Grace's Guide

British Industrial History

Bowater-Scott

From GracesGuide

Jump to: navigation, search

Company founded by William Vansittart Bowater

As a young man he joined James Wrigley and Sons, a Manchester papermaking firm, where he became a manager. He is reputed to have been ill-tempered, tyrannical, and hard-drinking, traits that eventually led to his dismissal by Wrigley.

By 1881, at the age of 43, he was in business on his own in the City of London, at the heart of the newspaper publishing and printing industries, operating as a paper wholesaler and as an agent for the purchase of newsprint on behalf of newspaper publishers.

The final decades of the 19th century saw the birth of the popular press in Britain and soaring demand for newsprint. Bowater secured contracts with two of the most dynamic newspaper and magazine tycoons, Alfred Harmsworth, publisher of the Daily Mail and the Daily Mirror, and Edward Lloyd, publisher of the Daily Chronicle.

Three of William Bowater's five sons joined him in partnership, and the firm - now renamed W. V. Bowater and Sons - gradually prospered and expanded.

1905 The personnel comprised only the four partners, six clerks, two typists, and an office boy.

1907 W. V. Bowater died.

1910 Bowater adopted limited liability as a private company as W. V. Bowater and Sons

1913 The head of the firm, Thomas Vansittart Bowater, the founder's eldest son (knighted in 1906), became Lord Mayor of London, leaving the running of the family business to his younger brothers. Besides wholesaling and agency activities, during the Edwardian era the company moved into large-scale dealing in waste paper, including the export of surplus newspapers to the Far East, where they were used for the protection of young tea plants.

1914 These years also saw the commencement of the export of newsprint to Australia, leading to the establishment of a US marketing subsidiary, Hudson Packaging and Paper Company, in 1914, and an office in Sydney, Australia, in 1919. These were the first steps in Bowater's development into a multinational corporation.

World War I boosted newspaper sales and demand remained buoyant in the postwar years. Bowater's first step towards becoming a paper manufacturer was the purchase of a site at Northfleet on the south side of the Thames estuary near Gravesend in May 1914.

The war interrupted the firm's plans and it was not until 1923 that the construction of a paper mill could be considered. The contractor was Armstrong, Whitworth and Co, a major armaments manufacturer which turned to other activities after the end of the war.

There were serious flaws in Armstrong's design of the Northfleet mill, and modifications had to be made during construction. These changes led to large cost overruns and delayed the commencement of full production from July 1925 until almost a year later.

The resolution of the serious problems at Northfleet was the work of Eric Bowater and this achievement was his stepping stone to the leadership of the firm. A grandson of the founder, he entered the firm in 1921.

In 1927, at the age of 32, he became chairman and managing director of W. V. Bowater and Sons and was the leading figure in the firm for the following three and a half decades. He dominated Bowater's affairs by sheer force of personality.

1928 Eric Bowater was determined to establish Bowater as a major force in UK paper making as fast as possible. He negotiated the sale of a controlling interest in the firm to the newspaper magnate Lord Rothermere, which reduced the family's shareholding to 40 percent. Rothermere's backing allowed Bowater to raise the finance to double the output of the Northfleet mill in 1928.

He looked immediately for further opportunities to expand and a new project was initiated to build a large paper mill on the Mersey, near Liverpool, which was financed jointly by Bowater, Rothermere, and Beaverbrook newspapers. The latter entered a long-term contract to receive supplies of newsprint from the new undertaking.

By the end of 1930 the output of Bowater's mills was 175,000 tons of newsprint per year, 22 percent of the UK's total output. In order to achieve this result, it had been necessary to cede control of the business to a pair of press barons. Rothermere's business, however, was badly affected by the slump at the beginning of the 1930s.

1932 In order to raise cash, Rothmere sold his Bowater shareholding back to Bowater. Beaverbrook followed suit. Eric Bowater thus found himself in absolute control of the firm again, now the UK's largest newsprint producer.

Newspaper circulation rose again in the 1930s and Eric Bowater's response was to double the capacity of the Mersey mills.

1936 He purchased paper mills at Sittingbourne and Kemsley from Edward Lloyd, which doubled the firm's output of newsprint to around 500,000 tons per annum. In little more than a decade since the start of manufacturing, Bowater was producing 60 percent of British newsprint and had become the largest newsprint undertaking in Europe.

In 1937, profits were squeezed by a large and unforeseen rise in pulp prices engineered by a cartel of Scandinavian producers. This was a chastening experience for Eric Bowater, who resolved to prevent its repetition by securing the firm's own pulp supplies. Bowater immediately acquired interests in Swedish and Norwegian pulp mills.

1938 It purchased the massive mill at Corner Brook, Newfoundland's most important industrial undertaking with newsprint capacity of 200,000 tons per year and resources of 7,000 square miles of timber land. These moves were described by Eric Bowater as a 'raw material insurance policy.'

By the eve of World War II, Bowater was a multinational manufacturer producing 800,000 tons of newsprint annually and a host of other products for an international clientèle.

WWII. Wartime controls to divert resources to the war effort had a devastating impact on Bowater's UK. newsprint production, which fell to a fifth of the pre-war level. The Northfleet mill closed down completely. Bowater himself was diverted from the firm's affairs from 1940 to 1945 by work for the Ministry of Aircraft Production, for which he was knighted in 1944. Since a rapid revival of demand for newsprint appeared unlikely, Sir Eric Bowater adopted a policy of diversification into paper packaging which began with the purchase of Acme Corrugated Cases in 1944.

In 1947, these interests were organized into a wholly owned subsidiary, Associated Bowater Industries. The war had much less impact upon Bowater's North American operations, and from 1944 to 1950 US consumption almost doubled. A streamlined structure was instituted, in which a number of wholly owned operating companies reported to a holding company which was given a new name, the Bowater Paper Corporation.

For Sir Eric Bowater the formation of the Bowater Paper Corporation marked a new point of departure. Over the ensuing decade and a half he worked tirelessly to build up the business on both sides of the Atlantic. In the United Kingdom, the strategy of diversification away from newsprint continued through the late 1940s and early 1950s with further acquisitions of paper products firms.

In North America, by contrast, the relentless rise in U.S. demand for newsprint led to the construction of a paper mill at Calhoun, Tennessee, marking the firm's debut as a producer in the United States.

1954 Self-sufficiency was taken a step further by the formation of the firm's own shipping fleet.

By the mid-1950s Bowater was the largest producer of newsprint in the world, a position Bowater had no intention of relinquishing.

1955 Diversification continued to be an objective in the United Kingdom, leading to expansion of the building products and packaging activities and most importantly to entry into the rapidly growing tissue market through the acquisition of the St. Andrews tissue mill.

1956 In the United Kingdom, the end of government paper control inspired a resurgence of optimism regarding demand for newsprint, and further capacity was added at Kemsley and on Merseyside. The Bowater-Scott Corporation, a company jointly owned with the market leader in tissue technology, the Scott Paper Company of Philadelphia, was formed.

Continental Europe was believed to offer tremendous growth potential and the late 1950s saw the establishment of a Bowater presence in Belgium, Switzerland, and Italy. The firm also became the largest newsprint maker in France, with the acquisition of the Les Papeteries de la Chapelle works with a capacity of 180,000 tons.

1959 Bowater entered a joint venture to produce pulp and newsprint in New Zealand to supply the Australian market. This extensive expansion program required substantial funding and Bowater's borrowings increased greatly.

By the beginning of the 1960s, it was plain that Bowater's strategy was flawed. Other competitors had made substantial investments in newsprint capacity and from 1957 the market was oversupplied, causing prices to weaken and profits to disappear.

Although the expansion program was curtailed, the firm was already heavily burdened with debt and the advance into Europe continued to absorb capital. Matters were made worse by production problems at the new American Catawba pulp mill and by the move to prestigious new headquarters in London's Knightsbridge in 1958, which doubled per capita office costs.

1962 The death of Sir Eric Bowater in August, in the midst of the financial crisis marked the end of an era in the history of Bowater.

Retrenchment was a hallmark of Bowater's strategy in the decade 1962-72.

Over capacity in U.K. newsprint was tackled by the conversion of machines to other types of paper making, and eventually by closures, including Northfleet in 1973. Overall, the reduction in capacity in the United Kingdom and North America by 1972 totalled 300,000 tons. In Europe, where the business had never lived up to Bowater's expectations, there was wholesale retreat, culminating in the sale of the loss-making French company.

Diversification away from newsprint was the other side of the strategy, with successful expansion in areas of activity such as building products in the United Kingdom, and tissue production in both the United Kingdom and Australia.

1973 Bowater Corporation bid for Hanson Trust, partly for tax reasons[1] but the bid was dropped when it was referred to the Monopolies Commission.

The strategy of the mid-1980s to the mid-1990s was to focus upon activities in which the firm enjoyed managerial expertise and excellence. The North American newsprint and pulp operations were de-merged from the rest of the firm, as Bowater Inc

Bowater Industries plc, as the UK-based firm was known after the de-merger, became a business with five functionally organized operating groups: packaging and industrial products, builders' merchants group, building products group, freight services group, and Australian group. In the UK, the manufacture of packaging was the leading activity, and the building products activities were mostly in the United Kingdom and Europe.

1986 Tissue manufacturing was the firm's foremost activity in Australia, following the acquisition of Scott's 50 percent interest in Bowater-Scott of Australia in 1986, in return for the sale of Bowater's interest in Bowater-Scott's UK firm to Scott.

1989 Further consideration of Bowater's strategic direction led to the disposal of the freight group.

1990 £382 million takeover of Norton Opax PLC, whose strengths lay in the complementary fields of printing and publishing. The creation of the combined entity was marked by a new name - Bowater PLC.

1992 Bowater expanded into packaging by acquiring Cope Allman Packaging and DRG Packaging[2]

1995 The Company changed its name to Rexam


See Also

Loading...

Sources of Information

  1. The Times, Jun 16, 1973
  2. The Times, March 03, 1992