A CHILL ran through the European aerospace industry last week when Wes Bush, president of the American group Northrop Grumman, said his company might not bid for the eldorado of defence contracts, a multi-billion-pound order to supply tanker aircraft to the United States Air Force.
Northrop is the US face of the European bid for the contract. If it withdraws the Airbus-based bid because of unhappiness over the Pentagon selection process, Europe's hope of breaking into big-ticket American military deals will fade.
At one British company, however, Bush's threat was met with equanimity. Cobham, a diversified defence contractor that traces it roots back to a prewar flying circus, can afford to be relaxed. No matter who wins the crucial contract, they will come to Cobham for some or all of the crucial inflight refuelling kit - the hoses, probes, pumps and tanks and their complicated control mechanisms that keep combat aircraft on patrol.
Cobham is the world leader for inflight refuelling, an arcane art investigated by Sir Alan Cobham, who founded the company 75 years ago. He saw the value of aerial pitstops during his days as an aviation pioneer, when he made record-breaking flights to the far reaches of the globe - and made money from a host of other aviation-related businesses, such as the flying circus.
He was succeeded by his son, Sir Michael, who turned the company into a sprawling conglomerate. Five years ago Allan Cook, only the fourth chief executive in the company's history, decided with fellow directors that the group was spreading itself too thin and should concentrate on niches, such as refuelling, where it could be a world-beater.
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Since then Cobham has become a corporate financier's dream. There have been 74 deals during Cook's reign, 58 acquisitions and 16 disposals. It has been one of the quiet darlings of the stock market, breaking into the FTSE 100 in March last year. The shares have risen 50% since last November.
His right-hand man in transforming the company has been Andy Stevens, chief operating officer, who will become chief executive number five when Cook, 60, leaves at the end of the month. He has been appointed chairman of WS Atkins, the construction and services company.
It's a complete change at the top for Cobham. The chairman, David Turner, formerly head of Brambles, is leaving to take the same role at Commonwealth Bank of Australia. Korn Ferry, the headhunter, is looking for a replacement, to be in place by the first quarter of next year.
Cook said the Cobham he took over in 2001 was fragmented, with a board dominated by executive directors - six of them to three non-execs. In 2004 and 2005, a series of management meetings set the course of pursuing niches and the winnowing began. A slew of companies went out of the door, such as Germany's Dräger Aerospace, which made oxygen-generation kits for commercial aircraft. "They wanted to do the tubes that come down from the ceiling, the masks. They wanted to do interiors. It just didn't fit with where we wanted to be," said Cook.
In deciding where to buy, Cook and Stevens judged that they should try to follow the example of inflight refuelling and become the leading supplier of crucial systems. Cobham is now big in sensors, satellite links, surveillance, avionics, battlefield communications - all key pieces of defence equipment - without getting into building aircraft, submarines or tanks.
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"We have tried to grow organically but where we saw the need to get hold of a technology then we made acquisitions," said Cook.
Stevens recalls three significant deals in America, the world's biggest defence market - Remec Defense & Space, M/A Com, a division of Tyco Electronics, and Sensor and Antenna Systems, part of BAE Systems. "They were a real test of our ability to do deals because the latter two were part of much bigger organisations on which they relied for almost everything. We had to cut all the tentacles and keep them alive."
Only 10% of Cobham's sales are now in the UK - it is a big exporter - and Cook and Stevens are rather depressed about the prospects for British defence spending.
"In America, there is a public acceptance that if you are going to send people to war you need to spend to provide them with the right equipment. That is not the case here," said Cook.
"The Defence Industries Council [a UK umbrella organisation] wrote to the chancellor earlier in the year saying that if you have stimulus money to spend, spend it on defence because you will get your stimulus and you will generate technology and high-value jobs. Nothing happened."
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It's unlikely, however, that Dorset-based Cobham will join the likes of Shire and WPP and quit Britain for tax purposes. "When it comes to winning export orders, the UK passport is still very valuable - more valuable than anywhere else we could be," said Cook.