Shipyard (1935)BFI’s ‘Shipbuilding on Film’, largely documentary, but also cinematic (including 1949’s Floodtide, a 90-minute film in which a young Gordon Jackson works his way up the firm, becomes a naval architect, marries the boss’s daughter and revolutionizes shipbuilding) is a rich and varied source. Three short films show cloth-capped workers finishing their 12-hour shifts and going home at the turn of the century through the shipyard gates at Scott & Sons of Greenock (the world’s senior shipyard, est. 1711 in the reign of Queen Anne) Ropner & Sons of Stockton-on Tees, and Vickers, Sons and Maxim of Barrow-in-Furness. Another historically important short film shows the construction of concrete barges in Barnstaple, Devon in 1918. The British Construction Co. Ltd at Barnstaple had seven slipways, and a 300 foot fitting-out quay. The firm received two orders for ferro-concrete barges from the Shipping Controller. The first, Cretepath, of 715 gross tons was launched on 21 September 1918, but was unfortunately grounded on a sandbank and broke in two. She was later blown up and removed. The second, Cretepond, was not completed until 1919. The building of ferro-concrete barges to transport munitions, all of which had the suffix, ‘Crete’, was a reaction to steel and skilled labour shortages as the war reached its final stages; but the programme was undertaken too late in to make any impact, and was more expensive than steel shipbuilding. Some 21 firms around Britain were engaged to build ferro-concrete vessels, however, of 154 vessels ordered only 54 barges and 12 tugs were completed. Of the vessels built most were abandoned, or used to prevent coastal, riverine or canal bank erosion as breakwaters.
The filming of launches was commonplace; but the film of the launching of HMS Thunderer, the third Orion-class battleship built for the Royal Navy is historically important as she was the last vessel to be constructed by Thames Iron Works and the last and largest warship ever built on the River Thames. Post her completion, her builders declared bankruptcy. Thereafter, the Thames became a shipbuilding backwater. Paul Rotha’s documentary film Shipyard (1935) follows the building of the Orient Line liner, Orion for the Australian trade at Vickers Armstrong’s shipyard at Barrow-in-Furness. From the laying of the keel and double bottom through all subsequent stages of her hull construction this film gives the viewer a rare insight into how ships were constructed in the interwar period. One can see the work of riveting squads paid for every 100 rivets deposited, shipwrights, platers, drillers, foundry smiths, and heavy machinists. Shipwrights, by driving out the keel and bilge blocks holding the weight of the ship prior to launching, had an important job. The launching of Orion on 7 December 1934 made history, as the Duke of Gloucester launched her by radio remote from Brisbane, Australia, an occasion broadcast throughout the British Empire. By viewing this and other post-1950 films the viewer can see the progression in shipbuilding methods through time.
Shipbuilding was basically a craft-based, labour-intensive assembly industry. From the days of iron and then steel construction it required a great deal of organisation of individual trades and processes within shipyards. Shipbuilders’ were primarily responsible for around 30 to 35 per cent of the finished product, i.e., the ship’s hull, the rest, main engines, steering gear, propellers, auxiliaries, derricks, electrical fittings, etc., at the outfit stage was usually sub-contracted to various firms and trades. The in-house percentage rose to around 50 per cent if firms owned their own main engine shops, foundries, and joinery shops. The process of building a merchant ship usually began with reviewing enquiries to build from ship owner’s and or shipbrokers before either proffering a stock design or designing a vessel to fit anticipated requirements before tendering for contracts. An historical basis of cost accounting was normally used to come up with a reliable estimate of labour and material costs plus an element for profit. The decision on whether or not to tender for a particular type of ship or ships was dependent on the product mix building in any one yard or yards and the amount of work in hand. If a tender was accepted then negotiations over contract/s began and a design and building plan/s were formulated. If agreed, materials were then purchased and production drawings drafted. Production normally began with the laying of the keel and then the erection of the frames and shell plating by the hull trades. Each of these building milestones triggered stage payments to shipbuilders ensuring liquidity.
British shipbuilding did not conform to easy assumptions about the growth of managerialism in industry generally during the late nineteenth and early twentieth centuries, and consequent organization of production and supervisory control resulting in increasing use of technology and consequent de-skilling of the workforce. Shipbuilding, per se, did not lend itself to standardisation of product. Built to order for individual owners and ship owning firms, ships were largely bespoke in nature. Indeed, the sheer size and versatility of the British Shipbuilding industry, which held 80 per cent of the world market for ships during the late nineteenth century, and on the eve of the Great War, 60 per cent of all tonnage launched, facilitated almost every whim of British shipowners, whose ships comprised the world’s largest mercantile fleet-the British Mercantile Marine. In addition, shipbuilding took up to 30 per cent of the national output of steel plates and sections of the British steel industry up to 1914.
British shipbuilders also dominated the export market for merchant ships and warships and its highly-skilled workers were the most productive in the world using craft-based labour intensive methods of production. Indeed, the industry’s productivity easily outstripped its competitors, by 1900; productivity was twice that of American, three times that of Germany and six times more productive than French shipyards.
The structure of the British shipbuilding industry was atomistic; firms ranged from huge vertically-integrated conglomerates such as Vickers at Barrow-in-Furness, Cammell Laird at Birkenhead and John Brown at Clydebank, to medium-sized and small-scale family-controlled enterprises. The major loci of firms were the rivers Clyde in the west coast of Scotland and the Tyne, Tees and Wear on the northeast coast of England. Together, these areas accounted for over one-half of the labour force engaged in shipbuilding. Other centres of shipbuilding activity were Southampton (Vosper and Thornycroft) on the south coast, and Leith, Grangemouth, Dundee and Aberdeen on the east coast of Scotland. Another major firm was geographically isolated: Harland & Wolff at Belfast in Northern Ireland. However, this firm also had interests in shipbuilding, ship repair and marine engineering on the Clyde, and ship repairing in Liverpool, London (mostly marine engineering) and Southampton.
A plethora of craft unions, many of their members organized in squads, their functions strictly demarcated, dominated the production process in British shipbuilding. In the hull trades, dominated by the Boilermakers Society (The United Society of Boilermakers and Iron and Steel Shipbuilders), a form of supervisory control was exerted by squad leaders who in turn were hired and overseen by foremen who had been promoted from the ranks of the skilled workforce. Higher management control was basically left to a small cadre of middle managers appointed by owners.
Payment of labour was determined by a plethora of time rates, piecework, price-agreed contracts, bonuses and allowances to particular trades, and the form of employment, owing to the cyclical nature of the demand for ships, was essentially casualised. Termination of employment was usually at one-day notice and in some cases at one hour’s notice, and the average working week up to January 1919, when there was plenty of work available, was 54 hours, thereafter it was reduced to 47 hours.
Ships Platers who were at the apex of the hull trades, belonged to the Boilermakers Society, as did Angle Iron Smiths and Riveters. Platers, the highest paid of the hull trades, were organised in squads of skilled (including Angle Iron Smiths) and unskilled (platers helpers) men, although the numbers varied in different shipyards and districts. Riveting squads comprised the principal method of metal joining in the industry. A squad consisted of a rivet heater, a catcher, (these were normally boys, and heating and catching were sometimes combined) a holder-on and a riveter. Some squads might contain a left and a right handed riveter. Payment in both cases was met by a pre-agreed weekly lump sum on individually priced contracts, which was divided among squad members. Other methods of payment were determined by results, that is, number of rivets deposited.
What control trade unions had externally in shipbuilding was in determining who had right to enter these industries, The industry ran on the principle of the pre or post-entry ‘closed shop’ that is, a potential entrant already had to belong to a recognised trade union or had to join one post-entry. Historically, owing to the low levels of education of the workforce, the division of labour in shipyards was strictly demarcated, which gave rise to myriad disputes over which trade had the right to undertake a particular job or process and, more importantly, for their long-term future of autonomous trade unions, of which they were around 27 in the British shipbuilding industry in 1912, to retain the right to exclusively dominate it. In short, shipyard work was inherently sectionalized; and trade unions within it, particularly the Boilermakers Society, who largely controlled the hull trades, mirrored that sectionalism, and strictly enforced entry to particular trades. Long-held animosity since the days of transition from wooden to iron and then steel shipbuilding between the shipwrights and boiler-making trades always bubbled under the surface, as did that between shipwrights and joiners.
Unions were also allowed to control entry of apprenticeships and the ratio of them to skilled tradesmen. Indeed, trade unions traditionally saw apprentice labour as a means for employers to undermine wages of time-served tradesmen (usually five years as indentured apprentices). Typically, the demand for workers varied widely according to the stage in the production process reached. For example, the boiler-making trades, angle iron smiths, riveters, platers and, much later, welders were almost exclusively concerned with the construction of iron and later, steel hulls. The fitting-out trades such as joiners, electricians and plumbers were also highly unionized; but were more generally employable outside shipbuilding, particularly in construction of houses and in the building trades generally.
Although demarcation disputes between trades were commonplace, their effects were less significant in terms of working hours lost than was the case with general disputes, with the employers’ organisations resorting to the general tactic of the Lock-Out and therefore closing their establishments until workers returned to work on conditions less favourable than those which began the dispute. Extended lock-outs also had deleterious effects on trade union finances. The adversarial and ultimately corrosive nature of industrial relations in shipbuilding gave rise to an enduring level of suspicion in employer-employee relationships bordering on hatred, which only got worse in the largely depressed interwar period. Such dispute resolution that was in place was often circumvented by unofficial [non trade union sanctioned] disputes. However, the extreme subdivision of labour in British shipyards was not mirrored in continental shipyards, where there was more interchangeability of workforces. Trade unions in Dutch shipbuilding, for example, were not delineated on a craft basis, they embraced all classes of workers-skilled, semi-skilled or unskilled, and the six unions in Dutch shipbuilding were organized on a religious-political basis. Both Dutch and German shipbuilding workforces worked longer hours in a week (54 hours) and for less pay than their British (47 hours) counterparts.
British shipowners lost nearly 9m gross registered tons (grt) of shipping during the Great War due to enemy action. A short-lived post-1919 replacement boom resulting in a record launching output of the British shipbuilding industry of 2m grt in 1920, soon gave way to a collapse in freight rates. Thereafter, the industry’s prospects were largely poor as worldwide shipbuilding capacity, much of it built up abroad during the Great War for nationalistic reasons as British shipping lost many of its traditional markets, exceeded demand. Those larger firms in the industry, primarily the mixed naval and mercantile builders who normally could have expected some counter-cyclical respite by gaining naval work, were severely affected by international naval limitation treaties, first in 1921 and later in 1930 limiting the construction of warships to an agreed ratio. Consequently, for the British shipbuilding and repairing industries the interwar period was largely one of contraction, and the Great War can be seen as the defining climacteric for the industry’s future prospects.
When freight rates collapsed in 1921 skilled and apprentice employees in the 29 member firms of the Clyde Shipbuilders Association totalled 42,209. With the collapse in demand for ships this figure had fallen in 1923 to 19,115, about 51 per cent of the 1913 figure. When labourers are included, overall male unemployment in Clyde shipbuilding in 1923 stood at 32,000. In April of that year the spectre of an employers’ lock-out once again raised its head, this time over the Boilermakers Society refusal to sign a nationally agreed overtime clause. The resultant lock-out lasted seven months. Consequent upon the 1921 depression in trade, wages were substantially cut and bonus payments-a feature of the last years of the war, were ended. With a substantial number of berths empty due to low demand, trade unions were obviously in a weak position and wages and conditions continued to be cut. By January 1923, labour’s wartime gains had been substantially lost and money wages had reverted almost to their 1914 level.
For shipbuilding labour, the 1920s and the bulk of the 1930s had been very difficult in terms of job security or, more correctly, the lack of it. At the nadir of the interwar depression in 1933, some 60 per cent of all workers in British shipbuilding and repair were unemployed and in Scotland the figure was 77 per cent. The 1930s were notable for a swathe of shipyard closures due to lack of demand. Many firms on the Clyde, Tyne and Wear voluntarily closed for good, or closed berths under restrictive covenants to an industry body, National Shipbuilders Security Limited (NSS). By the outbreak of the Second World War, NSS had got rid of one-third of the shipbuilding industry’s capacity, including Palmers of Jarrow in 1934, which sparked the Jarrow March to London in October 1936, and which left the town with a male unemployment rate of 75 per cent. As Great Britain faced another world war, there is no doubt that its shipbuilding industry was qualitatively and quantitatively weaker than had been at the end of the Great War. Moreover, such had been the advance of international competition during the interwar period that by December 1938, Great Britain’s percentage share of world shipbuilding output had slumped to 29 per cent, half the amount of 1914. By September 1939, management and workforces were on the whole old, and equipment was largely outdated in comparison to more capital intensive continental yards. The war, its longevity, and immediate aftermath would mask British shipbuilding’s fundamental weaknesses – lack of international competitiveness, lack of investment and inherently corrosive industrial relations.
Despite the wartime expansion of welded construction techniques, particularly in the USA, the bulk of British shipbuilding yards remained committed to riveting as the principal method of metal joining of ships plates. In 1950-51 only 3.8 per cent of British shipbuilding launching output was of all-welded construction, but it follows that the proportion of partly welded tonnage would have been considerably higher. The corresponding figures at 1950 for the USA (albeit a closed market) at 80.3 per cent and Sweden (open market) at 37.8 per cent are instructive.
Most British shipyards dated from the era of wooden construction and were spatially constrained. Berths were tightly packed together and lifting capacity was limited. Before 1914 and during the interwar period crane capacity was normally less than ten tons. As ships plates were relatively small, most work took place at the berth. Post-war, British shipbuilders saw a definite future for riveting and were on the whole reluctant to make a full transition from riveting to welding, as it implied a full-scale and therefore costly re-orientation of their productive facilities away from the berths to fabrication sheds to take advantage of prefabrication of flat ships plates and sections that welding offered. Moreover, production planning to maximise welding output and coordination of individual trades, materials, stock, and subcontractors in a sequential manner, all implied a greater deal of higher management control than hitherto was the case. With the nadir of the interwar depression in living memory, shipbuilders were reluctant to fully modernize their facilities. All were aware of the cyclical nature of demand, but few if any could have predicted from 1948 onwards a near 25-year post-war economic boom in world trade. Full order books and reasonable profits militated against full-scale reconstruction of facilities and no shipbuilder contemplated the building of a new shipyard on a green-field site.
Welding and prefabrication of plates and sections away from the berth would eventually replace riveting. Greater crane capacity allowed the prefabrication of larger sections and their transport to the berths. These developments had a marked effect on safety, by shifting the locus of production away from the crowded ship on the berth. Nevertheless, Dickensian working conditions and industrial relations still prevailed; relatively small proportions of yards were paved, rusty plates abounded, there were no showers or changing facilities, toilet facilities were grossly inadequate and insanitary, and health and safety, as we know it today, was non-existent.
With an order book glutted with mercantile orders from the Korean War onwards, profits rose accordingly and investment in fixed assets correspondingly dropped. Expenditure on plant and equipment can hardly have been barely sufficient to cover normal wear and tear and obsolescence in British shipyards. For an industry during the 1950s which was producing an average of £120m per annum, expenditure of £4m per annum on fixed assets indicated innate parsimony. In terms of share dividends, a representative sample of 13 firms between 1945 and 1956 paid average share dividends of over ten per cent, distributing over £2.6m per annum-over half what the industry was spending on fixed assets. Moreover, taking capital investment as a proportion of net output in British shipbuilding and repair and other industries from 1949 to 1957, shipbuilding and repair averaged under half of the all industry average, and in terms of share price index for manufacturing at the end of 1949 to October 1956, with 1949 at 100, shipbuilding easily came out on top at 288 at October 1956.
For almost the entire period from 1945 to 1958, there had been a seller’s market in shipbuilding. However, British shipbuilding output had remained largely static: its share of overseas orders had declined, and British shipowners increasingly ordered from overseas. Moreover, the major growth market segments post-1945: increasingly large crude oil tankers and bulk carriers had largely passed British shipbuilders by. On the whole the industry had remained wedded to producing to order for the British mercantile marine, had taken easy profits and largely failed to re-invest them in modern plant and equipment. From 1958, by which stage the post-Suez spike in freight rates had waned, to 1961, a buyers’ market reigned; the spectre of increasing international competition was all too real (Japan had overtaken Britain as the world’s major producer of ships in 1956, and remained in that position for the rest of the century) and the likelihood of increased and heavily localised unemployment loomed.
The 1960s witnessed the contraction of the British shipbuilding industry. With discussions between the industry and Government continuing throughout 1962 and 1963 on the industry’s prospects, the first shipbuilding casualty of real note was the shipbuilder, repairer and marine engine builder, Wm Gray of West Hartlepool who voluntarily liquidated in 1962. Gray’s was followed into liquidation in 1963 by perhaps the most versatile of all British shipbuilding and marine engine building firms, Wm. Denny Bros of Dumbarton. Denny’s personified the versatility of British shipbuilders. It had built clipper ships, cross channel ferries, flotilla craft, Clyde steamers, cargo liners, sloops, destroyers, and the D2 Hovercraft. In the same year the lower Clyde shipbuilder, Wm Hamilton’s Glen yard at Port Glasgow was closed and its premises incorporated into the neighbouring Lithgows Ltd. During 1962 the loss-making Harland and Wolff, Belfast had decided to close its three Upper Clyde shipbuilding and repair yards, A & J Inglis at Pointhouse, D & W Henderson at Meadowside in 1962 and Harland and Wolff, Govan in 1963. Thereafter, its shipbuilding operations were confined to its high-cost Belfast base. 1964 saw the voluntary liquidation of the tanker specialist, Blythswood Shipbuilding on the upper Clyde, the dredger specialists, Simons and Lobnitz at Renfrew, and the closure of the former specialist destroyer builder, J. Samuel White’s East Cowes yard on the Isle of Wight. All these yards were spatially constrained, and one could, and should, view these closures as entirely rational business decisions given the general increase in size of ships and the intensity of international competition.
Nonetheless, the level of closures, actual and potential, and resultant levels of unemployment in the industry had begun to worry Government. However, the steadily declining share of world output post-1945 was particularly evident and no real industry plan had been devised to combat international competition, particularly from Japan, Sweden and West Germany. A short-term response to the industry’s problems came in May 1963, when the then Conservative Government announced a Shipbuilding Credit Scheme of one-year’s duration and provided £30m at Government Lending Rate for 80 per cent of the cost of a ship and loans which could be extended up to ten years. In the course of the year the financial limit was twice extended up to a total of £75m, and by October 1964 the scheme was fully subscribed with 67 vessels from British shipyards on order totalling 892,000 grt. At best, the scheme accelerated orders when they were much needed as the industry struggled to hold its share of the market, but in reality it proved to be a costly sticking plaster as the industry’s share of world output had declined from 38 per cent in 1950 to ten per cent by 1965.
With the election in 1964 of a new Labour government after thirteen years of Conservative Party rule, another inquiry on shipbuilding and marine engine building, but not ship repair, was commissioned by the President of the Board of Trade, Douglas Jay, with a remit to increase the industry’s international competitiveness. Crucially, the Shipbuilding Inquiry Committee (SIC), which reported in March 1966, did not contain any shipbuilders, and was chaired by the then Chairman of the Dunlop Rubber Company, Reay Geddes. Members of the SIC visited shipyards and marine engine building works in Denmark, Sweden, Norway, West Germany, the USA and Japan, in tandem with visits to the largest 27 firms in the United Kingdom. On the labour side, the report’s authors acknowledged that management and unions had failed in their attempts to negotiate constructively and at a time when skilled labour is scarce it is wastefully employed. Furthermore, it was also noted that shipyard workers and trade unions should believe in the reality of a fresh start ‘…if they are ever to compete with Swedish and Japanese workers’ willing response, steady effective work, and pride in their job’.
The effectiveness of ‘ruthlessly efficient’ Japanese tanker building specialists was such, as one leading British shipbuilder, Ross Belch of Lithgows Ltd observed, that if Lithgows built a 52,000 dwt ton tanker for £2,500,000 then Japanese yards would undercut them on price by £500,000 and even if Lithgows paid out nothing in wages then it still could not undercut Japanese competition. In 1966, the tonnage output, largely tankers, of five shipyards of Mitsubishi Heavy Industries in Japan exceeded that of the British shipbuilding industry combined, and one yard, at Nagasaki, had exceeded the entire launching output of Clyde shipyards.
The SIC report did however; mark a watershed in the industry’s fortunes. It criticised the industry’s short term attitude to markets, men and money and its insufficient influence over its customers and suppliers. It saw the industry’s weakness in its fragmented structure; thus its major recommendations included grouping of firms on river centres to increase economies of scale, scope and specialisation and a major rationalisation of marine engine building firms. Funds would be provided by a new three-man Shipbuilding Industry Board (SIB) subsequently established by the Shipbuilding Industry Act, 1967, empowered to provide grants and loans to facilitate grouping of shipbuilding firms, and whose operation would be at arm’s length from government, who nonetheless would be providing the funds. Like the SIC, the SIB did not contain shipbuilders and was tasked to ‘promote the ability of the shipbuilding industry in the United Kingdom to compete in world markets’.
During the SIC reporting stage, one of the six major shipbuilders in Britain and Glasgow’s largest shipyard, the Fairfield Shipbuilding and Engineering Co. Ltd. of Govan entered Receivership in October 1965. Although the firm had an Order Book of some £20m, its major creditor, the Bank of Scotland had called in a floating charge on the company of £1m and in so doing had secured first creditor status. There then began a trade union campaign to save Fairfield and its marine engine building arm, David Rowan and Sons. Fairfield, which had modernised its facilities, had taken on a number of sophisticated contracts with tight delivery times. The final loss occasioned on one vessel, Nili, a 7,500 grt ferry for a Swiss/Israeli consortium finally delivered in June 1965, was £1.5m for late delivery and cost overruns. The Labour Government stepped in and rescued the shipyard, but not David Rowan and Co, and a new company, Fairfields (Glasgow, 1966) Ltd, was formed in January 1966.
From 1966 onwards progress on grouping of firms on river centres had been sporadic. On the Tyne, the major shipyard, Swan Hunter led the grouping effort there, with the river Wear yards conducting separate talks. On the Clyde, where the SIC Report had recommended not more than two groups, negotiations on mergers and SIB funding through grants and loans had begun between Scotts and Lithgows on the Lower Clyde, and some twenty miles upriver, between the remaining five shipyards on the Upper Clyde, John Brown, Stephen, Connell, Fairfield and Yarrow. The three other major geographically-isolated firms, Cammell Laird at Birkenhead, Vickers at Barrow-in-Furness, and Harland and Wolff, Belfast resisted grouping. Nonetheless, what came to be known as the Swan Hunter group had been established by 1968 as had Upper Clyde Shipbuilders. Clearly, the problems of merging disparate firms with separate ownership, product mixes, management and accounting systems, plant and equipment, labour agreements etc., against a background of increasing and in fact unrelenting international competition would be difficult.
Before the General Election of June 1970, the shipbuilding and repairing arm of the Laird Group of companies, Cammell Laird at Birkenhead, was in deep trouble. Losses on shipbuilding work taken on at keen prices were mounting, and the company faced a critical liquidity problem. By mid-May, however, the Labour Government through its Industrial Reorganisation Corporation had granted Cammell Laird through its parent company, the Laird Group, £6m to save its shipbuilding arm. A member of the Shipbuilding Industry Board, noted that apart from skilled labour and certain berths there were no other assets worth preserving, this despite an £18m modernisation programme begun in 1956, not all of which was committed to shipbuilding. All but three of 17 Directors were replaced, including the chairman, and 50 per cent shares in the shipyard were to be held by the Public Trustee on behalf of the workers, the other 50 per cent share was held by the reconstructed Laird Group as a trade investment, with no further say in management of the shipyard.
Just as Cammell Laird was saved by the Labour Government, Upper Clyde Shipbuilders was also in deep financial trouble. The election of a new Conservative Party Government in June 1970 did not augur well as it was apparently committed to a ‘no lame ducks’ industrial policy. When the Shipbuilding Industry Board created in 1967 to dispense grants and loans decided before the 1970 General Election not to lend UCS any more money, the Labour Government directly lent UCS £7m and in so doing it and the SIB now held 48 percent of UCS shares. By June 1971, UCS informed the Conservative government that it required another £5 to 6m in the form of grant or equity subscription to save the five shipyards under its control. The Government refused this plea and the company had little choice but to appoint a provisional liquidator. However, the Government then agreed to contribute towards the expense of keeping all employees on the payroll until 6 August 1971 to allow a report of experts to examine future prospects for mercantile shipbuilding reconstruction on the Upper Clyde. The three-page Report was published on 29 July 1971 and concluded that it should be possible to form a contracted but viable company from the ashes of UCS. The Government accepted the Report’s conclusions and advanced the provisional liquidator, Robert Courtney Smith, £4m.
Earlier, in February 1971, the Conservative Government, in line with policy it had already made in opposition, had allowed UCS’s only naval builder, Yarrow -the UK’s premier builder of frigates — to leave the consortium and advanced it a loan from the Ministry of Defence of up to £4.5m for working capital. Yarrow also inherited a Construction Hall costing £1.5m, one of the few items of capital expenditure by UCS. The Working Party’s conclusion to concentrate production at two of the remaining four yards in UCS with the probability that up to 6,500 jobs would be lost, sparked the famous UCS Work-in when workers led by two Communist shop stewards, Jimmy Airlie and Jimmy Reid occupied the four yards and continued to work under the overall supervision of the Liquidator. ( See, in this collection; ‘Sounds of the Clyde 1971’ Granada’s Television’s flagship current affairs programme, World in Action, reports on the Upper Clyde Shipbuilders Work-in after the liquidation of the company in 1971).
In the end, by 1972, the famous John Brown yard at Clydebank was in part saved when the President of the Boilermakers Society, Dan McGarvey led a trade union delegation to Texas and persuaded Marathon Oil of Houston to build jack-up oil rigs at Clydebank, but with a much reduced workforce, changed industrial relations and substantial government aid. The shipyard of Alexander Stephen at Linthouse, which had excellent steel work facilities, was closed with its facilities earmarked for integration in a new company. The two remaining companies, the old Fairfield yard at Govan and the Connell Yard at Scotstoun were saved and would be renamed Govan Shipbuilders and Scotstoun Marine respectively, with Government providing a £35m injection of cash over five years to ensure the future of the company. The decision between the government and Marathon dragged on longer than anticipated. This was mainly due to two facts: Marathon was intent on getting maximum assistance; and there was also still the matter of agreements to be sorted out between it and the trade unions. Negotiations with Marathon were concluded by 6th September and one week later Govan Shipbuilders became a reality.
By 1973, another major report into the British shipbuilding industry, British Shipbuilding 1972 by the consultants Booz-Allen and Hamilton International BV; had been published by the Secretary of State for Trade and Industry. In stark contrast to the SIC Report, Booz Allen painted a depressing picture: between 1967 and 1971 tonnage launched in UK yards had remained static and the percentage share of UK tonnage launched, relative to world launches, had fallen to just five per cent. New orders in 1971 were at their lowest level since 1967, and in the third quarter of 1972 just 22,000 gt of shipping had been ordered. Overall, the industry was uncompetitive with international competition in terms of price, delivery, labour relations, technological development and capital investment. Moreover, the extent of international competition coupled with rapid inflation in the cost of labour and raw materials had severely affected British shipbuilders’ financial performance, and had made the industry generally dependent on government support and assistance.
Booz-Allen also noted that the number of employees in shipbuilding and repairing had changed little since 1967 and that skilled labour accounted for 42 per cent of the total employed. Unofficial strikes in the shipbuilding and marine engineering sector through days lost per thousand employees were around three times the national average for all industries and services in 1969, and five times in 1971. However, as a result of the National Demarcation Agreement of 1969, working days lost through demarcation disputes in the two years 1970-71 amounted to only half a per cent compared with 32 per cent in the period 1967-1969.
The major structural change recommended by Booz-Allen was to concentrate warship production in just three companies: Vickers at Barrow-in-Furness (nuclear submarines), Yarrow at Scotstoun (frigates) and Vosper Thornycroft at Southampton and Portsmouth (frigates and fast patrol craft) as in the Report’s view there would be a large excess of warship building capacity relative to domestic demand by 1976 and that foreign orders would not compensate. This had potentially dire effects on the three large firms capable of naval and mercantile building, Swan Hunter on the Tyne, Cammell Laird at Birkenhead and Scott Lithgow on the Lower Clyde, all of whom had posted substantial losses in the years preceding the report, but whom Booz-Allen recognised could continue as mixed naval and mercantile builders until 1976, but no later.
From the General Election of February 1974 the new Labour Government was committed to the nationalization of British shipbuilding, repair and marine engine building companies. This was reaffirmed in the second General Election of that year in October and subsequently a Bill to nationalise the shipbuilding and aircraft industries was presented to Parliament in the spring of 1975. However, it failed to make it through the 1974-75 session of Parliament. Re-introduced in November 1975 the Bill was later successfully challenged on the grounds of hybridity. Consequently, 12 ship repair firms (three of which were publicly owned) were omitted from the nationalisation process.
July 1974 saw the collapse of the Court Line group of companies, which by this stage included aviation and leisure interests in addition to Appledore Shipbuilders in North Devon, North East Coast Shiprepairers, and Doxford and Sunderland Shipbuilders on the River Wear. The Labour Government, anxious to preserve employment, stepped in and effectively nationalised these companies saving some 9,000 jobs. With Cammell Laird, Govan Shipbuilders and Harland and Wolff also effectively nationalised only two large SIC Report-inspired groups, Swan Hunter and Scott Lithgow remained under private control.
Despite the growing market challenges facing the industry which, post the OPEC oil price hikes of 1973-74 was experiencing the worst depression since the early 1930s; the period from 1974 to 1977 was characterised by internecine political bickering over nationalisation. The debate soon descended into an ideological dogfight in Parliament that unduly delayed the process not least because of the Labour Government’s insistence in combining Aircraft and Shipbuilding in the same Bill. It also had a serious impact on the shipbuilding industry’s ability to survive against withering international competition. The high rate of inflation, which stood at 25 per cent in 1975 alone, in tandem with fixed price contracts, ate into the industry’s profitability. Over-manning was widespread and owners of the remaining privately-owned shipbuilding and repair firms were reluctant to commit to capital expenditure with the spectre of nationalisation looming. The owners who were in regular touch with the Conservative Party opposition in Parliament, virulently opposed state control. Conversely, the shipyard trade unions with their members’ jobs at stake were almost messianic in their desire for state control of the industry. By the time nationalisation actually took place, however, most firms in the industry were unprofitable and faced an uphill fight to survive.
During the latter part of the nationalisation process, strikes such as one at Cammell Laird at the beginning of 1977, where over 4,000 men were laid off because 450 platers and shipwrights had struck for another £2 per week, were characterised by The Economist as ‘a peculiar form of ritual suicide’. Such was the severity of Japanese competition that late in 1976 Japanese yards were quoting prices as much as 60 per cent lower than UK tenders. Such was the dire state of British Shipbuilding and indeed to some extent that of Western European shipbuilding in general, the fact remained that Japan had the capacity to produce all of the world’s shipbuilding capacity requirements by itself.
Before British Shipbuilders Plc was established, the long road to nationalisation frustrated the original Organising Committee so much so that the Chief Executive Designate, Graham Day, who since 1971 had been Managing Director of the loss-making Cammell Laird, had left the Organising Committee in December 1976 in protest against the length of time taken to nationalise shipbuilding. Subsequently, a new Organising Committee was established and British Shipbuilders Plc was formed on 1 July 1977 as a result of the Aircraft and Shipbuilding Industries Act, 1977, which nationalised 19 shipbuilding, five slow speed diesel manufacturing companies and three apprentice training companies in Great Britain, with Harland and Wolff, Belfast which was effectively nationalised in any event, exempted. A further six ship repair companies asked to be nationalised post-July and these, and one more shipbuilding firm, Ailsa Shipbuilding of Troon, Ayrshire added in 1978, comprised British Shipbuilders. Admiral Sir Anthony Griffin was appointed chairman and a civil servant, Mike Casey, Chief Executive. Collectively, British Shipbuilders accounted for 97 per cent of British merchant shipbuilding capacity, 100 per cent of its warship-building capacity, 100 per cent of slow speed diesel engine manufacturing and approximately 50 per cent of ship-repair capacity. From 1 July 1977 to 1 March 1978, British Shipbuilders employed on average some 86,600 employees, 44,800 of which were employed on merchant and mixed naval construction, 20,000 on specialised warship construction, 8,500 in ship repair, 5,600 on marine engine building, and 7,700 on general engineering and other activities. Of the 86,600 employees, 24,000 were located in Scotland and the rest in England.
British Shipbuilders Plc was set up with no common financial reporting system or corporate plan in situ, save that it was to be organised into four divisions; merchant shipbuilding, warship building, ship repair and marine and general engineering. Crucially, with some exceptions, its constituent companies were still being run by the same people who had presided over the near collapse of the industry under private control. Not surprisingly, British Shipbuilders attempted from the outset to bring its constituent companies under a standardised system of financial reporting and to impose cash limits on constituent companies. Under the Act establishing British Shipbuilders, companies were to be treated as individual profit centres under a de-centralised management system-a cataclysmic error of politicians passing the Act, which allowed local management, especially the cossetted warship building firms who operated under conditions of imperfect competition, to initially ignore the centre.
Originally headquartered in London, British Shipbuilders subsequently moved to Newcastle-upon-Tyne-the same city in which the Boilermakers Society had their headquarters. In the financial reporting period from 1 July 1977 to March 1978 British Shipbuilders posted a loss of £108m before tax and after receipt of Shipbuilding Intervention Fund monies.
Unsurprisingly, a substantial part of that loss arose from contracts taken before nationalisation. Given the perilous market situation, the government in consultation with the Commission of the European Economic Community had, under the Industry Act of 1972, established a Shipbuilding Intervention Fund (SIF) to aid British Shipbuilders to attract orders against far eastern competition by bridging the price gap between European and Asian prices. In February 1977, £65m was set aside for this purpose and by 1978 the amount was raised to £85m subject to annual negotiations with the EEC Commission.
SIF assistance was initially intended as a temporary aid for merchant shipbuilding only and was provided for contracts taken on a non-profit basis to maintain capacity. Only by way of SIF assistance could British merchant shipyards be kept in business against far eastern competition. With the aid of the SIF, British Shipbuilders, broadly, concentrated on survival by attempting to weather the storm of international competition and reduced demand in the hope that demand would once again pick up in the early 1980s. This was almost exactly the position taken by the European Commission with its various directives on shipbuilding subsidies up to and throughout the 1980s and beyond. However, simultaneously, the Commission reduced capacity in the expectation it would not. Clearly, the two positions were mutually incompatible.
If the constituent companies of British Shipbuilders were at the early stage, semi-autonomous, then by January 1979 industrial relations were not. On nationalisation on 1 July 1977 to the end of 1978 the industry was subject to 168 separate collective bargaining agreements on wages and salaries, by I January 1979 it was subject to one with a single negotiating date-a remarkable achievement but one which also reflected the gravity of the competitive position, which the trade unions involved were all too aware of. Nationalisation fundamentally changed the dynamics of industrial relations in the industry. Under the Aircraft and Shipbuilding Industries Act, British Shipbuilders was committed to a form of industrial democracy mainly of a consultative nature. Monthly discussions with the Confederation of Shipyard and Engineering Unions Shipyard Negotiating Committee were instituted to discuss and exchange views over a wide range of British Shipbuilders activities. In its first year of operations a number of agreements were made including a new procedure for the avoidance of disputes, and following discussions with Government and the CSEU a special redundancy payments scheme was instituted under the Shipbuilding (Redundancy Payments) Act, 1978. Indeed, one former trade unionist, Ken Griffin had been made Deputy Chairman of British Shipbuilders and three active trade unionists, Fred Baker of the General and Municipal Workers Union, Les Gregory of the Electrical, Electronic and Telecommunications and Plumbing Union and John Hepplewhite of the Boilermakers Society had been made part-time Board members.
Under its second Chairman, Robert Atkinson, appointed in May 1980, British Shipbuilders Plc was restructured in October into five trading divisions according to product profile: Merchant Ship-building, Warship-building, Engineering, Ship-repair and Offshore. The last division, comprising Cammell Laird and Scott Lithgow at a stroke took two mixed naval and mercantile yards out of naval con-struction altogether and also brought them out of the ambit of the SIF. Atkinson quickly recognised the need for more centralised financial control but continued the mistake of his predecessor by leav-ing production and productivity deals to the constituent companies, which inevitably would lead to interyard friction and hostility, especially between the loss-making merchant yards and the profitable warship yards. He did, however, centralise marketing. The Thatcher government’s 1979 manifesto had promised to de-nationalise shipbuilding but it did not feel confident enough to do so before 1984, particularly because of the very real threat of a total implosion of the largely unprofitable merchant ship-building sector and the likelihood that private investment in it would not be forthcoming. Initially, it pledged continuing financial support until 1981 contingent upon rationalisation and a return to viability but trading losses after intervention fund subsidy continued; over £45.5m in 1978-79 and £110m in 1979-80.
The only substantial profit earners were the three specialist warship yards, Vickers, Vosper Thornycroft and Yarrow. By the end of 1981 however, the number of engine building companies had been reduced from five to two. Employment had been reduced to 66,747 and ship repair had been reduced from six to four firms. From 1 July 1977 to November 1980, the industry consumed £316m in public dividend capital and £105.5m in Shipbuilding Intervention Fund monies, and was still unable to match prices quoted by competitors.
By the end of 1982 British Shipbuilders had closed half of its merchant shipbuilding capacity and the terms of the British Shipbuilding Act, 1983 gave the Government the required means to compel British Shipbuilders to begin a process of the privatisation of its remaining companies. Losses for 1982-83 totalled £117m mainly due to the Offshore Division. A new Chairman, Graham Day (who it will be recalled had resigned from the original Organising Committee of British Shipbuilders) was appointed in succession to Robert Atkinson with a specific brief to reduce losses and privatise the profitable elements of British Shipbuilders, the warship yards.
From 2 April 1984 the number of British Shipbuilders divisions was reduced from five to two to prepare for its eventual size and shape after disposals and privatisation. Now only warship building and merchant and composite building yards formed the core capability, reflecting the progressive withdrawal from ship repair, offshore and marine and general engineering. Earlier in March, British Shipbuilders biggest loss maker, Scott Lithgow became the first constituent company to be privatised: sold to the industrial conglomerate Trafalgar House Plc for a knockdown price of £12m. Post-sale, Trafalgar House received £36.649m in June 1985 from British Shipbuilders in compensation for continuing problems with completing a semi-submersible drilling rig. A record trading loss of £161m in the 1983-84 re-porting year for British Shipbuilders was almost entirely due to losses in its Offshore Division. The entire adventure begun by Robert Atkinson in 1981 into offshore semi-submersible drilling rig construction at Scott Lithgow and Cammell Laird had been disastrous.
Thereafter, British Shipbuilders Plc began the privatisation of its constituent companies in earnest by selling off its warship yards, its two remaining ship repair companies, Falmouth Shiprepair Ltd and Vosper Shiprepairers Ltd (both sold in 1984 and 1985 respectively) and engine-building and general engineering companies. Brooke Marine at Lowestoft was re-designated as a warship yard and sold in 1985 to a management buyout as was Vosper Thornycroft at Southampton and Portsmouth. Yarrow was also sold in that year to the conglomerate GEC-Marconi. In 1986 Smiths Dock on the Tees was closed as was Clark Kincaid’s Wallsend engine works, Vickers at Barrow was sold to yet another management buyout and was re-branded Vickers Shipbuilding and Engineering Limited (VSEL), which also included Cammell Laird, re-designated as a warship yard in 1984 after the collapse of the Offshore Division, and sold to VSEL for a nominal £1! Swan Hunter had also been designated a warship yard and was privatised in 1986 by another management buyout as was Hall Russell at Aberdeen. Re-designation of four of the seven yards above (three, Yarrow, Vosper Thornycroft and Vickers were already designated warship yards) precluded all seven from accessing SIF monies.
1986 also saw the sale of the small Ailsa shipyard at Troon, sold to the Perth Corporation. Ailsa was purchased by the Yorkshire-based Cathelco in 1996 and after completing a £20m order from the Ministry of Defence for ten landing craft, closed in 2000. 1988 saw the sale of Govan Shipbuilders to the Norwegian conglomerate, Kvaerner for a paltry £6m with the loss of 500 jobs and with British Shipbuilders picking up the redundancy costs and allowing Kvaerner access to the SIF. This left British Shipbuilders with only one major merchant shipbuilding facility, North East Shipbuilders Limited (NESL) at Sunderland, and the much smaller shipyards of Appledore-Ferguson at North Devon and Port Glasgow, and Clark Kincaid’s engine works at Greenock. By 1989, Appledore, Ferguson and Clark Kincaid had been privatised, and NESL’s Pallion (the locus of a large construction hall) and Southwick shipyards closed in a backstage deal with the European Union Commission as a counterpart for aid. Counterpart funding was designed to assist those areas where shipbuilding closed, in this case, Sunderland, but only on condition that no future shipbuilding be conducted.
The remaining assets of NESL were then privatised in 1989 as A & P Appledore International, and were utilised for ship repair. The NESL closure ended volume merchant shipbuilding in Great Britain. In contrast, ship repair and conversion, most of it undertaken in former assets of British Shipbuilders, survived in part, and largely returned to the casualised system of labour which had characterised it beforehand. The result of privatisation had been an income to British Shipbuilders of £125.5m while costs had been £234.8m-leaving a negative balance of £109.3m. All told, British Shipbuilders Plc, from July 1977 to 1989, cost British taxpayers over £2bn. In 1975, British shipbuilding had employed 48,000 employees in new building-by 1990 the figure stood at 6,000. The comparative figures for the Netherlands and West Germany for employees engaged in shipbuilding in 1975 were 21,000 and 47,000 respectively. By 1990 these numbers had been reduced to 4,000 and 15,000 respectively. In 1975, Japanese shipbuilding, at 256,000 employees, employed far more workers than Great Britain, West Germany, the Netherlands and Sweden combined (141,000). By 1990, however, shipbuilding employment in Japan had contracted markedly to 89,000. From 1977 onwards, British shipbuilding had marched towards statistical irrelevance.
