A history of positive response

The Great Depression, which originated in the US with the Wall Street Crash of October 1929, was a worldwide economic downturn that had a disastrous effect on virtually every country. It was the most severe economic depression of the 20th century, wiping out the value of equities, wrecking the international currency system and causing world commodity prices to collapse. International trade plunged by half to two-thirds, as did personal income, tax revenues, prices and profits. Construction came to a virtual halt in many countries. Facing plummeting demand and rocketing unemployment, areas dependent on basic industries such as farming, mining and logging suffered the most. In the UK the Great Depression brought to a head the mounting discontent of the British steel industry’s financial backers, some of which had already effectively taken control of many family-owned companies.

Tata Steel responds

Early in World War I Tata Steel had embarked on an expansion of the Works and this was followed by a larger expansion programme in 1917 to raise its steel production to 500,000 tonnes.

The value of this expansion programme was not fully appreciated until the world was reeling under the pressure of the Great Depression.The Tatas survived the Depression and supplied nearly three quarters of the country’s steel requirements at that time.

Formation of the British Iron & Steel Federation

Co-ordinated by the Bank of England and boosted by a devaluation of the Sterling, which helped exports and hindered imports, a series of measures were adopted in the early 1930s to cure the industry’s chronic ailments. In 1934 the British Iron & Steel Federation (BISF) was formed. Under its leader, Sir Andrew Duncan, the BISF espoused a policy of rationalised regional steel making. It left investment decisions to individual firms but retained a strong influence over policy matters, as well as control over the industry’s relations with the government. This industry structure remained largely intact until the second nationalisation of the UK’s steel industry in 1967 (the first was in 1949). The result was a swift improvement in business performance as living standards finally began to rise.

BIRTH OF KONINKLIJKE NEDERLANDSCHE HOOGOVENS

In September 1918 Koninklijke Nederlandsche Hoogovensen Staalfabrieken was founded as a private-sector initiative. Inspite of the uncertain future, at the end of the War, a group of 23 men comprising bankers, industrialists, merchants and politicians founded the company under the leadership of the visionary Henry Wenckebach. In 1924 iron making started up in IJmuiden, using cutting-edge coke making and blast furnace technology. Skilled labour was attracted from all around Europe.

By 1929, as the Depression took hold, the company was operating its two blast furnaces at full capacity, selling all the pig iron output, as well as all the furnaces’ by-products. However, a couple of lossmaking years in the pre-Depression period made it financially impossible to realise the dream of
expanding downstream into the melting and rolling of steel.

In 1931 Hoogovens made a profit and, with exports of 225,000 tonnes of pig iron, was the most important merchant iron supplier in the world. By carefully building up a dedicated worldwide customer base, establishing low-cost/high-quality integrated iron making operations and fully exploiting the opportunities to sell by-products, the new company had acquired the ingredients which would ensure its survival through the years of the Great Depression.