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2017 End of Term Report plus Current Issues and Airbus Helicopter By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.



Most probably this will be the final ‘Commentary’ until the start of next year and thus, before moving any further, may I wish all the many friends in the military, industry, government, and the many others who receive them a very Happy Christmas and New Year. Thank you for your support too and to those of you that have regularly responded to the views expressed and for your own views, thoughts and ideas, particularly those in relation to my main subject area of defence.

Had I been writing a more normal specific subject piece today then I guess that the choice would have been enormous! First up might well have been the decision by the US Commerce Department to uphold the Boeing subsidy case against Bombardier with the recommendation that steep 300% anti-subsidy duties should be placed on C Series jets sold in the US and, given that Airbus has now taken a 50.1% interest in the C Series jet programme, what this could mean?

That will no doubt be a subject for January just as will any result that arises from talks apparently held by Boeing with the Brazilian aircraft manufacturer Embraer, the third largest aircraft manufacturer in the world. Is the final round of consolidation in the western commercial aircraft manufacturing arena about to take place? Watch this space.

Finally, having given just a little piece of stick to the Defence Industrial Policy Refresh yesterday and in doing so, questioning why this needed to be published on the 21st December, by which time a great many of those that needed to read it had probably already broken up and gone away for the Christmas and New Year vacation, I could ask the same question as to why the MOD chose today to specifically to announce that Airbus Helicopter has been awarded a £100 million continuation contract to support the 24 Royal Air Force Puma HC Mk 2 helicopters through to March 2022?

The Puma Support Contract award is great news for Airbus Helicopter of course just as it is for the Royal Air Force and the many UK specialist engineering support jobs involved. Airbus Helicopter which is based at Kidlington on the site of what is now Oxford Airport has over the years established a truly excellent record of rotary support success. In respect of military rotary capability, the RAF Puma HC Mk 2 continues to play a vital role in UK defence and the aircraft is regularly deployed internationally in theatre. The specific contract awarded today will support an estimated 25 jobs both at Airbus Helicopter UK in Oxford and at nearby RAF Benson. I would add that given the excellent record that Airbus has already achieved in supporting the rebuilt fleet of Royal Air Force Puma HC Mk 2 helicopters through the first three-year support contract awarded in 2013, it is pleasing that the MOD has seen fit to reward the same supplier.

But why announce this today? Could it be perhaps that very soon into 2018 the MOD is about to go into another closedown period ahead of a full scale defence review?

The Year Past and the Year Ahead

2018 will be a very important year and there will be much to both celebrate and commemorate. These will of course include celebrations to mark the one hundredth anniversary of the founding of the Royal Air Force begin on my own birthday, the 31st of March, with a concert at the Royal Albert Hall and with a number of hugely significant events across the country, they will continue through the whole of the summer months.

The RAF Museum at Hendon and which I would remind here was a legacy creation from the 50th anniversary of the Royal Air Force in 1968, will formally open the doors to its massive new investment and redevelopment in June. In November we will of course recall the hundredth anniversary of the ending of the Great War. There are many others commemorations and celebrations that I could mention as well such as the fact that next year will mark the 25th year that I have been writing what is now called ‘Commentary’ and that started life as ‘Letter from London’ for the US brokerage, Prudential Bache, that I then worked for.

And yes, I have had yet another exceptionally busy year again with a great many industry related visits, plus those to military bases and establishments here in the UK and abroad, a large number of speaking engagements and fireside chats together with all the other support and engagement work that I undertake. Highlights for me would have to be visits to a fogbound RNAS Culdrose during April and to RAF Akrotiri in November but that is not to downplay any of the other visits that I have done during the year all of which have been very interesting, informative and valuable. Thank you to all those that have worked to make these possible and that allow me to do what I do.

During the year I was fortunate also to be invited to attend the naming ceremony of the second aircraft carrier currently being built for the Royal Navy in Rosyth, HMS Prince of Wales and also the commissioning ceremony of the first carrier, HMS Queen Elizabeth at Portsmouth.

From an industry perspective, personal highlights included revisiting a GKN plant in Birmingham that I had last visited a youngster of 17 years of age in 1966 when it was plain old Hardy Spicer was a magical moment for me in part because of the ability to see for myself how much the operations had changed over fifty one years and in retrospect, for me to recall that it was one of my personal mentors, the late Sir Trevor Holdsworth, who went on to be both CEO and Chairman of GKN who made me visit the plant all those years ago.

Another very interesting moment for me was to revisit what is now BAE Systems Telford and which when I last visited that same plant back in the late 1980’s as an equities analyst, had been a subsidiary of GKN formally known as Sankey and which then was very busy building the Warrior Armoured Personnel Carrier.

I was saddened to hear of the death of Sir Owen Green in June, a man who I met on several occasions in the dim and distant past and who drove through a number of major takeovers for BTR, a company that he had taken from being a virtual also ran in the peripheral tyre area to becoming the most important of all the conglomerate companies that for a time the ‘city’ had fallen in love with. Own Green was the master of acquisition and particularly of timing and when it came to obtaining clinical profits, earnings growth and shareholder reward there was no other man to touch him. Can you just imagine how in January 1985 Sir Michael Edwardes, the then newly installed chairman of the ailing Dunlop Company must have felt like when before he had the chance to announce his own recovery strategy for Dunlop, Owen Green walked into his office, slapped down an envelope containing a hostile bid offer for Dunlop by BTR and then, coolly and calmly, walked out again without saying as much as a word?

Another sad loss for me and one that I recorded mid-way through the year and whose funeral I later attended at the RAF church in St Clement Danes, Strand, was that of Commodore Jayne Millington. I had known and respected Jayne for many years and I know that she will always be remembered and very sadly missed by those who knew her well and who had served alongside her in the Royal Air Force. RIP

As we come to the end of another year long term I wonder whether I am any the wiser for what I have learned?

The obvious answer to that is yes, of course I am wiser, how could I possibly not be after so many issues and events have occurred over the past twelve months? One never stops learning but had I imagined that we would be where we currently are twelve months ago? That’s where it gets a bit interesting. Twelve months ago in my final commentary piece of the year I suggested that with sterling very low it was the perfect time [for the government] to provide greater stimulus for manufacturing and exports. Mr. Hammond or to use the title that I prefer to know him by, ‘Forensic Phil’ clearly did not agree.

I also worried about the inability, despite what under David Cameron had been a genuine if unfunded attempt to provide a raft of initiatives designed to help industry increase exports, that few if any signs of improvement in manufactured goods exports had occurred. I fretted over the inability of the UK to produce more than a fraction of what it consumes, that the deficit between what Her Majesty’s Government spends and what it earns in taxes was still unacceptably high to the point of being unsustainable and that because of this the national debt would continue to rise. All of that was spot on and I repeat the same theme for the year to come.

Back then I hadn’t got a clue of how the first phase of Brexit negotiations which were due to start in days might go although I always believed that at some point because we need them as much as they need us that common sense would win the day. Bad enough that Mr. Cameron had called a referendum on EU membership and lost but come December 23rd I was still smarting from the quite ridiculous decision that Theresa May had taken to call a General Election earlier in the year only to throw away the majority that she inherited.

A year on we are through the first phase of Brexit and getting ready for the next. No thanks to the BBC and others, but our society and institutions of government have remained intact albeit that media has damaged the public’s ability to respect those that hold the ideals of democracy together. For whatever reason and rightly so, Mrs May has seen three of her cabinet ministers forced to resign for failing to uphold the high standard that those on high office are supposed to have. But for all that and also having to have the SDP to prop up her government in Parliament, Mrs May has, as I projected she would a year ago, hung on and shown a tenacity and resolve that many had discounted.

I take the view that Mrs. May will still be around in No 10 a year from now but that the current senior occupants at both No 11 and the Foreign Office will not. We will have to wait and see. Earlier this week we had a visit from the Head of the IMF, Christine Lagarde who was over here in the Treasury to tell us that the IMF had once again decided to cut the UK growth forecast. I do not dispute that she is probably right to be cautious over UK growth but I am not sure whether it helps.

Sadly it is consumer confidence rather than global markets and competitiveness that drives the UK economy and it looks to be a pretty safe bet that 2018 will see weaker levels of demand. I had anticipated a falling away of consumer demand in 2017 and was glad that I had. House prices look set to be going nowhere over the next year and I suspect we will see a change in direction of unemployment figures through the next year although not to any major extent. It is of course pleasing to see that employment has remained so high but is worrying that we have now reached such a low point in respect of engineering and specialist skills that we are going to need in the post Brexit world.

We haven’t a clue what will happen next year – will North Korea implode? Will Donald Trump rue the day that he decided to recognise Jerusalem as Israel’s capital or will it be those who voted against the US in the United Nations vote this past week and that includes the UK that live to regret what they did? Will the geo-political scene get worse or better, will the UK realise that it needs to better fund defence and where will the global economy, the environment, China and Russia go from here and what will the final outcome of the Brexit negotiations lead to?

All will eventually be revealed and rest assured, as I have been doing on and off for 24 years now, I will try and shed light on these issues wherever and whenever it is appropriate!

CHW (London – 22nd December 2017)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon




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