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Newbold's had survived the hardest times of the Depression and indeed had made remarkable progress in the expansion of its operations. Profits and company turnover had improved throughout the 1930's. However, by 1939 Australia was again faced with national crisis. As with the First World War, Australia's industries would be dramatically changed by the demands placed on them to supply the wartime needs of the country. Steel as always would play a vital part and with them so would refractories.
In the late 1930's the head of B.H.P, Essington Lewis, had once again travelled overseas to assess the current status of these steel industries. When he returned he sounded his alarm at what he saw, what he believed to be preparations for war. As a result of his accurate forebodings, the steel industry was one of the better-prepared sectors of the economy when war was declared. This was also reflected in the 1940 appointment of Lewis as Director-General of Munitions and later also Director of Aircraft Production1.
By 1940 the steel industry was able to produce a wider range of products than ever before. The B.H.P was also producing a wider range of raw materials and was expanding and consolidating its interests in aircraft and ship production. However, after a production high of 1,700,000 tons of steel in the year 1941/1942, steel production began to fall. A variety of factors caused this decrease, including labour shortages, which in turn affected transport. Added to this was increased labour unrest, the unions who had been at the mercy of the B.H.P during the Depression, were now taking advantage of the labour shortages to win back and improve conditions. Disruptions due to industrial disputes occurred in both coal and steel2 industries.
All of these factors had an important impact on Newbold's. Newbold's, because of the vital role its product played in the production of steel and other industries, was classified an essential industry. This classification was taken very seriously, to the extent that employees who were called up for military service were literally pulled off troop trains at the last minute, so that they could return to their positions in the refractory industry3.
The first years of the war saw a decrease in the company profits, down from £31,814 in 1937/1938 to £20,215 in the year ended June of 1940. This decrease was due to the disruption of production in the first half of 1940 that caused some works to be either partly or wholly closed down. This closure was due, according the Sydney Morning Herald, to industrial disputes in other industries4. It is likely that the strike referred to was the ten week coal strike that ran from March to May of 19405. As the kilns of all the refractory plants of Newbold's were coal fired, as was much of the rail transport of the time, Newbold's would have been adversely affected by such a stoppage.
Newbold's was also affected by the increasing shortage of steel. Construction of a newplant was delayed because of lack of steel and also interruption in the manufacture of plant and other needed equipment6. It was also in this year, 1940 that the name of the Newbold Silica-Firebrick Company was changed to Newbold General Refractories Ltd.
Despite such problems, by 1941 Newbold's were making plans for large scale extensions estimated at £80,000. The Waratah plant at this time had twenty-two kilns, eight with a capacity of 150,000 bricks. Part of the extension programme included the introduction from the United States of new equipment for the machine moulding of silica refractory bricks. These new moulding machines were used in conjunction with a Proctor-Schwartz tunnel dryer, the only one in Australia at the time. The dryer offered better control over drying conditions as well as improved drying times, all of which increased the efficiency of the plant. New buildings were constructed and most of the ancillary equipment was made in Australia7. The whole expansion programme is a good example of the continual push within Newbold's to keep pace with the latest technological advances.
The financial year ended in June 1943 saw the profits of the company rise to £24,194 despite production being hampered by a fire and a shortage of raw materials caused by floods8. Though not mentioned in the newspaper article, it is possible that the fire and the flood referred to occurred at the Thirroul plant. The oral history of the Thirroul plant relating to this period refers to a fire9. The physical layout of the Thirroul plant, with its own reservoir and raw materials located within 100 metres of the plant, also suggest this as a likely location.
When dealing with this period of the company's history there are problems relating to the availability of sources. One major source of figures relating to production levels and the value of refractory products, both domestic and foreign, is the New South Wales Statistical Register. However, for the period of World War Two, no figures are given for local manufacturing or manufactured imports. This is presumably to guard against this information reaching the hostile foreign governments. However, despite the lack of quantative information in the Statistical Registers, the profits figures for this period indicate that growth was strong.
The end of World War Two saw Newbold's in excellent shape and confident of the future. Annual profits had risen to over £27,000 in 1944 and 1945 while plans were being mooted for a further increase in productive capacity. The evident expectation was that demand for refractory products would continue to rise; a reasonable view in the face of the wartime-induced increases in Australia's industrial production.
For the nation as a whole the end of World War Two saw the beginnings of a post-War investment boom. Demand and capital investment which had been surpressed by the Depression and postponed by the War, were both booming. Beginning in the late 1940's, the growth rate of the Gross Domestic Product averaged 3.9 per cent per annum, this was coupled with extremely low unemployment of 2 per cent10 and improving wages, increasedconsumer demand and created a favourable atmosphere for capital investment. As a result the economy as a whole boomed and Newbold's as well as other manufacturers took advantage of this, continuing to expand and diversify their production abilities.
In 1947 the expansion programme began in earnest when the company sought permission to issue 144,000 shares at £1 each. This offer was made to shareholders at one new share for every three held. This move increased the company's capital from its then level of £432,00011. Presumably this share issue was made as part of a capital raising effort to finance expansion begun in 1948.
The 1948 expansion programme was estimated to have cost £200,000, and took two years to complete. The extensions doubled the company's production capacity, especially its ability to produce refractory firebricks for industrial furnaces. By this time the paid-up capital of the company was £550,000 and the total workforce had increased to 500. Arthur Newbold was required to travel overseas in order to purchase new machinery not available in Australia12. As well as the extension at Waratah, another £50,000 was spent on upgrading the facilities at both Port Kembla and Thirroul.
It was perhaps also a sign of a new approach in Australian industry that the company opened an amenities block for its Newcastle employees in 1948. This block contained showers, change rooms, lockers, a canteen, drying room and an ambulance section. It could cater for 200 employees. The block was of good quality and a much needed addition considering the type of work the factory carried out, dusty, dirty and in extremes of temperature13.
Newbold's entered the 1950's, a decade which was to see Australia's manufacturing base further expand, with a forward looking attitude and policy of growth based on increasing capital investment. The expansion begun in 1948 was barely finished when a new round of modernisation and development began. In 1951 the company had work in hand which required a doubling of production in the next two years14. As a result two officials were sent to the United States and England to purchase equipment that would increase production and efficiency in the company. New buildings were erected to house a plant which would see silica refractory production rise from 1800 tons per month to over 5000 tons per month15.
While as always the steel industry played an important role in the fortunes of Newbold's, the increasingly significant and growing manufacturing sector in general provided new markets for Newbold's. During the 1950's many industries which had gained a foothold or had begun their development in Australia due to the necessities of World War Two, were growing and becoming increasingly important to the Australian economy. These industries, such as chemical and mineral processing, ferrous and non-ferrous metal processing, glass and ceramic manufacture, were all users of refractories at some stage of their manufacturing procedure.
While all these industries combined did not consume the amount of refractories that steel did, Newbold's did its utmost to cater for all these markets. By increasing its marketshare in non-ferrous refractories sales, Newbold's strengthened not only its financial position but also its independence from B.H.P. This was a policy which it had attempted to follow from its very beginnings. The increasing number of industrial manufacturers made this policy easier to implement.
By 1954 the profit position of Newbold's was excellent. In the year ended June 1954 to company recorded a profit of £106,848. This was an increase of 64 per cent on the previous year, a remarkable record, even taking account of inflation.
In 1955 Newbold's acquired the issued capital of Goodlet and Smith Ltd (a brick making firm) for £44,000 cash and 44,000 £1 Newbold shares16. This acquisition allowed Newbold's to participate in the post-War building boom and also gave them a base from which to further expand their non-refractory interests in the future.
This period also saw what appears to have been the first serious industrial conflict at Newbold's17. In 1957, 250 members of the Federated Brick, Tile & Pottery Workers Industrial Union walked out over the breakdown of a water cooler. The dispute lasted four days and the men returned to work after assurances were given by the company that the cooler would be fixed. Although on the surface a broken water cooler would seem a trivial excuse for such drastic action, it must be remembered that the conditions the men worked in were dusty and hot, lack of cold water was more than a mere inconvenience.
The fact that this strike made the newspapers is a dramatic illustration of two related points. Firstly, the industrial record of Newbold's must be considered quite good over the century. Its only noteworthy industrial disputes were over these types of issues rather than dangerous working conditions or poor pay levels. Secondly, it provides a dramatic contrast to the poor industrial record of the B.H.P., which even at the best of times was not good. The differences in industrial relations between the two companies testifies to different industrial cultures within the companies. It is possible that the contrasting records of the two companies were also due to size. Newbold's was always a relatively small company with a tradition of personalised labour relations18.
In 1957 the company experienced another large increase in profit, up nearly 43 per cent from the previous year to £241,875. Again further heavy demand from industry necessitated a further set of expansion plans, requiring another 250,000 share issue19 to raise the capital. This time the money was to be spent at Thirroul and Port Kembla rather than at Waratah20. By this time, Port Kembla and Thirroul between them were producing well in excess of ten million industrial bricks per year, the planned extensions increased this by another 50 per cent. The increased demand for refractories from these plants reflects the increasing relative pace of industrial development on the South Coast of New South Wales. This development was spearheaded by the expansion of the steel works at Port Kembla by B.H.P.
The year 1960 was a significant one for Newbold's. In March, Newbold's acquired the Clyde Brick Co of Sydney. This raised the issued capital of Newbold's to £1,150,00021. Later in the year the Ordish Firebrick Co of Melbourne merged with Newbold's. The company recorded a profit of £316,024 and also produced a record tonnage of refractories22. Most significantly, discussions were held with the B.H.P concerning the supply of a new type of refractory to be used in B.H.P's recently-introduced Basic Oxygen Steelmaking (BOS) furnaces.
The first of these furnaces was installed at the Newcastle steelworks. Installation began on the two, 200-ton furnaces in the late 1950's and with production beginning in 196223. These BOS furnaces required a completely new type of refractory - tar-bonded dolomite, requiring totally new production facilities. This required a very substantial capital input from Newbold's. The new plant required the company to raise its authorised capital from £2 million to £5 million24.
This fully integrated refractory plant was built at Hexham and was dedicated to the production of the one type of refractory. Opened in 1963, it experienced some initial teething problems requiring a technician to be brought out from Belgium. The plant was able, when fully functional, to produce 300 to 400 tons of tar-bonded material per week. The plant operated independently from the Waratah works and had a workforce of 35 men. The establishment of a self-contained product dedicated plant was rare and unique to Newbold's25. It seems unlikely that Newbold's would outlay such large amounts of money for a new plant that could produce only one type of refractory unless it had very strong assurances as to amounts and price of purchases in the future.
The decade of the 1960's also saw a change in the climate of industrial relations, bringing Newbold's closer into alignment with what had always been the norm at the B.H.P. Industrial disputes now became increasingly common, with the causes of contention including both wages and safety issues. In 1962 a stoppage over the safety of a kiln roof lasted over a week26. Another strike over roof safety occurred early the following year. However, this strike appears to have been part of a wider industrial disputation as over 1000 men in other industries were also on strike.
In late 1964 and early 1965, there was major industrial trouble resulting from Newbold's attempts to move some of its workforce to a different award. This would have resulted in a loss of over £3 per week to the workers involved. The dispute at its height involved around 400 men from four unions at Newbold's, as well as financial support from other unions such as the Newcastle Waterfront Group of Unions27. Eventually the dispute ended when the men returned to work under the original award.
After this dispute most action relates to individual unions, striking over such issues as unfair dismissals, and pay disputes. Overall, compared to many other industries in the region, notably the B.H.P, Newbold's industrial relations record remained relatively good. Although some disputes did involve the entire workforce of the plant at Waratah, they did not last long periods of time or spread to other unions.
Throughout the rest of the 1960's Newbold's continued to expand its production facilities at Waratah, Port Kembla and Thirroul. Newbold's also continued to follow B.H.P. In 1967 plans were announced to construct a new refractory plant at Kwinana in Western Australia. As part of a government initiative to attract industry to the West, the State Government had allocated land to B.H.P and other major industrial concerns. Newbold's was also given land - near the B.H.P and Alcoa28.
Technological change continued within the steel industry, driving change within the refractory industry. B.H.P as part of a $300 million development programme at Australian Iron and Steel, spent $45 million on installing a BOS plant at Port Kembla29. In the late 1960's plans were underway for the construction of a tar-bonded dolomite plant on land Newbold's owned at Unanderra, to cater for the new BOS plant. Construction commenced in 1970 and was completed in late 1971.
However, the Unanderra plant was to be a problem for Newbold's from its first days of production. The plant itself involved an investment of $3 million, while costly technical problems were experienced with the new rotary kiln. This kiln was vital to the production of the refractories and its problems caused long delays in the whole production process. By 1973, the full half-year loss that the company suffered could be attributed to problems at Unanderra30.
However, the financial problems experienced by Newbold's at this time were reflective of the economy as a whole. In a survey conducted in the last part of 1973, 73 per cent of firms said they were expecting a slow down and the majority were convinced it had already begun. This pessimism was well founded, as yearly growth slumped dramatically at the beginning of 197431.
This pessimism combined with massive post-1973 inflation and the oil crisis induced world economic downturn severely affected the financial position of Newbold's. Thus, in 1974, with Newbold's in an unsettled financial position a hostile takeover bid was launched by a company called Manufacturing Resources of Australia (MRA). On the 5th of March, 1974 MRA a company 50 per cent owned by Hooker Corporation, announced a bid for all of the issued capital of Newbold's not already owned by MRA32. The bid amounted to a $19.2 million offer for Newbold's33.
The bid for Newbold's became further complicated and surrounded in controversy because of the way in which the bid itself was conducted. While Hookers involvement in MRA was known the identity of the owners of the other 50 per cent holding in MRA was not. This led to a query from the Sydney Stock Exchange, which was not answered. A second more forceful query was also ignored. This treatment infuriated the Stock Exchange as questions had previously been raised about its takeover procedures following an earlier situation. The MRA situation was further inflamed by the failure of the company to issue a Part A statement within the required time period34.
While these events were under way, Newbold's and its directors were attempting to block the bid. Their various strategies included up-grading the value of the company and approaching the B.H.P, to propose that it buy the Newbold's refractory division35. B.H.P at this time was on the side- lines, watching its major supplier of refractory products being pulled to and fro.
Throughout the battles, B.H.P was in an interesting position. Newbold's supplied an estimated 50 per cent of its refractory production to B.H.P36, thus giving B.H.P considerable power over Newbold's but also making itself vulnerable. At some stage B.H.P, as the major consumer of Newbold's products, would have to be consulted by the eventual winner of the battle about its wishes. On the other hand, because of its dependence on Newbold's it had to play some role in order to ensure that its own interests were not compromised.
On the 9th of May, 1974, MRA withdrew its bid. However, it continued to buy Newbold shares on the stock market. Newbold's responded by making another offer of the company's refractory division to B.H.P. In turn, this proposal was blocked when MRA used its share power to veto the sale. On the 17th of August, 1974, five of Newbold's directors stepped down and acknowledged that they had lost the battle against MRA.
It thus appears that Newbold's fell prey to the era of the hostile takeover and the 'asset stripper'. Newbold's with its large asset base, including substantial land holdings, and deteriorating earnings returns was a classic target for the so called 'takeover merchant' of the period. It is possible that the structure of the company, with fairly self-contained and sprecialised branches made the possible breakup of the company an easier option.
Following the takeover, the break up began of the sixty year old Newbold General Refractories Ltd. While part of the company continued trading as Newbold's, the B.H.P acquired the major refractory plants at Waratah, Thirroul and Unanderra. The B.H.P then operated these plants under the name of Australian Industrial Refractories.
Thus it was under similar circumstances to the major B.H.P takeovers of the 1920's and 1930's, one of financial difficulty or the threatened existence for the company being taken over, that Newbold's finally became part of the B.H.P. Newbold's was too important to the existence of B.H.P for that company to allow Newbold's to cease functioning. As a result it was finally forced to take over the company which it had been closely associated with for over sixty years.
1 Hughes, p.132
2 Hughes, p.139
3 Interview with ex-Newbold Employees, Thirroul Plant, 26/7/1994.
4 SMH 27/8/1940
5 Hughes, p. 136
6 SMH 27/8/1940
8 SMH 30/8/1943
9 Interview with Ex-Newbold employee, Thirroul Plant, 26/7/1994
10 R Maddock "The Long Boom 1940-1970" in R Maddock and I McLean (eds) The Australian Economy in the Long Run (Sydney: Cambridge UP, 1987) p. 79
11 SMH 26/8/1947
12 NMH & MA 2/7/1948
13 NMH & MA 29/10/1948
14 NMH & MA 6/7/1951
16 Newbold General Refractories Ltd Directors' Report and Balance Sheet, 1955 (known hereafter as Directors' Report).
17 The AEU Strike of 1954 is the first reported strike to occur at Newbold's. Other disputes may have occurred but were not reported in the media.
18 Interview with Ex-Newbold employees, Thirroul Plant 26/7/1994
19 NMH & MA 19/1/1957
20 Directors' Report, 1956
21 NMH & MA 29/3/1960
23 McLennan, p. 20
24 NMH & MA 19/9/1960
25 NMH & MA 23/5/1963
26 NMH & MA 4/12/1962 - the kiln roof collapsed in January the following year narrowly missing several workers.
27 NMH & MA 8/1/1965
28 NMH & MA 2/12/1967
30 IM 21/3/1973
31 A Pagan, "The End of the Long Boom" in R Maddock and I McLean The Australian Economy in the Long Run (Sydney: Cambridge UP, 1987) p. 115
32 AFR 5/4/1974
33 AFR 5/5/1974
34 AFR 10/4/1973
35 AFR 8/5/1973
36 AFR 9/5/1973
© Copyright - Michelle Watson, 1996
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