Subsequent events at Govan provided an interesting commentary both on the industry’s earlier history and on the state of the world shipbuilding market in the 1990s. The Norwegian owners brought two things which had been lacking in the yard, and in much of the rest of the industry, throughout the post-war period: a clear product and marketing strategy, and a rigorous approach to the management of labour. The owners were prepared to cooperate with the unions and shop stewards, but only as long as ‘the accountability of the unions and their representatives was properly defined by procedures acceptable to management’.40 The shop stewards had to recognise that they were ‘first and foremost shipyard workers who were under the direct control of supervisors, and, in such a role, they had no authority to control the workforce’. Govan had survived as a loss-making yard for the preceding twenty years, thanks to government support, and it took some time for competitive realities to sink in. In 1991 a strike over three-shift working, called against the advice of the shop stewards, was seen as a last-ditch effort to turn the clock back. The collapse of the strike was a watershed for Kvaerner’s labour relations strategy. Meanwhile orders had been secured for four gas carriers. The first of these ships took 2.3m man-hours to build; the fourth took 1m hours, roughly in line with comparable yards overseas.
Yet despite these improvements Govan was competing in an over-supplied market in which fierce competition between Korean and Japanese yards was constantly tending to drive prices down. In 1999 Kvaerner, which had over-extended itself through an ambitious programme of acquisitions in engineering, construction and other industries, decided to put all its European shipyards, including Govan, up for sale. While the withdrawal from shipbuilding was largely due to the internal problems of the Kvaerner group, it was also an indication of the extreme difficulty faced by all the remaining European shipbuilders in building merchant ships at a profit. It is conceivable that if the changes in working practices instituted at Govan in the 1990s had occurred twenty years earlier the yard would have had better prospects of survival, but, as experience in Sweden and other European countries showed, harmonious labour relations were no guarantee of commercial success.
Could the Decline Have been Halted?
The shipbuilding story has some similarities to that of cotton textiles described in Chapter 3. Both were large and once-dominant industries. Both faced a disruptive change in their trading environment after the Second World War, arising in one case from the growth of low-cost imports from the developing countries, in the other from the rise of Japan. In both cases memories of the inter-war slump engendered a defensive attitude which discouraged investment and inhibited innovation in design and production methods.
Could the government have done more to help? The first Labour government under Clement Attlee has been criticised by some historians for not doing enough to modernise British industry. But even if the political conditions of the time had been conducive to large-scale government intervention, it was far from clear what form modernisation should take. Civil servants did not have the knowledge or experience to formulate a comprehensive plan for the industry; if they had tried it, the result might well have been misdirected investment on a substantial scale.
A more valid criticism is that when governments did intervene in the 1960s and 1970s, the effect was to delay change. The Geddes committee assumed too readily, in line with the fashion of the time, that the consolidation of the industry into larger groups would improve efficiency. As with the Courtaulds plan for reorganising the textile industry, the committee and the government exaggerated the advantages of size and under-estimated the difficulties of making mergers work. Following the Geddes report, government subsidy was used to preserve existing yards and existing jobs. In the case of the Govan yard, it took the imminent prospect of liquidation and the arrival of new owners to initiate the necessary reforms. It is possible that if British shipbuilders had been faced with a starker choice between adjustment and extinction twenty years earlier, they might have been quicker to tackle their internal inefficiencies and rethink their product and marketing strategies.
The Thatcher government has been attacked on the opposite grounds, that it was too ruthless in denying the industry support and that it failed to consider ways of preserving a small but viable core of merchant shipbuilding capacity. Other European countries, including Germany and France, subsidised their shipbuilding industries during the 1980s and 1990s to a greater extent, and their share of the world market, though far below that of Japan and South Korea, is greater than Britain’s. However, these subsidies were largely a response to local political pressures, and there is no indication that they will produce in the long run a commercially successful industry.41
Of the three institutional weaknesses referred to in Chapter 1, the financial system and the education system seem largely irrelevant in this case. Labour relations, on the other hand, have been widely regarded as a principal factor in the industry’s decline. It is certainly true that the old-established system of craft control was an obstacle to modernisation, and that shipbuilding suffered more than most other British industries from the sectionalism of the trade union movement. But even if labour relations had been drastically reformed in the 1950s – perhaps a move to a single union for all shipyard workers and an end to demarcations between trades – it is far from certain that the industry would have done much better. The fundamental reason for the industry’s failure to profit from the boom in world shipping in the 1950s and 1960s lay in the inability of management to adapt their product and marketing strategies to the changed conditions of the post-war world. A few companies, such as Austin & Pickersgill, did adapt successfully, and the trade unions did not prevent them from doing so. Bad labour relations were a contributory factor in the industry’s decline, not its central cause.
The last chapter described how, in the 1960s and 1970s, successive British governments intervened in an attempt to save the shipbuilding industry from decline. In steel, a much larger industry than shipbuilding and traditionally regarded as even more vital to the economic health of the nation, government intervention was more continuous, and had a more pervasive influence on performance. Nationalised twice and privatised twice, steel was meddled with by politicians to a greater extent than any of the other industries discussed in this book, with the possible exception of aerospace. These were not the best conditions in which to build an efficient, internationally competitive industry, and at the end of the 1970s steel-making in Britain was in a parlous state; the productivity gap between Germany and Britain was wider in steel than in any other major industry.1 Fortunately the damage was not irreparable. This is a case of an old industry which, unlike shipbuilding, did not fade away, but survived into the 1990s in surprisingly good shape.
1870–1914: An Entrepreneurial Failure?
The early history of the iron and steel industry has some parallels with that of textiles and shipbuilding. But whereas in those two industries British entrepreneurs retained their dominant position in world trade up to the First World War, the steel-makers were overtaken after 1870 by fast-growing competitors in the US and Germany. This is sometimes seen as a classic instance of British industrial failure, attributable to weaknesses which persisted into the inter-war years and beyond.2
The story begins with iron-making. Until the invention of the Bessemer converter in 1856, steel was an expensive material which could only be made in small quantities. British inventors led the way in iron-making technology, and in the middle of the nineteenth century Britain was overwhelmingly the largest producer and exporter of iron. But steel was a more resilient, more tenacious and more elastic material, and once the Bessemer converter was fully operational,