I am grateful to Julian Nettlefold of Battlespace and separately, Rob Goodenough for bringing to my attention that the sale by diverse engineering group Reece Group of its Newcastle-upon-Tyne based subsidiary Pearson Engineering to Israeli based Rafael Advanced Defence Systems was completed yesterday.
I have always had particular high regard for small privately owned UK based specialist engineering and manufacturing companies such as Aldershot based respiratory protection systems company Cam Lock Ltd whose absolute brilliance in this very specialist field I have written on before and also, in respect of publicly quoted companies such as Bath based Rotork and Cheltenham Spa based Spirax-Sarco, two highly specialist companies that I have both known and respected over many decades and that are either to be regarded as being global market leaders in their chosen fields or that, in one way or another, dominate their specific markets internationally. Pearson Engineering is, in my view, yet another perfect example of a UK engineering company at the top of its game and seeking to expand.
You might be surprised to know that I have no particular gripe about yet another specialist UK defence and engineering company being acquired by a foreign based company all’s provided of course that from a MOD perspective, sufficient protections have been put in place in regard to what might be regarded as UK intellectual property. However, In the case of Pearson, I am satisfied that Rafael will continue to invest in what is undoubtedly a world leading company in its chosen field.
Whilst I can well remember the former Vickers tank factory where Pearson are located and also that the company had in March this year been awarded a £25 million order to supply turret armour for the Challenger 3 tank programme – an £800m MOD contract to upgrade 148 Challenger 2 tanks into fully digitised armoured vehicles awarded to the Telford/Washington County Durham based Rheinmetall BAE Systems Land (RBSL) joint venture partnership, I was actually not aware of the Pearson sale to Rafael until yesterday.
So, who are Pearson Engineering?
Founded in 1985, Pearson Engineering is a world leader in delivering proven combat engineering battlefield mobility and counter-mobility equipment for armoured vehicles. The company has provided Armed Forces in many countries with the mobility and counter-mobility equipment that they need to succeed in their respective missions around the world. Based at the Armstrong Works in Newcastle upon Tyne, Pearson is recognised internationally for its contribution to armoured vehicle programmes. The company designs products that assist combat force elements to defend, move, fight and the constant need to adapt quickly in order to maintain battlefield advantage. The innovative approach is based on providing ‘scalable battlefield mobility’ through delivery of front-end attachments for armoured vehicles that enhance their agility, adaptability and flexibility and that can provide essential mission capabilities to Commanders.
Pearson does not anticipate any lessening in demand for combat engineering support or needs to provide combat vehicles with some form of independent mobility that does not detract from the core mission requirement. Together with its subsidiary company Responsive Engineering, Pearson is an undoubted leader in its field and I wish it continued success under its new Rafael ownership. This is an undoubtedly good acquisition of Rafael and Pearson’s armoured vehicle experience and class-leading manufacturing expertise that performs manufacturing, assembly, integration and test services for armoured vehicle programmes is likely to continue being in strong demand. This is a company that is highly respected international and one that this year receive the Queen’s Award for Enterprise in the International Trade category, in recognition of our exceptional export performance – for the third time in its history.
Innovation is at the heart of what the company does and recent examples include the Slice vehicle integration lit which permits front-end equipment to be shared between engineer and combat vehicle. Another more recent example of innovation is what Pearson I believe call ‘Threat Sense and Threat Pathway’ which is a visual and thermal based camera video stream designed to detect air-dispensed scatterable mines and other surface laid threats such as antitank and anti-personnel mines and that alerts crews with an audible warning and that then provides crews with a visible route in order to avoid the actual threat detected
Under its new Rafael ownership Pearson and its subsidiary company will continue to operate under their own brands and serve their existing markets, bolstered by Rafael’s global footprint and links to their network of over 8,000 employees and 30 subsidiaries worldwide. New owners Rafael said the acquisition will lead to a “significant increase in the number of jobs in Newcastle” and that the intention is to “enhance and expand Pearson’s manufacturing capabilities in the UK, thus strengthening our UK supply chain to better support our customers, especially the UK MOD and British armed forces. This will lead to a significant increase in the number of jobs in Newcastle and will build strong links with academic institutions throughout the UK and specifically in the North East.”
Rightly or wrongly, I have long believed that in respect of international based takeovers of UK based companies what matters most is the commitment and investment that the new owners are prepared to put in. One sees a lot of hype written and talked, particularly in regard of foreign takeovers of British defence companies, but the reality is that in respect of mid-sized quoted engineering and manufacturing companies, the ability of senior management to invest is often impaired by the need for management to look over their shoulders at shareholders before making any commitment.
One of the UK’s big problems has been that the institutional investment community which has a tendency to place quick returns as a priority and, in respect of engineering and manufacturing, dislikes long-term investment without the promise of earnings enhancement, and that has long taken a rather dim view of engineering and manufacturing here in the UK, shows no sign of change. That is of course why we have so few of them left today.
CHW (London – 29th September 2022)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785
Skype: chwheeldon