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The U.K. cement industry has its roots in the early 1800s. In 1824, Joseph Aspdin, a Leeds bricklayer, patented Portland cement, although others lay claim to its invention. The early years of the U.K. cement industry were characterized by the operating of many small producers in small, regionally competitive markets. Exports represented a fair proportion of earnings for such firms, many of whom operated along the River Thames and River Medway, and shipped cement to Europe in barges. It was a tough industry in these early years, characterized by long hours and a payment-by-results system for its work force.
During the last decade of the 19th century, with U.K. cement manufacturers having enjoyed a lengthy period of little or no foreign competition, they finally began to lose their export markets to domestic production both in Europe and the United States. This situation encouraged a spate of mergers within the industry, notably that between Brooks, Shoobridge and Company and Hilton, Anderson and Company, forming Hilton, Anderson, Brooks and Company.
The formation of Associated Portland Cement Manufacturers (APCM) in 1900 was due largely to the endeavors of Henry Osborne O'Hagan, a financier whose business interests were wide and varied and who principally was involved in share issues and dealings. In this task he was aided by two others, John Bazley White, a cement manufacturer, and his solicitor, H. S. Leonard, whose goal had been to bring about the amalgamation of all the cement manufacturers in the country.
Their task was a difficult one, as the competitive nature of most manufacturers prevented them from divulging necessary information to others in the industry. By July 1900, however, contracts had been drawn up for the amalgamation of 27 cement producers. All of the 27 companies bar 3 were located in the Thames-Medway area. The others were I.C. Johnson and Company of Gateshead; C. Francis, Son and Company of the Isle of Wight; and the Arlesey Lime and Portland Cement Company of Hitchin. Four other producers who refused to join the amalgamation had reached working agreements with the group, and between these 31 producers, over 80% of the country's production was accounted for.
The flotation involved an agreement between London's main cement merchants, ensuring that all their requirements were supplied by APCM--this was the first attempt by APCM to exert market influence from its dominant position--and the purchase of 3,697 acres of freehold land, and 1,058 acres of leasehold land in areas with raw material deposits and suitable dock and wharf facilities. Also involved was the purchase of railways and rolling stock, plant, and river barges.
The new company, Associated Portland Cement Manufacturers (1900) Ltd., had a nominal capital of £8 million, and its board of directors was comprised of one member from each company, with the two largest companies able to nominate the chairman and vice chairman. However the share issue, intended to raise £7.3 million, did not go smoothly, falling £2 million short. O'Hagan, who had failed to get the issue underwritten, had to return to the vendors, who finally agreed to find another £1.1 million, as did O'Hagan. Further trouble arose when three of the vendor firms broke away from the association, apparently unhappy with the lack of public support for the issue.
APCM attempted to impose a higher level of prices in the market, but the builders' merchants, led by George Wragge, reacted by increasing imports until prices assumed their previous levels. These were difficult times for Frederick White, the first chairman, and his 25-strong board of directors. By 1907, in the face of increasing competition in the domestic market, APCM's share of U.K. output had fallen to three-fifths of its 1900 level, and it was struggling to maintain market share in London.
The association sought a price agreement in its early years, with O'Hagan once again playing a major role, although many agreements were made and broken as competition and the rapid use of new technology caused prices to fall. It was clearly beneficial to APCM to secure such an agreement to enable it to set output levels among its constituent manufacturers and ensure a steady production rate in the medium to long term.
Over this period, 1906 to 1910, there were changes on the board of directors. Lord St. Davids was offered the post of chairman when it came to light that three-quarters of the ordinary shares were owned by a syndicate headed by this prominent financier and industrialist. It was agreed between O'Hagan and Lord St. Davids that a further £2 million would be found to try to secure a complete amalgamation of the cement industry.
This undertaking led to a spate of mergers over the next few years, starting with the takeover of Trechmann, Weekes and Company, and--most notably--G. and T. Earle, a high-quality cement producer operating in Lancashire and Yorkshire.
By December 1911, British Portland Cement Manufacturers was formed as a subsidiary of APCM, with capital of £3.5 million. BPCM contained 33 firms which had been taken over by APCM, and together they controlled around 75% of the industry. A.C. Davis of the Saxon and Norman Cement Company was appointed managing director in control of production. Although he was initially opposed to the amalgamation, his experience and knowledge of cement manufacture was unrivalled, and of great value to the newly formed subsidiary.
During World War I, APCM played a small, but significant role, placing its labor and transport resources at the disposal of the Admiralty, and promising all its workers their jobs back after the war. At the end of the war, the boards of both APCM and BPCM amalgamated, and thereafter both companies shared a board of directors.
An important development in 1918 was the formation of the Cement Makers Federation (CMF), intended to negotiate on behalf of the industry and promote greater cooperation within it. The CMF's members constituted 90% of the industry and it set local prices throughout the United Kingdom The first two CMFs failed, but the third achieved a small degree of success under an independent chairman, Viscount Woolmer.
After World War I came the slump of the early 1920s, but by the middle of the decade output rose. Over this period, a financial group had been acquiring ordinary shares until APCM was forced to admit Sir Philip Nash of Metropolitan Vickers, and General Critchley, both representatives of the Associated Anglo-Atlantic Corporation, to its board. A young financier by the name of Henry Horne was the head of this corporation; it appears his intent was to gain overall control, although he was bankrupted in the attempt.
In the aftermath, General Critchley pushed for a reduction in the number of executive directors, as APCM was top-heavy, and used the £100,000 annual salaries APCM saved to pay dividends on the ordinary shares. Despite a frosty response this was carried out, leaving only five executive directors, namely Sir Malcolm Stewart as chairman, Alfred Stevens as finance director, Harold Anderson as sales director, and A.C. Davis in charge of works. General Critchley stayed on in charge of publicity, transport, and personnel.
A common-price agreement was reached in 1934, covering price and production arrangements, and by December of that year was in operation in the form of a price and quota scheme. This agreement, although shaky at first, in fact lasted until 1987, and helped APCM determine investment levels, production, and sales.
World War II led to a dramatic increase in production as the United Kingdom prepared its coastal defenses beginning in 1940. However, most government contracts had been completed by 1944, leading to a general decline in sales and a shortage of orders. During the war, two of APCM's most influential figures retired, Alfred Stevens and Charles Davis. Alfred Stevens had been the first secretary of the association, and a managing director since 1906. He had played a vital role in the formation of BPCM.
The first postwar annual meeting, on July 16, 1946, was notable for the retirement of Sir Malcolm Stewart as chairman. He then became president, while the chairmanship went to George Earle, previously of G. and T. Earle. These were difficult times for APCM, which was under threat of nationalization, and also faced problems with the Town and Country Planning Act, which made it more difficult to develop industrial sites on new land.
The threat of nationalization receded in the 1950s. This was a period of rapid expansion in the cement industry, with large-scale public-sector projects in hand. By January 1957, when the new chairman John Reiss was appointed, record figures for both domestic production and exports were announced.
Throughout the early years of the next decade, the company was still pursuing the course of expansion through acquisition, the most notable acquisitions being the Midland Gravel Company and Hilton Gravel, both major quarrying firms. These formed the basis of Blue Circle's sand and gravel division.
Throughout the 1950s and 1960s, APCM faced problems in developing new sites as it sought to expand its production facilities. Most of these problems were caused by the Town and Country Planning Act, and a shift in public opinion toward conservation. However, despite many hold-ups, APCM managed to develop works at Westbury, Wiltshire; a mineral works on the Humber; and cement works at Shoreham in Kent, Dunstable in Bedfordshire, Hope, Cauldon in Staffordshire, and Dunbar in Scotland.
In 1965 John Reiss commissioned the management consultants McKinsey & Company, to analyze APCM's management structure and methods and present a report detailing its findings, conclusions, and recommendations. This report was completed by October 1966; it suggested that the existing management structure was inadequate for the future development of the company. The report concluded that there was no visible cohesion between the fina.gnce department, the works department, and the sales department, and that this was having an adverse effect on the profitability of the company.
However, few of McKinsey's recommendations were acted upon in the late 1960s. There was a general feeling that the existing structure had proved itself, and that the proposals for change were too radical. It took a new chairman, Anthony Binny, to recall McKinsey in 1976, and implement these changes in 1977.
In 1978 APCM became Blue Circle Industries. By now the group had four operating groups, namely Blue Circle Cement UK, the largest, and run by John Duthie; Blue Circle Enterprises, responsible for the sale and manufacture of non-cement products, run by Tom Chesterfield; Blue Circle Technical, responsible for research and development, run by David Stirling; and Blue Circle International, responsible for overseas investments and international consultancy activities. The head of this division, responsible for around half of the group's total profits, was Dr. Gordon Marshall.
The most important event in the company's activities toward the end of the 1960s was the construction of the North-fleet works, the largest cement works of its type in the world, which finally came on stream in the early 1970s. This new plant provided Blue Circle with the opportunity to shut down some of its older and less economical factories while still gaining from a net increase in capacity.
The oil crisis and high inflation of 1973 were unfavorable for the company, but a coal strike added a new dimension to its troubles, with the three-day week and cuts in electricity consumption reducing production levels, and creating two million tons of excess capacity by 1975, as exports fell and firms closed down. Sir John Reiss, chairman for 18 years, retired in 1975 and was replaced by Norman Mullins. Sir John Reiss had joined APCM in 1934, succeeded Sir George Earle as chairman in 1957, and was best remembered for his foresight in developing Blue Circle's overseas interests. His replacement, Norman Mullins, died a year after taking over as chairman, leaving Anthony Binny as chairman.
During the last years of the decade and the first years of the 1980s, Blue Circle, began expanding once again, through a series of acquisitions both at home and abroad. The most notable investments were an 82% stake in the Chilean cement company Fabrica de Cemento El Melan, later raised to 96% at a cost of £23 million, and the purchase of Armitage Shanks, a bathroom-fittings manufacturer, in 1980. The purchase of Armitage Shanks showed the extent to which Blue Circle had diversified, and was evidence of its desire to enter the lucrative North American market. Soon Blue Circle had acquired a Texan company, Kilgore Ceramics, expanded its interests in Malaysia and South Africa, and taken over Aberthaw Cement in south Wales.
In the 1980s, Blue Circle's overseas profits dipped dramatically as Chile and Mexico experienced debt problems, affecting sterling values of overseas profits. However, this was offset by continued expansion in the U.S. market. Blue Circle's special products division was absorbed into Blue Circle Enterprises after it continually failed to produce a significant contribution to group profits.
U.S. expansion continued with the purchase of three cement plants from Martin Marietta, based in Oklahoma, Alabama, and Georgia, at a cost of $100 million . This was followed in 1985 by the purchase of the Atlantic Cement Company in New York State for $145 million. Blue Circle now had around 6% of the U.S. market, a considerable achievement in a short time.
Throughout this period of expansion and acquisition, Blue Circle has continually upgraded its existing plants. It has not been afraid to dispose of parts of the group that fail to realize the required level of profits as was the case with Blue Circle Aggregates, sold in 1981, and two builders' merchants, Macnaughton Blair and Johnson and Patan of Scotland.
The year 1989 saw U.K. cement profits rise by nearly 50%, reflecting an increased level of construction activity in the United Kingdom, and the acquisition of Myson, a producer of plumbing and heating equipment. The group also sold its interests in Mexico for £250 million.
Blue Circle's investment in the modernization of existing plants is likely to continue into the next century, with particular expansion in the U.S. market across all its product ranges.
Principal Subsidiaries: Associated International Cement Ltd.; Blue Circle Property Holdings Ltd.; Blue Circle Dartford Estates Ltd.; Crossways 25 Ltd. (50%); Saxon Developments Ltd.; The Ockley Brick Company Ltd.; Ockley Building Products Ltd.; Armitage Shanks Group Ltd.; Birmid Qualcast PLC; Atco Ltd.; New World Domestic Appliances Ltd.; Potterton International Ltd.; Qualcast Garden Products Ltd.; Qualcast Bathrooms Ltd.; Myson Group PLC; Cemento Melon SA (Chile, 98%); Malayan Cement Berhad (59%); Armitage Shanks (South Africa) (Pty) Ltd.; Blue Circle Holdings Inc. (U.S.A.); Blue Circle Inc. (U.S.A.); Blue Circle Atlantic Inc. (U.S.A.); Blue Circle Raia Inc. (U.S.A.); Blue Circle Aggregates Inc. (U.S.A.); Circle Cement Ltd. (Zimbabwe, 76%); Wright Rain Africa (Private) Ltd. (Zimbabwe).