TABLE 4.5 Concentration in European textiles 1966–75
High German wages made it difficult for the labour-intensive clothing industry to remain competitive, and during the 1960s many apparel manufacturers began to transfer production to countries with low labour costs. This was often done in co-operation with their fabric suppliers. Under the outward processing system authorised by the European Commission, German-made fabric was made up into garments outside Germany and then re-imported free of duty. International sub-contracting allowed German clothing manufacturers to reduce their production costs while concentrating more of their attention on marketing and distribution.59
The least successful of the three largest Continental textile industries was that of France.60 In common with much of the rest of French industry, the textile manufacturers were highly protected during the 1950s, and much of their export trade was with the colonies. The opening-up of the domestic market following the creation of the EEC put the industry under greater pressure, and the government, which had taken little interest in textiles in the early post-war years, sought to encourage modernisation. In line with the prevailing belief in ‘national champions’, attempts were made to restructure the industry into larger groups, somewhat along the lines of what was happening in Britain during the same period.61 Although concentration did not go as far as in Britain, some large textile conglomerates were formed, including Prouvost, DMC, Agache-Willot, and Boussac, and they were not much more successful than their British counterparts.
What prevented the British textile industry from following a strategy similar to that pursued in Germany or Italy? There had been a long tradition, especially in Lancashire, of supplying yarns and fabrics in large quantity to non-European countries, and the industry was organised in a way which suited this trading pattern. Post-war developments in world textile trade made these arrangements obsolete. With hindsight, the right response to developing-country competition in the 1950s and 1960s would have been a shift to high-value-added fabrics, which were less vulnerable to competition from low-cost imports, and a reorientation of overseas marketing to Continental Europe. But this would have required a change of mindset in a long-established industry which had been struggling for years with continuous decline and chronic over-capacity. As it was, the attempt by Courtaulds to breathe new life into the industry led in the wrong direction.62 It is conceivable that if Courtaulds had not intervened in the way that it did more firms might have pursued a specialisation strategy along German or Italian lines, although whether this would have led to a spontaneous revival of the industry must be open to question.
Britain’s delayed entry into the Common Market was a disadvantage, and it was not the only factor which slowed down the Europeanisation of the industry. The concentrated structure of the retail trade, and the domination by Marks & Spencer in particular, made it difficult for manufacturers to establish their own brands in competition with retailers’ brands, except at the top end of the trade. Manufacturing under contract for Marks & Spencer was a profitable business, guaranteeing steady orders for firms which could meet the retailer’s specifications.63 This tended to reinforce the industry’s attachment to long runs of relatively undifferentiated products. If the retail market had been as fragmented as in Italy or Germany, there would have been greater opportunity for manufacturers to develop independent design and marketing skills, and to promote their own brands. The distinctive character of the British clothing market helped to isolate the textile industry from Continental Europe. Many of the East Midlands knitwear producers, for example, preferred to concentrate on the British retail trade, offering medium-quality, low-fashion products at low prices, rather than build up their export business.64
Because of history and because of the Commonwealth connection, the British textile industry faced a very difficult adjustment after the Second World War. The attempt to solve the problem through scale, standardisation and vertical integration was a mistake. As for the three institutional weaknesses mentioned in Chapter 1 – labour relations, training and education, and the financial system – none of them seem central to the textile story. Labour relations were generally stable throughout the post-war period. The trade unions did not resist the modernisation efforts of the 1960s, and they were largely passive during the contraction which took place in the 1980s and 1990s. On the issue of skills, the German industry’s emphasis on up-market, technically demanding fabrics may have been facilitated by the well-organised apprenticeship system, but deficiencies in British training arrangements played no more than a marginal role in the textile industry’s decline. There were, after all, some successful firms, like the Scottish knitwear producers, operating at the high-fashion end of the trade. That there were not more of them cannot be blamed on a shortage of workforce skills. Equally, the textile industry was not held back by lack of support from banks and financial institutions; it may even have been too easy for Courtaulds to finance its ambitious investment and acquisition programme. If there was a weakness in the financial system, it lay in the failure of shareholders and their advisers to scrutinise more rigorously the claims made by Courtaulds and others about the benefits of large-scale mergers.
The impact of public policy was unhelpful. Successive governments cannot be criticised for the failure of Kearton’s grand design since they were not responsible for initiating or implementing it. They were, however, sympathetic to the plan and, by partially conceding the industry’s demands for protection, they may have encouraged unrealistic ideas of what could be achieved through scale and standardisation. The government would have done better to have left the industry alone, as the German government did, instead of intervening in an erratic and inconsistent way. According to a study carried out by the Organisation of European Co-operation and Development, ‘Government policies for the textile and clothing industries have primarily affected the rate at which change has occurred, rather than the direction or broad thrust of change’.65 Britain’s experience confirms this judgement. Government intervention had the effect of delaying the textile industry’s integration into the world market; this is a theme which will recur in later chapters.
Shipbuilding: Imprisoned by History
If there is one industry which symbolises Britain’s transition from imperial power to ‘just another European country’, it is shipbuilding. At the end of the nineteenth century Britain had the largest shipbuilding industry in the world, the largest merchant fleet and the largest navy. The combination of circumstances which underpinned that supremacy began to fall apart in the inter-war years, and at a faster rate after 1945. One by one the great shipyards on the Clyde, the Tyne and the Wear wilted in the face of foreign competition, and no amount of support from the government could stop the rot. By the end of the 1990s only fragments were left of an industry which had once ruled the world.
This is often seen as an egregious British failure, attributable to specifically British weaknesses. Incompetent managers and bloody-minded trade-unionists figure prominently in popular explanations of what went wrong. Yet other European shipbuilders fared almost as badly. Even the Swedish shipbuilding industry, much admired in the 1950s and 1960s for its technical progressiveness and its stable labour relations, was overwhelmed by competition from low-cost yards in Japan and South Korea, the two countries which have come to dominate the world shipbuilding scene. The near-demise of merchant shipbuilding in Britain is as much a European as a British phenomenon. What was distinctive about the British case was the size of the industry at the start of the post-war period, and the extent to which its response to competition was conditioned by its earlier history.
The Sources of British Supremacy before 1914
In