Seventy Seventh Presidential Address
Presented by Professor Anthony Slaven, M.A., Blitt., FRHS on Tuesday, 1st October 2002
Clydeside Revisited: Shipbuilding in Retrospect
Synopsis without illustrations and tables.
1800-1914: Leading the Way
At the beginning of the 19th century the Clyde was a very small scale producer of shipping, building around 3,000 tons of vessels each year. These came from about 17 yards with an average employment of 50 men. But between the launching of the Comet in 1812 and the establishment of the Institution in 1857, the Clyde became the cradle for the development of the early steamship. Most of the early building was concentrated on the lower Clyde concentrating around Greenock and Port Glasgow with the engines and boilers coming from the cotton engineering districts in Glasgow. The Clyde not only was the pioneer in steam but was a quick innovator of the screw propeller and took the risk of building iron hulls more quickly and more completely than any other river in Britain. Between 1850 and 1870 the Clyde supplied over 70% of all iron tonnage in Britain. This leadership stimulated the growth of large integrated shipbuilding companies with shipyard, engine works and boiler shops in single establishments. This was true of Robert Napier, Todd & McGregor, William Denny, J & G Thomson, and Caird & Company by 1850. By 1870 the largest companies had capitals invested in the order of £200,000. The revolution in iron and steamship building also depended on technical expertise in engine and boiler design which on the Clyde led to the innovation of the compound steam engine in 1853 by Randolph & Elder. The subsequent development of the triple expansion engine in 1874 when linked to a modified Scotch boiler developed on Clydeside the standard power pack arrangement for the world’s merchant ships. The ascendancy of the Clyde was also supported by a massive development of warship construction which brought the steel and armament builders to Clydeside. John Brown and Company of Sheffield acquired the Clydebank yard in 1899 while Beardmore & Company built the new Dalmuir yard completed in 1907. Yarrows also transferred to the Clyde from the Thames at that time. The outcome of these changes was to create on the Clyde the single largest concentration of shipbuilding and marine engineering in the world before the First World War.
1914-1938: War and Depression
The war put great pressure on shipbuilding and induced a significant extension of capacity in the ship yards. Amalgamations also affected the ownership of the industry. The expectation that there would be a large postwar boom of orders was frustrated when activity declined sharply after 1921. World shipbuilding capacity and world merchant tonnage had greatly increased during the war and were now a drag on the market as world trade stagnated and failed to grow. Moreover the Washington Treaty of 1921 effectively eliminated new warship building and on Clydeside merchant order books contracted sharply. The Clyde operated at best at 80% of prewar levels of output in the I 920s and at only half that level in the I 930s when 4 out of 5 berths were idle. In order to bring capacity into line with expected demand from the British merchant marine, the shipbuilders embarked on a process of rationalisation through National Shipbuilders Security Limited. This company purchased and closed all or part of eleven yards on the Clyde in the 1930s eliminating an estimated capacity of 488,000 tons. During these difficult years the Clyde also had to adjust to the rising demand for the motor ship and the tanker. In general terms British builders moved more slowly into these areas than rivals on the continent and there was a sharp decline in Britain’s share of the world export market and in Britain’s world market share of shipbuilding output. This declined from 60% to 36% between the wars.
The war solved the problem of demand and introduced two decades of sustained growth in shipbuilding which enjoyed in effect a sellers market. This was virtually the monopoly of Britain since competition from Germany and Japan was eliminated. Yet although world shipbuilding output grew three told to 1958 British production remained stable and alone of all the shipbuilding nations Britain tailed to expand its capacity with the result that our market share slipped from 50% in 1948 to barely 15% in 1958. The prewar emphasis on the motor ship and tanker accelerated and was linked to the adoption of welding and prefabrication. On Clydeside investment in these new areas was modest and cautious, since there was a continued dependence on orders primarily from the British merchant marine and a belief that it was unwise to extend capacity given the experience of the interwar period. This reluctance allowed European and Japanese builders to consolidate advantages in price, delivery, and marketing. The immediate consequence was that Britain lost out in the export market and the long term loyalty of British ship owners came under such pressure that in the decade after 1958 foreign builders captured 70% of our domestic market.
Between 1958 and 1961 there was a brief recession in shipbuilding but thereafter the market enjoyed an unprecedented expansion. Between 1960 and 1974 the world order book exploded from 18 million to 133 million tons. However, throughout this boom British builders remained wedded to a stable state industry and to a primary dependence on orders from the British fleet. Relying as they did on customary clients they neglected market information, and were weakly place to anticipate or react to trends which revolutionised shipbuilding in the 1960s. The development of the VLCC and the large tanker market coincided with the decline of the ocean liner making it very difficult for Clyde shipbuilders to fill their order books. The new building technique of a flow line assembly with preplanned and prefabricated sections demanded new yard layouts, building docks, and large capital investments. Most British yards found this option unattractive and retained a more varied mix of building. Consequently Clydeside was not geared to building the type of ships most in demand in the 1960s and 1970s. As competitive pressures increased there was a rapid closure of yards on the Clyde between 1961 and 1964 and Fairfields went into liquidation in 1965. This stimulated government intervention which was quickly followed by the Geddes Report of 1966 and the subsequent grouping of shipbuilding on the Clyde into the two groups of Scott Lithgow on the lower reaches and Upper Clyde Shipbuilders on the upper river. In spite of improved order books, both groups were afflicted by mounting losses and with the collapse of the world tanker market following the OPEC price rise of 1973-74, many yards faced closure. The government’s response was to create a nationalized industry within British Shipbuilders which began life in July 1977.
1976-2002 Nationalisation and Privatisation
Nationalisation was primarily a measure to secure employment though the broad strategy for British Shipbuilders was to attract more overseas orders while attempting to improve competitiveness and efficiency. While there were initial hopes that the new Corporation could provide a framework to secure the future of the industry, timing was against the venture. British Shipbuilders was born into a world market glutted glutted with shipping and surplus shipbuilding capacity. World order books remained at little more than half the 1974 level for more than two decades, a situation which forced a contraction of capacity in both Europe and Japan. Conversely, new capacity was being added in South Korea, this helping to continually depress orders and prices. In spite of making considerable progress in improved efficiency and work flexibility, British Shipbuilders could only gain orders at loss making prices. The return of the Conservatives to power under Mrs. Thatcher from 1979 saw policy shift from supporting employment to voluntary redundancy and an agenda of selling off the industry. Scott Lithgow was sold to Trafalgar House in 1984 and by June 1988, Govan Shipbuilders was sold to Kvaerner and in the same year Ferguson and Kincaid were also sold off. By 1988 the British Shipbuilders experiment was at an end. During its ten years of existence it had received total subsidies in excess of £1.26 billion. With its demise shipbuilding on the Clyde was reduced to the small Ferguson and Ailsa yards on the lower river, Kvaerner at Govan and Yarrow Shipbuilders as a major naval yard. Today both Govan and Scotstoun are owned by BAE Systems, Ailsa is closed and Ferguson at Port Glasgow remains the sole surviving merchant yard on the river.
Clydeside was the pioneer of modern shipbuilding in metal and steam gained a world wide reputation for quality and reliability before the First World War. The Clyde was the most significant shipbuilding river in the world at that time. While the reputation lingered, Clydeside was bypassed by newer and more rigorous shipbuilders after 1950 and the industry has been much criticized fro poor or conservative management and intransigent and unproductive labour. It is too simple to accept this as an explanation of our decline. More important in understanding our eclipse is to see the Clyde in the context of the sheer scale of growth of world shipbuilding post 1950; especially with the rise of Japan. The market opportunity of the VLCC and the tanker was for much of Clydeside an illusion, a market so different in scale and requirements from the characteristics of our industry that to pursue it as a main strategy was to invite failure. Industries have life cycles in which leadership changes and develops over time. The shifts in scale and technology of the 1960s and 70s effectively put large volume merchant shipbuilding beyond our scale and beyond our craft skills and technologies. The intervention of government by subsidy and nationalisation was at best unhelpful and at worst destructive. In the absence of such intervention it is at least arguable that under private enterprise a more robust if smaller and more specialised industry might have survived on the Clyde.
The fate of Scotstoun and Govan is now tied to defence orders within BAE Systems which also owns Barrow. While the Scottish Executive has claimed that the order for six of the new Type 45 destroyers will secure the future of shipbuilding on Clydeside for ten years and beyond, BAE Systems is more circumspect. The future is far from clear or certain since only the first of the Type 45’s will be completed on Clydeside the others to be finished at Barrow. Thorneycroft also shares in this order. More worrying still for Clydeside is the resurrection of shipbuilding at Swan Hunter where no vessel has been laid down since 1993. In the forthcoming Future Carrier Programme, BAE Systems has linked in partnership to Harland and Wolff in competition with the French. Even if BAE succeeds here it might well find it more economic to build the larger vessels in the larger scale facilities of Barrow and Belfast. The upper Clyde yards may well suffer the fate of small scale producers but we must hope that BAE attracts sufficient orders to encourage it to retain Scotstoun and Govan as our flagship yards on the Clyde.
Paper No. 1598 Prof Tony Slaven http://www.iesis.org/images/map1.htm