The wars of the red roses
MONEY
CHRISTOPHER FILDES
Britain's bread hangs by Lancashire thread— or so Lancashire was told after the war. This was the slogan of the government campaign to get workers into the mills. Anyone who re- sponded to that appeal has very probably lost his job.
Of course, the story of cotton's decline starts further back. With coal, cotton accounted in Ed- wardian days for almost half Britain's exports, and Lancashire was said to weave for the home trade on Monday mornings before breakfast. But if that state of affairs had clearly gone for good, it was reasonable to suppose in the 'forties that Lancashire could at least keep in line with the rest of the country; that so long as there was no general slump the textile trade could look after itself. It was the experience of the 'fifties that disproved this. A change of direction violent even for an industry notorious for the extreme nature of its trade cycle signalled the end of the postwar restocking boom; and from then on mills began to close. This was, and is, the only advanced country that accepts any significant proportion of textile imports; and Lancashire took the consequences.
After a decade of protests from Manchester and dusty answers from the Board of Trade, pro-Conservative political pressures, with Lancashire constituencies voting against the trend, led to the Cotton Trade Reorganisation Scheme. This was both large-scale and lavish— running to £30 million of public money. It was based on the assumption that Lancashire's trouble was a plague of weak sellers—that if you could get the small, marginally competitive man out of the way there would be scope for long-run production and the economies of scale. But the scheme—which virtually amounted to buying out, at a favourable price, anyone who wanted to get out—had two defects : it was not selective, and it did not amount to an invest- ment in the industry. The beneficiaries took the money and sensibly went off with it to the south coast. So that when la made its unsuccessful bid and woke Courtaulds up, the two giants surveyed an industry on which they were dependent—both of Them for fibre sales, and ict for dyestuffs as well—which was still con- tracting, and was now lopsided and under- invested. They were obliged to act, and chose differing courses; the present turmoil in textiles traces back to this parting of the ways.
Courtaulds preferred direct action. One sunny afternoon it swallowed the biggest of the Lancashire combines — Fine Spinners and Doublers, and the Lancashire Cotton Corpora- tion, itself a 'rationalisation' of the 'thirties— at a single gulp. It has made other bids in Lancashire — Hayeshaw, for instance, and Nelson, the only rival rayon producer, which it closed down—and has moved into less charted waters, buying a whole series of clothing manu- facturers. Ict preferred to work at one remove.
It backed companies already in the business; and its biggest bet was on Viyella. To the complete astonishment of the whole industry, to took a 20 per cent shareholding in Viyella and offered the company up to flO million in loans without so much as putting a director On the board. From then on there was no doubt that Mr Joe Hyman, at the head of Viyella, was ICI's man in Lancashire. And although ICI certainly made money on their investment, it is too readily forgotten how Viyella's path was eased, its paper made more acceptable in a takeover, by the knowledge that ict was behind it and in the last resort could not let it fail. Last year Mr Hyman and his patron quarrelled, in language of extreme acrimony, and parted on fighting terms. The bone of contention was Ices refusal to give the profitable 'crimplene' licence to Viyella, a decision which does on the face of it seem odd. But the impression left on the trade was that this was Viyella's declaration of independence. No one doubts that Viyella intends to be master in its own house and any- body else's house it may become engaged with. And this is generally expressed not in terms of Viyella but of its chairman.
Mr Hyman is quite right in supposing that there is a good deal of prejudice against him, and that some of it is plain unreasonable— though his suggestion that English Sewing Cotton has rejected his advances because of anti-semitism on its chairman's part must be as unfortunate a remark as any businessman ever made. Clearly there is jealousy : there are plenty of people in Manchester to say that with ices backing they too could have bought Com- bined English Mills, the Bradford Dyers' and all the rest, and so have become great men. Beyond that, there is fear of Mr Hyman's personal autocracy. He first established himself by a reverse takeover bid for the old firm of William Hollins, whose trade mark was Viyella the board of Hollins was gone within months. The pattern has been repeated : few indeed are they that have been able to stay the course with Mr Hyman. And it is not just a question of weeding out family managements and their old retainers—though neither can be expected to relish the prospect. There has been a rapid turnover in the higher echelons of Viyella- especially on the accounting side. Whether Viyella's management is or could long remain broad enough to take on much heavier responsi- bilities—such as English Sewing Cotton—can be doubted. This, perhaps, is the kind of feeling that lets Sir Cyril Harrison of ESC say 'Not Viyella at any price.'
But with Courtaulds gobbling up companies like a child who fears that the plate will be snatched away, it is natural for the textile trade to look for some pole round which an alterna- tive grouping can be formed. And if not Viyella, what is it to be? English Sewing Cotton and Calico Printers are both companies using their outside income — ESC'S from its American possessions and Calico's from the terylene patent royalties—to diversify out of traditional Lancashire as fast as they can go. Carrington and Dewhurst, Highams, Ashtons—have they, or could they have, the weight to stand up to Courtaulds? It is hard to believe.
When Courtaulds bought the two great com- bines, it was said that Manchester had been reduced to the status of a branch office, And it is a justified anxiety that, if Courtaulds came to dominate the industry, its real decisions would be taken in Coventry or London, and would be seen as affecting what was only one part of a company with many interests. More than local pride is involved here. A Viyella polarisation, on the other hand, would have to stand or fall by its results in Lancashire. But will it come? After the reorganisation scheme and the takeovers, those who wanted to get out of Lancashire have been able to do so. Those who wanted to stay must doubt Nyhether they would be suffered to remain in the same nest as Mr Hyman. You may or may not think that doubt fair. But it has to be accepted as one of the facts of Lancashire life.
For Lancashire to run its own affairs has one crushing disadvantage: and that is that White- hill will not listen to it. This is, as Sir Frank Kearton has said, the only industry in any advanced country that has no tariff protection against its principal foreign competitor. When Manchester has said as much, the Board of Trade has dismissed it as the whimpering of incompetent provincials. To Sir Frank White- hall might respond. The most elaborate and expensive reorganisation can be no more than a palliative unless imports are controlled; and it may be that Lancashire must, by the logic of backstairs politics, buy its survival at the price of its autonomy.
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