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Reorganisation 1948

Page history last edited by Alan Hartley-Smith 11 years, 7 months ago

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Introduction

[Editors note - this is an extract from "A History of the Marconi Company" by W.J. Baker circa 1970]

 

The overall commercial prospects for the Marconi Company were depressing in the extreme [following the all-out effort during the war].

On the credit side was the vast store of accumulated knowledge backed by quality engineering of the highest order. And more than this a something which, like respect for a flag, is too intangible to be expressed in words. Perhaps one could best call it pride - pride of being part of the Marconi organisation, of being a Marconi engineer. Sentimental as it may look in print, it is there. It is seen in the extraordinary number of men who have seen over forty years' service with the Company; it is there in the sight of three generations of a family employed in the Works and in the outcry of a retired veteran whose copy of the House Magazine has been lost in the post!

This spirit, always strong in the Company, had been enhanced by the single-minded purpose of the war years, coupled with the personality of the Chairman of those days, Admiral H. W. Grant. In a very short time after his assumption of office the Admiral had captured the loyalty of the Works floor by his seeming determination to know every man personally. During the Chelmsford bombing he was there, ably backed by Mrs Grant who devoted her energies to the Welfare side of the organisation. News of the bombing of a Marconi factory in London would send him at top speed to the scene. Stories of the Admiral are legion and there is not one which does not underline his complete identification with his 'Ship's Company' as he called them.

Such factors as these cannot be entered into a Company balance sheet, but they may in some degree help to explain the spirit with which the Marconi organisation faced the future in the years immediately following the war.

But events seemingly unconnected with the Marconi fortunes were already conspiring to promote another crisis. In 1945 a Commonwealth Telecommunications Conference was held to consider the future of the cable and radio services linking the countries concerned. This, after deliberation, recommended that the existing services in the U.K., the Dominions and Southern Rhodesia should be acquired by their respective governments, with a unifying Commonwealth Telecommunications Board to replace the advisory Commonwealth Communications Council. This proposal was adopted and as one consequence Cable and Wireless Ltd. became nationalised under the Cable & Wireless Act of 1946, starting its new career as a Government-owned body as from I January 1947.

Cable and Wireless (Holding) Ltd., however, had owned the shares of the Marconi Company since the merger agreement of 1929 and since the Government's interest was solely in the traffic operating aspect there was no option but to dispose of Marconi's. This, when it became known, created wide interest in business circles, not only in this country but also in the U.S.A.

Among the big combines considering an offer was  the  English Electric Company. In July 1946 at an extraordinary meeting of that Company it was proposed that authorisation should be given for an offer of £3,750,000 for the whole share capital of Marconi's Wireless Telegraph Company Ltd., the amount to be paid in instalments spread over three years. This proposed purchase, if successfully negotiated, would include the ownership of the Wireless Telegraph parent Company, a 42 per cent interest in the Marconi International Marine Communication Company Ltd. and the entire interest in Marconi Instruments Ltd.

The English Electric Company Ltd. had originated in 1918 when four firms, each a pioneer in its own sphere of engineering, joined forces - Dick Kerr and Co. of Preston (already allied with the Siemens Dynamo Works of Stafford), the Coventry Ordnance Works Ltd., Willans and Robinson of Rugby and the Phoenix Dynamo Manufacturing Company of Bradford. The new Company had a wide sphere of manufacturing interests in the fields of heavy traction, electric power and hydro electric engineering and, for a time, it prospered. The years of depression from the mid-i920s to 1930 took their toll however, and by the latter date English Electric was in very low water financially.

The tide turned when in that year Mr G. H. Nelson was appointed to the Board and was elected Managing Director. Almost immediately the vigorous measures which he instituted began to bear fruit and by 1933 when he became Chairman (as well as Managing Director) the Company was showing a satisfactory profit. After a recession the following year brought about by the national economic situation, the turnover graph began to climb steadily and continued to do so year by year. When war broke out, the Company, now considerably expanded, was in the front line of the British manufacturing effort. Vast shadow factories were built and in addition to English Electric's normal products, large-scale armaments manufacture was carried on, including the production of tanks and bomber and fighter aircraft.

In 1942 the firm of D. Napier and Son Ltd. was added to the English Electric Group of Companies. In the following year the Chairman was knighted for his services in connection with the war effort; 1943 also saw his son, Mr H. G. Nelson, elected to the Board of Directors.

Sir George Nelson was that rare combination, a fully qualified practical engineer and an extremely astute business man. He knew that should the Commonwealth Telecommunication Conference elect to recommend the nationalisation of Cable and Wireless Ltd., this proposal would almost certainly be implemented. He knew also that this must bring Marconi's into the market and because it had become increasingly evident that the two fields of electric power and electronics were tending to converge, he considered that the acquisition of the Marconi Company would provide a potentially valuable asset. The strong Marconi position in radio communications and capital electronics in general would, he reasoned, provide an improved balance in the basis of the English Electric organisation and strengthen its position in competitive overseas markets.

In the light of this philosophy the preliminary financial arrangements were made, as stated, in July 1946 and in the following month the bid was offered and accepted. In such fashion Marconi's Wireless Telegraph Company Ltd., 42 per cent of the shares of the Marconi International Marine Communication Company Ltd., Marconi Instruments Ltd. and small subsidiaries were purchased by English Electric.

It would be quite untrue to imply that the transfer was looked upon with any degree of favour at Chelmsford. From the commercial standpoint the disengagement from Cable & "Wireless Ltd. represented a serious loss of revenue because the Marconi Company had hitherto enjoyed a virtual monopoly in the provision of equipment for the operating Company; henceforth, it was realised, any orders gained would have to be contested on an equal footing with competitors.

Again, what was known of English Electric policy and outlook showed it to be considerably out of phase with those which were favoured at Marconi's. This was in great measure due to the hierarchy structure at Chelmsford which consisted almost wholly of engineers - extremely good engineers, be it added - but possessing insufficient commercial leavening with which to combat the cut-and-thrust tactics of the Company's big competitors. The Works output at that time consisted of equipments which were of superlative craftsmanship and finish, built without regard to price, or as Mr F. S. Mockford, at that time Deputy Commercial Manager, put it m 1947 '... with a price a little too high, a delivery a little too long and a specification not quite in line with the customer's requirements' although it could be added that the specification was often out of line by being better than the customer needed.

In justice it must be admitted that there was something to be said for the dominance of the engineering element, for in the one period of the Company's history when this had not been in evidence (in the Kellaway regime) the Marconi organisation had sustained considerable losses. Since then, with the engineering power restored, it had been content to jog along, with a steady but unspectacular annual turnover and without much thought given to commercial expansion or for the changing needs which were emerging in the post-war world.

The English Electric takeover was therefore looked on with by many, who saw in it among other things, the submerging of the name Marconi in that of 'big brother'. At best it was painfully evident that the Marconi way of conducting its affairs was incompatible with the bustling drive which characterised Sir George Nelson.

Events moved swiftly; at an extraordinary general meeting of the Marconi Group on 12 August 1946 the Chairman and Managing Director, Admiral H. W. Grant, tendered his resignation. This circumstance might have passed without comment as the Admiral was in his seventy-sixth year, but the simultaneous resignation of the entire board of directors gave promise of further changes. The previous board of thirteen members was replaced by one of five only, with Sir George H. Nelson as Chairman and his son, Mr H. G. Nelson, as one of the directors.

In review, and remote by two decades from the takeover, it is not difficult to appreciate the two completely divergent points of view which existed; we have, on the one hand, Sir George Nelson, by no means the ruthless' tyrant that many of his new employees imagined him to be, yet fully determined to bring the Marconi Company to a state of greater prosperity, and on the other hand the hard core of senior Marconi staff who had served the Company faithfully and well according to their lights and who saw no good reason why existing policies should be overset.

No doubt at the time of the Norman invasion no true Saxon had a good word to say for William and his barons, yet today a claim to Norman ancestry is a matter for pride. Likewise in due course English Electric was to infuse new blood and new cultures into Marconi's but this prospect was far from appreciated in 1946, the date of the 'invasion'.

The year 1947, which should have been a particularly auspicious one, being the Golden Jubilee of the Company's founding, passed in an atmosphere of unrest and suspicion. Meanwhile Sir George Nelson was looking for someone to take charge of English Electric's export marketing. His choice fell upon the Managing Director of English Electric in South Africa, Mr F. N. Sutherland, who accordingly received a cable recalling him to England.

F. N. Sutherland had joined English Electric as an apprentice in 1922 after taking his M.A. degree at Cambridge. He had subsequently served at Preston, Stafford, Bradford and London on Works production, technical engineering and management. In 1925 he had been appointed Engineer-in-Chief of the English Electric organisation in Brazil and had been largely instrumental in bringing it from a precarious position to one of prosperity. In 1936 he had been transferred to South Africa for a similar process of resuscitation of the Company's interests there, a task he fulfilled with such success that under his direction the Benoni plant, one of the first English Electric works to be built abroad, was constructed and put into operation.

On Sutherland's arrival in England, Sir George changed his mind. It had become very clear that what was wanted at Marconi's was a leader who owed no allegiance to that Company's past methods of operation, and Sutherland had all the necessary attributes. He had a proven reputation of successful management and was well known for his love of a tough fight. He was a highly qualified engineer and an English Electric man to the core, to whom the Marconi Company was little more than a name.

For a month Sir George gave Sutherland no inkling of his intentions. Then, after a visit to the Chelmsford Works with Mr H. G. Nelson, the latter, on behalf of his father, offered him the general managership on the way back. It was accepted.

Early in January 1948 Sir George came to Chelmsford and addressed the employees, breaking the news of the new appointment and thereby causing more consternation. On 19 January 1948, the new General Manager took up his duties. This was a crucial day in the Company's history; the tension which existed can be imagined and so can the comments. Qualified engineer the new boss might be, but what did he know about electronics? (In fact he knew more than he was given credit for, having had a keen interest in radio for many years past.) From the managerial chair Sutherland faced a latently hostile factory; a host of strange faces and not a single one which he knew he could trust.

For a while he played it carefully; sizing up his key men and establishing the directions in which he could delegate responsibility. To the surprise of the Works the anticipated redundancy notices did not materialise; neither on the other hand did the new boss attempt to fraternise with the Works floor, being too shrewd to compete with Admiral Grant's bonhomie. He made no attempt to win the Works with verbal blandishment: he was, he stated uncompromisingly in a newspaper interview, a disciple of Sir George Nelson in the matter of the relationship between workers and management; his aims (he said) were to increase production and to study the well-being of the employees. (At the time it is doubtful whether anyone at Marconi's set much store by the second aim, but events were to prove the doubters wrong. Over the years there was a continual process of improvement in working conditions and social facilities.)

But strangely enough, there was no explosion. For in those first critical months, although it became plain to the senior Marconi men that the new General Manager was going to run the Company in exactly the way he wanted it, he was at least a man who talked their kind of language. Gradually a realisation dawned that their main aim, the prosperity of the Company, was identical with his, the divergences of outlook lying only in the means to be adopted to bring this about. With a common denominator established, the passing months saw a growing spirit of co-operation.

The Sutherland approach was that of deeds, not words. If the Works Floor did not get the informal addresses to which they had become accustomed there was nevertheless plenty of evidence that the new boss was around. New plant, terribly difficult to come by, began to arrive and was installed to increase production. Reorganisation of procedures was gradually introduced, to the betterment of working conditions, although the traditional model-shop methods of assembly by skilled craftsmen were still retained as representing the best constructional approach for equipments which had to operate vital services on land, sea and in the air. Over a comparatively short time a new and streamlined accountancy system was introduced, a new development and planning department implemented, a technical sales organisation formed and a new drawing office brought into operation. Buildings were modified and improved after a  strenuous  behind-the-scenes battle against the Government restrictions then in force over materials. Soon the new spirit which was being infused into the Company was reflected in an upward surge of output and orders; a situation which was promptly converted into positive feed-back in the form of a general increase in wages and salaries.

But these innovations, important as they were, were side issues compared with the overall problem of efficient production and marketing. From the first days at Marconi's the General Manager had seen clearly that the Company's Achilles heel lay principally in the internal production organisation, which consisted of a multifarious collection of small units, groups of which were engaged on kindred tasks but each independently of the other, with considerable wastage of research, development and engineering efforts. The General Manager decided that the moment was opportune for drastic action.

In October 1948 he put a main plan into effect. This, in essence, was the creation of six new sales divisions out of the welter of small units which existed at that time. The six were as follows:

(a) Services Equipment Division - Manager Col. E. N. Elford This had actually been formed a little earlier (in July). Its function was to be the supplier of radio and radar equipment of British Services pattern.

(b) Aeronautical Division. Airborne radio communication and electronic navigational aids. Aerodrome navigational aid equipment.

(c) Communications Division. Work appertaining to commercial communications and services as used by Posts and Telegraphs Authorities and others.

(d) Field Station Division. Portable, mobile and low-powered stationary equipment.  (This Division was absorbed into the Communications Division 15.5.50.)

(e) Broadcasting Division. Sound broadcasting and television equipment.

(f) Central Division. The Company's products not included in the above-mentioned divisions (thermionic tubes (valves), crystals, antenna masts etc.). The Installation Drawing Office and Mast Design sections were included in this division and provided their services to other divisions as required.

The new divisions were not companies in their own right in that they all drew upon the resources of a common Works floor. Each division however, had its own engineering and sales forces and full authority to conduct its own business. Only in the ultimate was it responsible to the General Manager with whom the responsibility for overall policy decisions rested. The scheme at one stroke provided greater incentives to individuals and at the same time simplified control by establishing six main arteries of information into the General Manager's office instead of the former multitude of capillaries.

At the same period Mr R.J. Kemp was appointed Chief of Research with a Deputy Chief newly arrived from English Electric in the person of Dr E. Eastwood, a physicist who had had considerable experience in radar engineering with No. 60 Group R.A.F. during the war.

One further event of particular significance occurred during the reformative period. In 1947 Mr Sutherland returned to England via Brazil where he had some business affairs to deal with. There he had met Mr R. Telford, a Marconi man who was at that time Managing Director of Marconi Brasiliera. Mr Telford had taken his M.A. degree at Cambridge and had joined Marconi's in 1937. Thereafter he had been appointed to various posts of increasing responsibility, the latest of which had been the assignment in Brazil. On the spot, Sutherland formed a high opinion of Telford's capabilities, and when, three years later, he required a man of the right calibre as his assistant, he offered the post to Telford. The offer was accepted. Today (1967) the two are still working in the closest collaboration, Mr Sutherland as Chairman of the Company and Mr. Telford as its Managing Director.

Without doubt the reorganisation in 1948 of the Company's sales and administrative effort into discrete divisions was an important factor in its subsequent prosperity. A secondary but most vital circumstance was the complete preservation of the Company's basic identity and engineering outlook. Sir George Nelson, having chosen his man, was content to allow him to run the business in his own way, for the good and sufficient reason that it would be, by and large, the Nelson way. His General Manager in turn established Divisional Managers with very wide degrees of freedom, while within the divisions there were groups or sections, the Chiefs of which also exercised considerable powers of decision within their respective areas of influence.

The wisdom of those decisions taken in 1948 can best be gauged by reference to the present day. Over the years, Company expansion has necessitated an increase in the number of product divisions to thirteen but the basic principles and the 'loose rein' practice remain unaltered, having stood the test of time. Facts and figures serve to underline this; for whereas Company turnover in 1947 amounted to £3,171 million, that of 1966 was over ten times greater, at £33 million. Furthermore, 50 per cent of the order book of 1966 was in terms of exports, obtained against all comers in the fiercely competitive world of electronics markets.


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