FEBRUARY 4, 1965
AN ADDRESS BY
The Viscount Knollys, G.C.M.G., M.B.E., D.F.C. CHAIRMAN,
ENGLISH STEEL CORPORATION LIMITED
The Second Vice-President, Mr. R. Bredin Stapells
Britain and Canada have many things in common. In this month of February, 1965, the phenomenon most common is our governments balancing precariously and nearing economic disaster.
In Canada, we have the diagnosis of an ill-trained and increasingly unemployed labour force.
In Britain, there is a fully employed but underproductive labour force.
We solve all our problems by appointing commissions, and hence our economic problems have just been solved by the publication of the first report of the Deutch Committee.
Sterner stuff was for Britain. The first prescription was the shock of competition through entering the Common Market proposed by the late Conservative government. The new Labourite doctors now prescribe the direct medicine of nationalization-with the steel industry as the patient on the table for the second time.
How can industrial Britain deal with the modern world? Lord Knollys, trained as a chartered accountant, found his first career as a banker with Barclays Bank. His second career was general insurance with the Employers Liability group; his third took him 200,000 air miles in four years as chief of B.O.A.C. and earned him the title of the "Flying Peer"; in his fourth career he directed that vast industrial complex-Vickers Ltd.; and finally he is now Chairman of English Steel Corporation Ltd.
As Governor of Bermuda during part of the last war, he was exposed to the problems of government.
From this diverse experience, our Guest will diagnose for us the position of Britain today.
With great pleasure, I present to you Lord Knollys, Knight Grand Cross of The Most Distinguished Order of St. Michael and St. George, M.B.E., D.F.C.
I appreciate very much your having invited me again to meet you at one of your luncheons, for I remember well what a pleasant occasion it was for me 7 years ago, on a similar occasion. I have been coming to Canada every year now, since I first came over for my Insurance Company over 30 years ago, and I am so pleased that whatever businesses I have been connected with they have always, luckily for me, had a Canadian interest. For example, I have recently become a Director of International Nickel, which has I think quite a well known connection with Ontario.
I am particularly pleased to see here today my old friend Mr. Brockington, but his presence really makes my task of speaking to you even more difficult. His renown as
a speaker and broadcaster of almost Churchillian standards makes him an uncomfortable critic to be sitting alongside one. We in England well remember some of the outstanding and moving broadcasts he gave during the war.
I think you might like to hear something today about the economic situation in my country and its effect on our position in the world-this new, complicated, difficult, but exciting world, which we have to face and come to terms with. In fact my theme is really-How Britain has been modernizing and is equipping itself to be, in the modem phrase, "with it" and to maintain our position not only to be effective industrially, and so survive, but to have a proper and real influence in world affairs.
Economics are now more than ever closely bound up with politics, but I want to be as objective as possible and I speak as a rather varied industrialist, and not at all as a politician.
Let me say at once that I know Canada well enough over the years to realize that you are anxious about our situation and where we are heading and may even have doubts as to our ability to deal with our long term problems. That is not perhaps surprising, for you must have been hearing the whispers-often rather stage whispers, particularly from across your Southern border-that we won't face modern facts of modern life, that we cling desperately to the past, that we lack the energy and initiative needed for these times. And that because of all this we do not count in the world's councils as we used to. We ourselves contribute to these overseas views through our traditional habit, which is now carried too far, of running ourselves down. I believe however that you members of the Empire Club of Canada do not accept these views-but it is often a comfort to be reassured with facts.
What is needed by any great country to hold its place in the world today and to have a proper influence, in order to make a worth while contribution towards solving the problems of the world, as well as domestic ones?
First, a viable economy, that is, to earn enough to live and to maintain acceptable living standards, and through that to prove to the world that one has the necessary initia tive, inventiveness, skills and drive needed to be competitive in a highly competitive world.
Secondly, for World Influence a nation must show that generally and over long enough periods that it has traditions of political stability, matured judgment, and moral standards, which give others confidence, and, for example, make one worthy of being consulted when an experienced opinion is required.
How does Britain measure up to these yardsticks?
First of all, we are a country of curious contrasts and contradictions. We have now the greatest prosperity amongst individuals we have ever had. We have the lowest possible rate of unemployment-less than 1 % in many areas. Though we have an official 42 hour or even 40 hour working week the average hours now actually being worked are 46. We have a great surge of modernization in industry and in education. But at the same time we have a recurrent balance of payments problems, a shortage of labour, and are consuming so much at home that we are not exporting enough to pay for these imports. And perhaps our greatest difficulty is to convince people generally, in apparently prosperous times, how serious the situation is, and how urgent it is to take the drastic measures needed to remedy it, not least because people know we have had six crises of this kind in the last 17 years and that we have so far survived them all. For such measures can only be successful if there exists understanding and co-operation amongst all individuals in every walk of life throughout the country.
The fundamental problem of our economy is how to be fully competitive in a world where it is harder than ever before for us to sell the goods necessary to maintain our position in world trade and our standards of living. Our dependence on exports is unique. We solved this in the past by being a leader in industrial techniques and know-how. Our relative position is changed now that other countries have caught us up. What was accepted by customers before is now not enough. But I believe that after some rude shocks and some essential self-analysis we are well on our way to deliver the goods-realizing that these are not those we think are the best, but what the customer demands.
To attain this competitiveness and to maintain it, there must be in every one of our industries, and above all in those which export:
1. Modernization of machines, methods and of men combined with effective human relations in industry, without which no modernized methods can be wholly effective.
2. Self-analysis, leading to a new approach.
3. A higher status for Research.
4. A high priority for Education, particularly technological.
I believe the vital importance of these objectives are broadly grasped by much the greater part of British industry and by Government and I will give you some examples to show why I think so.
One of the declared objectives of our new Government was how to modernize Britain. That is splendid, but I would amend it to say its aim should be to encourage and help "the further modernization of Britain." For a tremendous amount has been done by industry in the past few years, as those of you who have been visiting our country know, in modernizing plant, machines, methods and, as important as anything, ideas. That does not mean that we have not been slow in starting-as so often in our history-nor that there is not a great deal more still to be accomplished both by management as well as members of Trades Unions.
To give you some examples from my personal knowledge. Our steel industry-so much criticized for political purposes by some of our own people-has spent in the past 10 years over £ 1,000 million in capital expenditure for the purpose of expansion and modernization. The Company, of which I am Chairman, has built and is operating one of the most modern automated rolling mills for special steels in the world. Some of my friends in America even told me, not so long ago, that our steel modernization has in many cases been in advance of theirs.
There has been a good deal said about our steel productivity in comparison with others. The facts are these. Our productivity is admittedly about half that of the U.S.A. But it is generally equal to that in the Continent of Europe, which, though often held up as an example, must therefore also be about half what is achieved in U.S.A. Our prices--an important test of efficiency-are lower, and one must be careful in accepting some of these statistics as truly comparable.
You may expect me to say something about the proposed nationalization of steel. I do not have to tell you what my own opinion, as the Chairman of a highly modernized Steel Company, is on this subject. There is no economic justification for this disturbance but only a political one. But it looks as if the Government are determined to press on with legislation.
In the vital field of Labour Relations, in some respects we have been ahead of other countries in managementunion relationships (although the results often seem to belie this). In others we still have the problem of outmoded restrictive practices. But the spectacular "Statement of Intent" agreed recently, jointly by management, Unions and Government, is at any rate a great step forward in co-operation. For this declaration actually states on behalf of Trades Unions and management organizations that "we undertake to encourage and lead a sustained attack on the obstacles to efficiency, whether on the part of management or workers." This is a striking advance and recognizes the fact that it is not only labour which has been at fault. This could be a great achievement and one perhaps only possible with a Labour Government, if all parties to it are really determined to carry it into effect, and some leading Companies are already showing that they mean to.
As to self-analysis, I will quote one other sign of the determination of British industry to be more than ever efficient. A number of our largest industrial groups (includ ing one with which I am connected) have, in the last few years, brought in firms of management consultants to advise them on new ideas for efficiency and organization and have even been taking their advice. This may not seem unusual to you, until you remember the traditional British reluctance to think that anyone outside their own business can give any advice worth having.
Research, basic and applied, with the techniques of development which must accompany it, have been having more attention than ever before. Two years ago I was called upon to be the Chairman of a Committee set up by our Federation of British Industries to examine what was needed to encourage civil research, and how Government could best help and support what was already being done and should be done in universities and in industry itself. The Labour Party, both before and after coming into power, has largely adopted our recommendations, some of which were quite drastic, and are showing signs of being very much in earnest in finding the best means of giving proper support in this essential field.
Outside industry itself, (but in an area which affects our ability to hold our own in the future) I would mention what has been done in Education-particularly in higher, scientific and technological education. You will have read of the rash of new universities which are springing up all over the country, financed partly by Government, partly by private donors who are mainly industrial Companies. £ 5 million has just been raised from industry in a few weeks to set up two large Business Schools attached to universities, one in London, one in Manchester.
One example which I think typifies the enthusiasm of industry in the cause of technological education has been the founding, without any Government assistance, of Churchill College, Cambridge, inspired by Sir Winston's own farseeing views as to our urgent need for more and more scientists and technologists. I am one of the Trustees. We have raised £ 4 million from British industry quickly for this single College, which is now actively in being, with 70% of its students studying scientific subjects, one in three being postgraduates, and with Sir John Cockcroft, well known to you here, as its first distinguished Master. I am glad to say that 2 Fellows and 17 students (9 there now) from Canada have already attended the College. It is worth noting that Churchill College is also the chosen national memorial to Sir Winston-uniquely created in his lifetime.
I think you will agree that the picture I have given you is certainly not one of a decadent industrial nation in decline. And indeed our affairs are already showing signs of im provement. Exports are up, sterling is strong and no less an independent authority than Mr. Dillon, the Secretary of the United States Treasury, said a few days ago that the period of our crisis seems to be past and that from now on things should be getting better in the United Kingdom. He foresaw no devalution of the pound.
But more than industrial progress and achievement is needed to maintain a country's standing amongst its fellow nations. Its reputation and prestige cannot be based on material efficiency and success alone. It must be respected for its proven qualities of character, stability and soundness which we look for also in individuals, as for example-those whom we want to rely on in difficult situations and who we feel we would like to go to for advice, when sound judgment is required, which we perhaps do not feel we shall get from other more attractive or spectacular friends.
And when people look round for new up-to-date friends and allies, perhaps disappointed with the actions and attitudes of older ones, I think you will agree that those with long memories, and where material power is less important than qualities of character, are inclined to look for a record of basic political stability, of steadfastness in crisis and of experienced judgment. I believe that we still and shall always measure up well to those requirements.
It is, I think, worth noticing that when certain former East African Colonies achieved independence recently and then immediately ran into grave trouble and disorder they did not turn for help to countries which had been critics of so-called colonialism, but to the most obvious so-called colonial power of all-Britain. Such a show of confidence is encouraging. Of course from time to time we make mistaken decisions, and take badly-timed action-who does not? We should remember that in politics as in business, however right a decision, it is so often the handling and the timing which count most-not so much what you do but how and when you do it. I am afraid we have given examples of this recently.
We all, from time to time, have varieties of Governments which we don't always like to agree with-perhaps you have sometimes experienced this yourselves in your own history. But I am perfectly sure, as I believe you are, that whatever problems we may have in the short term, our country will tackle and overcome them and maintain our outstanding position in international affairs, if not now because of great material power and resources, certainly because of qualities of character which are so much needed in the world today.
And after last week's events I believe too that my country is still capable of the exertions which Sir Winston Churchill was able to call forth, and that at this very time the memories of his example, which his passing has called up, will be an inspiration for the nation to bestir itself to accept more readily innovations in thinking and methods. The words of his victory broadcast in 1945 contain for us an inspiring message for our future for he urged us then "not to fall back into the rut of inertia and confusion and the craven fear of being great."
To respond to this would be his greatest memorial.
Thanks of this meeting were expressed by Mr. Arthur Inwood, a Past President of the Empire Club.