From Empire to Europe: The Decline and Revival of British Industry Since the Second World War. Geoffrey Owen

Strikes over demarcation increased in the closing decades of the century, prompting efforts by employers and unions to devise new conciliation procedures. The establishment of national organisations – the Shipbuilding Employers Federation and, on the union side, the Federation of Shipbuilding and Engineering Trades – helped to bring some order into the industry’s collective bargaining arrangements. But the individual unions were not willing to surrender power to a central body; the Boilermakers, in particular, were frequently in conflict with other unions.

      There were moments when employers, irritated by persistent demarcation disputes and by union-imposed restrictions on how workers could be deployed, favoured a more aggressive labour relations strategy.⁷ In 1898 the engineering employers won a decisive victory over the principal craft union in engineering, the Amalgamated Society of Engineers, over the issue of managerial prerogatives, and some shipyard owners wanted to apply the same rules in shipbuilding.⁸ In 1902 employers on the Clyde proposed to their colleagues in the north-east a concerted attack on union-imposed restrictions. This would involve the freedom to deploy unskilled labour on new machinery, the detachment of foremen from union influence, and discretionary power to sub-divide the work process where this was felt to be desirable. But it proved impossible to maintain a united front among a notoriously individualistic group of employers. Some companies, especially in the north-east, had no stomach for an all-out fight. As G. B. Hunter of Swan Hunter, the largest shipyard on the Tyne, put it, ‘we in the north of England want to work by agreement with the trade unions. We think we can manage the men better by so doing’.⁹

      Although labour relations in shipbuilding were adversarial, workers and their unions recognised that changes in technology and organisation were essential if the industry was to retain its dominant position in the world market. Disputes over demarcation and other issues were seen as part of the give-and-take between the two sides which allowed the necessary adjustments to take place. The unions, moreover, performed a number of useful services; they administered the apprenticeship system and, through their welfare payments, helped to maintain the attachment of skilled workers to the industry during recessions.¹⁰

      There was another reason why employers needed the co-operation of their skilled workers. In the days of wooden shipbuilding the yard owner customarily sub-contracted part of the work to the shipwright, who hired, supervised and paid other, less skilled workers. Although sub-contracting began to die out after the transition to steam and iron, the industry continued to rely on self-supervising gangs or teams of workers, who were ‘given only the vaguest of instructions and then left to organise the work among themselves’.¹¹ The head of the team, a senior member of the relevant union, was given considerable responsibility. The foreman to whom he was nominally responsible belonged to the same union, and was no less concerned to protect the interests of the craft. There was no strong incentive to change these arrangements as long as the industry was doing well.

      Productivity in shipbuilding was higher in Britain than in any other country before the First World War.¹² In Germany, Britain’s strongest competitor in other industries, shipbuilding had developed slowly up to the 1890s, partly because of inadequate supplies of high-quality steel. Support from the government, in the form of protection and subsidies, gave the industry the confidence to expand and modernise, and after the turn of the century German yards were turning out ships which matched the British in quality. But despite lower wages production costs were higher than in Britain. This was partly a matter of scale; German merchant ship launchings were about one-sixth of the British level before the First World War. But a more important reason was the scarcity of skilled labour, which forced German firms to spend more on machinery. This was an expensive overhead, which, because of fluctuations in demand, could not be kept in continuous operation.¹³

      Like cotton textiles, shipbuilding was an industry in which there was no sign of entrepreneurial failure in Britain before the First World War. The production methods which had been developed since the middle of the nineteenth century, together with the skills and experience of managers and men, suited the conditions in which the industry was operating at that time. These conditions changed radically in the inter-war years, and, like the textile manufacturers described in the last chapter, the shipbuilders had great difficulty in adjusting to the new environment.

      The Inter-war Years

      For the first two years after the First World War new orders flowed into British shipyards at a high level as tonnage which had been lost in the war was replaced. Most of these orders came from British owners, who assumed that the growth of international trade would quickly return to its pre-war path and that Britain would resume the dominant role in world shipping which it had had before the war. Both these assumptions turned out to be wrong. The volume of sea-borne trade remained below the pre-war level until 1924, and, after a brief upturn in the second half of the 1920s, fell back again under the impact of the world depression. Within this declining market British shipowners faced growing competition from foreign fleets, some of which were protected and subsidised by their governments. There were also changes in the composition of world trade which worked to Britain’s disadvantage. Coal exports, which had been the staple business for many British tramp operators, declined in importance as the volume of oil shipments increased.

      Several firms had enlarged their yards after the war on the expectation of continuing growth in demand, and in 1920 the industry had the capacity to produce about 4m tons of merchant shipping a year. Output reached a peak of 2.1m tons in 1921, but for the rest of the decade it averaged little more than 1m tons a year, falling to below 700,000 tons between 1930 and 1939. To make matters worse, naval orders, which had accounted for about a quarter of the industry’s workload before the war, virtually dried up in the 1920s, and remained at a low level until the onset of rearmament in the mid-1930s. The warship specialists were forced to compete for merchant ship orders, adding to the problem of over-capacity and low prices.

      What had been a source of strength for the shipbuilders – their close ties to British shipowners – now became a weakness, since all the growth in sea-borne trade in the inter-war years was secured by non-British owners. Between 1913 and 1939 British-registered merchant tonnage remained virtually unchanged at about 18m tons, while the world fleet expanded from 43m tons to 69m tons. Part of the decline in Britain’s share was due to subsidised competition, but there were also some missed opportunities. Before 1914 the few oil tankers in service were owned either by oil companies or by governments as part of their naval fleets. After the war the oil companies supplemented their own tonnage with vessels chartered from independent tanker owners. This business did not appeal to British tramp operators, partly because they had invested heavily in traditional cargo vessels after the war and lacked the resources to tackle a new market. One historian has suggested that British shipowners had a contemptuous attitude to oil tankers, ‘which they seem to have regarded as being hardly ships at all, much as the American sailing shipowners in the nineteenth century turned their backs on steamships, which they regarded as floating kettles not worthy of their consideration’.¹⁴ British shipowners allowed a gap in the market to open up, which others were quick to fill. By the end of the 1930s Norwegian entrepreneurs had built up the largest independently owned tanker fleet.

      British shipowners were also slow to take up the diesel engine. This form of propulsion, invented in Germany in the 1880s and adapted for marine purposes after the turn of the century, gained wider acceptance in the inter-war years. It was particularly attractive in countries which did not have an indigenous source of coal. By 1939 more than 60 per cent of the Norwegian fleet was equipped with diesel engines, compared with 26 per cent in Britain. Some of this lag reflected the composition of the British fleet. In passenger liners, for example, which were more important for British owners than for the Scandinavians, the steam turbine was more economic than the diesel. But the long attachment to coal and steam bred a cautious attitude towards the diesel engine which was not shared overseas.¹⁵

      The shipbuilders did not find it easy to break away from an approach to designing, building and selling ships which was geared to the needs of British owners. Most of them had a close relationship with a small number of British owners from whom they derived the bulk of their orders; the export trade was regarded as marginal and unpredictable. But even if British shipbuilders had been