BAE is the rump of Britain’s’ once diverse aviation industry. EADS is primarily a civil aircraft maker, parent company of the enormous and successful Airbus range of airliners. BAE is mainly a defence contractor (now also owning the UK warship and tank industry) . Six years ago it sold its 20% stake in Airbus because it wanted to concentrate on defence, especially in America. It is a subcontractor for work on the way-over-budget-and-schedule Joint Strike Fighter. BAE hoped, it seems, this would all lead to a full tie-up one day with Boeing.
The American ambitions always looked dubious. The US has never had much respect for British military aircraft, the Harrier excepted. They bought the plane, adapted it, and built it under licence. When Britain foolishly decided to pension off the Harriers as a quick budget cut the US paid it the ultimate compliment of buying up the entire stock. But that’s about as far as it goes.
Come the financial crash and all has changed. BAE is a weak exporter – it has just lost the contract to supply Typhoons to India. It is heavily reliant on supplying the UK armed forces. This of course is not a growth area at present. US defense budgets are similarly down.
So now BAE wants to REBALANCE IN FAVOUR OF CIVIL AIRCRAFT! Six wasted years in other words. It should have upped the stake in Airbus 6 years ago, not sold it. BAE seems to be doing its best to follow in the wake of the British car industry and ICI. The latter, in a suicidal fit, sold all its heavy chemical businesses and bought into perfumery and flavours. “You’d never know us”, they crowed in an asinine advertising campaign. A few years later, the once giant of British industry had gone, the rump Dulux paint business sold to the Dutch Akzo Nobel.
So where does this leave Britain’s rebalancing in favour of manufacturing industry? I ask the question.