Early 20th century capacity data

Lesley Cook in 1958 wrote an account of the early history of Blue Circle that has become the standard narrative, recycled by many other writers. Underlying the account is the rapid evolution of industry production capacity in the first two decades of the 20th century, during which two concerted attempts to achieve a monopoly failed, overtaken by the more rapid expansion of competitors. The atmosphere of failure that hung over Blue Circle was not lifted until the Board coup d'état in the mid-1920s swept away the industry's "old guard".

Cook's account of the period drew heavily upon Henry Osborne O'Hagan's personal reminiscences, and on the more objective account by Macrosty. The capacity data in the account were very limited, being essentially restricted to the list compiled in Davis's second book (still in copyright), which was not yet published when Macrosty wrote his account. Other data consist of a few anecdotal snippets. Much of the argument hinges upon the interpretation of these data.

Quantitative data begin with the 1900 APCM Prospectus (Note 1). This said:

It must be noted that, apart from the "certified" production data, the figures are all estimates of unspecified precision.

Of the firms listed in the prospectus, three dropped out immediately after the launch (Note 3). Macrosty said "they represented a production of 140,000 tons on the Thames and Medway, and 50,000 tons on the Tyne".

In 1907, there was the national "Census of Production", which gave cement output as 2,886,000 tons (Note 4). In 1909, the second edition of A. C. Davis's Portland Cement was published. It included an appendix in which the cement manufacturers were listed, with their "approximated weekly tonnage outputs in 1907". The total of the listed data was 67,070 tons - or 3,353,500 tons for a 50-week year. The census production was only 86% of this, and it is clear that these "output" data were actually capacity. However, the Census of Production also implies that total capacity was at least 69,000 t/week, so both sources are questionable. The Davis List is as follows:

Companytonssites
1Aberthaw Portland Cement Co., Swansea60 wks
2Artillery and Albion Cement Co., Ltd., Greenhithe1000 wks wks
3Ashby and Son, Ltd., East Greenwich400 wks
4Aspdin and Son, Ltd., Wakefield0 wks
5Associated Portland Cement Mfrs., (1900), Ltd., 72, Fenchurch Street, London, E.C.2400016 wks
6Atlas Cement Co., Neath, South Wales160 wks
7Barham Bros., Bridgwater50 wks
8Barnstone Blue Lias Lime Co., Barnstone, Nottingham200 wks
9Barron, F. C. and Co., Ltd., Upchurch, Sittingbourne600 wks
10Bell and Sons, Saffron Walden120 wks
11Board, John and Co., Bridgwater450 wks wks
12Bottisham Lode Mill Cement Co., Bottisham Lode, Cambs0 wks
13Boulton and Co., Much Wenlock80 wks
14Brading Cement Co., Brading, Isle of Wight0 wks
15Bridgwater Portland Cement Co., Bridgwater120 wks
16Brown, O. A., Ltd., Mitcheldean, Dean Forest, Glos.350 wks
17Burley, C., Ltd., Sittingbourne80 wks
18Caledonian Cement Co., Nr Edinburgh400 wks
19Cam Blue Lias Lime and Cement Co., Ltd., Shepreth120 wks
20Casebourne and Co., Ltd., West Hartlepool1200 wks wks
21Chance and Hunt, Ltd., Oldbury250 wks
22Clitheroe Portland Cement Co., Clitheroe20 wks
23Colchester, Edward C., Hauxton Works, Gt. Shelford, Cambs0 wks
24Coles, Shadbolt and Co., Harefield, Rickmansworth400 wks
25Crosfields, Ltd., Warrington300 wks
26Dartford Cement Co., Ltd., Dartford400 wks
27Denbighshire Portland Cement Co., Afonwen250 wks
28Dorset Lime and Cement Co., Ltd., Wareham90 wks
29Earle, G. and T., Ltd., Hull2000 wks
30East Anglian Cement Co., Ltd., Shepreth250 wks
31Ellis, John and Sons, Ltd., 1, St. Martins, Leicester120 wks
32Farrance and Boyton, Pylle, Somerset50 wks
33Forder, B. J. and Son, Ltd., 104, High Holborn, London, W.C.800 wks
34Formby's Cement Works Co., Ltd., Rochester500 wks
35Grimshaw, W. and Sons, North Hylton150 wks
36Greaves, Bull and Lakin, Harbury, Leamington600 wks
37Hall and Co. (Croydon) Ltd., Croydon, S.E.500 wks
38Hylton Cement Co., Ltd., South Hylton, Sunderland150 wks
39Isis Portland Cement Co., Clitheroe200 wks
40Johnson, I. C. and Co., Ltd., London2600 wks
41Johnson, I. C. and Co., Ltd., Gateshead wks
42Kaye and Co., Ltd., Rugby600 wks
43Lee, Wm. Son and Co., Ltd., Halling, Rochester1750 wks
44Lewes Portland Cement Co., Lewes, Sussex200 wks
45Lyme Regis Portland Cement Co., Dorset120 wks
46Martin, Earle and Co., Ltd., Strood, Rochester4000 wks
47Mason, George and Co., Ipswich200 wks
48Meldreth Cement Co., Ltd., Meldreth, Cambs50 wks
49Nelson, Charles and Co., Ltd., Stockton, Rugby700 wks
50Norman Portland Cement Co., Ltd., Cambridge1200 wks
51Oxford Portland Cement Co., Ltd., Oxford350 wks
52Pattrick and Co., Dovercourt0 wks
53Peters Bros., Wouldham, Rochester1850 wks
54Potter, Addison and Son, Willington Quay, Newcastle-on-Tyne450 wks
55Premier Portland Cement Co., Ltd., Irthlingborough450 wks
56Queenborough Cement Co., Ltd., Queenborough600 wks
57Rhee Valley Portland Cement Co., Shepreth120 wks
58Richardson, A. and W. T., Teynham, Sittingbourne0 wks
59Robson's Cement Co., Ltd., Stoneferry, Hull800 wks
60Romsey Town Cement and Lime Co., Ltd., Cambridge60 wks
61Roshers Crown Quay Co., Gillingham0 wks
62Rugby Portland Cement Co., Ltd., Rugby700 wks wks
63Saxon Portland Cement Co., Ltd., Cambridge2000 wks
64Scott, Walter, Ltd., Newcastle-on-Tyne200 wks
65Sharps Green (Kent) Cement Works, Gillingham200 wks
66Skelsey's Adamant Cement Co., Hull650 wks
67Smeed, Dean and Co., Ltd., Sittingbourne600 wks
68South Wales Portland Cement Co., Ltd., Lower Penarth900 wks
69Stephenson, R. and Son, Ltd., Burwell, Cambs250 wks
70Sussex Portland Cement Co., Ltd., Newhaven (and Shoreham)1800 wks wks
71Swan, J. Cameron and Partners, Ltd., Jarrow-on-Tyne300 wks
72Tolhurst and Sons, Northfleet, Gravesend600 wks
73Trechmann, Otto, Ltd., West Hartlepool900 wks
74Trechmann, Weekes and Co., Ltd., Halling, Rochester800 wks
75Tunnel Portland Cement Works Co., Ltd., Grays400 wks
76Union Cement Co., Newcastle-on-Tyne400 wks
77Wear Portland Cement Co., Sunderland100 wks
78West Kent Portland Cement Co., Ltd., Burham, Rochester1250 wks
79Wouldham Cement Co., Ltd., West Thurrock, Grays2500 wks

It will be noted that 79 companies are listed, although a number of these are allotted a zero capacity, and some (not all) of these had in fact ceased to exist. Some had more than one plant, and of the 35 plants included in APCM at its launch, 16 remained in commission, so the list implies a total of 99 plants (not all operational). The total of the tonnages (67,070) divides into three cohorts: APCM (24,000 - 35.8%), other capacity in London, Thamesside and the Medway (20,030 - 29.9%) and other capacity in the rest of the UK (23,040 - 34.3%).

Lesley Cook used these numbers to explain the position of APCM towards the end of its first decade. She says that APCM did not grow between 1900 and 1907. The calculation took the 1899 "certified" production of 1,404,569 tons , subtracted 190,000 tons (in fact, a capacity) for the three drop-out firms, leaving around 1,214,600 tons. This she compares with Davis's 1907 capacity of 24,000 tons per week. The stasis, she thought, was due to the fact that plant closures (19 out of 35) had cancelled the effects of expansions at the larger plants (Note 5). The total national production in 1899 she gets from the prospectus: Thames/Medway production was 1,700,000 tons and this was " upward of 80 per cent. of the entire output of Portland Cement in the United Kingdom", so the national total must have been 2,125,000 tons. She then concludes that APCM began with "over half" (in fact 57%) of the total, while in 1907 (using Davis's numbers) it had "only just over one-third" (in fact 36%). In the London area, she says (page 40), "outside companies had by 1907 a capacity of about 20,000 tons a week, which means that the APCM had only a little over half the capacity in the area in which they had hoped for a monopoly". The capacity of provincial competitors in 1907 (34%), she compares with "only about a fifth" in 1899.

She claimed that "not a great deal is known" about the expansion of competitor firms. A number of snap-shot accounts of the expansion of such firms is not balanced by any account of the parallel developments in APCM. The industry could be divided into five sectors:

The original purpose of the formation of APCM had been to create a monopoly that could control supply, set unchallenged high prices and thus generate high profits. It failed in this basic objective. At the same time, production technology advanced faster in the first decade of the 20th century than in any previous or subsequent decade. Kilns installed in 1900-1904 were already obsolete five years later. Firms had to continually invest in new capacity in order to keep up, but were reluctant to discard the old equipment that generated the cash for reinvestment. The result, in a sluggish pre-war market, was over-capacity and falling prices, so that few firms generated profits in excess of those needed for their investment programmes. APCM in particular made steady profits, but paid no dividends on ordinary shares. The result was a steady diminution of share prices, to as low as 6% of face value (Note 6).

In 1910, there still existed a belief that a monopoly could be achieved, and a takeover of the company's shares was orchestrated by the "69 Old Broad Street Group" controlled by John Wynford Philipps, J. S. Austen and M. B. Snell. This group's purchase of the company was based solely on their assessment of the under-valued share price. O'Hagan was of the entirely correct opinion that their interest was solely in "buying cheap and selling dear" without any regard to the details of the business, but nevertheless, money was made available for a second round of amalgamation.

The purchase of what became BPCM took place during 1910-1912. They must - surely - have realised that anything short of a complete industry buy-out would once again result in failure, but it was recognised almost from the outset that this would not be achieved. Once again, the significance of those firms left out was grossly underestimated. Again, Cook assesses the size of the new groupings in terms of Davis's 1907 data: APCM with 24,600 tons per week capacity (APCM had taken over Tolhurst), BPCM with 30,560, and the remaining 47 firms with 11,910. Thus, APCM and BPCM together held 82.2% of 1907 capacity. The obvious problem with this is that the 1907 data no longer represented the situation in 1911, although the amalgamators' intelligence may not have been much better.

It is interesting in retrospect to look at the actual data on capacity and output during this period. The cementkilns database contains data on clinker production and capacity. These differ slightly from cement data depending on the proportion of other components added to the cement, the only legitimate one being at this time gypsum (Note 7). Gypsum was only added at plants with rotary kilns, and at these, addition rates were less than 2% originally, rising to 2.5% by 1925, so the effect is small. The database data are in tonnes, and can be aggregated into the five sectors as above:

The annual data over a 30-year period are given in the appendix. The capacity and output varied as follows:

In capacity, APCM (A) continued to develop through the first decade, its relative size diminishing mainly because of the faster development of the firms (B, C and D) that subsequently made up BPCM. After the formation of BPCM in 1910-12, there was sluggish growth in the combine, while the independents (E) began at that time a very rapid growth which diluted the combine's share to around 60% - essentially its share for the next 70 years.

Actual production was characterised for APCM by a rapid growth in the period leading up to its formation, probably partly an artifact of the contract terms for the participants, followed by a period of tactical retrenchment. After 1912, the independents' expanded modern capacity achieved higher utilisation than the other sectors.

Installation of rotary kilns was the main disruptive change during the period. Rotary output was as follows:

The immediate impression is that uptake of rotary production was fairly uniform across the sectors, except that the independents continually lagged behind by two or three years. The "early adopters" incurred high costs associated with modifying or scrapping early inefficient designs, and any gains in production efficiency from the new technology were probably insufficient to offset these. While the early adopters ultimately gained a large step-change in efficiency, by 1912, the new efficient plant designs were available "off-the-peg" to the independents from suppliers who had a good understanding of plant operation, so they avoided the costly learning process. Outstanding examples of this were Aberthaw and West Thurrock.

It is interesting to re-examine the original assumptions discussed above in terms of the database information. Firstly, the claim that "upward of 80 per cent. of the entire output of Portland Cement in the United Kingdom is produced on the Thames and Medway". This underlay the proposition that control of the Thames/Medway industry was sufficient to control the whole national industry.

Not only was Thames/Medway capacity scarcely more than 70% of national capacity in 1899, but this was only a temporary peak associated with the amalgamation. In fact, during the previous three decades, the proportion varied little from 67%, and it only ever reached 80% briefly in the 1850s. It should be remembered that Portland cement originated in the North, and with William Aspdin's move to Gateshead, a large industry grew in the Tyne/Tees area, consistently averaging 10% of national capacity throughout the second half of the nineteenth century. The southern chauvinism that gave rise to a belief in the overwhelming importance of the Thames/Medway area was the first nail in the coffin of the APCM project. Promoters who rarely stirred from their City offices never challenged it. This silly attitude continued among Thamessiders throughout the twentieth century.

A second claim: "The undertakings which the Association acquires, and others with whom they will have working arrangements, are estimated to produce about 89 per cent of the total capacity of production of Cement on the Thames and Medway". This would appear to be sufficient to dominate the local market.

89% is an 8:1 dominance. 86% is only 6:1. The real data show that, even if all firms had joined as planned, the proportion achieved was significantly less than that promised, even at the time of the prospectus. All these missed targets conspired to ensure that APCM could not possibly have dealt the knock-out blow to the industry that was intended. Those firms that decided to stand on the sidelines probably understood this.

NOTES

Note 1. The 27 cement companies contracted to join the association were:

CompanyPlants
Arlesey Lime & Portland Cement Co. Ltd.Arlesey
Booth & Co. Ltd.Borstal Court
Cuxton
Borstal Manor Cement Co. Ltd.Borstal Manor
Burham Brick, Lime & Cement Co. Ltd.Burham
Charles Francis, Son & Co. Ltd.Vectis
Francis & Co. Ltd.Cliffe Quarry
Gibbs & Co. Ltd.Thames (W Thurrock)
Hilton Anderson Brooks & Co. Ltd.Grays
Faversham
Halling Manor
Upnor
Hollick & Co. Ltd.Hollick's
Imperial Portland Cement Co. Ltd.Imperial
I. C. Johnson & Co. Ltd.Gateshead
Johnsons (Greenhithe)
Knight Bevan & SturgeBevans
Lawrence & WimbleCrown (Northfleet)
London Portland Cement Co. Ltd.London Portland
McEvoy & HoltBritannia
McLean Levett & Co. Ltd.Beaver
Beehive
Elmley
New Rainham Portland Cement Co. Ltd.Rainham (Essex)
Phoenix Portland Cement Co. Ltd.Phoenix
Robins & Co. Ltd.Robins
Tower Portland Cement Co. Ltd.Tower
Trechmann, Weekes & Co. Ltd.Weekes
Weston & Co.Westons
West Kent Portland Cement Co. Ltd.Aylesford
West Kent
J. B. White & Co. Ltd.Bridge
Gillingham
Globe (Frindsbury)
Greenhithe
Quarry (Frindsbury)
Swanscombe
Wilders & CaryShield
William Tingey & SonCrown (Frindsbury)
Wouldham Cement Works Ltd.Wouldham Court

In addition, certain ancillary businesses in Rochester were acquired: P. J. Neate Engineering Works, the Phoenix Barge Co. Ltd. and the Rochester Chalk Co. Ltd.

Note 2. These three were Arlesey, Gateshead and Vectis.

Note 3. Sixteen kilns were being installed at Swanscombe: the license was then extended to install twelve at Bevans, six at Wouldham and two at Arlesey.

Note 4. The companies with whom "working arrangements" were drawn up were:

CompanyPlants
William Lee, Son & Co. Ltd.Lee's
Martin, Earle & Co. Ltd.Martin Earles
Queenborough Portland Cement Co. Ltd.Queenborough
Wouldham Cement Co. (1900) Ltd.Wouldham

All these had considered joining the association, but had regarded the offered price as too low, in all cases because of an exaggerated notion of the value of their business.

Note 5. The flotation took place Wednesday 18/7/1900 to Saturday 21/7/1900. The Boxer Rebellion was under way in China, and news made its way out slowly and fitfully. The Foreign Legations in Beijing had been under siege 21/6 to 17/7/1900, after which conflict was averted, but a news report circulated on 19/7/1900 that the Legations had been massacred. This is said to have caused a panic on the London Stock Exchange over the next few days until the true situation emerged, and the APCM flotation was consequently seriously under-subscribed. Whether the situation would have been different without this event is open to question.

Note 6. These companies were:

CompanyPlants
I. C. Johnson & Co. Ltd.Gateshead
Johnsons (Greenhithe)
Trechmann, Weekes & Co. Ltd.Weekes
West Kent Portland Cement Co. Ltd.Aylesford
West Kent

Note 7. The litigation seems to have been driven largely by O'Hagan, who was incandescent with rage about these defections, and particularly with Johnson's, who had been central to the planning of the venture, and had taken up two places on the Board. A different viewpoint is to be found in John Hudson Earle's diaries, in which he reports (22/10/1907) a conversation with Otto Kramer Trechmann - another "drop-out". "The Combine sued him for £15,000 & settled it for £500, after the law case had hung on for four years, without being brought to a point. They offered him £130,000 for his works, turning out 800 tons a week, & he was to have a certain portion in cash. When they came to it they wouldn’t give him the portion in cash, only a small pittance, & he declined to hand his works over." Because of the failure of the flotation, there was no cash available for the promised transactions, and O'Hagan had to go to all the parties and offer shares or promissory notes in place of the cash to which they were entitled. Thus the promoters were as much in breach of contract as the vendors, and it is somewhat surprising that only three said "no deal".

Note 8. The standard fass was 170 kg: the imperial standard barrel was 170.6 kg. So 29 million "casks" is 4.93 million tonnes.

Note 9. It had not yet emerged that "slag cement" was a paper tiger.

Note 10. Financial Times, 28th November, 1901.

Note 11. The concept of free lime was not understood at this time (at least in Britain). Static kiln clinker was "picked over" to remove grossly underburnt material before grinding, but it remained standard practice to store the cement in shallow bins in contact with air for some time - typically a month or more - to allow expansion to "die down". The arrival of the rotary kiln brought about a rapid re-assessment of this practice, and silos started to be used for cement storage from about 1906 onwards, while the usual level of "stock on hand" was dramatically reduced.

Note 12. One might look at these data on a per-tonne basis. Using estimated APCM output and correction for inflation to 2016 basis, we get:

Output, tonnesProfits £(2016)£/t% of turnover
1898-1900 average1,160,00059,600,00051.3825.2
1901888,00024,944,00028.0916.3
1902958,00027,972,00029.2018.4
19031,125,00031,330,00027.8518.9
19041,076,00033,436,00031.0721.9
19051,078,00033,250,00030.8423.1
19061,156,00033,343,00028.8424.7

These figures would appear to be pretty reasonable. The lack of dividends was mainly due to the aggressive re-investment programme, against a background of changing technology. The conversion from static to rotary kilns, and the replacement of primitive grinding equipment with up-to-date mills occurred during 1900-1905, by which time technology had advanced enormously, and during 1905-1910, most of the new equipment was substantially modified or replaced. Economists at the time - and even fifty years later - had little conception of the frenzy of activity that was needed to stay ahead during this period.

Note 13. APCM paid its first dividend (5%) on ordinary shares in 1913.

Note 14. Financial Times, 25th October, 1902.

Note 15. The vast and unwieldy Board was one of the most criticised features of the early company. Its size was not due to any complexity of the work - it was merely to massage the egos of the vendors, most of whom were of low calibre. The preponderance of "old hands" was a considerable drag on the company's ability to innovate, during the decade when technological change was faster than in any before or since.

Note 16. Ibid.

Note 17. Financial Times, 24th September, 1903.

Note 18. Joseph Robinson & Co. were not in the Portland cement business - they made only gypsum products and were not at all comparable with the others.