MANAGEMENT STRATEGY AND THE REFORM OF COLLECTIVE BARGAINING: CASES FROM THE BRITISH STEEL CORPORATION
| DOI | http://doi.org/10.1111/j.1467-8543.1984.tb00158.x |
| Published date | 01 July 1984 |
| Date | 01 July 1984 |
| Author | James Kelly |
MANAGEMENT STRATEGY AND THE REFORM OF
COLLECTIVE BARGAINING:
CASES FROM THE BRITISH STEEL CORPORATION
JAMES
KELLY*
THE
article examines the role of management strategy in the reform
of
collective
bargaining arrangements at two steel establishments, one located at Corby in
Northamptonshire, the other at Ravenscraig in Lanarkshire. A management initiative
in this area occurred in the steel industry following the Donovan Commission Report
(1968)
and the industrial relations legislation
of
the
1970s,
both
of
which suggested the
reform of industrial relations as a means
of
re-establishing the competitiveness
of
British industry. The British Steel Corporation’s (B.S.C.) strategy, to reform its
industrial relations procedures and behaviour, reflected this objective and the two case
studies examined in this article investigate the strategic response
of
both the local
Corby and Ravenscraig managements to changes in the business and personnel
policies
of
the Corporation nationally.
To
this end the paper firstly identifies the external constraints and influence upon
the plant managements
of
Corby and Ravenscraig. In particular, reference
is
made to
the nationalisation
of
the industry, the B.S.C. corporate plan and its industrial
relations policy developments. Secondly the paper investigates the internal constraints
at Corby and Ravenscraig arising from management structures, multi-unionism,
fragmented bargaining and wage inequities. Having identified the problems the next
two sections assess the impact of local management strategies aimed at solving these
external and internal problems. The penultimate section evaluates their effectiveness,
whilst the final section discusses the applicability
of
the conclusions to be drawn from
the case studies to industrial relations generally.
EXTERNAL
CONSTRAINTS
ON
BOTH
ESTABLISHMENTS
Under the Iron and Steel Act
1967
the fourteen major bulk steel producing
companies were nationalised. There were a number
of
external factors adversely
affecting the industry’s performance but in particular changes in the world product
market, advances in steel technology and government intervention to limit the rate
of
rise in prices were crucial. During the early
1960s
world steel capacity had increased
markedly, especially that
of
Japan, the communist block and developing countries
particularly in S.E. Asia and Brazil, and resulted in world supply outstripping
demand. In addition Rowley
(1971)
shows that the British steel industry’s share
of
a
diminishing market was also falling. Ravenscraig’s production
of
strip steel in
particular had suffered badly from this surplus capacity. Built as a new complex in
1964,
its penetration
of
the
UK
market only improved from
11
per cent to
17
per cent
in its first four years
of
operation, eventually improving to a peak
of
22
per cent in the
early
1970s.
Although product market conditions were to improve generally in the
period
1972-74,
a
severe and deep recession hit the industry world-wide in
1’975-76,
and except for an upturn in
1’976-77,
continues to the present day.
For
instance
between
1976-77
and
1980-81
B.S.C.’s total steel output fell from
20
million tonnes to
*
Lecturer in Industrial Relations, University
of
Strathclyde.
135
136
BRITISH JOURNAL
OF
INDUSTRIAL RELATIONS
12
million tonnes with the numbers employed falling from approximately
210,000
to
136,000.
During the
1950s
and
1960s
advances in technology (e.g. steel smelting by the basic
oxygen method, and continuous casting of slabs) were introduced relatively more
slowly to the British industry than by its international competitors and resulted
in
the
cost structure of the industry being above average for international standards. These
technological advances were designed to allow economies of scale to be derived from
larger size plants, including integration of production processes, and a lowering
of
unit
costs of production. Industrial relations problems such as
the
employers’ fear
of
disruptive strikes, and restrictive job practices, no doubt contributed to the slow
adoption of the new technology but the main explanation lies elsewhere. Pryke
(1973)
has argued the fall off
in
investment during the
1960s
had to do with the enormous
boom between
1960
and
1962
with an average rate per annum
of
El71
million compared
to
f56
million between
1963
and
1966.
An alternative explanation emphasises
Government anti-inflation Prices and Incomes policies which hindered the industry’s
investment programme. Prior to nationalisation the Iron and Steel Board had
regulated the industry’s price levels, and by the
mid-1960s
onwards the government
sought to restrain company price increases through the National Board for Prices and
Incomes. The inability to increase prices sufficiently resulted in the industry being
unable to finance an adequate investment programme to improve its competitiveness.
Indeed the Select Committee on Nationalised Industries on B.S C.
(1973)
estimated
that government interventions in five out
of
six years had cost the Corporation
between
El50
and
f200
m
in
lost revenue. In addition some have argued that the
investment level would have been higher had it not been for the political uncertainty
surrounding the industry. It had been nationalised in
1950
and de-nationalised by a
Tory government in
1951.
The Labour Party however pledged itself to re-nationalise
the industry on returning to office. This ‘political footballing’ was thought to have a
destabilising effect upon the willingness
of
private owners to re-equip their mills with the
most up-to-date machinery.
Given these external constraints the steel industry required to re-establish its
domestic and international competitiveness by reducing costs per unit
of
output. The
achievement of this objective was seen as requiring a major rationalisation
programme. The Labour government of
1964-70
felt that the reconstruction needed
could only be achieved by a nationalised Corporation. In
1967
Parliament enacted the
Iron and Steel Act which brought into being the British Steel Corporation. Public
ownership concentrated management authority, power and control at Corporate
headquarters which was also aimed at overcoming the resistance
of
the old company
directors in the regions to the new Corporation. This was ultimately achieved in
1970
when the corporate headquarters reorganised the business from its original regional
structure
in
1967
into product divisions. The
1970
corporate structure included a high
status personnel director charged with the responsibility
of
formulating an industrial
relations policy and of integrating it with the Corporation’s business plan to improve
competitiveness. The influence
of
the reformed corporate structure was reflected in
the change in the T.U.C.’s Steel Committee, from being-in
1967
a loose consultative
body to becoming, in the early
1970s,
a cohesive negotiating institution.’ The degree of
centralisation
in
trade union organisation was carried further in
1981
when the National
Craftsmen’s Coordinating Committee (N.C.C.C.), Transport and General Workers
Union (T.G.
W.U.)
and the General, Municipal, Boilermakers and Allied Trades
Union (G.M.B.A.T.U.) formed the National Joint Council to negotiate with the
Corporation on pay.
Initially B.S.C.’s corporate plan for recovery was to develop certain brown field
sites such as Ancher at Scunthorpe, but this was revised in the Ten Year Development
Strategy of
1973.
Both sought to concentrate production (and new investment) into
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