THEORIES OF COMPETITION AND THE BRITISH POTTERY INDUSTRY*
| Author | R. L. Smyth |
| Published date | 01 February 1971 |
| Date | 01 February 1971 |
| DOI | http://doi.org/10.1111/j.1467-9485.1971.tb00975.x |
THEORIES
OF
COMPETITION AND
THE
BRITISH POTTERY INDUSTRY
*
In the 1760’s Josiah Wedgwood produced
‘
a species of earthenware for the
table, quite new in appearance, covered
with
a
rich and brilliant glaze,
bearing sudden alterations of heat and cold, manufactured with ease and
expedition, and consequently cheap.’ The earthenware which is produced in
large volume by the British Pottery Industry today would be recognised by
Josiah
as
based
on
his
Queen’s
Ware,
and he would appreciate that
mechanisation has speeded-up rather than transformed the traditional hand-
skills of the potter. Bone china which
is
steadily replacing earthenware for
tableware was developed by Josiah Spode
in
the early years of the 19th
century.
In
1968 Britain’s exports of bone china were
€8,500,000.
However,
the outstanding thing about the BritishPottery Industry is not its tradition
but its recent transition from a craft-based to a science-based industry.
Scientific developments have not been restricted to materials preparation,
clay forming, glazing, decorating and
firing,
they have also been introduced
into accounting. product development and marketing.
The aim of this article will be to demonstrate that two relatively new
theories
of
the firm admirably illuminate the economic forces which have
changed the structure of the industry
in
the past
25
years. Firstly, there
is
Downie’s theory (1958) of the competitive process which helps to explain
why oligopoly has developed in each of the industry’s four sectors; and
secondly, there is the study of the
growth
of the
firm
by Penrose (1959) which
provides insight into management decisions and pressures inside firms which
promote growth. While Downie stresses market forces, Professor Penrose. in
contrast, stresses administration, and her analysis is, in consequence, some-
what less impersonal.
Also
Professor Penrose provides a deeper understanding
of take-overs and she explains why some small
firms
are likely to persist.
They do not appear to be rival theories
so
much as theories which supple-
ment each other. This is not
an
attempt to test the theories against
industrial performance. Rather it attempts to show how elements of the
theories and the predictions accord with what is happening
in
the pottery
industry.
Part(11 of this article
is
devoted to Downie’s theory, as applied to the
Pottery Industry, and Part
I11
to Penrose’s theory. Part
I
provides
a
brief
description of the industry and contains remarks
on
the nature of clay and
*
This article is based on
a
research project being undertaken in the Department
of
Economics, University of Keele into ‘Economic
Aspects
of the Non-Tableware
Sectors
of
the British Pottery Industry
’
which is being financed by the Social Science
Research Council.
I
am grateful
to
Professor
L.
Fishman
for
reading successive drafts
and
for
suggesting improvements.
83
84
R.
L.
SMYTH
aspects of clay technology which are needed for an understanding of the
changes that have taken place. Part
IV
is &ncerned
with pricing in the
domestic ware sector
of
the industry. There is also
a
conclusion.
1963
I
1970
THE
CHANGING
S~RUC~URE
OF
THE
POTTERY
INDUSTRY
The industry
is
organised in four distinct sections: Domestic
and
Ornamental Ware (henceforth referred to
as
domestic ware), Tiles, Sanitary
Ware and Electrical Porcelain. (Industrial Ceremics
is
a
new small sector
which is growing rapidly.) The main substitute materials for pottery are
toughened glass, plastics and waxed paper (for domestic ware)
and
plastics,
wallpaper and paint (for tiles). The production
by
pottery manufacturers
of substitutes for ceramics
is
negligible. Table
I
shows the value
of
gross
output of each sector in 1963, also employment in 1963 and 1970, and the
dependence
on
export markets
in
1970. The percentages show that domestic
ware is by far the largest single sector. The value of sales in 1969 was
€95,580,000. It
is
a
small industry (it accounts for about
0-25
per cent.
of
the United Kingdom's Gross National Product) which would be considerably
smaller if it were not for its export achievements (Macdiarmid and Smyth,
%
46.8
223
13.8
13.4
I
3.5
____-
1969).
PO00
35,648
8,651
5,418
7,061
1,269
Table
I
THE
MAIN
SECTORS
OF
THE
INDUSTRY
%
61.4
149
9.3
12.2
2.2
Domestic ware
Tiles
Sanitary ware
Electrical ware
Other
f'm
34,800
8,100
5.600
4,000
1,100
I -I
Employment
I
output
f'm
35,78 1
17,164
10,588
10,239
1,269
%
64.9
15.1
10.4
7.5
21
Exports
as
%
of
output
(approx.)
%
48
25
20
20
I
-
35
I
76,336
I
100.0
1
58,047
I
1000
1
53,600
I
100.0
I
Sources:
1963
Census
of
Production.
1970
Pay
and Other Terms and Conditions
of
Employment
of
Workers in
the Pottery Industry.
National Board
for
Prices and Incomes, Report
No.
149,
Cmnd.
411,
July,
1970.
Note:
The
1963
figures cannot be compared directly
with
the 1970
figures,
in
1963
firms employing less than
25
persons
were excluded.
In
1938 there were
2,000
coal-fired intermittent
kilns
in the industry
now there may be five or
six
remaining. They were replaced by some
400
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