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

established on which all the unions were represented, and shop stewards were given the right to participate in matters which had previously been the preserve of management. Stewart and his colleagues were also firmer than their predecessors in only taking orders which offered a realistic prospect of profitability. But Stewart’s vision of using the yard as an example for other shipbuilders had to be abandoned in 1967 when the industry was restructured in line with the recommendations of the Geddes committee.

      Much of the Geddes report went over familiar ground – the need for more stable industrial relations, more attention to research and development, and better yard management.³⁰ The novel recommendations were, first, that the shipbuilders should focus more strongly on the world market, and, second, that the industry should be reorganised, with government financial support, into four or five large groups. These groups, the committee argued, would be able to reduce costs by allowing each yard to specialise in a particular type of vessel. The committee recommended that within each group naval work should be clearly segregated from merchant shipbuilding.

      Although the Geddes committee did not quantify the benefits which would accrue from the creation of large groups, its proposals were quickly accepted by the government. A new government agency, the Shipbuilding Industry Board (SIB), was set up to implement the scheme. The availability of public funds was a strong incentive for companies to co-operate, especially those which were in a weak financial condition or, like John Brown, wished to reduce their commitment to shipbuilding. It was difficult for the SIB to exclude yards which wanted to take part, even if their prospects of commercial viability were doubtful.

      The most fragile of the new groups was Upper Clyde Shipbuilders (UCS), which brought together the Stephen, Connell, Fairfield, John Brown and Yarrow yards. The last of these, a warship specialist, participated with great reluctance and insisted on being treated as a separate, autonomously managed subsidiary. The finances of UCS were under pressure from the start. This was partly due to losses on inherited contracts, but the management also decided to keep the labour force stable and to give the highest priority to winning new orders. The cost savings which had been anticipated at the time of the merger did not materialise, and further support from the SIB was necessary to keep the business alive. Yarrow withdrew from the group in 1971, leaving it entirely dependent on merchant shipbuilding.

      The other large groups formed as a result of the Geddes report were Scott Lithgow on the lower Clyde and the Swan Hunter group in the north-east. On the Wear the SIB tried without success to promote a merger between the three leading companies, Doxford & Sunderland, Austin & Pickersgill, and James Bartram. (The smallest of the three, Bartram, was later acquired by Austin & Pickersgill without SIB intervention.) On the other side of the country merger discussions were held between Vickers at Barrow, Cammell Laird at Birkenhead and Harland & Wolff at Belfast, but no agreement was reached.

      These structural changes coincided with an upturn in the world shipping market, and the price competitiveness of British yards was improved by the devaluation of sterling in 1967. But although the workload increased, profitability was undermined by rising inflation and inadequate control of costs.³¹ Apart from the problems at Upper Clyde Shipbuilders, two other companies were in severe financial difficulties by the end of the decade. Harland & Wolff made big losses in 1965 and 1966. This company was the largest employer in Ulster, and it had a special political importance at a time when civil unrest in the province was mounting. The decision by the Northern Ireland Ministry of Commerce to guarantee a £1.5m loan in 1966 was the first step towards a transfer of control to the government.³² Cammell Laird was hit hard by cost over-runs and had to be bailed out by the government in 1970.

      What had started as a programme of modernisation and rationalisation was turning into a series of rescues, and little progress was made on other aspects of the Geddes report. Several companies tried to buy out restrictive practices with higher wages, using the newly fashionable technique of productivity bargaining.³³ This was a technique pioneered by Esso, the American oil company, at its Fawley refinery in 1960, and it was widely applied in other industries during the 1960s. But most productivity agreements gave away more in wages than was gained in greater efficiency. In shipbuilding, the willingness of the government to subsidise loss-making yards reduced the incentive on both sides to reform long-established working practices.³⁴

      When the Conservatives were returned to power in 1970, their intention was to leave uncompetitive industries like shipbuilding to find their own salvation, and when UCS went into liquidation in the summer of 1971, the government at first refused to provide further funds. The decision provoked furious protests on the Clyde, and the unions organised a ‘work-in’ to keep the yards in operation. By the end of the year, the government was in retreat, agreeing to inject public funds into a new company, Govan Shipbuilders, which would take over three of the four yards; the fourth, John Brown’s yard at Clydebank, was sold to an American oil company for building oil rigs. After this climb-down government policy towards shipbuilding was not much different from what it had been under Labour. The three ‘lame ducks’, Cammell Laird, Harland & Wolff, and UCS, continued to receive subventions from the taxpayer. The shipbuilding industry was becoming almost a ward of the state.

      The most successful yard was one which had deliberately steered clear of government involvement. Austin & Pickersgill, a medium-sized firm on the Wear, had traditionally built general-purpose cargo vessels for tramp operators. In 1957 it was acquired by a London-based consortium of shipowners and ship-brokers. The largest shareholder was London and Overseas Freighters (LOFS), founded by two Greek ship-owning families. The yard was extensively rebuilt in the early 1960s, before the Geddes committee was set up, and the managing director, Ken Douglas, conceived the idea of concentrating production on a standard bulk carrier which would meet the needs of the yard’s traditional customers at the lowest possible cost. The new design, known as the SD14, was planned as a replacement for the US-built Liberty ships which were nearing the end of their lives. First launched in 1968, the SD14 proved to be a great success, competing effectively against the Japanese and Germans until the late 1970s.

      The Austin & Pickersgill case showed that survival depended, not on size, but on a sound product and marketing strategy, backed up by low-cost manufacturing methods. It also showed that the problem of disorderly labour relations could be overcome by competent management. The transition which Austin & Pickersgill had to make in the 1960s was in some ways less difficult than the situation facing other shipbuilders. There was a long tradition on the Wear of supplying predominantly small shipowners with economical cargo vessels. The SD14, though innovative in concept, was a natural evolution from the vessels which Austin & Pickersgill had been building before.³⁵

      The other major Wearside builder, Doxford & Sunderland, was also taken over by an outsider. Court Line had originally operated a small fleet of tramp vessels, but moved into the tanker market during the 1960s and then diversified into aviation, package holidays and hotels. Its Appledore yard in Devon had been developed to produce small cargo ships on a flow-line basis, and Doxford & Sunderland was seen as an opportunity to apply the same technique to larger ships, principally gas carriers. After the take-over in 1972 extensive modernisation was carried out. The reconstruction was more costly than Court Line had hoped and several of the orders were unprofitable. But the subsequent collapse of the company (see below) was due to problems in other parts of the group. During its period of ownership Court Line modernised the Sunderland yards on a scale which the old management could not have contemplated. As one historian has commented, ‘whatever faults Court Line had, it did not lack the drive and vision which would have been so useful to the UK shipbuilding industry before 1972’.³⁶

      These partial successes showed the value of new thinking in a highly traditional industry. They were, however, exceptions, and it was clear when Labour took office again in 1974 that the prescriptions offered by the Geddes committee had not worked. The new cure was nationalisation. The arguments for public ownership had been set out in 1973 in a document jointly produced by the Labour Party and the trade unions. This document noted that the industry had failed to grow despite the expanding world market, had failed to modernise despite receiving more support from the government than any other industry apart from aircraft, and had failed to reform its labour relations. A co-ordinated national strategy was essential, the document