Leading the Charge: David Lockwood Takes on the Challenge at Babcock International
David Lockwood, the CEO of Britain’s second largest defense contractor, Babcock International, made headlines when he sold historic defense firm Cobham to a US private equity company. Now, he is determined to lead Babcock to success without the need for another sale.
Lockwood was brought in to revamp Babcock in 2020 after the company issued multiple profit warnings and struggled with underperforming businesses. With his turnaround strategy proving successful, some may question whether Babcock, responsible for maintaining the UK’s nuclear submarines, could become a takeover target.
However, Lockwood firmly believes this is highly unlikely. He explains, “There aren’t that many people in the nuclear space, and anyone wanting to enter would have to overcome a very high UK Government hurdle, given that we maintain the UK’s nuclear fleet.”
On a personal level, Lockwood is eager to see his plans through to the end. He reflects on his time at Cobham, stating, “I didn’t get to do the interesting bit there, and here at Babcock, I’m about to head into the interesting bit.”
Babcock is a significantly larger and more complex company than Cobham. Established in 1934, Cobham was an aerospace and defense firm with 10,000 employees. In 2019, it was acquired by Advent International for £4 billion after Lockwood’s efforts to turn the company around attracted investor attention.
When asked about Cobham’s post-takeover story, Lockwood admits he hasn’t been keeping close tabs. He explains, “Private equity only ever holds companies for a limited period. That’s almost in their nature. They’ve probably done what you would expect a private equity company to do. It’s not been high on my radar.”
Lockwood has prior experience dealing with Advent International, as his previous role was at Laird, another company targeted by the private equity group. With a background that includes high-level positions at firms like BAE Systems and Thales, Lockwood is no stranger to the defense industry.
While private equity may not concern Lockwood, he admits that Vladimir Putin’s aggression against Ukraine troubles him. As the leader of a major defense company during a European war, Lockwood acknowledges the weight of responsibility on his shoulders.
Babcock is already the UK’s second-largest defense contractor, responsible for maintaining nuclear submarines and building the next generation of Royal Navy warships. Lockwood recognizes the company’s significance, stating, “An analyst once wrote that the UK can’t go to war without Babcock, and that’s pretty true.”
Lockwood reveals that Putin and the potential invasion of Taiwan by China keep him up at night. Climate change is another pressing concern. He believes that inadequate preparations are being made for the inevitable effects of global warming.
To decompress, Lockwood plays the piano and goes to the gym, both of which require his full focus. He also takes a similar approach at the office, encouraging others to go for walks to clear their heads and discuss any concerns.
Babcock’s head office is located in a modest building near Oxford Street in London. With 27,000 employees, most of whom are based in the UK, Babcock also has international operations in Australia, Canada, South Africa, and France. Its dockyards in Plymouth and Fife in Scotland play a crucial role in the company’s operations.
Lockwood faced significant challenges upon joining Babcock, including a lack of shared culture among a workforce that had been formed through years of acquisitions. There were also allegations of fraught relationships with the Ministry of Defence and overstated profit margins.
To address these issues, Lockwood ordered a full review of Babcock’s accounts, which led to a restructuring of the balance sheet. The company announced write-offs and charges totaling £2 billion and initiated job cuts to reduce layers of middle management.
While the scale of the problems surprised Lockwood, he is now focused on the next phase of Babcock’s turnaround. The company’s recent annual results showed a rise in sales, although profits declined due to complications with a major contract to build Type 31 frigates.
Lockwood clarifies that if the contract had been better written, there would be no debate about its terms. Despite the challenges, the City and investors are satisfied with Babcock’s fresh start and Lockwood’s strategic plans.
Lockwood’s commitment to leading Babcock through these challenges is unwavering. As he takes on the interesting and critical task at Babcock, he remains resolute in his mission to drive the company to success.
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