HOWZAT

A BIG week looms for Sir John Rose, chief executive of Rolls-Royce, and his fellow aerospace executives. The Farnborough air show opens its doors tomorrow, although the pre-show wining and dining will start in earnest across the capital this evening.

Rose will have a diary full of appointments with airline bosses, air vice-marshals and suppliers. He will be talking to people intimately familiar with the workings of the industry, something that can’t be said of two of his recent visitors, George Osborne, shadow chancellor, and Alan Duncan, shadow business secretary. They made the trip to Derby, Rolls-Royce’s main UK base, to get up to speed on engineering and to hear from Rose how Britain remains under threat of seeing its high-tech manufacturing lured abroad.

It’s a smart move on both sides. Politicians have rightly been accused of failing to understand manufacturing’s needs and reacting to threats only in times of crisis — remember Labour’s woeful after-the-horse-had-bolted attempts to find a saviour for MG Rover. Osborne, Duncan and a bunch of other Tory aides and advisers have been spending time in Derby in an attempt to address the problem.

For Rolls-Royce, there can only be benefits from explaining the industry to politicians, particularly those who might be about to take power. While it still has significant manufacturing operations in Britain, Rolls-Royce is now a global company and has its choice of tempting locations for new plants. If politicians better understand the fierce foreign competition for inward investment, they are likely to do more to make sure Rolls-Royce and its peers stay in the UK.

Food for thought

ROBERT SCHOFIELD, chief executive of Premier Foods, the branded foods giant, admits that when he bought RHM

19 months ago for £2 billion (including debt), he did not see food inflation coming down the track, let alone the credit crunch.

Operationally, integrating the two businesses has been a success, the hard bit has been tackling the £1.7 billion of debt that goes with it. Inflationary pressures have made it difficult to pay down. This has spooked the market — along with continuing fears of a rights issue — and the result is that the share price has fallen 72% in the past year, valuing the group at £608m.

The strategic benefits of the merger are clear. Huge savings are still to come through from factory closures and Schofield now has negotiating power with the big food retailers to sell products from Hovis to Branston Pickle.

When the trading update appears on Tuesday, Schofield is likely to scotch talk of a fundraising. Instead he will focus on the benefits of the merger and the accelerated factory closures.

In addition, bread, which has been hit by soaring wheat prices, is starting to come through the bad times. For the first time in a decade bread sales are on the rise. Sorting out Premier’s debt will take longer, but potential sales of overseas divisions and scaling back less attractive non-branded products could free £500m.

Ultimately a longer-term solution will be required, but in the interim this is a group with defensive qualities. When you sell staples like beans and bread, you will always be in business, no matter how tight consumers’ wallets become. However, Schofield knows salvation will only come when he recovers the lost ground in the share price and that will be a long haul.

john.waples@sunday-times.co.uk

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