Is the unopposed sale of the UK's last helicopter maker to its Italian partner a sign of national indifference or a smart strategic move?


Eighteen years ago the Conservative government of UK Prime Minister Margaret Thatcher was almost brought down by the controversy surrounding the sale of the UK's only surviving rotorcraft manufacturer, Westland Helicopters. Last week, UK industrial giant GKN announced the sale of its stake in AgustaWestand to its Italian joint-venture partner. This time there was no political outrage, no public outcry.


Does the lack of protest make the deal acceptable? In the UK, apparently so. While it could be argued that Westland is a special case - a predominantly military company with a dwindling domestic order book that wlll benefit from closer integration with a predominantly civil company with a growing international business base - BAE Systems could announce tomorrow that is is merging with one of the US aerospace giants and politicians and public alike would probably wave the deal through.


Have the British ceased to care about their aerospace industry, or are Westland's sale to an overseas owner and BAE's hopes for a transatlantic merger just the logical consequences of having the most open aerospace market in Europe - and probably in the world? Is it a good sign that much-needed industry consolidation can be allowed to occur without political interference or public debate?


Back in 1986, Westland needed rescuing and US helicopter manufacturer Sikorsky was its favoured saviour. Flamboyant Conservative politician Michael Heseltine, then defence secretary, wanted a European buyer, triggering a famous feud with trade and industry secretary Leon Brittan, who backed the US bid. The political crisis that erupted almost toppled the government. Heseltine resigned over the issue; Westland stayed British, and independent.


GKN bought a substantial stake in the helicopter manufacturer in 1988, and a decade later merged Westland with Finmeccanica's helicopter manufacturing Agusta subsidiary to form the AgustaWestland joint venture. While the deal, which took three years to complete, frustrated those who wanted to see a single European rotorcraft giant take shape around Eurocopter, it did create a viable company.


AgustaWestland has a growing civil order book for the Agusta-developed A109 and AB139 and the jointly manufactured EH101 large helicopter is proving surprisingly competitive. If there is a weakness in the venture, it is in Westland's declining domestic military business, with deliveries of EH101s and licence-built Boeing AH-64 Apaches to the UK forces almost complete. The only major new UK programme on the horizon is the remanufacture of 100 army and navy Lynx helicopters under the still-to-be-launched Future Lynx programme.


The timing for a change in ownership is right. To have waited until after Future Lynx would probably have invited opposition, and any delay in the contract would only worsen Westland's financial picture and heighten the need for its closer integration with Agusta - little of which has occurred under the AgustaWestland joint venture. No UK jobs appear to be at risk and the UK operation will get an owner that is committed to increasing its market presence.


The sale to a foreign owner of a company as steeped in British aviation history as Westland could have been avoided, but only if the UK government years earlier had ditched its policy of open, competitive defence procurement. But open markets are what the aerospace industry needs to survive. Continental European countries that cling to national champions are preventing the consolidation of the region's defence market, and slowly strangling their own military equipment makers.


By allowing Westland full integration into Agusta, the UK is also ensuring there is home-grown competition in the European rotorcraft market, and empowering AgustaWestland to ensure that Eurocopter does not establish monolithic dominance. Some would argue that Europe only needs one helicopter manufacturer, but that invites comparison with the US industry, which remains strangely fragmented.


The Westland sale should be a lesson for the USA that consolidation is inevitable, no matter how many industrial and political tantrums are thrown. It is ridiculous that the US military rotorcraft market is still divided between three manufacturers when the business can barely support two. In any other industry, the loss of a major programme - the US Army's RAH-66 Comanche - would at least prompt discussion about consolidation, but Bell, Boeing and Sikorsky seem as stuck in their respective corners as ever. Meanwhile, the European industry - led by a newly strengthened AgustaWestland and its US101 venture with Lockheed Martin - is circling the battlefield, looking to join the fight.

Source: Flight International