GKN: The Great Manufacturing Survivor

Posted on 22 Sep 2009 by The Manufacturer

Howard Wheeldon celebrates his favourite UK manufacturing story and identfies some key developments in its recent success.

Having waited in vein for a third volume of ‘A History of GKN’ which might bring the official story of what is surely the most remarkable survivor of the British manufacturing story up to date, it is with much pleasure that I welcome the recent publication of ‘GKN; The Making of A Business 1759-2009’ by my old friend Andrew Lorenz.

This fascinating account by Lorenz is not the ‘official’ third volume of GKN history – one that might have taken the story beyond the 1945 Plimsoll line that was left by Mr Edgar Jones in the second volume, published in 1990. It does go some way to bringing the GKN story up to date but Lorenz’ success in my view is that his account demonstrates why GKN should be regarded as the great survivor in the otherwise miserable post war story of British manufacturing.

GKN – from woodscrews, nuts and bolts to automotive components, aerospace equipment and various products for the defence industry – is a company that has survived just about everything thrown at it because it has always been prepared to adapt and change. Although having routes dating back to 1759 [from the Welsh based Dowlais Iron Company] GKN has been recognised in its current form ever since the final merger that created what first became known as Guest, Keen and Nettlefold back in 1902. Having followed the various fortunes and failures of the UK engineering sector for over forty years now I find myself in complete agreement with Lorenz when he implies that the success of GKN is down to remarkable agility and the ability of two separate generations of management since the 1960s to recognise the constant need to adapt and change. The bottom line is that GKN has somehow always managed to shift away from mature or ailing businesses with remarkable speed as opposed to any attempt to hold on for too long to sacred cows that may by others have been regarded as a legacy that could not easily be dismissed. Out went nuts, bolts, steel and eventually other products and businesses such as auto parts distribution that either suffered miserably low margins or had little if any value added. Indeed, it is easy to forget that GKN slashed its workforce by almost a half over the period 1981-83 as it either closed or sold various subsidiaries. Just as I would myself, Lorenz highlights the great strength and foresight of then chairman Sir Trevor Holdsworth and various others that I have personally known well over the years such as Sir David Lees, Trevor Bonner, Alec Daly and the late Roy Roberts. Back at the ranch though, particularly under the seemingly ruthless Holdsworth regime, ably assisted by then Finance Director David Lees who later became both CEO and Chairman of GKN and is today chairman of Tate & Lyle, out went over reliance on not only the specific UK market but also much of the UK manufacturing base as well, unless divisional management could prove that it was truly competitive with international peers, despite often needing to suffer the rigours of damage that pound sterling could do. Quite rightly Lorenz also cites the move by GKN into automotive manufacturing through development of then West German based Uni-Cardan [a large driveline auto equipment manufacturer] as being principle amongst the forward momentum decisions and later successes that management took during the early 1980’s while at the same time the seemingly ruthless phase of closure and change took place.

That is not to say that GKN was altogether new in the game of higher margin automotive component engineering when it acquired Uni-Cardan in 1980 of course. In fact the company had accidently moved into the world of serious automotive component production following the end of WW2 in an attempt to fill up manufacturing capacity left behind when war work finished. The best of this, particularly in driveline products, expanded and grew into what some of us still persist calling Hardy Spicer in Birmingham. Even so, while Hardy Spicer would always fit well within any attempt to expand driveline products internationally there can be little argument that it was the Uni-Cardan purchase that laid the foundations of what we today may regard as the well established international presence and strength that GKN commands in driveline product across the international automotive industry today.

Lorenz rightly cites also that the development by GKN Sankey of the Warrior armoured personnel carrier and the subsequent award [in 1983] of a production contract for close to 1,000 units marked another turning point for the company. Those ‘Warriors’ are of course still in service with British forces today – indeed they are crucially important pieces of kit in moving troops and saving lives and are currently subject to a major modernisation programme by BAE Systems – the owner today of what was the Telford plant of GKN Sankey. For the record and for those interested I understand that this plant has only over the last few weeks been closed by BAE Systems. The point though is that Sankey and Warrior opened the door for GKN’s entry into defence. Later it would include the acquisition of Westland and, after owning the great British helicopter manufacturer through what would be some very good years that included development with the Italian company Agusta of the excellent and highly successful EH101 Merlin helicopter, an initial 50/50 ownership partnership with the Finmeccanica owned Agusta and eventually its sales to the Italian group.

Few corporate manufacturing industries in Britain can lay claim to such and interesting story as GKN. Two hundred and fifty years of history is a long time of course but it is a period that is far from over yet. Today GKN is in the very capable hands of Sir Kevin Smith. It is he that is facing up to a somewhat similar recession faced by Sir Trevor Holdsworth when he took up the mantle back at the beginning of 1980. Smith of course does not face the gargantuan job of coping with such a fast decline in UK manufacturing as Holdsworth did and, cutting jobs and costs apart, he has not been required to make such a serious transformation as Holdsworth was forced to do. The result is that GKN is today very well placed in the markets it serves and very well positioned in my view to return decent levels of growth as the international recovery gathers momentum. Ironically what Smith might share with Holdsworth today is the rebuke that the latter gave to the British government back in the early 1980’s when he accused them of “turning a world recession into an unprecedented national depression”. We should thank Lorenz for reminding us of those wise Holdsworth words just as we should for reminding us of similar words of wisdom from then British Leyland chairman Sir Michael Edwardes a few years later, “that if the Cabinet does not have the wit and imagination to reconcile our industrial needs with… North Sea oil, they would do better to leave the bloody stuff in the ground”.

All in all this book – published by John Wiley – and written by someone who has closely followed the fortunes and specific failures of the UK manufacturing industry since the 1970s really does make for essential reading. BAE Systems and Rolls-Royce may also be regarded as similarly great survivors too but, interesting though their individual histories are, they bear little resemblance to the fascinating story GKN.

Howard Wheeldon is the Senior Strategist at BGC Partners.

[email protected]