The capacity reduction scheme was an unusual exercise in collective self-help in an industry which in the past had found great difficulty in maintaining a common front on any issue. Previous inhibitions about government intervention were laid aside as the industry’s plight worsened. Both shipowners and shipbuilders pressed for action to counter subsidised foreign competition. In 1934 the government agreed to provide a temporary subsidy for tramp operators, and in the following year a scrap-and-build scheme was introduced; loans were made available to British shipowners to scrap old ships and order new ones in British yards.
If the response of the employers to the inter-war crisis was defensive, the same was true of the unions. High unemployment made the unions even more determined to preserve traditional demarcations between trades, and less co-operative in their response to technological change. The replacement of riveting by welding provoked a lengthy dispute. The employers proposed the creation of a new class of skilled worker, the ship-welder, to be organised and trained outside the existing union structure. Inconclusive negotiations took place, but no national agreement was reached. The allocation of welding work within individual yards was determined in the time-honoured way, ‘through a process of competitive struggle between groups of skilled workers and their unions for control of the new process’.17
Delays in the introduction of welding in the 1930s did not put British yards at a serious competitive disadvantage. The technology was not yet fully developed, and the shipbuilders were understandably concerned that a premature rush into welding might damage their reputation for building high-quality vessels.18 But the reaction of the unions was symptomatic of the lack of trust between managers and workers, which was exacerbated by high unemployment.
The inter-war depression made it more difficult for employers and unions to shake off attitudes and habits which had taken root before the war. The employers were more interested in cutting costs than in a radical reform of the industry’s labour relations system or in altering the traditional approach to the organisation of work. Other shipbuilding nations were putting more emphasis on the pre-planning of production and on organising the flow of materials so as to economise on the use of skilled labour. This was the start of a transformation in shipbuilding techniques which was to be taken much further after the Second World War.19
The Post-war Boom in World Shipping
The Second World War, like the first, was followed by a worldwide surge in orders, and this time the boom did not quickly evaporate as it had done in the 1920s. From the early 1950s the world economy entered a golden age of growth, which continued for the following twenty years, and sea-borne trade increased at a rate which had no historical precedent. World shipbuilding output, which had fluctuated between 2m and 7m tons a year between the wars, rose to 36m tons in 1975. Yet Britain’s shipbuilders signally failed to profit from this favourable environment. Annual output from British yards was virtually static in the 1950s and 1960s (TABLE 5.1).
TABLE 5.1 Britain’s share of world merchant ship launchings 1950–95
In the early post-war years production in Britain was held back by the scarcity of labour and materials, but these shortages had eased by the early 1950s, and cannot account for the stagnation of output for the rest of the decade. Part of the explanation was the cautious view which British shipbuilders took about the future course of demand. Always anxious lest another depression was round the corner, they were determined to avoid the mistake that had been made after the First World War, when over-investment was followed by a prolonged slump. But two new forces were at work, neither of which sat easily with the skills and experience of British shipbuilders.
The first was a change in the market for ships, leading to a loosening of the ties between national owners and builders. The most striking development was the rapid growth of the so-called flags of convenience. This was a post-war device whereby owners registered their ships outside their home country, principally in Panama, Liberia and Honduras, partly for tax reasons, partly to avoid restrictions imposed by their home governments on manning levels and wage rates.
The second force was a change in the way ships were designed and built. In oil tankers and bulk carriers there was a trend towards scale and standardisation. There was also a growing demand for technically sophisticated ships, such as containerships, roll-on/roll-off ferries and chemical carriers, which called for specialised equipment and skills.
British shipbuilders had traditionally looked to British owners as their primary source of orders. If the British merchant fleet had retained the 26 per cent world market share with which it started the post-war period, this might have been a viable policy. But the British share declined even more precipitately than it had done before the war; by 1970 it was down to 11 per cent as other nations, principally Greece, Japan, Germany and Norway, built up their merchant fleets. Some of the trades in which British operators specialised were in slow-growing sectors of the market. Passenger traffic across the Atlantic, for example, was badly affected by the rising popularity of air travel. There was also a continuing decline in coal exports. But the shipowners responded sluggishly to new opportunities. For example, the 1950s saw a spectacular rise in the volume of oil shipments from the Middle East to the consuming countries of Western Europe, the US and Japan. The oil companies relied even more than before the war on independent tanker owners with whom they negotiated time charters, usually lasting for seven or fourteen years. The charter agreement provided the security on which owners raised loans to finance the construction of new ships. This market was open to British owners, but most of them regarded it as too risky. The Norwegians and the Greeks, as well as Chinese entrepreneurs based in Hong Kong, had no such inhibitions.20
A marketing strategy geared to the requirements of domestic owners was becoming obsolete, and the same was true of the industry’s production methods. For the transport of oil and bulk commodities such as iron ore the trend was towards larger, simpler and more economical vessels. In the early post-war years tankers were between 10,000 and 15,000 gross registered tons, but by the middle of the 1950s there were 50,000-ton ships on order. The closure of the Suez Canal in 1956, forcing operators to re-route their tankers round the Cape, led to a surge of orders for 100,000-ton vessels. With increasing scale came greater standardisation. The idea of ‘mass-producing’ ships on a flow-line basis had originated in the US during the First World War, but the big advance, made possible by the introduction of welding and prefabrication, came in the Second World War; some 2,600 Liberty ships – standard dry cargo vessels of 11,000 deadweight tons – and nearly 600 16,000-ton tankers were built in the US between 1941 and 1945. After the war other countries drew on US experience to rethink their approach to ship design.
Flow-line production called for a higher degree of mechanisation than under the traditional British system, and could be applied only in yards which specialised in a narrow range of ships. It also put a premium on planning and organisation. Instead of relying on the initiative and independence of skilled craftsmen, responsibility shifted to the drawing office, and the task of management was to ensure that plans were carried out precisely; a disciplined approach to the control of labour was required. British shipbuilders had difficulty in adjusting to these changes.21 Some yards were too small to accommodate the larger vessels now in demand, and specialisation did not come easily to firms which prided themselves on their ability to produce a wide variety of different ships. The resource which had underpinned this flexibility, an ample supply of self-reliant skilled labour, was no longer a competitive advantage.
New entrants, unencumbered