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Aviation History
1986
1986 - 0109.PDF
Westland war continues LONDON Confusion hovers over West- land as the January 14 dead line approaches for the company's shareholders to vote on whether to accept the rival partnerships offered by the USA/European bid by United Technologies Cor poration, owner of Sikorsky and the Italian Fiat group, or to take up the offer by the totally European consortium of Aerospatiale (France), Agusta (Italy), British Aero space and GEC (UK), and MBB of West Germany. Westland chairman Sir John Cuckney has asked for, and received, assurances from UK Prime Minister Margaret Thatcher that Westland would not be discriminated against should the company accept the UTC/Fiat offer. The request followed a letter from the Ministry of Defence Procurement Executive (MoD PE) to Lazards, Westland's financial advisers. The letter stated that only by accepting the European bid would West- land be able to take responsibility for the UK share of any European multi national helicopter projects. Thatcher's letter to Sir John states in part: "As long as Westland continues to carry on business in the UK, the Government will, of course, continue to regard it as a British and therefore, European company, and will support it in pursuing British interests in Europe. "Government policy will remain that the UK should procure its helicopters from the most cost-effective source. Against this background, the Government would wish to see Westland play a full part in existing and future Euro pean collaborative projects. "Some of these are still at a very early stage, and all of them require the agreement of the companies and govern ments—including the UK Government—concerned. "In this connection you should be aware of indications from European governments and companies that they currently take the view that a number of projects in which Westland is expecting to participate in co-operation with other European compa nies may be lost to Westland if the United Technologies Fiat proposals are accepted." Thatcher goes on to say that Westland must assess the significance of these indi cations, and that whichever bid is accepted, the UK Government will support Westland should it wish to participate in European projects, and will resist any discrimination against West- land. Sir John Cuckney has advised Westland share holders to accept the UTC/Fiat offer (See Flight, last week, page 7), but the rival bid by the European consortium is thought to be seen by many shareholders as more attractive on the face of it. Sikorsky talks Meanwhile, Sikorsky presi dent Bill Paul and a team of leading Sikorsky management have arrived in London for further talks with Westland, and it is expected that the UTC/Fiat partnership will table a better offer before the January 14 shareholders' deadline. Paul is playing his cards close to his chest, but Sikorsky believes that short- term subcontract work is not the sole solution to West- land's problems. Colin Green, Sikorsky's vice-president for planning, told Flight on January 3: "The European offers dribble in a page at a time. We have not yet responded with a revised offer, but we're looking at it. But don't misunderstand what our original offer is. Guaranteed manhours of work are not the sole answer to Westland's problems. They have a whole list of problems. The immediate problem is to provide work to preserve the engineering force. Otherwise, without engineers you become a tin-bashing company. That's the last thing we want. Our pledge of one million manhours is split two-thirds to engineering and one-third to production, and that addresses the company's immediate problem. "But the company's core problem is that it needs a core product. For years Westland has had the Sea King as a core. Some years ago they realised they needed a new product and chose the W.30, which has not been successful, but they were damn right in forseeing the need for a new product, though. We are offer ing the Blackhawk as the core product. The Europeans don't address that problem. "Another long-term prob lem is management, and I'm talking of the broad view, not individuals. West- land has stood alone in Europe as a helicopter- product-dominated public company. We at Sikorsky have three powerful rivals, and we can see and compare our strategies with theirs. We know how a single-product- dominated public company should act. Aerospatiale is nationalised, as is Agusta. MBB is pseudo-private, but only 7 per cent of its sales are helicopters. There are two other issues. Westland's potential in the US military market; there is no guarantee of access but, it's a possibility, and one you should not ignore—the US Army is the biggest helicopter buyer in the free world. "The other issue, and the biggest long-term challenge facing Westland, is that it must have potential to grow into fields other than aerospace/defence. UTC and Fiat have about $30 billion a year sales between them, dominated by non-aerospace products. Westland could put its aerospace skills and tech nology into that pool some 10 or 15 years downstream. No, short-term finance and subcontract work are not the main problems." So where would Westland fit in with the Blackhawk? "Well, look at Westland's expertise with the Sea King," says Green. "That was a Sikorsky licence product, but they took it a lot further than we ever took the SH-3. You see, when you're tied to a long production run for a major customer such as the US Navy or Army, you sometimes have to turn business away because you can't afford to build small, highly modified batches. As I see it, we'll keep the big machine going and Westland can produce the low rate. We're talking say 20 aircraft a year, perhaps, of highly specialised aircraft batches. And they have access to markets that we don't have. And let's make it clear, an order from the RAF for Black hawk is not a pre-condition of any subcontract work or licence work for Westland." Why did UTC join with Fiat? Is this to provide an Italian connection, so that Sikorsky can pre-empt any problems in any marketing of EH.101 to the US armed forces? "No, Fiat and UTC overall have similar interests and we've been looking at a formal tie-up for some time. Of course we'd be glad to be associated with a company with EH.101. It's a good heli copter, and don't forget that Sikorsky already has good relations with Agusta. They have been licencees for our helicopters for some years now. But don't forget we'll only have a minority interest in Westland, with two UTC and one Fiat board members." What about the agreement between Sikorsky and Shorts for them to build any RAF Blackhawks? "That was never a licence, it was a Memorandum of Under standing for AST.404, which could be terminated by either party, given 60 days notice." Would Sikorsky support W.30 sales in the USA? "No, on civil sales we would not help or hinder the W.30. We will sell the S-76. "All in all, what we are saying is that we've worked with Westland since 1947, and we don't like to see them dead in the water. We want to help—but the deal will be beneficial to all concerned. Right now we're in town, and we'll be talking to Westland again." Further developments took place as Flight went to press. Sir John Cuckney advised Westland shareholders to accept the UTC/Fiat offer. Meanwhile, Defence Minister Michael Heseltine says that he is "furious and amazed" that Westland has not talked formally with the European consortium. Heseltine is asking for the January 14 shareholders' meeting to be postponed until the European offer can be fully examined. FLIGHT INTERNATIONAL, 11 January 1986 7
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