Assault brings site of political affair full circle

UNTIL Christmas 1985 the Somerset town of Yeovil was more famous for its sloping football pitch and giant-killing Cup exploits than for the company that generated the bulk of its wealth and employment, writes Michael Harrison.

But in three months Westland, the employer, was transformed from a sleepy West Country helicopter manufacturer into a byword for political intrigue. Since then it has never been far from controversy.

The Westland affair began as a financial crisis within the company, turned into a battle royale between two rival rescue consortia - one European, one American - and ended in the resignation of two Cabinet ministers and, very nearly, the collapse of the second Thatcher government.

If GKN's pounds 500m bid for Westland succeeds, the company's fortunes will, in some respects, have come full circle.

In 1986 Westland hitched its wagon to the US, agreeing to a rescue by the defence contractor United Technologies Corporation, owner of Sikorsky helicopters.

Eight years later it is heading back into full British ownership because UTC has decided it would rather have pounds 75m than an 18.7 per cent stake in Britain's only helicopter manufacturer.

In truth, the UTC rescue, aided by Fiat of Italy, which joined the US-led consortium, and abetted by key Westland shareholders such as Lord Hanson, never delivered what it had promised.

Sikorsky promised two million man-hours of work for Westland and participation in its Black Hawk helicopter programme.

But barely a year after the rescue the Yeovil workforce was cut by 2,000 and Westland has not built a single Black Hawk, nor looks likely to.

In June 1988 Fiat announced that its shareholding in Westland was up for sale. Four months later it was bought by GKN along with 14 per cent held by Hanson.

By February 1989 speculation had begun that GKN was preparing a full bid. The rumour has flourished ever since.

As Westland entered the 1990s, continuing to shed workers, it became increasingly clear that its future rested not with Sikorsky but with the EH101 helicopter, a pounds 2bn programme with Agusta of Italy that was by then running three years late.

Westland's lifeline came in the autumn of 1991 when the Ministry of Defence finally placed a pounds 1.5bn order for 50 Navy versions of the EH101, a contract worth pounds 700m to Westland.

That success was followed a year later by a pounds 1.7bn EH101 order from Canada. But in the same year Westland's UTC links came back to haunt it when a former Sikorsky employee implicated the British company in a bribery scandal involving Black Hawk sales and Saudi Arabia.

In November last year, Westland suffered a reverse, however, when Canada elected a new government that cancelled the EH101 order. The setback did not deter GKN, which began negotiating the purchase of UTC's holding that month.

There is another respect in which the Westland saga has turned full circle. The more famous of those two ministerial resignations in 1986 was that of Michael Heseltine, who stormed out of Cabinet muttering betrayal.

It is also Mr Heseltine, in his present role as President of the Board of Trade, who must decide whether or not to refer GKN's bid for Westland to the Monopolies and Mergers Commission.