Читать книгу From Empire to Europe: The Decline and Revival of British Industry Since the Second World War - Geoffrey Owen - Страница 37

For the first fifteen years after the Second World War European steel-makers enjoyed a period of unprecedented prosperity in which demand for steel persistently outran supply. The priorities were to tackle the backlog of underinvestment which had been left by the war, and to raise productivity closer to the US level. With the rapid growth in demand for cars, there was greater scope for introducing the wide strip mills which had been pioneered in the US. An additional stimulus to investment in the second half of the 1950s was the invention of a new steel-making process, the basic oxygen furnace, which used less fuel, less capital and less labour than the older steel-making techniques. Basic oxygen steel-making was well suited for large-scale production, and its introduction hastened the closure of smaller plants.

Of the leading European steel-making nations, Britain seemed at the end of the war best placed to exploit these opportunities. The industry had suffered little damage from bombing; the new plants built in the 1930s were in good working order; and detailed planning for the post-war development of the industry was under way. In Germany the revival of steel production was delayed by political and economic uncertainty; it was not until the early 1950s that the structure and ownership of the steel industry in what had become West Germany were settled. The French steel-makers were quicker to get back into full production, but France had been a laggard in this field before the war; a notoriously conservative industry had to be shaken out of its old ways.

When Winston Churchill’s coalition government began examining the future of the steel industry in 1943, a central issue was whether the regulatory arrangements which had been put in place in the 1930s should be retained. Some economists in Whitehall argued that cartels and protection were a recipe for inefficiency, and that competition should be given freer rein. But this was a minority view. The advantages of co-operation between industry and government had been reinforced by the war. Central planning worked well, and the British Iron and Steel Federation acquired more authority over member firms. The main debate was between those, including the leaders of the Federation, who favoured self-regulation under government supervision, and those who wanted a stronger role for the government.²⁶ The Labour Party’s position – and that of the principal trade union, the Iron and Steel Trades Confederation – was that the industry should be brought into public ownership. A joint study carried out by the Board of Trade and the Ministry of Supply at the end of 1944 accepted the Federation’s view that the industry should be protected against imports for at least the first five years after the war and that price controls should be retained. In reaching this conclusion the civil servants were impressed by the apparent eagerness of the industry’s leaders to press ahead quickly with modernisation. The Federation was then asked to prepare a development plan, which was presented to the newly elected Labour government at the end of 1945 and approved a few months later.

The plan called for an expenditure of £168m over a seven-year period to renew some 40 per cent of the industry’s capacity.²⁷ A third strip mill, in addition to the existing mills at Ebbw Vale and Shotton, was to be built at Port Talbot in South Wales by the newly formed Steel Company of Wales, in which Richard Thomas & Baldwins²⁸ and several other sheet and tinplate producers were shareholders. Two other integrated works were proposed for the East Midlands and Scotland, and several of the rationalisation schemes which had been left outstanding from the 1930s were revived. The plan was put together by the Federation out of projects submitted by its member companies. However, the companies were not necessarily committed to the projects contained in the plan. Some of the rationalisation proposals involved difficult negotiations between long-standing local rivals. Moreover, steel was in short supply, and the quickest way to raise output was to patch and mend existing plant.²⁹ The Federation had no powers of compulsion, and it could not prevent investment from being spread over a larger number of sites than had been envisaged in the plan.

Meanwhile the industry was engaged in a political battle over public ownership. Because of the complexity of steel nationalisation, the government excluded it from the first wave of nationalisation measures which covered coal, gas, electricity and the railways. As an interim measure an Iron and Steel Board was set up in 1946 to advise the government on the progress of the development plan, working closely with the Federation. Early in 1947, when the nationalisation bill was about to be put before Parliament, the Federation suggested a compromise, whereby the Board would be strengthened and given the power to acquire shares in individual steel companies. Some senior members of the Cabinet had been uneasy about steel nationalisation from the start, and they welcomed the Federation’s proposal as a way of ensuring effective state control without the cost of a full-scale take-over. However, pressure from the left of the party, which regarded steel nationalisation as a test of the government’s commitment to socialism, proved too strong for any halfway house to be acceptable.³⁰

The nationalisation bill, after lengthy delays in the House of Lords, was enacted in 1949. Implementation was delayed until after the 1950 election, which Labour won with a much reduced majority, and the Iron and Steel Corporation of Great Britain began operations early in 1951. The chairman, Steven Hardie (former chairman of the British Oxygen Company), intended to reorganise the industry into seven regional groups, but the life of the Corporation was too short for any such plan to be put into effect.³¹ Within less than a year another election was held, which the Conservatives won, and they promptly set about denationalising the industry.

The political battle over nationalisation was fought with much passion, but there were fewer differences between the parties than the rhetoric suggested. Both sides accepted the steel-makers’ argument that steel was not a normal industry; with its large, capital-intensive plants, and its vulnerability to ruinous price competition when demand was weak, some form of regulation was thought to be unavoidable. The issue was whether regulation would be more effective under public or private ownership. Thus in 1950, when Britain was invited to join the European Coal and Steel Community (ECSC), the idea of exposing steel to competition in a wider European market held no appeal for the government.³² The steel-makers had no interest in Ruhr coking coal or Lorraine iron ore, and most of their export trade was with the Commonwealth; closer links with Europe were at best irrelevant and at worst disruptive. When another opportunity for closer association with the ECSC came up in 1954, the Conservative government’s position was much the same as that of its Labour predecessor.³³

The return of the steel companies to private ownership began in 1953 and was largely complete by 1957.³⁴ The only major producer left in the public sector was Richard Thomas & Baldwins; this firm was planning a large new steelworks and its shares were not easily saleable. Denationalisation did not involve any significant changes in the structure of the industry, although two small plants were bought by a newcomer to steel-making – Tube Investments, an engineering group – and the Steel Company of Wales was detached from its original shareholders as an independent quoted company. The Conservatives set up a new Iron and Steel Board to control prices and monitor the capital spending programme. The Board set maximum prices on a selected range of products, mainly semi-finished steel; price-fixing agreements ensured that these were normally the prices charged. On capital investment, the Board’s prior approval was required for schemes costing more than £100,000, but it could not force companies to do things which they did not want to do.

This controlled environment, together with the seller’s market for steel which prevailed for most of the 1950s, did nothing to encourage radical change in the way the industry was run. The focus was on increasing production rather than reducing costs. The patch-and-mend policy which had been adopted by several firms in the early post-war years meant that a number of older, poorly located plants had been expanded, and less rationalisation took place than had been envisaged in the Federation’s 1946 development plan. Everyone was aware that productivity in British steel-making fell far short of the US level, and this was confirmed in 1952 when a team of managers and employees visited American steel companies under the auspices of the Anglo-American Council on Productivity.³⁵ Their report showed that output per man was between two and three times higher than in Britain, mainly because the average size of plant was larger. While recognising that the smaller domestic market imposed limits on how far British steel-makers could go in the American direction, the team set down minimum sizes for blast furnaces and steel-making equipment to guide future investment decisions. But to put these recommendations into practice would require the closure of smaller plants, many of which had been partially modernised since 1945 and were making money for their owners. There was no incentive for these firms to abide by the productivity team’s guidelines.

The American advantage derived not just from larger plants, but also from lower manning levels. When Steel Company of Wales managers visited Inland Steel in Chicago in 1955, they saw ‘many instances of one man doing what our trade unions would require three to do, and each craftsman assigned to departmental maintenance was able to turn his hands to fitting work, electrical repairs, welding and so on as required’.³⁶ But the chairman of the company declined to act on their report for fear of opposition from the trade unions. This was not because the steel unions were especially militant. On the contrary, the stability which had characterised the industry’s labour relations since the nineteenth century continued throughout the Second World War and into the 1950s. But it was a stability based on a privileged position for the production workers’ union, the Iron and Steel Trades Confederation. Other unions, representing craftsmen, blastfurnacemen and unskilled workers, resented the ISTC’s high wages, and the employers had no wish to exacerbate these tensions. As long as they could sell all the steel they could make, it was better to leave the status quo on the shop floor undisturbed. Booming demand and persistent labour shortages put the unions in a strong bargaining position, and the employers were willing to make concessions on pay and manning levels in order to keep production going. The Port Talbot strip mill, in particular, which began full production in 1951, was notoriously overmanned; it was regarded by the unions as ‘a treasure island with a permanently filled pot of gold’.³⁷

The political climate of the 1950s did not favour confrontation with the unions. The Conservative governments which held office from 1951 to 1964 attached a high priority to full employment and social peace. Ministers were particularly concerned with the so-called depressed areas, which had suffered badly from high unemployment in the inter-war years. When plans for a fourth strip mill were being considered in 1957, a choice had to be made between two rival schemes, one from Colvilles in Scotland and the other from Richard Thomas & Baldwins in South Wales. The government was directly involved, partly because of regional policy considerations, partly because it was being asked to provide part of the finance. Richard Thomas was still state-owned, and the project was too big for Colvilles to finance entirely out of its own resources. The outcome was a Solomon-like judgement by Harold Macmillan, the Prime Minister, to split the project between Ravenscraig, adjacent to Colvilles’ existing works, and a coastal site at Llanwern, near Newport, in South Wales. The Ravenscraig mill was linked to the planned development of steel-using industries in Scotland, including a car assembly plant.³⁸

The strip mill decision appeased the regional lobbies at the cost of depriving the industry of the economies which a single works would have provided. As one commentator wrote, ‘the greatest economic advantage would be sacrificed deliberately in the interests of immediate social comfort and convenience’.³⁹ It was to some extent a repetition of the political battle which had taken place in the 1930s over the location of the first strip mill. Firth’s original plan had been to build the works at Immingham in Lincolnshire, but he came under intense political and trade union pressure not to desert South Wales, where Richard Thomas was a large employer. Ebbw Vale was an awkward, inland site which had many disadvantages compared to Immingham.

Thus the partnership between industry and government which was reestablished after denationalisation did nothing to alter the insularity of steel policy in Britain. Yet there was no sense at the end of the 1950s that the steel-makers were failing the nation. Prices were lower than on the Continent and the problem of shortages was easing. Even if the objectives set out in the first development plan had not been fulfilled, a substantial investment programme had been carried through, and it included some impressive projects – among them the Port Talbot strip mill, Dorman Long’s universal beam mill at Lackenby on Teesside, and a major iron-making expansion by United Steel at Scunthorpe in Lincolnshire.⁴⁰