THE ORGANISATION OF THE INDUSTRY

I p Y the end of the 1920s the British iron and in di St A 1■4 19 steel industry had lost its wartime prosperity and had begun to suffer from both the general slump and foreign competition. The industry asked for protection against continental imports but this was refused by successive Governments until the great depression of 1931 produced the National Government. In the spring of 1932 the newly established Import Duties Advisory Committee (IDAC) recommended that a duty of 331 per cent. should be placed on most grades of steel for a short period, their renewal being conditional upon the re-organisation of the industry. IDAC thought a prosperous steel industry essential for economic progress and national security and they wished to see machinery created to promote co-ordination and co-operation both within the British industry and between it and its rivals.

1DAC's wish was considered by the trade asso- ciation of the industry—the National Federation of Iron and Steel Manufacturers—and in April, 1934, IDAC approved a new collective constitu- tion for the industry. The National Federation Was replaced by a much stronger central body— the British Iron and Steel Federation. The new body was to have an independent Chairman, who Should have had no previous connection with the industry and so be able to see it as a whole and be free from interest in any particular firm. Sir Andrew Duncan was the first independent Chair- man. Soon the industry had an agreement with the Continental cartel. Then followed a great deal of public controversy about the location of certain new plants, in particular a strip mill originally intended for Lincolnshire but diverted after much agitation to Ebbw Vale. This and other factors caused the industry, with Government support and pressure, to provide first (in March, 1936) that firms planning expansion were in future to Consult the independent Chairman and shortly afterwards for a committee of the Federation to " supervise and plan development. IDAC continued to take an active interest in the industry, concern- ing itself with prices, arrangements for purchase of scrap, etc., as well as its technical progress. Thus by 1939 there was already a large measure 01 Government intervention and supervision of the industry, and a special relationship between the Federation and the individual firms; What has happened since, with the exception of the Labour nationalisation measure, has largely developed or varied these arrangements.

During 1939-45 the industry, like many other dustries, was brought under closer Government rection and control, in this case by thedron and eel Control of the Ministry of Supply. Sir Idrew Duncan was first Controller and later "lister. At the General Election of August, 45, however, there came to power a Labour overnment whose electoral programme included the nationalisation of several industries, including iron and steel. To supervise the industry pending nationalisation, the new Government established, in October, 1946, an Iron and Steel Board in place of the Control. The Board occupied a position someNvhat akin to 1DAC, which was suspended in 1939.

The Labour Government left the nationalisation of iron and steel until it had dealt with the other industries and services in its programme. The Bill introduced late in 1948 passed through the House of Commons, but was strongly opposed in the House of Lords. In the end, the Government agreed to change the vesting date from not earlier -than 1st May, 1950,. to not earlier than January, 1951, i.e., a date later than the latest date possible for holding the impending General Election. At the election of February, 1950, the Labour Party's large majority was reduced to only eight. This was sufficient, however, to bring the Act fully into operation on February 15, 1951. The Act of 1949 established the Iron and Steel Corporation of Great Britain, a holding company in which all the capital of ninety-two companies with their subsidiaries was vested. This entitled the Corporation to appoint the directors of these com- panies. The Act had to define the industry for the purpose of nationalisation. It provided for taking over companies engaged in the four primary processes : digging or working of iron ore; smelt- ing pig iron in a blast furnace; making steel ingots and shaping steel by hot rolling. As well as leaving out the small producers engaged in these processes, the Act also left out, among others, companies making iron or steel castings, forgings, or drop stampings and cold-rolling steel. The Federation continued in existence, but was now composed of both publicly and privately owned companies.

Very shortly, however, the situation changed again with the victory of the Conservative Party, at the General Election of October, 1951. The new Government quickly ordered the Iron and Steel Corporation not to make further changes in the financial structure or management of any com- pany or in the organisation of the industry without Ministerial consent. In November, 1952, the Minister of Supply introduced a Bill to de- nationalise the industry, the Act taking effect on July 13, 1953. On that day, the companies vested in the Corporation were transferred to a newly established Iron and Steel Holding and Realisa- tion Agency (ISHRA). An Iron and Steel Board was also established. The present structure of the industry and of Government control dates from that Act.

PRESENT ORGANISATION AND CONTROL

There are five elements in the present organisa- tion: the Companies, the Federation, ISHRA, the Board and the Minister.

The Companies There are some 300 companies producing steel in one form or another. Some are very large, producing everything from the raw material to the finished product, others quite small, possibly concerned only with one process. In 1956 the six largest concerns, Colvilles, Dorman Long, Steel Company of Wales, Stewarts and Lloyds, Richard Thomas and Baldwins, and United Steel, ac- counted for 58 per cent; of crude steel output (averaging 2 million tons each), and the next ten companies. for 26 per cent., (averaging a half- million tons each). On the other hand, in the re- rolling section there is a, large number of much smaller businesses.

The process of selling the companies to the general public did not take place straight away. The United Steel Companies were sold in Novem- ber, 1953, Stewarts and Lloyds in June, 1954, Dorman Long in November, 1954, Colvilles January, 1955, and The Steel Company of Wales in March, 1957, to mention five of the largest. Denationalisation is not complete and there re- main two major companies (Richard Thomas and Baldwins and the Staveley Iron and Chemi- cal Co.), and a dozen others still wholly in public ownership, i.e., owned by ISHRA. In addition, ISHRA also owns debentures and fixed interest securities in the otherwise privately owned firms .to the nominal value of £158 million. The British Iron and Steel Federation Iron and steel companies are members of one or 'more of ten Conferences (or associations) accord- ing to the products they make, e.g., the Pig Iron Producers' Conference. These Conferences are permanent trade associations handling matters specific to and representing the views of par- ticular sections of the industry. The Federation is a compound organisation, its direct members being the ten Conferences and not the individual companies. In practice, however, the Federation has regular communication direct with the com- panies as well as the Conferences. The Council of the Federation is composed of the leaders of the different sections of the industry appointed each year by the Conferences. The body chiefly responsible for general policy is the Executive Committee, meeting monthly under the indepen- dent Chairman. Appointed by the Council from its members, the Committee is composed mainly of the Chairmen and Managing Directors, or Directors personally concerned with major policy in their companies. The Federation has a staff of about 300.

In addition to representing the industry, col- lecting statistics and other normal trade association functions, the Federation has wide and far- reaching activities. Its Development Committee examines proposals from individual companies for new plant and presents the industry's long- term development programme to the Iron and Steel Board. Through its Raw Materials Co- ordinating Committee and the Steel Production and Supplies Committee, the Federation is con- cerned with the best use of productive capacity in different sections of the industry, the importation of ore and scrap and with other matters vital to production. The Federation cannot, however, en- gage in commercial activities and has, therefore, established several companies for this purpose. The principal company is the British Iron and Steel Corporation Ltd., which undertakes the cen- tral purchase and distribution of imported pig- iron, scrap and semi-finished steel according to programmes laid down by the Federation in agree- ment with the Iron and Steel Board and the Government. Ore shipments are arranged cen- trally by BISC (Ore) Ltd. which has a large fleet of specially designed ore-carriers.

The Federation collects and administers the Industry Fund which is fed and maintained largely by levies on the individual companies according to their output at rates fixed by the Executive Committee with the approval of the Iron and Steel Board. In addition to financing certain common services, principally research and training, the Fund is also closely related to the price structure of the industry. Thus, imports of scrap, iron-ore and semi-finished steel are bought at world prices and resold to the companies at home-controlled prices, any difference being met by the Fund. In this way the extra cost of using imported materials incurred by some firms is spread over the whole industry.

The Iron and Steel Holding and Realisation Agency Consisting of a Chairman and three to six mem- bers appointed by the Treasury, ISHRA was established by the Act of 1953 with the following main duties : (a) To secure the return to private ownership of the iron'and steel companies that had been nationalised.

(b) To carry out this duty in a manner approved by the Treasury, and so as to ensure that the consideration obtained from the dis- posal of the assets is financially adequate; Meanwhile to exercise its powers as a hold- ing company to promote the efficient direc- tion of the companies remaining in its possession.

The Agency's powers include power to sell or otherwise disrosse of any securities vested in it.

The exercise of these powers is subject to direc- tion by the appropriate department—i.e., - the Treasury, except where the Treasury decides that the appropriate department should be the Ministry of Power. ISHRA is also required to consult with the Iron and Steel Board before carrying out any grouping or re-grouping of the companies it owns.

The Iron and Steel Board The Board consists of a full-time Chairman and nine to fourteen members, appointed by the Minister of Power. The Chairman cannot be directly concerned with iron and steel production.

The principal duty of the Board is to exercise a general supervision over the industry, with a (c) view to promoting the efficient, economic and adequate supply under competitive conditions of iron and steel products. It is. in particular, to keep under review productive capacity, arrangements for procuring and distributing raw materials and fuel, prices, and the arrangements for promoting research, training, safety, health, welfare and joint consultation.

Another duty of the Board is to consult with iron and steel producers and other appropriate persons with the object of securing the provision and use of such iron and steel production facilities as may be required for efficient, economic and adequate supplies, and in so doing, at the request of the Ministry of Power, to have regard to em- ployment and other considerations affecting the national interest.

It is also the duty of the Board, if after con- sultation with appropriate organisations it is satisfied that importation or distribution of raw materials should be undertaken as a common service and that satisfactory arrangements do not already exist, to make arrangements for that pur- pose.

. It is further required, after similar consultations, to take steps to promote research and the train- ing and education of employees, so far as existing arrangements appear to be inadequate.

The Board's powers include : (a) After consultation with iron and steel pro- ducers and representative organisations, the Board may require any person, intend- ing to provide in Great Britain additional production facilities of a kind defined by notice, to submit particulars to the Board and obtain its consent before proceeding. The Board must refrain from exercising this power in cases which would be unlikely sub- stantially to affect the efficient and econo- mic development of production facilities in Great Britain, and may not refuse con- sent in any case where the proposal would not seriously prejudice such development.

(b) The Board may determine and prescribe the maximum prices of iron and steel products.

(c) The Board may by notice in writing require iron and steel producers to provide infor- mation and forecasts reasonably required by the Board for the purposes of its func- tions.

(d) The Board may seek from the courts an injunction if necessary to enforce its deci- sions under (a) and (b) above.

The Board has no power to compel develop- ment, but if it decides that additional production facilities are needed for the efficient and adequate supply of iron and steel, or if it appears to the Minister, after consultation with the Board, that additional production facilities are required in the national interest and if the Board reports to the Minister that it is unable to secure their provision by consultation, the Minister may, with the ap- proval of the Treasury, provide and use these facilities or make arrangements for someone else to do so, whether as his Agent or otherwise. More- over, if it appears to the Minister after consulta- tion with the Board and others concerned, that any existing production facilities which would not otherwise be kept in use ought in the national interest to be kept in use, he may, with the per- mission of the Treasury, himself acquire or take on lease and use these facilities or arrange for someone else to do so.

The Minister of Power The Minister of Power took over responsibility from the Minister of Supply in January, 1957. Most of his statutory powers have already been mentioned in the description of the powers and duties of the Iron and Steel Board. In addition to those already mentioned the Minister decides appeals against the Board's refusal to allow a company to provide additional productive facili- ties. He may, after consultation with the Board, direct the Board to determine the maximum price bf any iron or steel product or vary or replace any determination the Board has already made, but cannot give such direction unless he considers it necessary in the national interest and consistent with promoting efficient, economic and adequate supplies.