Page 100 - Five Forces of Americanisation Richard Hooke 04072025 final post SDR1

The UK Defence Industry in the 21 Century
st
The Five Forces of Americanisation

decision-making, particularly any incidence of unforeseen or urgent requirements for approvals or
exceptional measures.

Recruitment of senior executives had been a major preoccupation, together with Aeroflex’s
integration and performance, especially with the architect of its acquisition and its new President,
leaving Cobham the following year. At £852m, Aeroflex was three times larger than any other
company acquired by Cobham. Together with the group-wide change programme introduced in
succession to the six-year “Excellence in Delivery” improvement and rationalisation programme and
Mission Systems’ performance on the notorious Boeing KC-46 tanker programme, there were three
major projects absorbing senior management effort at a time when five of its leadership team,
including its Chief Executive and Finance Director, had left the company within a period of under 30
months.

Focus on cash flow, particularly after the board’s commitment to its improvement after the 2016
Rights Issue, would have placed pressure on Cobham’s planning and reporting systems. The board
may well have demanded very short term, regular cash flow and cash balance reporting and this would
have stretched a finance function whose leadership was disrupted by a prolonged and uncertain
Finance Director recruitment process reported in the national press.

Calculation of score Maximum Marks Awarded
possible marks
2. MISTAKES

2.1 High gearing 15 **
2.2 Overtrading 15
2.3 Big projects 15 **
Sub total 45
(Pass Mark) (15)
Note: the higher the mark awarded, the more pronounced the defect, mistake or symptom

Calculation of score Maximum Marks Awarded
possible marks
3. Visible SYMPTOMS of Corporate Failure
3.1 Financial signs of deterioration 4 ***

3.2 Creative accounting 4
3.3 Non-financial signs of 3 ***
deterioration

3.4 Terminal signs 1
Sub total 12
(Pass Mark) (0)
Note: the higher the mark awarded, the more pronounced the defect, mistake or symptom

The new Chief Executive virtually ran through Argenti’s diagnostic check list in the Company’s Annual
Review in the Cobham plc 2016 Annual Report (the red asterisks below refer to those applied to the
relevant sections of the checklist above):

“In hindsight, it is clear that the integration of Aeroflex into Cobham, alongside the management
of pre-existing change programmes, was beyond the capability of the Group, despite extensive
spend on third party help**. Momentum was lost and the Group became internally focused.

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