A UK index of manufacturing decline and banking’s rise
The mergers and acquisitions trend means the FT30 index of 1952 holds just two names in the FTSE 100 today
The shipbuilder Swan Hunter, Leyland and Morris Motors carmakers and an array of textile firms dominated the stock market in the year the Queen came to the throne, when the postwar economy was a quarter of its size now and yet to have a single bank banking sector that warranted an entry in the leading stock market index of the day.
That index, the FT30, was created in 1935 by Maurice Green and Richard Clarke, respectively editor and chief leader writer of the Financial News (which later merged with the FT). Clarke called it a “truly modern and sensitive industrial ordinary share index” having set out to choose stocks that were not necessarily the biggest companies, but among the most actively traded and those that reflected the shape of UK industry. Clarke said: “It is likely to be representative for some time to come.” Clarke said.
The only names in the index of 60 years ago and today are Guest Keen & Nettlefolds (GKN) – which began in iron production and is now in aerospace and motor engineering – and the sugar firm Tate & Lyle. But while names in the FT30 index of 1952 such as Dunlop Rubber and Hawker Siddeley might be thought to belong to the past, they can be traced forward to a firm, Invensys, that still exists. Until last year it was in the FTSE 100 – which was not introduced until 1984 – but it was dropped for the inclusion of the international trading group Glencore.
Tube Investments has a similar story, a steel tube maker later to become known as TI. In the 1950s and 60s it included several bicycle manufacturers makers such as Raleigh. In 2000 it merged with Smiths, which is also in the index 60 years later.
The merger and acquisition theme continues as you read down the list of names in the FT30 index of 60 years ago. Two of the textile firms in the original index, J&P Coats and Paton & Baldwins, merged and by the 1980s had become part of the Coats Viyella empire, which was later taken over by Guinness Peat. Another engineer, Vickers, eventually ended up inside Rolls-Royce.
Lancashire Cotton, an amalgam of businesses in the troubled spinning industry, was a notable entry 60 years ago. It was bought by Courtaulds just over 10 years later. Courtaulds itself had a place in the FT30 and in the 1980s bought another constituent of 1952, Pinchin Johnson & Associates. Courtaulds eventually came to symbolise the loss of Britain’s status as a manufacturer, with its chemicals arm being sold off and its textile business – once a major supplier to Marks & Spencer – being sold off to US and then Hong Kong companies.
The now-bust FW Woolworth’s inclusion shows its once-firmly established place in national life. At the other end of the shopping scale was another national institution, Harrods. The upmarket department store in London’s Knightsbridge has had many incarnations in the 60 years since then, being taken over by House of Fraser in 1959, embroiled in a row with Lonrho, then the 25 years under Mohamed Al Fayed until its sale in 2010 to Middle Eastern investment funds.
Some of the 1952 constituents are more easily recognised under their newer names. Associated Portland Cement became Blue Circle in the 1970s before Lafarge of France took it over in 2001.
Electric & Musical Industries was quickly shortened to EMI, taken over by Thorn in 1979 and demerged 15 years later. Guy Hands’ private equity business Terra Firma later got burnt after buying the music empire just as the credit crunch took hold in 2007.
Turner & Newall, the first UK industrial asbestos weaver, also met a difficult end after being sold to Federal Mogul, which collapsed under the weight of asbestos claims and led to the T&N pensions scandal.
Obvious absentees from the index when the queen began her reign are banks, which is perhaps not surprising given the restrictions on the financial industry at the time. The Council of Mortgage Lenders points out that in the early 1950s, almost all lending was conducted by about 800 small, locally based building societies which operated under centrally fixed recommended mortgage rates.