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The Decline of Jute and the De-globalization of Dundee

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The Decline of Jute and the De-globalization of Dundee

Economic History Conference

The Decline of Jute and the De-globalization of Dundee

Jim Tomlinson, University of Dundee

    This paper is part of an on-going project financed by the Leverhulme Trust entitled: ‘Managing Decline: the Case of Jute’. It uses the case of jute to contribute to two

    broad issues in modern British economic historythe management of industrial decline

    and the character and significance of patterns of globalization/deglobalization.

    As is well-known, Britain on the eve of the First World War was an

    extraordinarily ‘globalized’ economy in comparison with any other large state. Within Britain there was a spectrum of local and regional levels of exposure to international economic forces, and on that spectrum Dundee was an extreme case of openness. This derived from the city being overwhelmingly dominated by one industry, jute, which drew its raw material from abroad and sold most of its output in international markets. This industry directly employed almost half of all workers in the city in the early 1900s, two-1 The economic welfare of the inhabitants of Dundee was thus thirds of them women.

    especially affected by international economic forces in the era of free trade. Like other Britons, Dundonians had gained enormously from cheap imported food in the last quarter of the nineteenth century, but they had also begun to be affected by serious competition in jute markets, especially from Calcutta. This competition acted to keep down money wages in the industry, and from the early 1900s led to the beginnings of the decline of the industry in Britain, with output and employment starting to fall.

     Thus, like all the staples, jute eventually had to contend with both shifting patterns of demand for its product and increased competition. The great boom in the industry in the second half of the nineteenth century was built above all on the production of jute bags, used for the transportation of all manner of agricultural products, coal, fertilizers and chemicals. Thus in this period jute boomed as part of the enormous growth 2in international trade, especially in primary products. In the twentieth century other uses

    of the product became more important, partly because substitutes developed to the use of bags for the transport of bulk products, notably containerization, and partly because of 3the use of different material for bags, notably paper and later polypropylene. Alternative

    uses for jute were found especially in backing for linoleum and woven carpets, so that even by 1936 such non-bag uses consumed around a third of the total of Dundee 4production. The other aspect of the story was competition from other countries. The most important of these was India, though there was also significant production in continental Europe. Competition from India was evident even in the home market before the end of the nineteenth century, but was even more significant in capturing overseas

     1 Valerie Wright, ‘Women and Work in Twentieth Century Dundee’ in J. Tomlinson and C.Whatley (eds) Dundee in the Twentieth Century (forthcoming). 2 The industry also did enormously well out of the production of sand bags in the two world wars. 3 Invented in Italy in the 1950s, polypropylene was produced on a large scale from 1960, and in the decade that followed output grew at 50 per cent per annum, over half the total produced in the USA. FAO, Impact

    of synthetics on jute and allied fibres, Commodity Bulletin Series, (Rome, 1969), p.14. 4 Board of Trade, Working Party Report on Jute (London, 1948), p.18.

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markets. As Gordon Stewart rightly emphasizes, by the 1930s the Calcutta industry was 5the key player in the world market, Dundee reduced to a bit part.

    Faced with this competitive pressure, the jute employers (acting both individually and collectively) developed a number of strategies to resist or manage this decline. These can be summarized under three broad headings: protection, ‘modernization’ of jute

    production and corporate diversification by erstwhile jute companies. 6 The story of protectionism in jute is discussed at length elsewhere. The bulk of

    jute employers became committed to a protectionist stance before the First World War. However, the pursuit of this was constrained both by the characteristics of the industry (it was primarily an export industry; its main competitor was within the Empire, and hence raised major problems of imperial policy); and also by politics (in Dundee, as elsewhere, no mass support for protectionism emerged). However, the industry was given protection for strategic reasons in 1939, and this continued post-1945 largely because of arguments about employment. From the 1940s the employers deployed the labour market argument with some success, building local coalitions of support, and achieving some influence in national policy. The industry was protected by the ‘Jute Control’ from 1939 to 1969 (albeit with cumulative reductions in levels of protection from 1957), and by diminishing quotas thereafter.

    Modernization: as Marx observed many years ago, ‘the bourgeoisie are constantly

    revolutionizing the means of production’ and the jute employers were no exception. They

    did not simply adopt a passive posture in response to competition, so, for example, in the inter-war period, there was a major period of amalgamation, which also commonly 7involved vertical integration. But arguably it was only from the 1940s that the industry

    as a whole pursued a distinctive ‘modernization’ strategy, combining (i) major

    investments in new equipment, especially looms; (ii) significant reforms of working practices, including extensive shift working and job evaluation (iii) a market shift towards more complex products less subject to Indian competition.

    Third, the jute companies (especially the ‘big two’ that emerged in the 1920s, Jute Industries Limited, and Low and Bonar) pursued corporate diversification: this involved movement into both related technologies/products, most importantly polypropylene, and 8into wholly unrelated activities.

     In the context of this broad summary of the history of jute, this paper focuses on two main issues:

    a) The relationship between the protection granted to the industry from 1939 and the

    ‘modernization’ of the industry in the post-war years, and;

     5 G. Stewart, Jute and Empire (Manchester, 1998), pp. ix, 15. Indian output equalled Dundee’s by about

    1890, was four times as much by 1913, and ten times by the 1950s. Pakistan also emerged as significant producer after Partition. 6 J. Tomlinson, ‘Managing Decline: the Case of Jute’ Scottish Historical Studies 29 (2008) pp.123-140; S.

    Masrani, ‘International Competition and Strategic Response in the Dundee Jute Industry during the Interwar (1919-1939) and Post-war (1945-1960s) Period: the case of Jute Industries, Buist Spinning, Craiks and Scott and Fyfe’ (Unpublished PhD dissertation, St Andrews University, 2007). 7 J. Jackson, ‘Leading industries’ in Jackson, ed., The Third Statistical Account of Scotland: the City of

    Dundee (Arbroath, 1979), pp.118-124; Howe, Dundee, pp.13, 73-79. 8 J. Napier, ‘The Dundee Jute Industry: Decline, Change and Prospects’ (Unpublished MBA, University of Edinburgh, 1995) for interview material.

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    b) The impact and significance of the decline of jute in ‘de-globalizing’ Dundee.

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    In inter-war Britain the imposition of protection in 1931/2 led to an ‘arms length’

    industrial policy, by which government sought to do deals with various depressed staple industries. The deals would involve the industries receiving protection in return for ‘putting their house in order’ by pursuing measures to improve their efficiency. By all

    accounts this diplomacy was not very successful. The National government, ideologically committed to protectionism, effectively had little leverage on industries who knew that promises of rationalization would not have to be delivered to secure the tariffs and quotas 9they desired.

     In 1929 such a deal was proposed by a leading figure in jute, George Bonar, who suggested that the increase in European competition of the 1920s would be halted by 10protection, and in return the industry would put its house in order. In the event the

    industry did get protection against European producers in 1931, but not against the key competitors in India until 1939, and the idea of a ‘deal’ was not revived until the mid-111940s. This idea was central to the Report of the tripartite Working Party in 1948. The

    Report argued that there was:

     ‘no prospect of the jute spinning and weaving industry in this country achieving stability, unless it is afforded protection in the home market when it is again subjected to the competition which existed before the war from low priced imports of jute goods from India…we have satisfied ourselves that no amount of re-organization and re-equipment

    on the part of the home industry will bridge the gap between costs of production in the two countries.’ The Report that there was great scope for modernization of the industry through voluntary amalgamation, rationalization and re-equipment, but:

    ‘To enable the industry to develop on these lines, however, it is essential that it

    should be assured now that, when necessary, it will be afforded protection against low-priced Indian imports. At the same time, we are strongly of the opinion that the industry should not be granted protection unless it is prepared to carry out reorganization and re-12equipment on the lines indicated’.

    But as the President of the Board of Trade, Harold Wilson, immediately made brutally clear, such a formal deal was not possible. Protection could not be offered to the industry because of ‘our commitment under the trade agreement with India to afford free entry of Indian jute goods into this country’ and he referred to the ‘possible reactions India to an assurance now of protection in the future’. He went on: ‘in any event it would

     9 R. Roberts, ‘The administrative origins of industrial diplomacy: an aspect of government industry relations, 1929-1935’ in J. Turner (ed) Businessmen and Politics: Studies of Business Activity in British

    Politics, 1900-1945 (1984), pp.93-104. J. Tomlinson, Government and the Enterprise since 1900: the

    Changing Problem of Efficiency (Oxford, 1994) chapter 4. 10 G. Bonar, The Industrial Outlook, Lecture by George Bonar (Dundee, 1929). 11 Board of Trade, Jute, p. ii. The independent members were an economist, an accountant, and the bosses of two local Dundee companiesCaledon Shipbuilding and Metal Industries Ltd. 12 Board of Trade, Jute, p.2.

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be contrary to normal tariff policy to give assurance of protection at some future date 13under conditions which could not now be foreseen’.

    British concerns, were twofold. In the short-term; ’an announcement of our

    intention to protect the UK jute industry might bring to a head current resentments of a more general and political nature and lead to retaliatory action’. In the longer-term the

    fear was of having to pay an unacceptably high price to protect jute in any negotiations, given its importance to India, a price in the form of loss of trade preferences, demands for 14new preferences, or increased tariffs on British goods. Behind the scenes the Board of

    Trade also objected to protection on the grounds that it would reduce competitive 15pressure on the industry, and thereby slow the necessary re-organization.

    Despite the absence of any formal deal, the fact is that the twenty years after the Report did see a combination of protection and significant ‘modernization’ of the industry, so we can usefully think of that period in the history of jute as involving an implicit deal, whose terms and consequences can be examined. The interest of this approach derives in part from the literature on how far the protection afforded British industry in the post-1945 years contributed to inefficiency and lack of competitiveness, 16and for an allegedly general problem of ‘industrial decline’.

    The kind of changes in the industry envisaged in the Report were very much in line with contemporary understanding of the sources of higher efficiency, a topic very 17much at the centre of the Labour Government’s polices. Some of these had a clear

    political aspect, most obviously the favouring of tripartite ‘Development Councils’ for fragmented industries, with a prime purpose of encouraging amalgamations, themselves seen as a necessary condition for many other improvements in efficiency. In the case of jute no such body was set up, but rather a body called the British Jute Trade Federal Council was established, combining the interests of producers and merchants, but which, 18unlike a Development Council, had no trade union participation.

    A later report in the Scotsman suggested that the Board of Trade had denied the

    industry protection because of this failure to set up a Development Council, but as noted 19above, Wilson had other reasons for such a denial. It is probably more accurate to say

    the matter worked the other way round-the absence of formal protection provided the industry with an excuse not to set up a Development Council. The employers objection to such Councils was not only the involvement of trade unions, but also that some schemes for Councils in other industries involved strong encouragement of amalgamation. However, while there was no collective body encouraging amalgamation in jute, amalgamations did occur, continuing the trend established in the 1920s when Jute

     13 PRO BT64/3762 ‘Note of President’s talk with Chairman and members of the WP’ 10 June 1948. His predecessor, Stafford Cripps, had refused to give any undertaking to the

    industry on protection in1945, telling the employers and unions to await the Working Party Report. Dundee University Archives (DUA), Association of Jute Manufacturers and Spinners (AJSM), MS 84/6/1 14 Dec 1945. 14 PRO BT64/3762 ‘Protection of the UK Jute Industry against Indian Imports’, Feb 12 1948. 15 On the issue of competition, H.Mercer, Constructing a competitive order (Cambridge, 1995). 16 This is the theme of, for example, Geoffrey Owen, From Empire to Europe (London, 1999). 17 J. Tomlinson, ‘Mr Attlee’s Supply-side Socialism’ Economic History Review 46 (1993), pp.1-22. 18 The AJSM was the major employers organization, established in 1918. Dundee City Archives (DCA), Dundee Chamber of Commerce Minute Book, ’Proposed Jute Federation’ 25 March 1947. 19 Scotsman 12 Feb 1952 ‘The Jute Industry’s Future’.

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    Industries Limited and Low and Bonar became the two dominant firms in the industry. Describing the period since 1948, Lewis Robertson wrote: ‘Regrouping within the

    industry occurred, though in the absence of an unqualified and definitive assurance from the Government of the day, and of the advisory machinery envisaged, it did not take the regimented form contemplated by the recommendations of the Report, which was 20 He calculated that since conditional upon a definite assurance of continued protection’.

    1948 the number spinning firms had fallen from 26 to 18, and cloth manufacturers from 36 to 24, mostly as a result of amalgamation, with three firms ceasing to produce entirely. 21

    Whether the enthusiasm for amalgamation as a pre-condition for greater efficiency was correct for jute is unclear. As Broadberry had plausibly suggested, Dundee jute up to the 1940s had a relatively good productivity record based on the realisation of 22external economies of scale. It was commonplace to assume that amalgamations were

    a necessary condition for higher levels of investment in the industry, and in turn this would generate higher productivity, but Howe’s analysis just of the 1969-77 period had

    ambiguous results, with capital intensity being related to average productivity, but not the growth of productivity, and we have no calculations of such relationships for the earlier 23period. Nevertheless, given imperfections in the capital market, amalgamation, other things equal, probably encouraged investment, which expanded rapidly post-war. Howe’s calculations suggest investment rose to a peak annual level of ?1.5m. in 1954, 24with a cumulative total of ?30m. between 1945 and 1972. The pattern over this period,

    with sharp rises peaking in the mid-1950s, then a slowdown followed by a renewed acceleration after 1964 fits with contemporary narratives. The first period was one of especially rapid shift towards automatic spindles, and looms to weave wider cloth, while the later boom was related to the switch by jute companies to polypropylene (see below). Investment in jute machinery declined sharply after 1968, while that in synthetics 25machinery overtook that in jute by 1971.

    This investment was substantially funded from ploughed-back profits. Between the end of the war and the mid-1950s profits recovered from their depressed level of the 1930s, with strong demand and output and, up to 1954, employment expansion. Contemporary analysts suggested: ‘the first ten years after the war were years of

    prosperity and high profit margins, which produced a sizeable capital fund for the first 26time in perhaps half a century’.

    That these profits were higher than they would have been in the absence of protection is surely obvious. Supporters of protection were happy to embrace that point,

     20 The Restrictive Practices Court (Scotland) The Jute References. Precognition by L.F. Robertson (Dundee,

    1962), p.39. Lewis Robertson, along with leading figures from Jute Industries Limited and Low and Bonar, formed the ‘three wise men’ of the industry who conducted most of the key negotiations with the government. 21 Ibid. 22 S. Broadberry, The Productivity Race (Cambridge, 1997) pp. 193, 253,259-60. 23 W. Howe, The Dundee Textiles Industry, 1960-1977: Decline and Diversification (Aberdeen ,1982)

    p.137 24 Howe, Dundee, p.153. 25 S. McDowall and P. Draper, Trade Adjustment and the British Jute Industry (Glasgow, 1978) p.20. 26 A. Carstairs and A. Cole ‘Recent Developments in the Jute Industry’ Scottish Journal of Political

    Economy 7 (1960) p.130.

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    arguing that this was precisely the kind of benign consequence made possible by a protectionist deal tied to enhanced efficiency. However, the profitability of protected jute was a controversial matter, because of fears that behind its protective wall the industry would earn excess returns. The Board if Trade was alive to this issue and this awareness shaped the workings of the jute control. To try and secure both efficiency and only reasonable profits the Control operated by establishing in consultation with the industry the price level of jute products compatible with the costs of the more efficient firms in the industry, and rates of return in line with the average for the whole of British manufacturing (deemed to be 10%). Thus the Control, guided by the Board of Trade sought to enforce the ‘deal’ with the industry both by providing an incentive for firms to increase efficiency by ‘marking-up’ import prices in relation to the prices charged by the

    most efficient, and also scrutinising profits. There was controversy about how effective this regime was at the time of the Restrictive Practices Court case on the Price Agreements in jute, in the early 1960s. The economist Stanley Dennison was sceptical about how far the regime was effective, but his evidence was largely anecdotal. The data suggests that while there was a post-war profit recovery in the industry, the close regulation by the Board of Trade stopped the industry exploiting the situation to earn 27 excess profits.

     In retrospect it could also be argued that as well as generally raising rates of return (albeit with a cap), two aspects of the protectionist regime encouraged investment. The governments refusal to switch to a permanent tariff regime as advocated by the Working Party lent a strong sense of impermanence to protection, and this was added to after 1951 with a Conservative government which found the whole dirigiste apparatus of

    jute control uncongenial, and sought for ways to change it. While the Conservatives in the end did not abolish the Control, from 1957 they did lower the degree of protection accorded to the jute products in which Indian competition was strongestbroadly

    speaking, the heavy Hessians traditionally used in sacks. The sense of impermanence for protection, and the clear differential favouring production of more sophisticated products, meant the protective regime both provided resources for investment and incentivised investment, as long as it was concentrated on more up-market products. Hence the

    concentration of investment up to the mid-1960s especially on capacity to produce wide-loom carpet backing, which in that period became the staple product of the Dundee 28industry.

    ‘the industry has turned steadily away from common Hessians which are least

    able to compete with Indian imports, and more in the direction of higher quality products in which Dundee equipment and skilled labour have an advantage. It is, moreover, in these high quality products that the extensive investment in the Dundee industry since the 29war has overwhelmingly been concentrated.’

     27 Dundee University Archives (DUA) MS84/18/1 (8) Association of Jute Spinners and Manufacturers, Restrictive Practices Court: Jute References: ‘Precognition by S. Dennison’. The rates of return on jute

    spinning and weaving in the five years leading up to 1962 were consistently below the 10% level: ibid., ‘Precognition by C.O. Allan, Accountant’, pp.19-20. 28 C. Carter and B.Williams, Industry and Technical Progress (1957); the archives of the BJTRA suggest

    an enthusiastic embrace by the industry of this Association: DUA MS 114/1-4, Publications of BJTRA. It became the Scottish Textiles Research Association in 1969 and was closed in 1975. 29 A. Carstairs, and A. Cole, ‘Recent developments in the jute industry’, Scottish Journal of Political

    Economy 7 (1960), pp.117-133.

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    Table 1. Dundee’s output and imports of jute in 1963 (tonnes)

     Sold by Jute Control % of JC sales Produced in Dundee % of Dundee

     Production

Heavy 5,400 15 - -

    bags etc

Hessian

    Cloth 21,700 60 4,300 5

‘Equated 9,000 25 34,400 40

    goods’

‘Excluded

    goods’ - - 47,300 55

     Heavy bags sold at no mark-up on Dundee prices.

     Hessian cloth sold at 20 per cent mark-up.

     ‘Equated goods’ sold at Dundee prices ie with variable mark-up.

     ‘Excluded goods’ sold at 50 per cent mark-up.

Source: Board of Trade Journal 16 August 1963.

    1940s views on the route to greater efficiency put a lot of emphasis on labour or what contemporaries called ‘the human factor’. The Working Party called for

    collaborative actions by employers and workers to improve labour productivity, including by a thorough review of the wages system. While the employers refused any role for the unions in the oversight of the industry through a Development Council, they successfully pursued a pioneering shift in the wage system towards Payment By Results, in 30 Here the employers seem to have successfully persuaded collaboration with the unions.

    the unions that they must contribute to the deal with government by committing to changes in working practices and the payment regime, albeit this was facilitated by the wage increases that accompanied the introduction of the PBR system.

    But a key problem for the industry was that while differential protection may have given incentives to invest and innovate in the more sophisticated products, it encouraged 31substitution of jute by other materials. Demand for jute bags appears to have been

     30 I. Gibson, ‘The Revision of the Jute Wages-Structure’ Scottish Journal of Political Economy, 4 (1957),

    pp.46-59. 31 On the political use of arguments about the substitution effects of high jute prices see D. Eccles in Hansard (Commons) 17 July 1957 cols 1154-1158.

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    highly price elastic, and substitution by paper proceeded rapidly in the 1950s and 1960s, but given Dundee’s product mix this was less significant than the rise of polypropylene, especially for carpet backing. Table 2 makes the point strongly that in the crucial years of post-war decline, the problem for Dundee was not increasing imports, but the shrinking of demand for the ‘up-market’ largely home-consumed products it had built up in the

    1940s and 1950s.

    Table 2 UK Production and trade in jute manufactures 1961-1974 (000 metric tons)

     1961 1964 1967 1970 1974

    Yarn

    Production 118 133 114 89 58 Import 3 4 2 1 1 Export 3 3 2 2 3

    Availability 117 134 114 89 55

Cloth

    Production 74 84 68 40 20 Import 33 39 43 39 24 Export 9 10 4 5 2

    Availability 98 112 107 73 41

    Source: S. McDowell, P. Draper and T. McGuinness, ‘Protection, technological change and trade adjustment: the case of jute in Britain’ St Andrews Dept. of Economics Report series no 14 (St Andrews, 1976), p.46.

     While bags declined in importance, especially relative to carpet and linoleum backing, neither of the latter provided a stable alternative use. A substantial local industry grew up using jute to back linoleum, especially in Kirkcaldy, but declined from the late1950s, as linoleum was displaced by cheap carpet, and what linoleum was produced 32was increasingly backed by bitumenised paper. The use of jute for carpet backing also 33boomed in the 1950s and 1960s, with strong demand for broadloom carpets. But the rise

    of tufted carpets and above all the rise of polypropylene hit the market for jute backing, so that the proportion of primary carpet backing in the UK from polypropylene rose from 10 per cent in 1967 to 95 per cent in 1974; the use of polypropylene for bags and

     32 B. Lenman, Economic History of Modern Scotland 1660-1976 (Edinburgh, 1976), p.212.

     33 Lenman, Economic, p.257.

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    industrial cloth rose over the same period 25 fold, to take over 40 per cent of the 34market. In advanced countries as a whole the level of demand for jute declined through the 1960s, and this accelerated in the 1970s. In poor countries demand was still expanding, but the pace of expansion was being hit by the growth of polypropylene from 35the mid-1960s.

    This shift in Dundee’s primary market broadly coincided with removal of jute control in 1969, so there was a double shock to the industry, with polypropylene prices 36falling sharply relative to jute. Dundee producers reacted strongly to this opportunity. Unlike cotton, the move to artificial fibres was not driven by ‘outside’ companies (which 37did not rescue the Lancashire industry.) Rather, the process was largely one of

    diversification of the existing jute firms; by the mid-1970s four firms accounted for over 38two-thirds of UK polypropylene. So in Dundee protection encouraged a shift from jute 39to polypropylene on both the demand and the supply side, unlike in Western Europe.

     As a result, unlike in the USA, it was initially the jute firms who led the way to 40polypropylene, not the petro-chemical producers of the raw material. Consequently, in 41Dundee, these firms survived-at least for a time- while jute production didn’t. But even

    where firms survived, their employment levels collapsed. Polypropylene production is much less labour intensive than jute, requiring only around one-sixth of the labour per 42yard needed in jute. But in the longer run the rise of polypropylene was accompanied by the domination of the sector by the raw material producers, giant petro-chemical firms 43who organized the industry on a global scale. Thus, for example, Don and Low were

    taken over by Shell in 1986, who in turn sold their polypropylene interests to Union Carbide in 1995. By the end of the century only four small manufacturers of polypropylene products remained in Dundee, employing a few hundred people. Of the major old Dundee jute firms, only Low and Bonar sustained a presence in polypropylene,

     34 S. McDowell, P. Draper and T. McGuinness, ‘Protection, technological change and trade adjustment: the

    case of jute in Britain’ St Andrews Dept. of Economics Report series no 14 (St Andrews, 1976), pp.47-8. 35 M. Thigpen, P. Marongiu, and S. Lasker, ‘World demand prospects for jute, World Bank Staff

    Commodity Working papers, 16, 1982; FAO, Impact of synthetics on jute and allied fibres, Commodity

    Bulletin Series, (Rome, 1969); FAO, Impact. 36 McDowell et al, ‘Protection’, p.51. 37 M. Rose, Firms, Networks and Business Values: the British and American Cotton Industries since 1750

    (Cambridge, 2000), p.261; idem., ‘The politics of protection: an institutional approach to government industry relations in the British and United States cotton industries, 1945-73’ Business History, 3 (1997),

    p.143 points out that one motive for these takeovers was to create much larger firms able to bargain more effectively with government on the protection issue. 38 McDowall and Draper,Trade, pp.5, 8; C.Whatley, Onward from Osnaburgs: The Rise and Progress of

    a Scottish Textile Company, Don and Low of Forfar, 1792-1992 (Edinburgh, 1992), chapter 11. The most

    detailed discussion of diversification is in Howe, Dundee, chapter 3. 39 McDowall, et al, Protection, p.53. 40 J. Odling-Smee, ‘Introduction’ to McDowall and Draper, Trade, p. xvii. 41 McDowall and Draper, Trade, p.8; Howe Dundee, pp.54-5 suggests that in 1977 Dundee and district had

    77 per cent of UK polypropylene manufacturing. The last jute production in Dundee was in 1999, when the last looms were dismantled (by Indian workers) and transported to India. Dundee Courier 26 June 1999. 42 McDowall, et al ‘Protection’, pp.51-2. 43 Howe, Dundee, p.33 points out how different the cost structures of polypropylene are compared with jute- notably, much higher capital costs, very sensitive to activity levels and therefore tending to encourage concentration.

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    44 but with only one of their plants in the City, the rest in Belgium, Hungary and China.45Don and Low continue to produce polypropylene products at their factory in Forfar.

    Carter and Williams case study of jute in the early 1950s led them to the

    conclusion:

    ‘the greater security given by import controls and by government purchasing has freed managers from the immediate struggle for existence, and they have been able to give attention to the introduction of new equipment which had been developed in other industries. We would not put forward protection as a general method of improving efficiency of backward industries; we think that its success in the jute industry is related to the higher quality of existing management in that industry, and to strong additional 46stimulus from the shortage of labour.

    The argument here endorses Carter and Williams view that protection did give an impetus to an ‘efficiency drive’ in the industry. However, while the quality of management and labour shortage played their part, this paper stresses the ‘political

    economy’ of the particular protectionist deal done in jute. We see a tightly knit employers

    group able to fight a quite effective rearguard action against decline of jute, especially by deploying the employment argument in favour of protection, while simultaneously responding strongly to changing market and technological circumstances, those responses ultimately leading to moving out of the industry entirely.

     II

     How did the decline of jute affect the level of globalization of the Dundee economy? As stressed above, from the late nineteenth century, because of the predominance of jute, the fortunes of the Dundee economy became directly dependent upon events across the globe. The state of the jute harvest in Bengal directly affected the fortunes of the industry, especially as Dundee jute manufacturing ran on low margins, with the cost of raw materials crucial to profitability. Conversely, fluctuations in the overall volume of international trade directly impacted upon the demand side of the industry, which as a result was characterized by sharp cycles of activity, with frequent 47lay-offs and short-time working.

     Pre-1914 globalization brought both large fluctuations in the economic

     fortunes of Dundonians and also long-run adverse trends in competition, it also yielded huge benefits. The standard of life of most Dundonians was affected not only directly by the global forces of jute prices and the volume of world trade, but also, of course, by the price of consumption goods, above all, food. At this time a typical British and Dundonian 48working class household spent around 50 per cent of its outgoings on food. In Dundee

    an enquiry made in 1904 into local conditions found a modal household income of

     44 http://www.lowandbonar.com/lwb/divisions/

    http://www.themanufacturer.com/uk/detail.html?contents_id=5 46 Industry and Technical Progress, p.187. 47 B. Lenman, C. Lythe, E. Gauldie, Dundee and its Textile Industry 1850-1914, (Dundee, 1969). 48 M. Pember Reeves, Round About a Pound a Week (1979; originally published 1913) is a classic study of

    working class households in Lambeth. It emphasizes (chapter 7) the extraordinary importance of bread in contemporary diets.

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