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

The only major producer left in the public sector was Richard Thomas & Baldwins; this firm was planning a large new steelworks and its shares were not easily saleable. Denationalisation did not involve any significant changes in the structure of the industry, although two small plants were bought by a newcomer to steel-making – Tube Investments, an engineering group – and the Steel Company of Wales was detached from its original shareholders as an independent quoted company. The Conservatives set up a new Iron and Steel Board to control prices and monitor the capital spending programme. The Board set maximum prices on a selected range of products, mainly semi-finished steel; price-fixing agreements ensured that these were normally the prices charged. On capital investment, the Board’s prior approval was required for schemes costing more than £100,000, but it could not force companies to do things which they did not want to do.

      This controlled environment, together with the seller’s market for steel which prevailed for most of the 1950s, did nothing to encourage radical change in the way the industry was run. The focus was on increasing production rather than reducing costs. The patch-and-mend policy which had been adopted by several firms in the early post-war years meant that a number of older, poorly located plants had been expanded, and less rationalisation took place than had been envisaged in the Federation’s 1946 development plan. Everyone was aware that productivity in British steel-making fell far short of the US level, and this was confirmed in 1952 when a team of managers and employees visited American steel companies under the auspices of the Anglo-American Council on Productivity.³⁵ Their report showed that output per man was between two and three times higher than in Britain, mainly because the average size of plant was larger. While recognising that the smaller domestic market imposed limits on how far British steel-makers could go in the American direction, the team set down minimum sizes for blast furnaces and steel-making equipment to guide future investment decisions. But to put these recommendations into practice would require the closure of smaller plants, many of which had been partially modernised since 1945 and were making money for their owners. There was no incentive for these firms to abide by the productivity team’s guidelines.

      The American advantage derived not just from larger plants, but also from lower manning levels. When Steel Company of Wales managers visited Inland Steel in Chicago in 1955, they saw ‘many instances of one man doing what our trade unions would require three to do, and each craftsman assigned to departmental maintenance was able to turn his hands to fitting work, electrical repairs, welding and so on as required’.³⁶ But the chairman of the company declined to act on their report for fear of opposition from the trade unions. This was not because the steel unions were especially militant. On the contrary, the stability which had characterised the industry’s labour relations since the nineteenth century continued throughout the Second World War and into the 1950s. But it was a stability based on a privileged position for the production workers’ union, the Iron and Steel Trades Confederation. Other unions, representing craftsmen, blastfurnacemen and unskilled workers, resented the ISTC’s high wages, and the employers had no wish to exacerbate these tensions. As long as they could sell all the steel they could make, it was better to leave the status quo on the shop floor undisturbed. Booming demand and persistent labour shortages put the unions in a strong bargaining position, and the employers were willing to make concessions on pay and manning levels in order to keep production going. The Port Talbot strip mill, in particular, which began full production in 1951, was notoriously overmanned; it was regarded by the unions as ‘a treasure island with a permanently filled pot of gold’.³⁷

      The political climate of the 1950s did not favour confrontation with the unions. The Conservative governments which held office from 1951 to 1964 attached a high priority to full employment and social peace. Ministers were particularly concerned with the so-called depressed areas, which had suffered badly from high unemployment in the inter-war years. When plans for a fourth strip mill were being considered in 1957, a choice had to be made between two rival schemes, one from Colvilles in Scotland and the other from Richard Thomas & Baldwins in South Wales. The government was directly involved, partly because of regional policy considerations, partly because it was being asked to provide part of the finance. Richard Thomas was still state-owned, and the project was too big for Colvilles to finance entirely out of its own resources. The outcome was a Solomon-like judgement by Harold Macmillan, the Prime Minister, to split the project between Ravenscraig, adjacent to Colvilles’ existing works, and a coastal site at Llanwern, near Newport, in South Wales. The Ravenscraig mill was linked to the planned development of steel-using industries in Scotland, including a car assembly plant.³⁸

      The strip mill decision appeased the regional lobbies at the cost of depriving the industry of the economies which a single works would have provided. As one commentator wrote, ‘the greatest economic advantage would be sacrificed deliberately in the interests of immediate social comfort and convenience’.³⁹ It was to some extent a repetition of the political battle which had taken place in the 1930s over the location of the first strip mill. Firth’s original plan had been to build the works at Immingham in Lincolnshire, but he came under intense political and trade union pressure not to desert South Wales, where Richard Thomas was a large employer. Ebbw Vale was an awkward, inland site which had many disadvantages compared to Immingham.

      Thus the partnership between industry and government which was reestablished after denationalisation did nothing to alter the insularity of steel policy in Britain. Yet there was no sense at the end of the 1950s that the steel-makers were failing the nation. Prices were lower than on the Continent and the problem of shortages was easing. Even if the objectives set out in the first development plan had not been fulfilled, a substantial investment programme had been carried through, and it included some impressive projects – among them the Port Talbot strip mill, Dorman Long’s universal beam mill at Lackenby on Teesside, and a major iron-making expansion by United Steel at Scunthorpe in Lincolnshire.⁴⁰