The Large Industrial Enterprise

Some Spatial Perspectives

H.D. Watts

• Publisher: Routledge
• Year: 2018
• Print ISBN:
  9781138571006
• eBook ISBN:
  9781351335133
• Topic: Business
• Subtopic: Business General
• Index: Business

Large industrial enterprises are an important phenomena in advanced Western economies. They control large percentages of total industrial assets, employ millions of workers and together with their dependent satellite firms produce their own spatial patterns of employment, location of production capacity and flow of material and information, and thus dominate the economic base of whole towns. This study, first published in 1980, surveys a massive amount of work on large industrial firms, and features an in-depth study of the growth of large industrial enterprises in the UK brewing industry from 1951-76. This illustrates many of the themes discussed in the book.

1 INTRODUCTION

The most important of … [the] fundamental changes in the world industrial environment during the’past half century … is the rise of large scale organisations … to dominate the management of urban, regional, national and international industrial systems.

F.E.I. Hamilton, 1976¹

In the United Kingdom 2.5 million workers are employed by only 100 large industrial enterprises. The same enterprises control more than 3,000 different industrial establishments.² The five largest enterprises in an average industry account for over two-thirds of the industry’s output.³ These figures indicate quite clearly that large industrial enterprises, whether large in an absolute or in a relative sense, are established features of the UK economy. This situation is not unusual. The 100 largest industrial corporations in the United States employ 9.4 million workers, and the 100 largest manufacturing firms control nearly half the assets of all manufacturing firms.⁴

These large industrial enterprises are not new phenomena but they have been growing steadily in importance over the last few decades. The 52 enterprises in the United Kingdom with over 10,000 employees in 1935 had risen to 74 by 1958, and to 85 by 1972.⁵ Moreover, increases have been recorded in the share of net output attributable to the 100 largest concerns. In 1948 they accounted for around 21 per cent of net output and by 1970 for 45 per cent.⁶ Similarly, between 1965 and 1973, the number of workers employed by the 100 largest industrial enterprises in the United States rose by almost 2.5 million, and the 100 largest manufacturing firms’ share of the assets of all such firms rose by 7.4 percentage points between 1948 and 1972.⁷ If these trends continue, Jay has suggested that ‘the small private corporate kingdom controlled by its proprietor will be as rare an anachronism in the future as the landed aristocrat is to-day’.⁸

Not surprisingly, the importance and increasing dominance of large industrial enterprises has attracted considerable attention. One of the first popular works to describe them was Galbraith’s The New Industrial State,⁹ and more recently substantive research such as Prais’s The Evolution of Giant Firms in Britain,¹⁰ Hannah’s The Rise of the Corporate Economy¹¹ and Sobel’s The Age of Giant Corporations¹² has appeared. The enterprises have figured also in more general works such as Bannock’s The Juggernauts.¹³ The majority of the accounts concentrate upon the absolutely large enterprise but Hannah & Kay’s Concentration in Modern Industry,¹⁴ and Aaronovitch & Sawyer’s Big Business¹⁵ redress the balance by focusing on industries where a few firms control a high proportion of the output. A similar task was undertaken in the United States in Blair’s study of Economic Concentration.¹⁶ The work of industrial economists has been paralleled by students of business behaviour. Examples are Chamberlain’s Enterprise and Environment¹⁷ and Channon’s The Strategy and Structure of British Enterprise¹⁸, which developed from Chandler’s seminal study of Strategy and Structure.¹⁹ listing of a selection of works on the large industrial enterprise is indicative of the interest it has aroused in the academic community.

Politicians have expressed an interest too, fearing particularly the sheer power of these large organisations. As Prais observes,

if the greater part of the investment policy of the country is in relatively few hands, and if the greater part of the country’s employment is controlled by relatively few employers, then the market mechanism is increasingly by-passed and replaced — ultimately by the administrative decisions of a few powerful men, whose aims and responsibilities are often not clear.²⁰

Early concern is seen in the anti-trust legislation in the United States, and very much later in the setting up of the Monopolies Commission in Britain. The very largest enterprises in several Western countries have been taken over by the state. In addition to the power of these organisations, much of the political interest comes from the role they play in a national economy in investment, wage and price policies and in export activities. Within Britain in the 1970s both major political parties recognised the need for special treatment of these very large concerns. This is reflected in the Labour Party’s proposals to take an increased financial stake in private industry through the National Enterprise Board and to make Planning Agreements with the largest firms.²¹ Similarly, in their White Paper on Prices Policy the Conservative Party selected for special treatment Category One firms with turnover in excess of £50 million at 1973 prices.²² There appears to be agreement that these enterprises need to be monitored carefully by the state, a point of view expressed forcefully by Holland.²³

The geographical study of large industrial enterprises grew out of the geographer’s traditional concern with explaining and predicting spatial patterns. In geographical enquiries an attempt is made to understand the spatial patterns created by the enterprises, both in aggregate and individually, and to examine their influence on the location of different industries and on city-systems and regions. The effective starting point was McNee’s pioneering attempt to put the geography of large industrial enterprises into perspective. ²⁴ In subsequent papers, Krumme²⁵ and McNee²⁶ have touched upon some of the essential spatial characteristics of large enterprises, but there has been no major review of the field. Since 1960 progress in this area has been slow, so that while McNee regarded ‘the enterprise approach [as] relatively new’,²⁷ so also Krumme argued nine years later that ‘in economic geography particularly manufacturing geography — relatively few attempts have been made to take the phenomenon “enterprise” into account’.²⁸ Since 1969 an increasing number of studies of individual firms such as the British Steel Corporation,²⁹ Royal Hoesch Union,³⁰ Siemens,³¹ Watties Industries,³² Creusot-Loire,³³ Harland & Wolff,³⁴ Triumph³⁵ and Boeing³⁶ have appeared. These works have been paralleled by the examination of small groups of large enterprises operating in specific industries such as fertilisers,³⁷ beet-sugar processing,³⁸petrochemicals,³⁹ forest products,⁴⁰ together with the whole series of enterprises examined by Rake.⁴¹ Despite this ‘rapidly increasing interest in the spatial implications of large enterprise behaviour’,⁴² Dicken was right to argue that the ‘study of the spatial behaviour of business organisations is as yet in its infancy’.⁴³

The lack of detailed geographical studies of large enterprises until the 1970s probably mirrors two factors. The first is related to the quantitative paradigm which has dominated geography. It has been fashionable to approach geographical problems by computer based assaults on large data sets. Yet the large enterprise is often not amenable to this kind of approach. The population of enterprises in any one industry is too small for the appropriate use of many quantitative techniques, and statistical inference is an almost impossible task. Cross-industry studies, while permitting an increase in the number of firms examined, raise a number of difficult problems, the most important being that the results can be influenced markedly by technological contrasts between different industrial sectors. The second factor is the lack of any well-developed theory from which to begin. Admittedly a lack of theoretical developments has not stopped some geographers in the past, but industrial geography has had the classic locational literature on which to draw. Regrettably, but not surprisingly, the majority of this literature is concerned with small, single-plant firms.

Theories about large enterprise behaviour in space are still undeveloped, but with increasing interest in behavioural approaches to geography (for example, Pred⁴⁴) and in location decision making (Stafford,⁴⁵ Townroe⁴⁶ are examples) interest turned away from industries and plants to decision-making units. One such decision-making unit is the large industrial enterprise.

Large Industrial Enterprises

The isolation of a type of organisation for discussion is relatively unusual in economic geography, and until quite recently industrial geographers were constrained within the frameworks of standard industrial classifications of economic activities. In these classifications manufacturing is divided into classes based on the physical characteristics of either inputs or outputs. While this approach has considerable merit, Krumme has suggested that the ‘classification of firms other than to industrial categories [is] … increasingly important’.⁴⁷ The basic argument of this book is that a large industrial enterprise, whatever the industry or industries in which it operates, has more in common with other large enterprises, in the same or different industries, than with small firms operating in the same industry (or industries) as itself. Whether a motor vehicle assembly enterprise can be compared with a brewing enterprise of the same size is a moot point, but the spirit of research in studies of the enterprise is that such comparisons are valid and are likely to lead to significant generalisations.⁴⁸

Once large industrial enterprises are recognised as distinct phenomena, there is one very important reason why economic geographers should consider their spatial behaviour. In one way or another, they impinge on the lives of most members of advanced Western economies.

Large industrial enterprises influence a wide range of social and economic activities because of their size and the geographical distribution of their plants. Not only are these enterprises important employers in their own right, they may also, by input and output links, affect the location of smaller firms. Their decisions to abandon or expand certain plants can modify the economic base of specific towns, and their long-term investment strategies can influence the degree of regional differentiation in a national space economy. Individuals may feel that they have little power over these enterprises, whether this is because they are redundant as a result of a rationalisation policy or because their home environment is changed suddenly by the arrival of a new plant or ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Tables
• List of Figures
• Acknowledgements
• Preface
• 1. Introduction
• Part One: The Large Industrial Enterprise in Space
• Part Two: The Large Industrial Enterprise in Space and Time
• Part Three: Case Analyses: Enterprises in the UK Brewing Industry
• Part Four: Spatial Policy Implications
• Postscript
• Select Bibliography
• Author Index
• Subject Index