM Government or HM Armed Forces”, while the Competition and Markets Authority (CMA) examined the deal.

The official intervention notice came after pressure from Labour and trade unions to intervene in the takeover bid by Cobham, which is based in Dorset and which was itself bought last year by the US buyout house Advent for £4bn.

Steve Turner, assistant general secretary of the trade union Unite, said: “The government’s action with regards to the sale of Ultra Electronics is significant and is a step in the right direction.” But he said the government must not “just talk tough” but should take steps to stop the sale to “overseas venture capitalists” of Ultra as well as the defence manufacturer Meggitt.

Based in Coventry, Meggitt, which makes wheels and brakes for military fighter jets, is being pursued by two US aerospace companies, Parker Hannifin and TransDigm, and appears to be on the verge of a £7bn sale.
That's a month old.

 

Yokel

LE
The Guardian article is dated 18 August 2021 - in other words today. As was the Twitter feed from Kwasi Kwarteng MP, and this Government notice.

Proposed acquisition of Ultra Electronics Holdings plc by Cobham Ultra Acquisitions Limited: public interest intervention notice

On 16 August 2021, Cobham Ultra Acquisitions Limited (Cobham) and Ultra Electronics Holdings plc (Ultra) announced that they had reached agreement on the terms of an acquisition of Ultra.

Under the Enterprise Act 2002, the Secretary of State for Business, Energy and Industrial Strategy has the power to intervene in mergers on public interest grounds relating to national security. This responsibility is discharged in a quasi-judicial capacity, which means that the Secretary of State must act, and be seen to act, in a scrupulously fair and impartial manner.

On 18 August 2021, acting on official advice, the Secretary of State issued a Public Interest Intervention Notice to intervene in the proposed transaction on national security grounds.

The Competition and Markets Authority will prepare a report on the proposed transaction. The Competition and Markets Authority has until midnight at the end of 18 January 2022 to complete and submit this report to the Secretary of State.
 
@Yokel - Ultra owns several subsidiaries that supply sensitive equipment and services to the USG. Those bits are at arm's length from the UK board, have US SCIFs etc, and do not disclose stuff they shouldn't to the UK. The acquisition by Cobham will just reverse that paradigm, and the UK-specific sensitive bits will be at arm's length to US HQ/management. I worked very closely indeed with one of them (may as well have been on their staff for 4 or 5 years) and know people in two others. Much of it TS-SCI NOFORN.

I pointed this out in #292 - none of this should be at all concerning, since it already happens, and has done for decades. If it were China or a Middle East nation, that would be concerning.
 

Yokel

LE
@Yokel - Ultra owns several subsidiaries that supply sensitive equipment and services to the USG. Those bits are at arm's length from the UK board, have US SCIFs etc, and do not disclose stuff they shouldn't to the UK. The acquisition by Cobham will just reverse that paradigm, and the UK-specific sensitive bits will be at arm's length to US HQ/management. I worked very closely indeed with one of them (may as well have been on their staff for 4 or 5 years) and know people in two others. Much of it TS-SCI NOFORN.

I pointed this out in #292 - none of this should be at all concerning, since it already happens, and has done for decades. If it were China or a Middle East nation, that would be concerning.

All understood - but the acquisition is not by a US giant in the defence/aerospace/electronics field looking for growth, it is by a private equity group who may strip, close, or sell parts of the group for short term financial gain.

The asset strippers are a menace to Western industrial capabilities.
 
All understood - but the acquisition is not by a US giant in the defence/aerospace/electronics field looking for growth, it is by a private equity group who may strip, close, or sell parts of the group for short term financial gain.

The asset strippers are a menace to Western industrial capabilities.

"May" and "will" are not the same. In any event, how do you think it looked when Ultra (a small UK based company) bought key suppliers to the USG? Even worse, Ultra was FTSE-listed, so could be bought by anybody.

My (unrelated) company was bought by private equity about 18 months ago. Apart from merging one of our divisions with another group company, all they've done is invested in it. We have more people, we have budget for things that weren't getting done etc.

I would expect Cobham to restructure both companies and put like-for-like together. The PE company has invested about $7bn now between the two. Looks to me like they're trying to grow their defense portfolio, not asset strip it.
 

Yokel

LE
"May" and "will" are not the same. In any event, how do you think it looked when Ultra (a small UK based company) bought key suppliers to the USG? Even worse, Ultra was FTSE-listed, so could be bought by anybody.

My (unrelated) company was bought by private equity about 18 months ago. Apart from merging one of our divisions with another group company, all they've done is invested in it. We have more people, we have budget for things that weren't getting done etc.

I would expect Cobham to restructure both companies and put like-for-like together. The PE company has invested about $7bn now between the two. Looks to me like they're trying to grow their defense portfolio, not asset strip it.

Presumably the US Government was able to ensure that key technologies and sensitive intellectual property were protected, just like they did when Rolls Royce acquired Allison. Mind you, since then Rolls Royce themselves have been involved in very important and sensitise things, such as the LiftSystem for the F-35B.

I am not Mr Kwarteng - why not send him your comments?
 
Presumably the US Government was able to ensure that key technologies and sensitive intellectual property were protected, just like they did when Rolls Royce acquired Allison. Mind you, since then Rolls Royce themselves have been involved in very important and sensitise things, such as the LiftSystem for the F-35B.

I am not Mr Kwarteng - why not send him your comments?

I really don't give a shite, but if anything I'm trying to save you from a coronary by worrying about something that's just not that big a deal, and illustrating that with examples I have personal knowledge of.

Being regulated by governments because of NS concerns is just part and parcel of international defense business. I imagine it was the same in the 1940s, even. Things like Ford of Britain and Vauxhall having US owners, but sister companies in Germany. I imagine this was a cause for concern until the end of 1941.
 

Yokel

LE
The original theme of this thread was just about sensitive technologies, but about capabilities that we need to have as a nation. Medical equipment was one of the categories I listed in the original post, as were their suppliers. As such, the following story fits here.

£250,000 polishing line investment puts the finishing touches to PPS’ recovery

“Like many firms, we’ve had to withstand some tough times over the last eighteen months, but the recovery is now back on and we’re trying to put in place the technology we need to meet escalating demand from pretty much every sector, including automotive, construction, food and drink, nuclear and leisure.

In the early days of the lockdown, we furloughed everyone except two senior managers and myself, who moved to the shopfloor to ensure work for the medical sector was completed. Before long we had to call staff back, as we were polishing steel that was going into ventilator stands and the big vats that were helping to develop the vaccines.

She went on to add: “More than £750,000 has been invested in reinforcing our position as a market leader in the last three years and we are confident this will play a key role in us achieving record performance over the next twelve months.”

Professional Polishing Services offer a bespoke stainless steel and non-ferrous polishing service to a client base that spans the world, with its efforts seen as far afield as Hong Kong and Australia.
 

Yokel

LE
Supply chains resilience is mentioned in this RAND report on the Mod part of the ,gov.uk website.

Foresee: Map vulnerabilities in infrastructure and supply chains and mitigate these as required

This is important because, in an increasingly interconnected world with global supply chains dependent on technology, there is greater risk to CNI These vulnerabilities need to be understood as they cannot be considered in isolation, and with greater networking brought about by the Internet, cyber security is a growing concern. This requires a greater level of understanding of where these vulnerabilities and their interdependencies are so that more robust defence measures can be implemented. Threat from state actors means it is no longer sufficient to shore up only those places that are most at risk from various factors (i.e. floods). Now, everything is vulnerable. This should include identifying potential single points of failure, the need for additional capacity and places where redundancy or alternative capabilities are required. It should also include an assessment of critical national infrastructure and possible cascade effects. This is also particularly vital for communications systems that might be moved in the case of a crisis and could involve activity such as developing redundant Command, Control, Communications and Information (C3I) and reversionary modes to build communications resilience, and ongoing threat assessment of space, cyber and electronic warfare (EW) capabilities. This mapping should encompass both civilian and MOD-specific infrastructure and should consider any need for pre-positioning of material and stockpiling both for UK Defence. Sweden and Australia are both currently in the process of mapping infrastructure and supply chains to determine vulnerabilities. Sweden in particular has identified ‘just-in time’ acquisition as a key threat to potential societal resilience.
Both countries have identified a high reliance on imports as a vulnerability.

Page 51
 

Yokel

LE
Policy Exchange - Britain and the Geopolitics of Space Technology

In Britain and the Geopolitics of Space Technology, Dr John Sheldon argues that spacepower has become critical in shaping the 21st century strategic competition and that space is a strategic sector of national security interest. Competing effectively in the global space race requires industrial scale. The report warns about China’s aggressive build-up in global tech markets. The allied response must ensure viable Western alternatives to Beijing-backed players. Furthermore, AUKUS should be expanded to include space technology cooperation. Safeguarding space-industrial competitiveness via an internationalist policy, rather than protectionist measures, is essential. Most importantly, Government should view the space sector not just in hard geopolitical terms, but also from a wider geoeconomic perspective as well.
 

Yokel

LE
I had hoped to find another source for this, but had no luck.

Peers round on government over foreign steel in Navy warships and submarines

Britain's reliance on foreign steel for Royal Navy nuclear submarines and warships is "an appalling state of affairs", peers were told today.

A Government minister said specialist metal required to make Trident-armed Dreadnought subs and Type 31 light frigates could not be supplied from the UK.

But industrial leaders and unions have repeatedly said if they were given enough notice and sufficient orders, they would be able to manufacture the products needed.

Hmm!
 

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