Читать книгу From Empire to Europe: The Decline and Revival of British Industry Since the Second World War - Geoffrey Owen - Страница 25

The redirection of Courtaulds which had begun under Arthur Knight was taken further by his successor, Christopher Hogg. Appointed chairman in 1979 at the age of forty-three, Hogg belonged to a new generation of managers who came to the fore in British industry during the 1980s. Educated at Oxford, Hogg had taken a master’s degree at the Harvard Business School, worked as a merchant banker in the City, then joined the staff of the Industrial Reorganisation Corporation. Recruited by Kearton in 1970, he made an outstanding success of running the paints subsidiary, the most profitable of the company’s non-textile activities.

Within a few months of becoming chairman Hogg was faced with a drastic fall in profits resulting from the so-called Thatcher recession. The new Conservative government under Margaret Thatcher imposed tight monetary policies in an effort to stamp out inflation, and the consequent rise in interest rates led to an unintended overvaluation of sterling, putting extreme pressure on exporting and import-competing industries. The immediate task was to cut costs, and the programme of plant closures which had started under Knight was accelerated. Hogg’s long-term strategy was to focus only on those businesses which had a realistic chance of becoming internationally competitive. As he said in 1981, ‘you’ve got to be reasonably certain that you can make money against the worst that imports can challenge you with’.⁴⁶

An early decision was to discontinue the production of nylon and polyester, businesses in which Courtaulds was too small to compete against ICI and the other major suppliers. This left the long-established rayon business and Courtelle, where the company’s market position was stronger. In textiles, Hogg saw that Courtaulds had no future as a producer of commodity yarn and fabric, which would always be under attack from low-cost suppliers; most of the weaving plants which Kearton had built on greenfield sites were closed down, as were several of the Lancashire spinning mills. Another change from the Kearton era was Hogg’s determination to rebuild friendly relations with Marks & Spencer, the principal customer for Courtaulds’ hosiery and knitwear. Unlike most of the other multiple retailers, Marks & Spencer bought almost all its clothing in Britain, and it was willing to enter into a long-term relationship with suppliers. This was how the Djanogly brothers at Nottingham Manufacturing had built their success, and Hogg aimed to win a larger share of Marks & Spencer’s business, while also promoting Courtaulds’ own brands – Aristoc, Berlei, Gossard and others – to other retailers.

The old policy of vertical integration had been largely abandoned by Knight, and Hogg established Courtaulds Textile Group as a separate subsidiary in 1985. The management skills required in textiles and clothing – design flair, fashion consciousness, quick response – had little application for the rest of Courtaulds, which consisted mainly of capital-intensive chemical and industrial businesses. To run the Textiles Group Hogg appointed Martin Taylor, a former financial journalist, who set in train a radical overhaul of the business. ‘We found that in too many products we were number 4 or 5 in Britain, and number 29 in Europe. We had to make ourselves more international, and we had to simplify, do fewer things.’⁴⁷ Lancashire spinning and weaving were cut back even further, and the Samuel Courtauld weaving business, the oldest part of the company, was sold to a Japanese company. At the same time Courtaulds continued to invest in products such as stretch fabric where it had a technical edge over its rivals.

The assumption on which these plans were based was that protection against low-cost imports was likely to diminish and eventually disappear. Although the Multi Fibre Arrangement was renewed for a further five years in 1981, the developing countries were increasingly hostile to a system which had been envisaged as a short-term measure to give the older textile industries time to reorganise. The Uruguay Round of GATT trade negotiations, which began in 1986, ended five years later with an agreement that the MFA would be phased out by 2005. This was in line with the forecasts made by Martin Taylor and his colleagues. The only businesses worth having were those which could survive in an open world market: Courtaulds had to turn itself into an international company. In the mid-1980s 90 per cent of the products which Courtaulds Textiles sold were made in Britain, and 90 per cent of its sales were in Britain. The objective, over a period of a decade, was to reduce the first of these two figures to 40 per cent, by sourcing more goods in cheaper overseas locations, and the second to 50 per cent, by exporting more British-made products and by overseas acquisitions.

In 1989 Hogg took the separation between fibres and textiles to its logical conclusion, floating Courtaulds Textiles on the stock exchange as an independent company; this was an early example of ‘demerging’, a practice which was to become fashionable during the 1990s. Although Taylor left the company in 1993 to be chief executive of Barclays Bank, the strategy of specialisation and internationalisation which he and Hogg had set in place was maintained. The final step in the unwinding of Kearton’s grand design came in 1996, when the remaining Lancashire spinning mills were sold to Shiloh, an old-established firm run by Edmund Gartside, the third generation of a family which had controlled the business since 1874. Shiloh’s survival was based on flexibility, service and the ability to respond quickly to a wide variety of customer demands – not the characteristics of the giant vertical enterprise which Kearton had constructed in the 1960s.⁴⁸

During the 1990s the British textile industry continued to contract as more firms shifted part of their production overseas. Among the survivors, Courtaulds Textiles appeared to be relatively well placed at the end of the decade, specialised as it was in a much narrower portfolio of businesses, principally lace and stretch fabrics, lingerie and hosiery, casualwear and underwear. Marks & Spencer was by far its largest customer, accounting for more than 40 per cent of sales, but substantial progress had also been made in internationalising the company along the lines mapped out in the mid-1980s.⁴⁹ In 2000, however, one of the largest US clothing manufacturers, Sara Lee, owner of Playtex, Pretty Polly and other brands, launched a successful bid for Courtaulds Textiles. Although this was a disappointing outcome after the efforts that had been made to reorganise and re-position the company, it could also be seen as another example of the internationalisation of British industry. There was a reasonable prospect that the combination of Courtaulds’s brands with those of Sara Lee would create a stronger force in world markets. (The same fate had overtaken Courtaulds itself, which was taken over in 1998 by the Dutch company, Akzo Nobel; the main attraction for Akzo was Courtaulds’s paints business – the fibres division was sold off.)

While Hogg and Taylor were setting Courtaulds on a new course, the other textile groups which had been formed during the merger wave of the 1960s were going through upheavals of their own. Carrington Viyella, like Courtaulds, was hard hit by the recession of the early 1980s, and it was no longer of much interest to ICI, its principal shareholder. The huge profits which ICI had made in nylon and Terylene in the 1960s had evaporated in the 1970s as a result of worldwide over-capacity, and fibres were no longer regarded as a core business. But Carrington Viyella had an array of strong or potentially strong brands – Viyella, Dorma, Van Heusen and others. These assets attracted the attention of David Alliance, an entrepreneur somewhat in the Hyman mould. Alliance, scion of an Iranian textile merchanting family, had come to Britain in 1959. Starting in Manchester as a merchant-converter, he began buying up near-bankrupt textile manufacturers, and he used Spirella, one of the acquired firms, as the vehicle to build a substantial household textile business. The biggest purchase was that of Vantona in 1975, making Alliance one of the largest household textile manufacturers in Europe. The decline of Carrington Viyella – and ICI’s obvious eagerness to sell out – presented Alliance with an opportunity to expand his empire at a favourable price; he bought the company in 1982. This marked the end of a highly unprofitable diversion for ICI in the textile business.⁵⁰

Alliance was a shrewd buyer of companies, and his acquisitions were guided more by opportunism than by strategic planning. A remarkable coup was the purchase of Nottingham Manufacturing in 1985, giving Alliance a big stake in the East Midlands knitwear industry. This was followed by the acquisition of Coats Patons in 1986 and Tootal in 1991. Alliance’s group, now called Coats Viyella, had become the largest textile company in Britain, even bigger than Courtaulds Textiles. However, as the industry’s experience since 1960 had shown, size was no guarantee of success, and Coats Viyella’s performance during the 1990s was poor. The most consistently profitable operation was sewing thread, the original Coats business, which had few links with other parts of the group. The spinning and weaving operations were sold in a management buy-out in 1995, and two years later the company announced plans for a demerger. The thread business was to be separated from the garment, household textiles and retailing activities, which would be grouped together under the Viyella name and floated as an independent company. A few months later the demerger was deferred because of unfavourable stock market conditions.

The decline of Coats Viyella was confirmation, if any was needed, that the future of the industry did not lie in big, diversified groups. As Martin Taylor remarked in 1989, ‘experience has shown time and time again in the last twenty-five years that it is easier to assemble large groups with apparently formidable strengths than it is to manage them’.⁵¹ To survive in the 1990s companies had to find defensible market positions, based on a well-established brand name, or close relations with a major customer like Marks & Spencer, or a technical advantage which rivals could not easily imitate. Another essential skill was the ability to manage an international supply chain, whether through wholly owned overseas subsidiaries or through contractual arrangements. This was particularly important as Marks & Spencer moved away from its previous reliance on British suppliers, and bought more of its clothing from overseas; by 1999 the proportion of its goods sourced within Britain had dropped to 65 per cent, and the figure was expected to fall further to about 50 per cent within a few years.⁵²

As with most of the industries described in this book, the 1980s and 1990s saw an internationalisation of the British textile industry. In conditions of free or nearly free trade the only manufacturing activities likely to remain in Britain were those which, for technical or commercial reasons, had a competitive edge over low-cost producers in the developing countries. At the end of the 1990s, after three decades of restructuring, the British textile industry was drastically reduced in size, and the mistakes made during the merger mania of the 1960s had been largely reversed. Although the contraction in employment was certain to continue as more production was shifted overseas, what was left of the industry was better equipped to compete in the world market.