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Alvis Ltd.

By 2003 Alvis Vickers made 90 percent of the British Army's vehicles, including Warrior and Challenger 2. Alvis Vickers was the last company that remains capable of building high quality vehicles for the British Army and for export. In 1997, there were four factories in the UK: GKN Defence at Hadley, Alvis Vehicles at Coventry and Vickers Defence Systems at Leeds and Newcastle. After absorbing former rival GKN's armored vehicle division in 1998, Alvis has made public its intention to acquire Vickers Defence Systems, the heavy-armored vehicle component of Rolls-Royce, in 2002. The acquisition not only placed Alvis as the United Kingdom's top armored vehicle maker but also give it a leading place on the European market. By 2003, only two armored vehicle factories were left: Alvis Vickers at Hadley and at Newcastle. During the same period, the number of people employed was reduced from about 3,000 to just over 1,000, of whom 470 worked at Hadley.

Alvis began operations when T.G. John, an engineer who had designed battleships for Vickers during World War I, founded a business to design and manufacture motor cars. The company, TG John Ltd., was based in Coventry, which had by then become a major British automotive manufacturing center. John's earliest production, however, focused on manufacturing stationary and scooter engines while the company developed its own automotive design. By 1920, John had found its first automobile. The name "Alvis" was chosen for his automobile design, in part because it sounded good in a variety of languages.

The development of the company's aircraft and military vehicle components led it to shorten its name, to Alvis Ltd., in 1936. The outbreak of World War II, gave a boost to Alvis's aircraft engine and military vehicle production. Alvis faced an uphill struggle rebuilding its automotive business in the postwar period.

The 1950s saw the company's full-fledged entry into the light-armored vehicle field with the launch of its Saladin and Saracen high-mobility vehicles; as with the company's later products, these were wheeled--rather than tracked--vehicles. Alvis followed up these two early armored vehicle models with the release of its Scorpion in the mid-1950s.

Alvis was acquired by Rover in 1965, which in turn was taken over by British Leyland, then the United Kingdom's largest car-making group, in 1967. Leyland promptly ended production of the Alvis car and also cut out its aircraft engine manufacturing division.

By 1981, British Leyland, with the Government's approval, was continuing its policy of disposing of major non-mainstream interests, including the sale of Alvis for £27 million to United Scientific Group plc [USG]. Included within United Scientific Holdings Ltd. are Helio Millor Co. Ltd., United Scientific Instruments Ltd., Fidelity Instrument Co. Ltd. and, from 1981–82, Alvis Ltd. Avimo Ltd. is also part of the United Scientific Holdings Ltd. group. As of 1984 information on payments by the Ministry of Defence is available only for years from 1973. During this period Avimo Ltd. was paid under £5 million in each year up to 1982–83. United Scientific Holdings Ltd. received under £5 million in each year from 1973–74 to 1980–81. In 1981–82 and 1982–83 (after it had taken over Alvis Ltd. from British Leyland) expenditure with it was in the bracket £25 million and £50 million.

Invitations to tender for the main production order for MCV 80 were issued in April 1984. Alvis, a subsidiary of United Scientific Holdings, was one of four contractors who submitted bids.

The Anglo-German development program of the M3 amphibious bridge was completed in early 1993. An invitation to tender was issued in February 1993 for the production of bridges to meet United Kingdom and German requirements. Following completion of the tender exercise we plan to take a decision on production in mid-1994. A number of European companies have been invited to tender, including ALVIS and GKN from the United Kingdom and EWK, the German contractor which carried out the development.

The industrial feasibility studies for TRACER were due to be completed by end of April 1994. The principal companies involved in the three consortia are British Aerospace royal ordnance division, Alvis, GEC-Marconi, GKN Sankey, Vickers Defence Systems, Texas Instruments, Shorts, Siemens-Plessey and Teledyne. There are numerous other United Kingdom and foreign supporting companies which were also involved to varying extents.

By the mid-1990s, Alvis's profits were leading the European armored vehicle market. Yet Alvis was preparing to move to a new level. In 1997, the company surprised the industry when it announced its agreement to acquire Swedish light armored vehicle maker Hägglunds. The purchase, at a cost of £80 million, doubled Alvis in size, allowing it to stand shoulder-to-shoulder with U.K. market leaders GKN and Vickers. A year later it announced that it had reached an agreement to acquire GKN's light armored vehicle division in exchange for a 30 percent stake in Alvis.

Terrier replaced the in-service Combat Engineer Tractor to provide battlefield mobility/counter mobility by performing Engineer tasks. Tenders for the Project Definition phase were received in 1999 from three companies, Alvis, Marconi Marine and Vickers Defence Systems. It was planned to place two competitive Project Definition contracts later in the year, leading to the selection of a contractor for Full Development and Production. The vehicle was expected to enter service in 2008.

The Future Engineer Tank program was to provide the Army with modern armored bridge launchers and engineer vehicles to support the Challenger 2 Main Battle Tank. A number of potential solutions had been identified and the MOD planned in early 1999 to let feasibility study contracts with Vickers Defence Systems, Alvis Vehicles Ltd. and OBRUM in partnership with Marconi Electronic Systems (Land and Naval).

On 05 November 1999 the UK and Germany signed a contract with ARTEC GmbH, a consortium including Alvis Vehicles Ltd from the UK, for the development of a family of armored utility vehicles, known in the UK as the Multi-Role Armoured Vehicle (MRAV). The MRAV program would provide the British Army with a modern and flexible family of armoured utility vehicles that can operate in both high intensity conflict and in rapid reaction peace support and humanitarian operations world-wide. It was thought that the medium to long-term future for Alvis Vickers was assured due to the multi-role armored vehicle contract, which evaporated in 2003.

TRACER was a UK/US collaborative program. Contracts for project definition studies, worth a total of some £180m. were awarded in January 1999 to two consortia: LANCER, an alliance of BAE SYSTEMS and Alvis Vehicles with United Defense and Raytheon; and SIKA, a joint venture company formed by BAE SYSTEMS and Lockheed Martin. The consortia were competing for a single demonstration phase contract although neither nation is formally committed beyond the current phase, and any decision to proceed to future project phases would be the subject of further national approvals.

The CVR(T) Life Extension Programme was a single source procurement for which only Alvis Vehicles Ltd. were invited to tender. Since Alvis are the Design Authority for CVR(T) and hold the Intellectual Property Rights for much of the vehicle, the MOD could not issue information to a third party to have the vehicle redesigned. There was therefore no practicable alternative but to contract with Alvis.

A Post Design Services enabling agreement with Alvis Vickers Ltd., the Design Authority (DA) for Challenger 2, was authorised at the end of October 2002. There had been a wide range of discussions with Alvis Vickers Ltd. (previously Vickers Defence Systems) related to the deployment of Challenger 2 in desert conditions.

On 17 July 2003 the government announced the results of the competition for the future command and liaison vehicle (FCLV). The Alvis Vickers Limited multi-role light vehicle was selected to deliver the solution to the Army's requirement for enhanced speed, reliability, flexibility and protection for a wide range of users in combat or peacekeeping operations.

The project to introduce a Future Rapid Effect System was in its concept phase by late 2003. As part of this, Alvis Vickers Ltd. (AVL) completed background planning work to develop initial estimates of programme schedule and cost. This work involved some 70 staff drawn from AVL, BAE Systems and General Dynamics (UK) Ltd. and was valued at approximately £4 million.

General Dynamics tried to acquire the UK's armored-vehicle maker, Alvis PLC, in early 2004. With the Alvis acquisition, General Dynamics would have been one of the top three armor vehicle makers in Europe, along with GIAT of France and Germany's Krauss-Maffei. The US firm had received regulatory approval from the EU and Britain's Department of Trade and Industry. The effect of the undertakings proposed would be that General Dynamics Corporation would be required to take certain measures to enable the UK to maintain its strategic capabilities and protect classified information and the intellectual property rights of the Ministry of Defence.

But in June, BAE Systems offered almost $100 million more than General Dynamics's $556 million bid, and the Alvis board withdrew its recommendation to shareholders that they accept the GD bid. On 3 June 2004 the Alvis plc Board recommended to its shareholders their acceptance of an offer from BAE Systems to acquire the company. GDC subsequently announced on 4 June 2004 that it would not revise its offer. The GDC offer for Alvis plc formally lapsed on 7 June 2004.

The Government, as advised by their merchant bankers, Rothschild, believed that the price obtained was very fair. Indeed, it was almost twice the £100 million that Rothschilds advised would have been obtained had the government floated the company.

It was Sir John Nott who first tried to move Royal Ordnance in this direction when he was Secretary of State. The Member for Henley (Mr. Heseltine) had a go at it, too. Nobody wanted it then because it was unsuccessful, unprofitable and inefficent. The changes made over the years were enough to persuade some people that it was worth buying. It was put out to competitive tender and went to the highest bidder. One or two of the other bidders might well have been preferable customers, but the going rate was assessed in fair competition and paid.

The National Audit Office investigated the sale. The report by the Comptroller and Auditor General acknowledged that. It said "The sale to BAe was achieved in a competitive situation and the evidence available suggested that the competition was sufficiently widely based to secure the highest price likely in the prevailing commercial climate."