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The boom did not last. A sudden reduction in the steel trade in the United States, followed by a downturn in Europe, hit the international industry hard. As world steel prices fell steeply, and despite anti-dumping legislation in 1921, the Australian steel industry found itself in fierce competition with imports. A combination of comparatively high labour costs1 and high coal prices weakened its position and the B.H.P began to suffer from over capacity. By June 1922 there were insufficient orders, according to the company, to keep the steel plant operating and steel manufacturing operations were suspended.
The danger signs at the B.H.P had been apparent much earlier. In November, 1921 over 600 men were dismissed and, more alarmingly, over 4,000 were given notice two days before Christmas. From June, 1922 until March, 1923 steel production at the B.H.P works in Newcastle ceased. These dramatic developments at the steel works were again to demonstrate the closeness of the relationship between steel and refractory producers.
This period of Newbold's history is significant for two reasons. Firstly, the actions of the B.H.P were to have a dramatic effect on the financial circumstances of Newbold's. Secondly, we are fortunate to have detailed documentation from within the Newbold company for this period. An almost weekly record of major events for the next two years survives, written by Arthur Newbold and others, to the Directors of the company in Sydney.
In early February 1922, B.H.P Co Ltd informed Newbold's of a reduced need for its products, from 230,000 bricks to 160,000 bricks, a reduction of approximately 30 per cent. Although this was viewed as only a temporary set back, there were immediate repercussions at Newbold's Waratah plant. As Arthur Newbold put it to his Head Office,
...I suggest that we at once reduce the number of employees to proportionately conform with the amended monthly order furnished by our B.H.P friends...2
This was a graphic illustration of the close dependence of the refractory industry on steel. The proportionate reduction in employees at Waratah, represented the dismissal of 16 men from a work force of approximately 48 men. One week after these dismissals Arthur Newbold received more news of the deteriorating situation at the steelworks,
...the Purchasing agent [at B.H.P] warned me that -in confidence - that we might expect anything within the next few days, not only us but all firms may be called upon to cease delivery - encouraging is it not? 3
In the weeks following this statement the scope of the problems at the steelworks became clearer, with rumours spreading of a long period of idleness beginning at Easter4.
Arthur Newbold began to assess the situation and the repercussions for the company of a layoff possibly lasting several months. With the combined stock of bricks between Newbold's and B.H.P, coming close to one million bricks (approximately 750,000 at B.H.P and 250,000 at Newbold's) Arthur Newbold noted that B.H.P would not be in need of further deliveries until well after production had resumed. The result was plain to see:
...that our works are likely to be idle - the full period of the B.H.P Co closedown, plus the life of whatever furnaces go into action or resumption. 5
The cessation of production at B.H.P had a devastating effect on many industries in Newcastle.
Many of the industries dependent on B.H.P for their supplies of steel had originally been encouraged to set-up in Newcastle by the B.H.P. With the closure of the steelworks, the Lysaghts' plant, which had begun production in 1921, closed in April 1922 with the dismissal of 250 men. The plant was reopened in December but did not achieve an employment figure of 250 men until mid-1923. The Ryland company had barely begun operations when it was forced to close in April 1922 6.
On the 17th of March 1922, Arthur Newbold received a communication "...to the effect that our BHP friends had cancelled all deliveries indefinitely..."7. As a result, all operations at Newbold's Waratah refractory plant ceased on and from the 22nd of March 1922. All employees except three staff were dismissed; 32 men in all were laid off. Since the first dismissals earlier in the year a total of 48 men had been retrenched at the Waratah plant.
At the Lithgow plant intermittent production continued to supply some of the needs of the Hoskins iron works which had continued production. However, the majority of the 25 men previously employed there were out of work. This number may not appear significant in theface of the over 5,000 men dismissed a few months later at the B.H.P steelworks, but in reality it represented the closure of virtually an entire industry.
Arthur Newbold was certain that the lay off would last at least six months8. He therefore decided to use the time to travel overseas and study the refractory industries of the United States and the United Kingdom and also allow those few who remained behind to carry out repairs and renovations at the plants.
During the absence of Newbold, repairs were carried out to the plant, following his instructions. The three remaining employees, a fitter, A. Osbourne, a foreman, Harry Bloomfield and a clerk, John Henry, were put to work winding up what production remained and carrying out repairs. During the lay off the men were responsible for setting (loading the kiln), burning and loading out a kiln of 90,000 bricks, fixing a grinding pan, cleaning boilers, unloading arriving raw materials ordered before the shutdown, overhauling engines and re-roofing some kilns9.
The strategy of the company over the lay off period was essentially the same as that of the B.H.P, it used the forced halt in production to carry out needed repairs and streamline production methods. This was to allow the company to maintain current production levels with a reduced workforce for the furture. Even before the closure of the plant and his departure overseas, Arthur Newbold had been attempting to reduce production costs, especially labour costs, in order to maintain or enhance profit levels.
After leaving in April, Newbold toured the major refractory producing areas, paying special attention to the situation in the United Kingdom. He submitted a report to the Board of Newbold's in November of 1922. In it he reported on conditions not unlike those he had left behind in Australia.
In the area of South Wales, near his birthplace, he inspected plants which had been expanded to met the increased demands of war, but he also found:
....most plants were either totally or partially idle owing to extreme trade depression at present experienced throughout the British Isles. 10
As he moved north the situation did not improve. While describing Sheffield he speaks again of total or partial idleness, resulting in an unemployed list of 50,000 hands11. In Scotland the situation is similar with "...few works are doing even half capacity output whilst many are totally idle."12 The causes were the same as in Australia13.
It was not until the 23rd of April, 1923 that normal operations resumed at the Newbold's Waratah plant. The original Lithgow plant of the company had also closed in March of 1922. This closure had resulted in the dismissal of approximately 25 hands. Although there was sporadic production at this plant during the period of the main shut down, it too did not resume full production until 1923.
Something of the complementary relationship between Newbold's and the steel industry is captured in the output trends shown in Figs. 1 and 2. However, when looking at the firebrick production levels in Fig.1, although there is a fall in production, it does not correspond with the very dramatic fall in steel production seen in Fig.2, for the same period. There are several possible reasons for this discrepancy. The first is the lack of detail in the statistics concerning firebrick production. There is one heading only for this product, there is no indication given of production figures on a sub-product level, for example, no figures of fireclay firebrick production as distinct from silica firebrick production.
So although Newbolds was shut down for a significant length of time, this closure affected only silica brick production. There were many smaller firms, both refractory firms such as the Vulcan Refractories Company and the Illawarra Fireclay and Brick Co, both based near Wollongong, and general brick firms, which produced refractories. These various types of refractory bricks supplied the non-steel sector of the refractory market. It is likely that their continued production is responsible for the less pronounce fall in refractory brick production overall.
As an important aside, another of these South Coast refractory firms should be mentioned. Joseph Pendlebury and his brick works, producing silica bricks, was established in 1901. The existence of this company and its product may contradict the claim of Arthur Newbold that his firm was the first to produce silica refractories in Australia. The claim thatthis honour goes to Pendlebury is made in a local history work concerning the Bulli district, which states that Joseph Pendlebury "...founded the silica brick industry in Australia,..."14. However, no reference is given for this claim and relevant newspaper articles are not specific as to the type of firebrick referred to. Thus it is not possible on the evidence presented to decide positively one way or the other.
The history of silica brick production on the South Coast is further complicated by the existence of the Illawarra Fireclay and Brick Company. Established in 190715, it is significant to the story of Newbold's for two reasons. Firstly, it has been claimed that the company supplied, over a period of time, millions of silica bricks to the B.H.P. Secondly, this company was later purchased by Newbold's in 1965 16.
The first point is of greatest significance here. In an article written in 192117, a description of a visit to an "...interesting industrial enterprise which is pioneering the way in Australia for the production of the highest grade fire and silica bricks..."18 is given. The Illawarra Fireclay and Brick Co. also claimed to have supplied the B.H.P Co., with well over twenty million silica bricks, used to build its furnaces. This claim seriously contradicts the significant claims made by and of the Newbold company concerning their supply relationship with B.H.P.
One situation which this evidence does help to clarify is the anomaly concerning the statistics related to firebrick production mentioned above. In the above analysis it was postulated that the lack of an expected dramatic drop in firebrick production (after the cessation of production by Newbold's) could in part be accounted for by the existence of other producers. The evidence presented relating to the Illawarra Fire and Brick Co., and its production levels, appear to support this view.
The closure of both the Newbold's manufacturing plants resulted in a large scale downsizing of a strategically important manufacturing industry. Yet, when looking at the correspondence from Arthur Newbold at the Waratah plant to his Head Office in Sydney there seems to be no indication of panic or fears as to long term disastrous effects on the company. This would suggest that the financial status of the company was good enough to withstand the almost complete suspension of manufacturing activities and the resultant loss of income.
There was an evident expectation in the letters that the problems at the Steel Works were temporary. Later events proved this belief to be correct. In fact, as with the B.H.P, the shut down allowed Newbold's to carry out much needed maintenance and also to streamline its production process, including a reduction in the work force needed to operate.
By the middle of 1924 the about face in the fortunes of both companies was demonstrated by the fact that Newbold's was having difficulty supplying the needs of the B.H.P.
The close ties between steel and refractories was comprehensively demonstrated in events between 1921 and 1924. When the steel industry collapsed, so did the refractory industry. Yet, when both had recovered from the disasters of the post-war boom and bust, both companies emerged stronger and perhaps, more prepared than many others to survive the challenges that would have to be faced in the following decades.
1 The living wage in New South Wales had risen and B.H.P claimed that this had increased its labour costs by 10%, see Hughes, p.93
2 A.R Newbold to The Newbold Co Ltd Head Office, 11th February, 1922
3 Letter from A.R Newbold to The Newbold Co Ltd Head Office, 18th February, 1922
4 Letter from A.R Newbold to Mr Parkes (Chairman of Newbold Co Ltd) 17th March, 1922
5 Letter from A.R Newbold to Mr Parkes, 11th March, 1922
6 Sheila Gray, Newcastle in the Depression (Newcastle: Newcastle Region Public Library, 1984) p.12
7 Letter from A.R Newbold to the Newbold Co Ltd Head Office, 21st March, 1922
8 Letter from A.R Newbold to Mr Parkes, 24th March, 1922
9 Letter from A.R Newbold to Newbolds Head Office, 21st March, 1922
10 Letter from A.R Newbold to the Newbold Co Ltd Head Office, 28th November, 1922
11 Letter from A.R Newbold to the Newbold Co Ltd Head Office, 28th November, 1922
13 see J.C Carr and W. Taplin, History of the British Steel Industry (Cambridge: Harvard UP, 1962)
© Copyright - Michelle Watson, 1996
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