The Collapse of Shipbuilding

THE COLLAPSE OF SHIPBUILDING

PURPOSE OF LECTURE

1.TO HIGHLIGHT THE SOURCES OF COMPETITIVE STRENGTH OF BRITISH SHIPBUILDERS AS THE DOMINANT FORCE IN WORLD PRODUCTION BEFORE 1914

2.TO IDENTIFY THE LONGER TERM SOURCES OF COMPETITIVE WEAKNESS WHICH UNDERMINED THE INDUSTRY’S RESIIENCE AFTER 1914

3.TO EXAMINE THE REASONS FOR THE INDUSTRY’S SUDDEN MARKET COLLAPSE AFTER THE MID-1950s

SOURCES OF COMPETITIVE STRENGTH, 1870-1914

(a)LEAD IN STEAM TECHNOLOGY  STEAM TURBINE

NB. NAVAL REQUIREMENTS SUSTAIN TECHNICAL LEAD VIA ‘SPIN OFF’

+ MAIL SUBSIDIES

(b)THE LABOUR PROCESS/ORGANISATION OF WORK

RELIANCE ON SKILLED LABOUR AND TRADITIONAL CRAFT SPECIALISMS

LABOUR RATHER THAN CAPITAL INTENSIVE

POLLARD: BRITISH TECHNICAL BACKWARDNESS CAN BE EXCUSED BY:-

(i)PRODUCT QUALITY REPUTATION BASED ON LABOUR SKILLS (‘CLYDE BUILT’): (‘AL’ AT LLOYDS).

(ii)MARKET DEMAND PLACED LOW PREMIUM ON CAPITAL INTENSITY DUE TO VIOLENT DEMAND FLUCTUATIONS.

POLLARD:‘MANY FOREIGN PRODUCERS,

PARTICULARLY IN THE USA,

BANKRUPTED THEMSELVES OVER THE

COSTLY EQUIMENT WHICH STOOD IDLE

MUCH OF THE TIME OR WAS USED

BELOW CAPACITY ON SMALL VESSELS.

CAPITAL INTENSITY COULD ONLY BE JUSTIFIED BY MASS PRODUCTION

NOT POSSIBLE PRE-1914 DUE TO

(a)ONE-OFF ORDERS

(b)NAVAL AND LINER COMPANY ‘CLASS’ ORDERS PLACED IN DIFFERENT YARDS

SHIPS ‘A SPECIALISED BESPOKE PRODUCT’

2.LONGER TERM CAUSES OF COMPETITIVE WEAKNESS

(a)ORGANISATION OF THE WORK FORCE DEMARCATION: WORSENED/INTENSIFIED POST-1918 DUE TO

(i)MECHANISATION

(ii)SWOLLEN COSTS

(iii)WASTE OF MAN POWER

(iv)SLOW TECHNICAL CHANGE

(v)WASTE OF MANAGERIAL TIME

+FEAR OF UNEMPLOYMENT  JOB PRESERVATION

(b)SKILLS ACQUIRED BY APPRENTICESHIPS DISCOURAGED FORMAL TECHNICAL EDUCATION

(c)FAMILY FIRM LEGACY INHIBITED STRUCTURAL CHANGE

3.POST-1955 MARKET COLLAPSE

1949-51UK a/c FOR 38% OF ALL VESSELS BUILT FOR FOREIGN REGISTRATION: LEADING PRODUCER

19563RD BEHIND GERMANY & JAPAN: MARKET SHARE = 4%

19664TH IN WORLD RANKINGS

1977MARKET SHARE = 4%

19808TH IN WORLD RANKINGS: IMPORTS = 50% OF HOME DEMAND

GERMANY & SWEDEN CHIEF COMPETITORS PRE-1955 INDUSTRIES WERE:

(i)DEVOID OF DEMARCATION PROBLEMS

(ii)TECHNICALY ADVANCED

(iii)ORGANISED ON LARGE SCALE BASIS

JAPAN TAKES LEAD POST-1955 WITH SAME ADVANTAGES + MASS PRODUCTION/STANDARDISATION OF TANKERS & BULK CARRIERS

JAPAN POSSESSES PRODUCTIVE CAPACITY + LARGE SUBSIDIES

POST-1960 JOINED BY TAIWAN, S.KOREA, BRAZIL, POLAND, YUGOSLAVIA.

BRITISH SHIPBUILDERS FORMED 1977 – 27 COMPANIES

1978: SALES = £548mLOSSES = 108m

CONCLUSIONS

1.UK COMPETITIVE ADVANTAGE SUSTAINED UNTIL 1950: WEAKENING 1919-39, BUT CONSEQUENCES MASKED BY COLLAPSE OF WORLD DEMAND.

2.NEW COMPETITORS POST-1950 CHARACTERISED BY

(a)HIGH INVESTMENT IN NEW CAPACITY

(b)CAPITAL INTENSITY

(c)STANDARDISATION: FACILITATED BY (a) + (b) + MARKET DEMAND