Cobham plc

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Cobham plc

Brook Road
Wimborne
Dorset
BH21 2BJ
United Kingdom
+ 44(0) 1202882020
Fax: +44(0) 1202840523
Web site: http://www.cobham.com

Public Company
Incorporated: 1934 as Flight Refuelling Limited
Employees: 5,300
Sales:£384.l million (1998)
Stock Exchanges: London
Ticker: FRG
NAIC: 336411 Aircraft Manufacturing; 336413 Other Aircraft Parts & Auxiliary Equipment Manufacturing; 54171 Research & Development in the Physical, Engineering, & Life Sciences

From its beginnings as an aerospace job shop and purveyor of some of aviation’s first air-to-air refueling systems, Cobham plc has grown to become an indispensable link in the most advanced European military and civil aerospace programs. Cobham is divided into three divisions, Manufacturing, Avionics, and Flight Operations and Services. These divisions market a wide variety of products and services to the aerospace, defense, industrial, and communications industries. In addition to aerial refueling equipment and related services, the company produces or assists among other things in the development of rotary joints, antennas and radar systems, search and rescue equipment, anti-armor weapon launchers, and shallow water diving systems, and also operates a helicopter flight training school.

Audacious Origins

Although best known today for his namesake aerospace firm, Alan John Cobham took a somewhat circuitous route to aviation. He was enthusiastic about geography studies as a child and, as a teenager, he developed a hobby of building large kites. Nonetheless, at age 15 Cobham apprenticed at a garment wholesalers’ firm. A brief stint at farming came three years later, followed by lingerie sales back in London. By this time, World War I had broken out. Unable to enlist otherwise, Cobham used his farming experience to gain a slot in the Army Veterinary Corps. He was sent to France and given the daunting task of tending up to 1,500 ill and injured horses. In spite of the continuing demand for veterinary assistance, Cobham (with the help of a family friend connected to the War Office) managed a transfer to the Royal Flying Corps, where he could work in a field he felt had a more secure future.

In spite of his curtailed education, Cobham passed aviation ground school. He survived flight training in the unreliable machines of the day and became a flying instructor in August 1918. His first assignment was restoring the confidence of aviators who had crashed.

After the war, Cobham landed a brief job scouting potential airfields for the British Aerial Transport Company. He later teamed with two other pilots giving pleasure flights in the Berkshire area. Soon the group was barnstorming as far north as Scotland. In Yorkshire, Cobham met an actress who would become his wife, Gladys Lloyd.

The Berkshire Aviation Company venture faltered in 1920 as the novelty of airplanes wore off, and Cobham found himself selling ladies’ clothing again. A promising engagement taking aerial photographs with Airco was curtailed by that company’s bankruptcy.

Newly liberated Aireo designer Geoffrey de Havilland formed his own aircraft manufacture and hire service with Cobham as his pilot. The first client was Aerofilms, which had received Aireo’s assets in the liquidation. Cobham helped de Havilland conceptualize his wildly popular “Moth” series of aircraft, a legendary design which helped popularize flying in Britain.

In order to promote de Havillands, Cobham set out upon a series of aerial exploits that included setting a speed record for flying to Africa and back. He toured Europe with the wealthy American Epicurean Lucien Sharpe. He flew to Burma via India to investigate the possibility of air service there. A subsequent trip to Cape Horn, in which Cobham raced a passenger ship on the way back, generated enormous press coverage.

In 1926, Cobham flew to Australia. Tragically, his engineer was killed by a hunter over Iraq. Nevertheless, he returned a hero. A crowd of one million watched him land on the Thames in front of Parliament upon his return. He was knighted at age 32 after this great adventure.

Cobham formed his own company, Alan Cobham Aviation Ltd., in 1927. The firm soon merged with the North Sea Aerial and General Transport Company Ltd., which also was interested in developing intercontinental flying boat service. The new firm was known as Cobham-Blackburn Airlines.

Cobham organized a voyage around the African continent in a Short-Rolls Royce Singapore. After the grueling African trip, he flew around Britain urging local politicians to create new airports. However, government-backed Imperial Airways stole his thunder, establishing its own service to southern Africa. Cobham-Blackburn Airlines closed in July 1930.

Soon after, Cobham joined the board of the new Airstream Company, replacing Neville Shute (Norway), who later became a famous novelist. In 1932, Cobham toured Britain with his National Aviation Days: These air shows introduced thousands of future aerospace professionals to flight. Cobham also founded a Guernsey Islands airline, Cobham Air Routes Ltd., which he soon sold.

A number of engineers had been pondering aerial refueling as a solution to power limitations of the planes of the day. Aircraft expended a great deal of energy climbing to altitude. If they were refueled in flight, they could carry heavier loads and fly longer distances. Cobham began experimenting with the concept, and soon took over the air Ministry’s testing as well.

Although a demonstration trip to India ended in disaster in September 1934, Flight Refuelling, Limited soon incorporated on October 29, 1934. Cobham moved his operations to Ford Aerodrome in January 1936. With backing from new partner Imperial Airways, which took a 60 percent stake in the company, Cobham began to consistently work to improve the range of civil aircraft. A variety of configurations were tried.

World War II and Beyond

Flight Refuelling’s civil work was halted by the war. Ford aerodrome, where the company had facilities, was first taken over by the Admiralty and then bombed by the Germans. The British government relocated the firm to the Morgan Motor Works where it engineered problems for Bomber Command, for example, the problem of wing icing. It also experimented towing fighters to altitude.

Cobham’s suggestions to use in-flight refueling to make possible aerial escorts of North Atlantic shipping were neglected. Late in the war, the firm was called upon to help in a plan to bomb Japan via Burma, using in-flight refueling. Flight Refuelling got an order to convert 600 Lincoln bombers and 600 Lancaster tankers. The plan was canceled when American forces captured an island within flying range of Japan, however.

After the war, the U.S. government expressed interest in using aerial refueling to extend the range of its B-29 bombers, and Cobham landed a contract for US$1.25 million. What really interested the Americans was the prospect of refueling fighter aircraft. The new “probe-and-drogue” method allowed just that. FRL also assisted the U.S. Air Force in the historic around-the-world flight of a Boeing B-50A in February 1949. Boeing went on to develop the “flying boom” aerial refueling system adopted by the USAF.

Lucrative contracts were scarce after the war. FRL found some success selling pressure fueling equipment. During the Berlin Airlift, FR ferried fuel into the city. Cobham also briefly became involved with another short-lived airline which had bought the name “Skyways.” British South American Airways was formed to investigate south Atlantic service, and contracted with FRL for aerial refueling support. FRL also experimented with BOAC crews.

FRL began doing aircraft refurbishment in the 1950s, first on British Meteor jet fighters. The company later converted them into drones, leading it into the aerial target field. The company modified USAF tankers for use in the Korean War.

Sir Alan Cobham bought out his company’s other shareholders in 1952. Flight Refuelling went public in 1955, taking the name Flight Refuelling (Holdings) Ltd. It spent the rest of the decade growing internally and making opportunistic acquisitions.

New Leadership in the 1960s

Sir Alan Cobham gradually passed leadership of the company to his son Michael in the 1960s. Michael Cobham was a trained barrister who had joined the company in 1955. He became managing director in 1964, although his father remained rather involved in the business until 1969. His style was less autocratic and more scientific than his father’s. Sir Alan Cobham died in 1973.

Michael Cobham took over at a particularly challenging time for the company, as defense work was drying up. Contracts were also being awarded less on the strength of personal persuasiveness, Alan Cobham’s strong suit, and more in terms of competitive bids. Management structure became more formal. The company’s acquisition strategy would also be more systematic.

Company Perspectives:

The group has maintained its policy of acquiring carefully selected companies and product lines which complement its strategy of growth in world-leading niche markets.

In order to survive, Flight Refuelling diversified. It formed Alan Cobham Engineering to provide high pressure fuel systems services to the oil and mining industries. It also began marketing the switch it used in its fueling systems, beginning the company’s involvement in electronics. Aviation components became a strong part of the company’s business, particularly after it acquired the aviation division of Saunders Valve.

Several R&D projects came to fruition in the mid-1970s. At this time, Michael Cobham delegated the role of managing director to Ken Coates, although Cobham retained a substantial voice due to his 25 percent shareholding. The Cobham board of directors, however, pressed Coates for more rapid growth than had been achieved previously.

FRL had been organized on functional lines, with one sales force for all its different customers. Coates organized the company into three divisions: nuclear and industrial business (which had been losing money); military systems; and aerospace components. Improved financial reporting helped the company define its strengths.

The aerospace industry grew rapidly in the late 1970s. However, the company’s electronics operation fared poorly in the fast pace of that industry’s growth. Nuclear plant components suffered due to inconsistent government policies. The company shifted its efforts in this field toward defense. The flight operations division suffered from defense cuts, but fought back by expanding its range of services beyond aerial towing.

Turnover reached £19 million in 1980. Profits were £3 million. Aerospace components accounted for 40 percent of turn-over; military systems, approximately 30 percent. Management Today ranked Flight Refuelling, which then had 1,200 employees, Britain’s most profitable engineering firm.

Coates aimed to triple PR’s business within five years. In 1982, FR entered the vast U.S. components market via its £5.15 million purchase of Stanley Aviation. FR had previously manufactured Stanley pipes under license in Europe. The purchase gave FR a stronger presence with the U.S. military than it could have attained on its own. To reflect its broad range of activities, Flight Refuelling (Holdings) Ltd. was renamed FR Group in 1985. The group acquired Chelton, a leading maker of aircraft antennas, in 1989.

FR had to contend with the vagaries of defense spending, and the recession prompted “financial discipline” from the Ministry of Defense. However, the Falklands War brought new demand for the company’s services. FRL teamed with Grumman to bid on a huge U.S. Navy contract for inflight refueling. Its aerial target offerings proliferated, culminating in the Advanced Subsonic Aerial Target (ASAT). It also pushed its military wares abroad and looked for new product opportunities.

Air-to-air refueling was another economical way for air forces to extend their reach: a “force multiplier.” However, this very power made its export subject to close government scrutiny. Onboard fuel systems were one important export, however; FR shipped half of this production to Europe, where it claimed a 50 percent market share. While British aircraft production was at a near standstill, the company was able to supply about every European aircraft program with some type of component. The company vied to be chosen for a wide spectrum of planes still in the design stages—which resulted in a steady supply of work and a wealth of engineering knowledge in reserve.

During the Persian Gulf War, allied forces discovered first-hand the shortcomings of a dual approach to air-to-air refueling. While U.S. naval aircraft refueled using Alan Cobham’s probeand-drogue system, U.S. Air Force (USAF) planes used an incompatible boom-and-socket method. Operation Desert Storm brought many different forces into play, and the shortage of appropriate tankers added a new level of complexity for military planners. FR subsequently went to work retrofitting USAF tankers with probe-and-drogue refueling pods allowing them to service naval aircraft. FR sent training and support personnel to the Persian Gulf, a trend predicted to continue owing to shrinking military force sizes. PR’s annual sales were £185 million (US$296 million) in 1993, when the company had 3,500 employees. Military sales accounted for 70 percent of the total.

Diamond Jubilee: 1994

FR Group renamed itself Cobham plc in November 1994. Its operations had long since expanded beyond its flight refueling core. This also marked the 100th anniversary of Sir Alan Cobham’s birth.

In October 1994, FR bought Sargent Fletcher, a U.S. aerial refueling company, for US$11 million. Sargent Fletcher added helicopter refueling capabilities. It bought Comant Industries, a California company making GPS antennas, for US$3.25 million. Comant and the French antenna company Rayan SA were placed under the Chelton subsidiary.

Board member Sir Michael Knight replaced the retiring Michael Cobham in July 1995. Defense spending was tight. Though Knight continued Cobham’s course for expansion, broad diversification was not on the agenda. “We will not make electric kettles,” he told a Jane’s interviewer. Cobham aimed to be a leader in all the markets it entered. Acquisitions and internal growth doubled Cobham’s size within a few months. Cobham employed 4,000 personnel worldwide in 1996.

Cobham also strived to reduce costs while improving products. Trends in the aircraft industry were for prime contractors to outsource larger assemblies from vendors. The company directed much of its efforts towards upgrades and upgradeable products. The defense contracts it won tended to be for upgrades. In 1996 British Aerospace and Cobham won a contract to refurbish the Royal Air Force’s Nimrod maritime patrol aircraft. Their strategy was to extend the life of each plane by replacing high-stress areas of the aircraft such as wing sections. The company was also chosen to manufacture the unmanned aerial vehicle for the British Army’s Phoenix artillery surveillance system.

FR Aviation teamed with Bristow Helicopters and Serco Defense Ltd. to establish a joint service military helicopter training school. The joint venture was termed FBS Ltd. The joint service program was expected to save £77 million (US$120 million) over 15 years, largely through the use of newer, more efficient helicopters.

In the late 1990s, Cobham was developing several air-to-air refueling programs. It cooperated with Boeing to retrofit USAF KC-135 tankers with probe-and-drogue systems. Since the cost of converting the Air Force’s F-15 and F-16 fighters to this system was prohibitively expensive, Sargent Fletcher created an aerial-refueling tank system (ART/S) that featured an external fuel tank with a probe fitted directly to it. Lockheed Martin chose Flight Refuelling to supply refueling pods for its new KC-130J Hercules tankers.

Cobham continued its growth by acquisition strategy, buying a small maker of lightweight pressure vessels in March 1998. Pressure Technologies Inc. of Baltimore, Maryland, cost the company US$1.3 million (£800,000). Cobham acquired Conax Corporation in May 1998 for US$5.9 million (£3.6 million). Conax, headquartered in St. Petersburg, Florida, made aerospace products such as emergency life support systems. In December, Cobham bought a French maker of communications components, Hyper Technologies SA, for FFr 11.5 million (£1.2 million). The company also stripped off non-core properties.

Annual turnover increased in 1998 from £322.8 million to £384.1 million. Profits reached £63.6 million. About 55 percent came from the military; the rest was civil. Cobham’s largest division was Manufacturing, with a turnover of £236.8 million. Avionics had £89.6 million and Flight Operations and Services, £57.7 million.

The group continued to buy businesses in 1999, including certain product lines from Avionics Controls Inc. Chelton bought Flitefone and Bendix King Series III radio product lines from Allied Signal for US$7.7 million (£4.7 million). Cobham spent US$26.8 million (£16.5 million) for ACR Electronics Inc., a Florida firm specializing in marine search and rescue equipment. Cobham bought two other English firms: Credo wan Limited, a small microwave components supplier, and the larger European Antennas Limited, which cost £6.75 million.

Cobham’s Stanley Aviation and Flight Refuelling subsidiaries worked on the fuel system development for the Boeing X32 Joint Strike Fighter. Cobham also supplied its competitor, Lockheed’s X35. Besides the busy military schedules, increased production of Airbus civil airliners and Embraer regional jets helped create record demand for the group’s antennas. One area of business that was particularly hard-hit in the late 1990s was Cobham’s Westwind subsidiary, which was a long time in recovering from the Asian financial crisis.

Principal Subsidiaries

Alan Cobham Engineering Limited; Carleton Technologies Inc. (U.S.A.); Conax Florida Corporation (U.S.A.); Flight Refuelling Limited; Westwind Air Bearings Limited; Stanley Aviation Corporation (U.S.A.); Chelton (Electrostatics) Limited; FR Aviation Limited.