THE NEXT DECADE
An Address by
SIR GRAHAM HAYMAN Chairman, Distillers Company, Ltd.
Joint Meeting with the Canadian Club of Toronto
Monday, May 2nd, 1960
CHAIRMAN: Mr. Harry H. Wilson.
MR. WILSON: It is well known that Distillers Company Limited is the largest producer of Scotch whisky. What is not generally appreciated-at least on this side-is that D.C.L. employs over 10,000 people in its industrial groups, -producing chemicals, plastics, bio-chemicals and food products.
Apropos of this, the story is told of a self-made Glasgow tradesman who died a number of years ago leaving a considerable estate, most of it in shares of the Distillers Company. His daughter who inherited was an ardent teetotaller who never ceased to plague her friends with violent denunciations of the evils of whisky. One of them, himself a holder of D.C.L. shares, said: "If you hold such strong views, why don't you sell your shares?" "Och, I've no need to do that. My shares are in the yeast department."
D.C.L. had its growing pains, and the shares did not always enjoy the enviable investment rating they have had for many years. Shortly after formation, in 1877, application was made for registration of D.C.L. shares on the London Stock Exchange. Opposition was encountered, spearheaded by a Mr. Gundry, himself a member of the Exchange. Fighting a series of rear-guard actions, he sorely harassed the Company's solicitors. No explanation would satisfy him and, when the lawyers sent him the fullest legal details of a revised plan, he wrote back saying that if their letter was a sample of Scottish law, "I thank God that I am not a Scotsman."
The Scottish lawyers sent him the reply which he deserved: "Messrs. Fraser, Stoddart and Ballingal acknowledge receipt of Mr. Gundry's letter ... and join with him in thanking God that he is not a Scotsman."
Apparently this retort routed the opposition, for not long after a quotation was obtained.
Our guest speaker, Sir Garham Hayman, has been associated with the chemical and distilling industry since the early 1920's. He is Chairman of the Distillers Company Limited, British Tyre & Rubber Co. Ltd., and British Plaster Boards Co. He is a past Chairman of the Association of British Chemical Manufacturers and past President of the Federation of British Industries. In addition to his many business interests, he finds time to play an excellent game of golf.
I have pleasure in presenting to you--SIR GRAHAM HAYMAN-the subject of whose address will be "THE NEXT DECADE."
SIR GRAHAM: First, let me say that this is not my first visit to Toronto. I have, however, just completed a brief trip, starting from Vancouver, and visiting a number of intermediate cities for the first time. Even during this short period, I have received indelible impressions of beautiful scenery, and above all, of robust and attractive people. Since 1945, you have received over 1,000,000 British emigrants-a fact which is not at all surprising-and it is gratifying to know that nearly all of these have remained here to do their bit towards building the Canada of the future. As for the Canada of the past, you do not need me to catalogue your achievements, which have gained for your country universal respect. But your massive change-over from a purely agricultural community to one which is highly industrialized, is particularly noteworthy, and Canada now ranks sixth in world manufacturing output. I mention this because of its significance, not only in world trade, but in a deeper sense, to the old country, whose pride in your progress is second only to your own.
I must admit that when I was asked to give a title to my talk today, I felt considerable diffidence in providing one which covered a narrowly defined field, because this would involve expertise. Feeling little qualified for this, I decided to select a broad canvas in the hope that I might be able to project a few of the high spots in Great Britain's progress, and without assuming the mantle of a prophet, indicate the portents for the ensuing years. We stand on the threshold of a new decade. It is not like casting off an old garment and donning a new one. We have to live with the mistakes--and successes--of the past, drawing lessons from the one and encouragement and inspiration from the other.
Britain had a good year in 1959. We had a greater degree of price stability than has been achieved since the war, combined with a high level of employment. The Gross National Product has risen from just under £17,000,000,000 in 1955, to nearly £21,000,000,000 last year. Our total exports amounted to £3,330,000,000, which means that Britain exported an average of between eight and nine million pounds worth of goods every single day of the year. To be a world exporter is a tough game, but we have been learning our business for a very long time. The state of our economy in 1959 contrasted markedly with the pattern in 1957, when following upon a long period of continuous inflation, we moved into a trade recession. The subsequent recovery, although assisted by improvement in world trade, undoubtedly owes much to the Government's firm-one might say harsh-monetary policy at the end of 1957, in controlling credit and the flow of money. We do not like the philosophy of controls for their own sake, and it is better, as far as possible, to permit the free play of market forces; but Britain is a highly integrated economy and when pressures of excessive demand are allowed to develop in one sector or another, the whole economy tends to re-act strongly. The post-war years have provided us with painful and costly examples of this, and although one would not venture to claim that inflation has been conquered, we can at least demonstrate that it has come under reasonably effective control during the past two years, for the first time since the war.
The British budget, which was produced recently, provides much food for thought, and indeed, as is traditional, for argument. But I think it can be summed up as a blend of confidence and caution. The balance of payments is less favourable, although still on the right side. This follows from the extension of our removal of import restrictions from which Canada, as well as others, have benefited. Temporarily, at any rate, our imports have jumped ahead, so that it becomes urgently necessary to redress this by increased exports. The buoyancy of the economy has also given rise to a large increase in consumer demand at home. Some stimulus to this has been provided by the increase of hire purchase, or instalment buying. This system became very popular in 1954, when the Government freed it from restrictions. The heavy response by the public gave rise to excessive imports, and controls were re-introduced during 1955 and 1956. Late in 1958, when economic conditions had improved, these controls were again removed, but the present tempo of hire purchase spending will now doubtless be closely watched. An interesting recent development has been the acquisition by the leading Banks of Hire Purchase companies. This is a new departure for our banks, but it may well be a good thing, bearing in mind the need for a careful balance to be maintained in promoting this particular form of consumer investment. There is obviously plenty of scope for hire purchase business in Britain, so long as the level of employment remains satisfactory and the import/export ratio is kept under control.
Some three years ago, the Government passed an Act to deal with restrictive trade practices. You will be familiar with your own regulations on these matters. Although subjected to a good deal of criticism at the time, it has become a permanent feature of the British manufacturing economy. There is little doubt that this new regulation has had some effect on selling prices in certain sectors, and at the same time, it has tended to influence a number of mergers which have taken place. Apart from this, however, the increasing tempo of trading conditions abroad and the intensive competition which prevails, have undoubtedly accelerated the tendency towards amalgamation among firms of like interests. But there have also been quite a number of take-over bids during the last year or two, some of which would seem to be inspired by the desire to acquire a profitable business having no affinity to that operated by the purchaser. Diversification is the term applied to cover this type of operation, but it has directed the close attention of some companies to adjusting the balance sheet values of their assets so that a more realistic figure is reflected in the stock market, which is all to the good, and does, at least, discourage the operator who is merely interested in speculation.
While in some respects this would appear to be an age of the "Big battalions", it is important to note that the pattern of our manufacturing industries still includes a substantial proportion of small and medium-sized firms whose contribution to the national economy, both economic and technical, is quite significant.
One of the most far-reaching developments in Europe has been the formation of the Common Market between Belgium, France, Germany, Holland, Italy, and Luxembourg, involving a degree of political and economic unity which represents a new chapter in the history of Europe. While the basic principle was admirable in removing tariff barriers and stimulating freer trade, it posed a serious problem for us and a number of other European countries. To have joined this economic union as full members would have involved surrender of sovereignty by several countries, and Britain in particular felt bound, and rightly so, by her obligations to the Commonwealth. This gave rise to the proposal to form a European Free Trade Area, which would have brought in all the seventeen countries of O.E.E.C., including the Six, thus creating a multi-lateral free-trading system. It was found impossible to reach agreement, and we were therefore left with the sombre prospect of a divided Europe. Steps were then taken to form a Free Trade association between Austria, Norway, Denmark, Portugal, Sweden, Switzerland, and Great Britain. While this plan should provide solid advantages to its members, it is not an alternative to association with the Common Market. It must be operated as a means of ultimately achieving a workable plan for economic co-operation between both bodies.
When the Common Market was first proposed some years ago, considerable attention was directed to it as an economic union, whereas, in fact, as we now see it more clearly in retrospect, it also had deep political implications. It may be that Britain will have to give greater weight to these in considering some compromise which would facilitate a solution for the benefit of all concerned. In what I have just said, the emphasis is on Europe, but with the entry now of Canada and the United States into the arena of discussion, we have the possibility of a solution to these problems in a broader context. I think we should also keep in mind that the trade preferences between us were instituted largely as a means to an end, and that the true identity of interest between Britain and Canada and other members of the Commonwealth rests upon something more basic and profound in order to secure the future of the English-speaking peoples.
So much has been written on this complicated subject that a number of the issues must be familiar to many of you here today. My only reason for this brief reference is to try, in some small degree, to strengthen your interest and co-operation in reaching a solution, and to assure you that Britain, deeply conscious of the reciprocal ties with the Commonwealth, will be unremitting in her efforts to achieve it.
What are the other portents for the next decade? In reviewing the events over the past ten years, we have reason to be encouraged-and grateful-for British achievements in trade and industry. Britain has established an outstanding position in technological fields, to mention only the aircraft industry, in which three out of every five aero engines in use or on order in the Western world are British; nuclear energy, in which we led the world in the erection of the first power station at Calder Hall in 1956. In the electrical goods industry, our annual manufacture exceeds £ 1,300,000,000, of which 25 per cent is exported. Many new industries are making rapid progress: the plastics industry, for example, having increased four-fold in ten years, now produces half a million tons per annum. The gross output of the British chemical industry is well in excess of £2,000,000,000, while pharmaceuticals has risen from X-19,000,000 before the war to over Z150,000,000 in recent years. Petroleum now holds a prominent place in our chemical operations, and this year the production of organic chemicals from petroleum feedstock will approach 900,000 tons. Having regard to my own business association, I am sure you would not wish me to omit one other very important industry, exclusive to Scotland. Scotch Whisky consumption continues to flourish and expand. Its unique properties, nurtured by art and craft, enshrined as they are, in the mysticism of the Scot, make an ever-widening appeal the world over. Your own market is very valuable to us, although we have lost some part of it due to the unavoidable shortage of supplies resulting from the war. However, with your co-operation-and this I do assure you will be to our mutual advantage-we shall hope to improve our position.
I think I should mention that Britain is taking part in overseas Trade Fairs on an increasing scale. We are holding an Exhibition in New York, which opens on 10th June next, and I hope many of you will be able to visit it.
The last ten years have seen many changes, the speed of which has been startling. It is certain that the next decade will provide an even greater tempo of challenge and opportunity. Perhaps one of the most profound influences will be the raising of living standards in the less developed countries, which, humanitarian and political considerations apart, will open the way to greatly increased world trade. The character and pattern of our exports and imports will undergo change, but as an industrial power, we are becoming more flexible and adaptable.
The big advances in the social and living standards of our people, and the increasing degree of mechanization in manufacturing processes, have posed real problems of adjustment and education in industrial relations. The continuing advance in technologies will make it even more important to preserve and recognize the human element which is, after all, our main asset. I am glad to say that there is today a greater awareness than ever before on the part of management in British industry of these vital issues.
I am afraid this brief outline does little justice to the canvas I have chosen. Its purpose is not self-aggrandisement, but the maintenance of your confidence in the Old Country, which is not lagging behind. Your own remarkable development, side by side with a powerful neighbour, is a convincing demonstration of your abiding faith in your own destiny. We, in Britain, also have that faith. The ties between us are, I hope and believe, unbreakable. Our relationship is not based upon dependence, but interdependence and mutual interest. It is in that context that I have presumed to say a little about British progress, believing as I do that, notwithstanding world problems, it is a heartening augury for the next decade.
THANKS OF THE MEETING were expressed by Mr. Alexander Stark, Q.C.