ARMSTRONGS OF ELSWICK

Transcription

1 ARMSTRONGS OF ELSWICK

2 STUDIES IN BUSINESS HISTORY This series aims to publish outstanding works in the field of modern business history. Emphasis will be placed on general issues in the history of business rather than on the biographies of individual companies or businessmen. The main focus of the series will be on the experience of the nineteenth and twentieth centuries. Authors are encouraged to interpret business widely in its political, social, technological and economic dimensions. The series was founded by Professors Leslie Hannah and Leslie Pressnell in In 1989 Dr Terry Gourvish took over the editorship of the series from the fifth title onwards, on his appointment as director of the Business History Unit. Geoffrey Jones THE STATE AND THE EMERGENCE OF THE BRITISH OIL INDUSTRY Stephanie Jones TWO CENTURIES OF OVERSEAS TRADING Jonathan Liebenau MEDICAL SCIENCE AND MEDICAL INDUSTRY Kenneth Warren ARMSTRONGS OF ELSWICK Series Standing Order If you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (If you live outside the United Kingdom we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire, RG21 2XS, England.

3 Armstrongs of Elswick Growth in Engineering and Armaments to the Merger with Vickers Kenneth Warren Fellow and Tutor Jesus College, Oxford pal grave macmillan

4 Kenneth Warren 1989 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended), or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 33-4 Alfred Place, London WC1E 7DP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1989 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world Typeset by Footnote Graphics, Warminster, Wilts This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. British Library Cataloguing in Publication Data Warren, Kenneth, Armstrongs of Elswick: growth in engineering and armaments to the merger with Yickers.-(Studies in business history). I. Tyne and Wear (Metropolitan County). Newcastle upon Tyne. Elswick. Engineering industries. Armstrong Whitworth (Firm), to 1927 I. Title II. Series 338.7'62' ISBN ISBN (ebook) DOI /

5 For my father in appreciation

6 Contents List of Maps and Figures List of Tables List of Plates Preface 1 Introduction: British Industrial Decline and the Armament Trade 1 PART I THE ESTABLISHMENT, EXPANSION AND DIVERSIFICATION OF ARMSTRONGS, The Foundation of Elswick Works and its Entry to the Armament Business 9 3 A Managerial Team 18 4 Beginnings in Shipbuilding 21 5 Integration to the Mid-1880s 26 6 The Organisation of the Armstrong Company: the Role of Andrew Noble 32 PART II INTEGRATION, ORGANISATIONAL PROBLEMS AND NEW COMPETITORS, The Emergence of Vickers 45 8 Acquisition and Integration: The Transformation of the Armament Trade, Elswick Leadership, Problems of an Early Multinational: the Origins of Armstrong's Italian Venture Pozzuoli, PART III DIFFICULTIES AND ADJUSTMENTS, Organisation and Efficiency in Complex and Multiplant Operations Managerial Skills: Armstrongs and Vickers A New 'Complete' Armament Firm: Beardmores of Parkhead Armstrongs and Beardmores Italian Business, Accommodating Increases in the Scale of Naval Shipbuilding: The Question of a New Yard 128 vii ix X xi xii

7 Vlll Contents 18 The Completion of Integration: Marine Engine Manufacture Company and Regional Diversification: The Case of Automobile Manufacture New Blood and the 'Succession' to The Salaries Crisis and the 'Concordat' of PART IV THE FIRST WORLD WAR AND THE TRANSFORMATION OF THE FIRM, Armstrong Whitworth in the First World War Early Stages of Reconstruction and Diversification 24 ~~~-M~ 1~ The Problems of Diversifying into Commercial Lines: The Instance of Scotswood Locomotives Italian Business in the Twenties The Newfoundland Project The Crisis at Armstrongs to Late Into the Depths: The Threat of Collapse The Reconstruction of Armstrongs and the Rationalisation of the Heavy Armament Business in 1927 and Armstrong Whitworth and Vickers Armstrong after the Merger 248 Epilogue 252 Appendix A: W. G. Armstrong and Co. and successor companies, 1847 to 1928: a commercial and financial record 256 Appendix B: Members of the Board of Directors of Armstrong Mitchell and successor companies, Appendix C: Warships and other armed vessels built by Armstrong Whitworth and its predecessor companies to Notes and References 264 Bibliography 281 Index 283

8 List of Maps and Figures 2.1 Elswick and Benwell, Elswick Works, The armaments industry in Italy, early twentieth century Sites or works offered to Armstrong Whitworth, The new Walker naval construction yard as planned, The layout of the Walker naval yard Scotswood, 1894 and Armstrong Whitworth operations during the First World War Newfoundland and the pulp and paper industry in the 1920s Armstrong profits,

9 List of Tables 7.1 Share values of Armstrong Mitchell and Sheffield firms, Autumn The dividend record of Armstrongs and other armament/engineering companies, Armstrong Whitworth gross profits and employment by departments, 1900/ Admiralty orders for hulls and machinery for war vessels already ordered placed with Beardmores and Sheffield firms, Capital expenditure of William Beardmore & Co., Dividends declared by Armstrong Whitworth and Beardmores, Ships built by the Armstrong company at Walker and Elswick, Dimensions of selected British capital ships, Sources of engines for the tons of warships built by Armstrong Whitworth, Armstrong Mitchell and Armstrong Whitworth financial record, Dividends of British armament firms, The great private builders of warships, War vessels built at the Armstrong (later Walker) naval yard, Holdings by Sir W. G. Armstrong Whitworth & Co. Ltd, Pozzuoliprofits, Capitalisation and earnings of Canadian pulp and paper companies, British basic trades output, 1913 and British armament firms: dividend paid on ordinary shares, 1913and Armstrong Whitworth departmental net profit, Armstrong Whitworth earnings account for half-yearto30june Armstrong Whitworth assets, 30June Market price of Armstrong Whitworth 1 ordinary shares, X

10 List of Plates 1 William George Armstrong, An early Armstrong hydraulic crane 3 Elswick Works, George W. Rende! c Stuart Rende], c HMS Staunch 7 Charles Mitchell 8 Sir Andrew Noble and Lord Armstrong 9 Elswick Works and Shipyard, Pozzuoli Works, c Pozzuoli Works, c Elswick Works, The site of the new yard at Walker, before clearance work began 14 The Walker Naval Yard 15 John Meade Falkner 16 George Murray and Francis Hopwood, c Sir Glynn Hamilton West, Chairman of Armstrongs, Armstrong Whitworth Locomotive Works advertisement, Montagu Norman, c Elswick Works, c Elswick: the dismantled works site, 1985 xi

11 Preface 'The true epic of our time is not Arms and the Man but Tools and the Man - an infinitely wider kind of epic.' Thus Thomas Carlyle commented on the industrial achievements of the nineteenth century. A particularly interesting group of cases involve all three - men, engineering and armaments. Among the engineering and steel groups of the advanced industrial countries are to be found the descendants of firms whose manufacturing range included (and in some cases still includes) heavy armaments. This class excludes both the longestablished producers of small arms, and the newer, lighter orders of armaments, developed since the aerospace and electronic group. It centres on an age whose major weapons of war were massive iron or steel structures and on firms which, however they may have diversified, were largely concerned with heavy ordnance, armour and warship construction. At a later stage, many of them also made tanks. The heyday of this trade was in the fifty years to the end of the First World War. Since then, in an era of the nationalistic building-up of basic industries and of growing world armaments, the class has more members than in the past. Socialist as well as capitalist nations, and now even some of the developing ones, make their own weapons of war. It was, however, the older, western industrial nations which dominated production before the First World War. Britain, as the pioneer industrial nation, had more firms in this as in other trades than most others, and these companies supplied not only the imperial forces, but also much of the rest of the world. Both conditions, the large number of producers and their dependence on world markets, led later to problems of economic adjustment. As others advanced, the British heavy armament trade was left with over-capacity, too many firms and too many plants. Its development is worthy of study for a variety of reasons. In the first place, and simply, the relics of that era continue to present problems of industrial reconstruction and physical planning - as anyone who visits Barrow-in-Furness or who looks down the Don valley from the Tinsley viaduct near Sheffield, will readily appreciate. Secondly, the multiplicity of firms and locations left over from that era when Britain dominated world trade, was, for many decades, mirrored in attitudes of exclusiveness, and inadequate willingness to adjust on the part of firms, work-forces and communities. Even more important, the xii

12 Preface xiii decisions which then affected such varying matters as product ranges, locations, mergers and so on, are revealing indicators of the process whereby the British industrial structure became the rather antiquated one, still struggling to adjust in the 1980s. Finally, the armament firms were pioneer multinationals, and their early experiences provide a comparison with those of modern industry in the same field. Early in the twentieth century, the largest single industrial plant in Great Britain was not, as now, a widely sprawling industrial agglomeration, such as that of ICI on Teesside, a great integrated steel works, or one of the bigger motor assembly plants, but a long, rather narrow ribbon of plant, extending along the north bank of the Tyne above Newcastle. The Elswick Works was the leading operation of Armstrong Whitworth, engineers, armament makers and naval shipbuilders. The growth of this firm over the eighty years which separated its foundation and its crisis, major reconstruction and loss of separate industrial identity in the late 1920s is surveyed below, within the context of various ideas about the causes of the decline of British industry in the late nineteenth and early twentieth century, but for the rest a case study, the life history of a firm. Because this is the focus, other vital matters involved in the study of Armstrongs are not taken up here. At home, as this business became a prototype of giant industrial organisations in which combinations of heavy machinery and large labour forces were essential, it was a pioneer in the evolving connections between masters and men. The nature of the trade is taken into account only in so far as it affected their business career; no attempt is made to examine sales techniques, or the morality of armaments manufacture. It was a trade closely involved with national political power, and throughout this period an evolving, ever more complicated British military-industrial complex may be traced. As foreign sales were of prime significance, relationships with foreign governments were important and the trade played a role in their political and economic evolution, as well as in the shaping of international relations. In short, from industrial history one may proceed to considerations of power relationships in local, national and international society, and to value judgements about them. The decision to exclude such matters from this account should in no way be taken to indicate that they are of lesser importance, but rather as based on the recognition that their inclusion would distract from the main theme of the life history of a major industrial concern. These matters deserve separate and fuller attention.

13 XIV Preface A further note on the method of treatment is in order. Armstrongs became so big and complex that it was decided that, while maintenance of a broad framework of chronological treatment was desirable, it was impracticable, and indeed would be quite unhelpful to understanding, to attempt a year by year analysis. Instead aspects, themes and particular problems are the focus of attention, especially in the middle decades. The crisis of the 1920s, which involved a dramatic change in the traditional relationships between central authorities and private firms, partly by government but in the main by banks, in the interests of business reconstruction, is given especially fully coverage. The less than 10 years in which this occurred receives well over one-fifth of the space given to the 80-year history of the firm. For the reader who wishes to fix any of the thematic analysis within the time-scale of Armstrong's development, reference to the annual record of the firm in Appendix A may be found helpful. There is a full literature on British engineering and steel and in recent years a number of important studies of individual armament firms have been produced. In addition to these, the writer has been permitted to consult Armstrong papers and Minute books at Tyne and Wear Archive Services and Vickers Limited, material in the University of Glasgow's Business Archives, and the extensive and vitally important files of the Securities Managment Trust in the Bank of England. Miss Rosemary Rendel, grand-daughter of George Rende!, and Mr John Noble, a descendant of George Rendel's Elswick colleague, Andrew Noble, have been of great help in making available correspondence extending over almost 70 years from the early 1860s. The support of Vickers Limited is gratefully acknowledged. It should be stressed that they are in no way responsible for my selection of themes or interpretation of events. Witney, Oxfordshire KENNETH WARREN