Yesterday brought reports that Smiths, one of our remaining powerful engineering groups, is wondering whether or not to sell its medical division, the unit which has been involved in many of the most significant advances in UK medical technology.
Smiths has a huge pension fund deficit and a workforce which is a mere fraction of what it was. The vast majority of the pension fund members whom the trustees exist to serve no longer have any connection with the group.
Thus the problem with any disposal is that it is likely to trigger a demand from the pension trustees that the proceeds be given to the fund to meet the obligations of the past, rather than reinvested in the business to meet the challenges of the future. If the medical division does go, the most interesting aspect of the sale will be how this dilemma is resolved.