LONDON — The British government plans to nationalize specialist steel components-maker Sheffield Forgemasters in order to protect the supply chain involving critical defense programs in the nuclear submarine and other sectors.
The Ministry of Defence announced July 28 it was stepping in to take over the company by acquiring the entire shareholding of the privately owned Sheffield, England-based operation for £2.56 million (U.S. $3.54 million).
The deal, which must be approved by shareholders, assures the future of a company that is a key strategic industrial asset. The transaction is subject to a three-week offer period and is to be completed Aug. 19.
Sheffield Forgemasters is best known as a key supplier of cast and forged steel components for defense programs like the Royal Navy’s Vanguard-class and Astute-class nuclear submarine fleets. It’s also involved in the Dreadnought nuclear missile submarine construction program, now underway at BAE Systems’ yard in Barrow-in-Furness.
BAE and nuclear submarine power plant-producer Rolls-Royce each provided financial support in the recent past to Sheffield Forgemasters, which can trace its origins back more than 250 years.
In a statement, the MoD justified its decision, saying Sheffield Forgemasters “is the only available manufacturer with the skills and capability to produce large scale high-integrity castings and forgings from specialist steels in an integrated facility to the highest standards required for these program.”
Howard Wheeldon, of Wheeldon Strategic Advisory, said the deal is long overdue.
“At last, common sense has prevailed, and the hugely important but long-troubled Sheffield Forgemasters — a company that is a vital supplier of specialist steel for Royal Navy ships and submarines plus other important aspects of military capability — is to be taken over by the U.K. government under a flag of this being vital to our national interests and the U.K. supply chain,” Wheeldon said.
“The current situation was unsustainable, and without the ability to invest in the business, increase borrowings or attract a suitable investor that did not compromise national interest requirements and necessary security concerns, the business was already living on borrowed time. In my view it is absolutely right that the government has, albeit quite probably reluctantly, stepped up to the breach.”
The MoD said it plans to invest up to £400 million over the next 10 years to improve the production of assets critical to defense; that includes plans for a new heavy forge line and building as well as major machine tool replacements.
Earlier this year, it was reported that Sheffield Forgemasters acquired a 13,000-ton press from Japan for more than £120 million to support nuclear submarine components supply operations. The MoD provided a loan to support the purchase of the equipment.
At the time, local Sheffield newspaper The Star reported Sheffield Forgemasters CEO David Bond as saying: “We have a clear line of sight for the provision of critical forgings into UK defence nuclear work, which spans decades, but our ageing main forge press is unlikely to survive for that length of time.”
Sheffield Forgemasters also operates in the civil sector, supplying components to the nuclear, oil and gas industries, among other sectors.
The nationalization plan is further evidence of the Conservative government’s willingness to intervene where key strategic assets are at stake. Last year, the government, together with Indian communications giant Bharti, rescued low-Earth orbit satellite communications-producer OneWeb from bankruptcy in a deal that saw Britain invest $500 million.