Scottish Steel- a lesson from history?

Scotland’s steel industry is facing a crisis. As this brief history shows, the industry has experienced other crises in the past. The most acute occurred in the 1920s and 30s. In response, a bold plan to concentrate steel production near Erskine Ferry on the Clyde was proposed in 1929 but not adopted. The plan was proposed again in 1945 but rejected in favour of developing what became the Ravenscraig plant which opened in 1963 and closed in 1992.

Will independence lead to better decision making about the future of major Scottish industries? Possibly, but as the history of Scotland’s steel industry shows, making the right decisions is immensely difficult. And divisive. I conclude that it would be better to start thinking and discussing the difficult decisions now- even at the risk of division- rather than waiting until after independence.

1. The Iron Industry
Scotland’s steel industry has its origins 350 million years ago when layers of iron bearing rock were intermingled with layers of coal in what was to become west central Scotland. Although the first use of iron produced using charcoal occurred 3200 years ago, coal in the form of coke has only been used to produce iron for 300 years.

In 1759, first use of this new technique in Scotland was pioneered by the Carron iron works. However as late as 1825, annual Scottish production of iron had only risen to 25 000 tons. In contrast, South Wales was producing 150 000 tons of iron annually by the 1820s.

The problem was that most Scottish coal had a low carbon content. This meant that to produce one ton of iron, 8 tons of coal had to be turned into coke, twice as much as was needed in Wales where the coal had a higher carbon content. As a result Scottish iron was more expensive than Welsh iron and only the high cost of transporting Welsh iron to Scotland kept the local iron industry going.

This situation was dramatically reversed after 1828 when James Neilson from Glasgow discovered that pre-heating the air used in iron smelting furnaces improved their efficiency. Now only 3 or 4 tons of coal was needed to produce one ton of iron. It was soon found that raw Scottish coal and blackband ironstone (which was a mixture of iron ore and coal) could be used directly in the blast furnaces.

This cut the cost of Scottish iron so it became competitive with Welsh iron and led to the rapid growth of the iron industry in north Lanarkshire and Ayrshire where coal and iron were found in close proximity.

However, before the iron could be used to build bridges, make rails for railways or plates for shipbuilding it had to be converted into wrought or malleable iron. This involved re-melting the iron and working it in ‘puddling’ furnaces. Here in a physically exhausting and high skilled process molten iron was stirred with iron rods. The end product was iron which could be rolled into rails, beams and plates.

2. The growth of the steel industry
In Scotland, the companies which produced the wrought iron were separate businesses from the ‘raw’ iron producing companies. In 1857 one of the wrought iron making companies tried to mass produce steel using the Bessemer process. This failed due to the high phosphor content of Scottish pig iron. Ten years later the rival open-hearth method of producing steel was perfected and this was the process adopted in Scotland.

Steel was cheaper to produce than wrought iron. Scottish shipbuilders soon adopted the new material. Between 1879 and 1890 the tonnage of steel ships launched in the Clyde grew from 18 000 to 326 000 tons. Scottish steel production grew from 1199 tons in 1873 to steel 585 00 tons in 1890. By 1913, Scotland was the world’s leading shipbuilder, launching 23% ( 757 000 tons) of the world’s ships.

But as Scotland’s steel industry expanded, the once pioneering Scottish iron industry began to decline. Scottish reserves of ironstone were becoming exhausted by the 1870s and had to be made up by importing iron ore from other parts of the UK and Spain. Producers of pig iron did not enter the steel-making industry. Instead they expanded their coal-mining activities. The Dalmellington Iron Company in Ayrshire started producing iron in 1847 but its furnaces were blown out in 1921. However the coal mines which had fed the furnaces survived to be nationalised in 1947 and continued in production until 1978.

3. The Brassert Plan
After the First World War there was a brief boom in shipbuilding, but by the mid 1920s this petered out. This led to a crisis for Scotland’s steel makers. Although their plant was not quite as archaic as the iron makers, it was still embedded in iron embrace of Scotland’s Victorian infrastructure. To survive they would have to modernise and rationalise. In 1929, a bold plan to create a Scottish steel industry fit for the twentieth century was proposed by USA based consultants H. Brassert.

The Brassert plan involved integrating and concentrating Scotland’s iron and steel production at new, coastal, site on the lower Clyde near Erskine Ferry. Here ships could bring in iron ore and coking coal to produce first cheaper iron then cheaper steel. The cheaper steel would then be sent up the Clyde to the shipbuilding yards and Glasgow’s locomotive and other steel using industries.

It was a very bold plan. Too bold as it turned out. It would have meant drawing a line under 100 years of history which had made north Lanarkshire the centre of Scotland’s iron and steel industries. As well as constructing new industrial infrastructure, a new town would have been needed to house the workers and their families, leaving the towns and villages of north Lanarkshire as ghost towns.

One Scottish company did adopt a bold strategy for survival, also based on advice from H. Brassert. Stewart and Lloyds was formed in 1903 by the merger of a Scottish company (Stewarts) and an English company (Lloyds). Lloyds had been using iron ore from around Corby in Northamptonshire to produce iron since 1880. Unlike Scotland, significant quantities of iron ore were still available in this part of England. This factor led Stewart and Lloyds to move their steel production from Scotland to Corby in 1933. In 1931 Corby had a population of 1500. By 1939 it was 12 000, including 4000 Scots who had moved with Stewart and Lloyds to Corby.

The strongest opposition to Brassert’s Erskine Ferry proposal came from Colvilles. Colvilles favoured an alternative strategy based on rationalising existing production by taking over rival steel making companies. By the mid-1930s Colvilles had control of 80% of Scottish steel making.

Colvilles original base was the Dalzell Steel and Iron Works which was opened in 1872. In the 1930s Colvilles acquired the Clydebridge and Clyde Iron works. The Dalzell and Clydebridge works, now owned by the Tata corporation, are [October 2015] to be ‘mothballed’ by Tata with 225 jobs lost at Dalzell and 45 at Clydebridge.

A key feature of the 1929 Brassert plan was to physically integrate iron and steel production. Molten iron from blast furnaces would have been by directly converted into steel, rather than the iron having to be re-melted prior to conversion into steel. While rejecting the main parts of the Brassert plan, Colvilles did adopt this part of the plan. They built a railway bridge over the Clyde to carry molten iron from blast furnaces on the Clyde Iron site to the Clydebridge steel works. This project was completed in 1940 at a cost of £2.5 million compared to the £5.5 million estimated cost of the Brassert plan.

As had happened in the First World War, demand for steel grew rapidly during the Second World War. However, there was no time to develop new facilities. Instead existing steel works were used to maximise production.

4. Ravenscraig
With the Second World War drawing to a close, the prospect of a post-war revival of Scottish shipbuilding, leading to an increase in demand for steel brought the Brassert plan back to life in 1945. But just they had done in 1929, Colvilles argued strongly against this, proposing to upgrade and expand their existing plants instead.

Then in 1948, with the prospect of nationalisation looming, Colvilles came up with a bolder idea- to create a brand new steel making facility in the Motherwell area. This became the Ravenscraig works.

The Labour government’s iron and steel nationalisation act was passed in 1949, but it was not due to come into effect until February 1951. In October 1951 the Conservatives won a general election and immediately began preparing to return the iron and steel industry to private ownership. De-nationalisation took effect in 1955. Parts of the steel industry were later re-nationalised by Labour in 1967 to create British Steel.

It was during the intervening period of Conservative government that the Ravenscraig steel works was built by Colvilles. Construction on the new site began in 1954, but even as the new plant was taking shape, in 1956 a proposal was put to Covilles by the British Iron and Steel Federation. This was to include a strip mill as part of the Ravenscraig development.

The strip mill would produce thin sheets of steel, suitable for making cars and for light engineering. Colvilles rejected the idea, arguing that there was not enough coking coal available in Scotland to make the additional steel required. However the idea did not go away.

The argument for the strip mill was political. Back in the 1950s, even Conservative governments were in favour of economic developments which would reduce unemployment. Unemployment in Scotland was twice the UK average. Two British vehicle manufacturers- Rootes and BMC (who made Austin and Morris cars) wanted to expand production in the English Midlands, but the Conservative government were keen to see them set up factories in Scotland as a way to reduce unemployment.

In May 1958 Iain MacLeod MP, Minister for Labour, argued that ‘Scotland was without facilities for producing high class sheet and strip steel and, so long as this lack of facility existed, they could not expect motor car industries to set up in Scotland’. Furthermore, MacLeod argued that even if the strip mill made a loss of £4 or £5 million a year for many years to come, this would be ‘much less than the public assistance and unemployment benefit paid to men out of work in Scotland without such a development’ and that ‘the balance would be favourable to the general national economy’.

Through 1958, the Conservative government put pressure on Colvilles to accept a strip mill for Ravenscraig, at one point threatening to authorise the Iron and Steel Board to build a new works in Scotland with government money. Finally, despite their reservations and with the offer of £50 million loan from the government, Colvilles agreed. On 18 November 1958, Conservative prime minister Harold MacMillan announced to the House of Commons that not one but two strip mills would be built, one in South Wales and one at Ravenscraig.

The main part of the Ravenscraig site was completed in 1962 and the strip mill in 1963. In the same year, Rootes opened their Linwood car factory which produced the Hillman Imp. The British Motor Corporation’s truck and tractor making factory at Bathgate had already opened in 1961.

Opened under one Conservative government, they were all closed under another. Linwood closed in 1981, Bathgate in 1986 and Ravenscraig in 1992, although by then John Major had taken over as prime minister from Margaret Thatcher. These and other closures have been called Scotland’s industrial clearances.

5. The industrial clearances
The connection between Scotland’s industrial clearances and Margaret Thatcher’s economic policies became a central theme of the Labour party’s approach to Scottish politics. Labour argued that only strong support for Labour at Westminster could defend Scotland from a destructive Conservative party. However Labour’s actual performance in office 1997-2010 undermined this rhetoric allowing the SNP to emerge as the party most voters trusted to defend Scotland’s economy from the Tories.

Although the 2014 independence vote was lost, SNP success in the 2015 general election and the hope for a similar result in the 2016 Scottish elections is keeping the possibility of independence alive. An independent Scotland would, for example, be able to save the remnants of the Scottish steel industry and even expand it.

Significantly, the Scottish National Party itself was formed in 1934 from the merger of the left of centre Scottish party (founded in 1928) and the right of centre National party ( founded in 1932), Modern Scottish nationalism therefore has its roots in the period of economic crisis when Scotland’s Victorian industrial infrastructure was facing collapse.

If Scotland had become independent at the same time as Ireland could it have managed the transition from Victorian to twentieth century industries better than the UK did?

Possibly, but the structural problems would have been ferociously difficult to overcome. To follow the Brassert plan and build a modern integrated coastal plant producing steel for shipbuilding, steam locomotive building and other heavy industries would have risked turning Motherwell, Coatbridge and Airdrie into ghost-towns. At the same time this would have locked Scotland into export based industries during a world-wide depression. New industries, like car-making and light engineering, were growing in England but Scotland lacked a large enough domestic market to develop these sectors.

In the 1920s and 1930s, an independent Scotland able to make its own economic decisions was just a dream. Today it is almost a reality. However, the challenges Scotland faces in the twenty-first century are very different from those of the last century. Industries which once employed hundreds of thousands of Scots like coal-mining, ship-building and steel-making are all but extinct. Even the industries which were supposed to provide alternative employment, like car-making at Linwood, have come and gone.

Researching the story of steel-making in Scotland has been a very sobering experience. With the benefit of hindsight and thinking about the relatively short life of the Ravenscraig plant, the failure to build an integrated steel works at Erskine Ferry in the 1930s seems like a lost opportunity. On the other hand, Stewart and Lloyds Corby steel works, opened in 1934, was closed by British Steel in 1980, 12 years before Ravenscraig. An Erskine Ferry steel works could well have suffered a similar fate during the Thatcher years or be facing closure now like the Redcar and Scunthorpe steel works in England.

Furthermore, while Peter Payne (Colvilles and the Scottish Steel Industry) and Steven Tolliday (Business, Banking and Politics-British Steel 1919-1939) provide an immense accumulation of detail on the agreements and disagreements between the businessmen, bankers and politicians as they decided the future of steelmaking in Scotland, the voices of the workers, trades unions and communities affected are absent. Even nationalisation did little to change this top-down approach to decision making.

The current threat to Scotland’s surviving steel works is a consequence of globalisation. The Chinese, having built up their steel industry as the global economy was growing are now trying to keep it going by cutting the price of their steel. This is similar to the problems of the 1930s. And like in the 1930s, the UK government’s belief in ‘free trade’ makes it reluctant to intervene to support the steel industry. Then as now, UK governments were more influenced by the global financial interests of the City of London than the regional and national interests of manufacturing industries.

With independence, Scotland will be able to develop economic strategies free from the dominance of London’s financial markets. However this raises the question: what would the economic strategies of an independent Scotland be? As James Foley and Pete Ramand pointed out in their book ‘Yes-The Radical Case for Scottish Independence (Pluto Press, 2014), a Scotland which follows neoliberal economic policies will not be independent of the City of London, since it is a key global centre of neoliberalism.

To be effectively independent, to be able to pursue economic policies which best serve the interests of Scotland’s people, an independent Scotland will have to break with current economic orthodoxy. But to do so will be politically very difficult and challenging.

The outline of these difficulties can already be seen in the tension between supporters of the SNP and Scottish Green party and RISE/Scottish Socialist party supporters ahead of next year’s Scottish parliament elections. The SNP supporters argue that it is essential to vote SNP for the constituency and the regional list votes or risk splitting the independence vote. People who take this position often go on to argue that discussion and debate about what might happen after independence is a distraction. Independence first is their priority.

Scottish Green party and RISE/ Scottish Socialist party supporters reject this approach. Firstly, they argue, even if the SNP win an overwhelming majority in the next Scottish parliament, the SNP are not going to commit to a second independence referendum until they are sure it can be won. In the interim, politics as normal will continue. Secondly, independence is not an end in itself. Rather it is a necessary but not sufficient step towards building a new and different Scotland.

This means we have to start thinking, planning and working towards that future Scotland now. By doing this, the transition from a Scotland which is embedded in the UK to one which is not will be smoother and easier. Waiting until after independence before thinking about economic, environmental and social policies is a recipe for confusion and delay- the last thing a newly independent country needs.

Thinking ahead also means that tensions and conflicts between different possible Scotlands can be, if not resolved, at least recognised and anticipated. One way to achieve this will be to ensure that the next Scottish parliament contains a diversity of pro-independence parties. This would overcome the sterility of the current Unionist opposition parties and allow the Scottish parliament to start reflecting the politics of an independent Scotland.

No doubt this will lead to fierce debates and divisions within the Scottish parliament. But it is only through such democratic debates taking place in the public sphere that a new Scotland will be forged within the shell of the old.

British Industry between the Wars -Instability and industrial development 1919-1939, editors Neil Buxton and Derek Aldcroft (London, 1979)
The Rise and Fall of Scottish Industry 1707-1939 R H Campbell (Edinburgh, 1980)
The Coltness Iron Company- A study in private enterprise, J L Carvell (Edinburgh, 1948)
The Uppas Tree- Glasgow 1875-190, R G Check land (Glasgow, 1981)
Capital and Class in Scotland, editor Tony Dickson (Edinburgh, 1982)
Yes-The Radical Case for Scottish Independence, James Foley and Pete Ramand (London, 2014)
Scotland and the United Kingdom- The economy and the union in the twentieth century, C H Lee (Manchester, 1995)
Colvilles and the Scottish Steel Industry, Peter Payne (Oxford, 1979)
The Development of the West of Scotland 1750-1960, Anthony Slaven (London, 1975)
The Economic Development of Modern Scotland 1950-1980, editor Richard Saville (Edinburgh, 1985)
Business, Banking and Politics- the case of British Steel 1919-1939, Steven Tolliday (Harvard, 1987)