Share ownership may have spread over the last 15 years but it is still heavily concentrated in value

Share ownership may have spread over the last 15 years, but it is still heavily concentrated in value terms among a small number of prosperous private investors, pension funds and other City institutions.This small pool of equity capital providers therefore has a powerful lever to demand high rewards, in the form of dividends and capital growth combined.The best way to reduce the investors' demands for high rewards and provide cheaper capital for industry is not to restrict dividends but to divert far more of Britain's savings to the equity market. Put simply, if the market is flooded with capital looking for equity investments, it will have to accept lower returns, to the benefit of British industry.Anything that widens share ownership and increases the proportion of savings that goes into equities would boost the economy. Mr Spencer believes it would even be beneficial to encourage borrowing to finance long-term investment in the equity market.If Mr Spencer is right, the best way for Labour to reduce the financing costs of British industry would be to push through its plans for a new form of collective pension fund - the so-called stakeholder pensions - which would bring large numbers of new investors into the stock market. This would be a lot more useful to British industry than interfering with the level of dividend payments.. When CK Chow joined GKN last July as chief executive designate, the omens were set fair for a relaxed start in the job. But as he took up the reins on New Year's Day, he already faced a tough problem which had sent the shares into freefall.

In December the automotive components to helicopters and waste services group declared it could face damages of up to half a billion dollars in the United States - destroying profits this year. A US jury had decided to award a penalty of pounds 91.6m against GKN in favour of some franchisees of its US subsidiary, Meineke Discount Muffler Shops, over some disputed rebates on press advertising. GKN has chosen to appeal against the decision, but faces the risk of the penalty being tripled if it loses the appeal. The company is confident that not only will the damages be reduced, but that there is only a minuscule chance the sum can be increased. Most followers in the City take a similar view and longer term, there is little to suggest GKN's prospects have been damaged much, if at all.Long-term shareholders have little to complain about, given the threefold rise in the share value over the last five years. Times may have changed from the days when, as Guest, Keen and Nettlefold, the business was one of the great British metal bashers, but GKN looks to be well up with the demands of the late twentieth century.Ironically, defence, despite fears of shrinking budgets, has been one of the cornerstones of the company's recent success. In 1994 it made the bold decision to buy Westland, the ailing helicopter concern at the heart of a Tory defence scandal in the mid-1980s.

From wafer thinness, Westland's order book currently stands at pounds 4bn - pounds 2.7bn of which is from a Ministry of Defence order for the new Apache attack helicopter - and profits are buoyant.The picture at GKN's Warrior light armoured vehicle business - its only other defence operation - is less bright. However, the company, in partnership with Krauss Maffei of Germany, looks to be well placed in the bidding to build the European "battle taxi", the first major commission by the new pan-European defence procurement agency.Either way, the vehicles division will have a key role in an expected wave of consolidation for companies in this market, including Vickers and Alvis in the UK, Giat of France and Krauss Maffei itself.Mr Chow's challenge will be to ensure that, in the face of the more or less global phenomenon of ever dwindling defence budgets, GKN can continue to thrive in this field.Elsewhere, GKN is firing ahead on all cylinders. In its automotive and agritechnical components business it retains clear ties to its roots as a heavy engineer. GKN automotive parts are used in almost every car manufacturers' models.Automotive parts is a fast-moving world these days, with suppliers having to run just to keep up with their clients' demands: a trend ushered in by the revolutionary tactics of Ignacio Lopez - first at General Motors in Spain and subsequently at Volkswagen in Germany - who re-drew the way car makers buy from suppliers.GKN, however, seems to have weathered the storm in good shape. It has capitalised on the upheavals with an equally radical response: outsourcing for the major car manufacturers.