JOSEPH LUCAS (INDUSTRIES) LIMITED
Birmingham
Webmasters note:
I
was the Lucas Industries company pilot from 1979 - 1987, based at
Birmingham Airport in conjunction with Central Air Services Ltd.. The first aircraft I flew was a Cessna Golden Eagle 421
(G-BEFT)and latterly a Cessna Citation 1 (G-BHTT). When I joined the
company the chairman was Sir Bernard Scott who then retired and handed
the reins to Sir Godfrey Messervy, a true gentleman in every sense of
the word. I also had the pleasure of teaching Sir Godfrey to fly.
The
demise of Lucas is one of Birmingham's saddest industrial stories. How
this once great giant and major employer was broken up into a series of
smaller non-descript companies and lost its identity is truly tragic.
Birmingham's Think Tank compounds the loss by having no information
about this landmark company.
My father was a supervisor on the dynamo line at Shaftsmoor Lane from approximately 1948 - 1955.
LUCAS, The story of a Giant!
The Lucas
business was founded in Birmingham in 1872 by Joseph Lucas, trading
with his son Harry Lucas as Joseph Lucas & Son for the Manufacture
of pressed metal goods, including ship, coach and carriage lamps.
Later, the firm developed the manufacture of oil lamps, bells and other
items for supply to the expanding cycle industry which was concentrated
mainly in the West Midlands. In 1897 a public company, Joseph Lucas Ltd.
was formed with a nominal share capital of £225,000 to take over the
Lucas business. Supply by the company to the motor industry of
non-electrical goods began about 1902, and was followed a few years
later by the company's entry into the electrical field with the
manufacture of car batteries and dynamos, and lighting sets for sale to
car owners. Expansion in the manufacture of electrical equipment
followed the company's acquisition in 1914, for the sum of £9,000, of
the share capital and business of Thomson-Bennett Ltd. which made
Magnetos. From this early take-over of the Thomson-Bennett magneto
business stemmed the paramount interest of Lucas in the supply of
electrical equipment for the motor industry. During the 1914-18 war,
the company was engaged principally in the manufacture of shells, fuses
and electrical equipment for aircraft and military vehicles. In this
period it also began the manufacture of starter motors which had by
then been developed in America. From 1923 Mr. P. F. B Bennett (later
Lord Bennett of Edgbaston), one of the two former partners in the
Thomson-Bennett business, and Mr. Oliver Lucas, a grandson of the
founder of the Lucas business, were until Mr. Lucas's death in 1948
Joint Managing Directors of the Company they established close personal
relations with the principal vehicle manufacturers and themselves
became leading personalities in the motor industry. (Lord Bennett died
in 1957.)63. A notable feature of the early days of Lucas's supply of
electric equipment was the close relations which were established with
Morris. We understand that Lucas's first bulk order was from Morris in
1914 for the Morris Cowley and that by 1923 over half its output of
starting and lighting equipment was supplied to Morris. The value of
the Morris business to Lucas is illustrated by the fact that in the
four years from 1921 to1925, Morris's sales of vehicles jumped from
3,000 a year to 55,000. At the same time, however, Lucas was selling in
increasing quantities to other manufacturers, including Armstrong
Siddeley, Rover, Standard and Triumph, with the result that by 1926 the
proportion of Morris business to Lucas's total sales had dropped to
about one-third. In 1926, Lucas obtained the contract for the following
year for the whole of Austin's requirements of starting, lighting and
ignition equipment. For the year 1925-26, Lucas's production of
starting, lighting and ignition sets for supply as initial equipment
averaged 2,000 a week.64. Between 1920 and 1925 Lucas laid down the
pattern of its present distribution and service arrangements. It
established its own depots in London, Liverpool, Leeds, Edinburgh,
Glasgow, Newcastle, Manchester, 23 Birmingham, Bristol, Dublin and
Belfast for local distribution to wholesalers, traders and the public
and for service and repairs. Between 1925and 1929 a number of wholesale
electrical stockists and repairers were appointed as Battery Service
Agents to stock supply and service not only Lucas batteries but also
other Lucas motor vehicle goods, including spare parts for repairs.
Lucas also established a number of its own trade and repair outlets
which it operated through County Electrical Services Ltd., a company it
formed for the purpose through nominee shareholders. Lucas did not
publicly disclose its ownership of these outlets and has said that the
reason was that it wished to test customers' reactions to its products
and service and that the information obtained through its own depots
was always coloured to some extent and not sufficiently reliable
Acquisitions 65. The development of the company in the inter-war years
was marked not only by rapid internal growth due to the increased
demands of the Vehicle manufacturers but also by the acquisition of a
number of other businesses and by certain important agreements made
with other electrical equipment manufacturers, British and foreign
.Lucas has said that amongst the reasons for its present dominant
position in the motor electrical industry are (i) that its competitors
got into financial difficulties with the collapse of the boom after the
first world war, (ii) that competitors were in a relatively worse
position than Lucas was when the American motor trade threatened to
sub-merge the British motor trade even in the British market (before
the introduction in 1915 of the McKenna duties) and (iii) that when the
outlook was black it acquired certain competitors who were in financial
trouble. Lucas attaches importance to the fact that among the
businesses of which it acquired control were its two biggest
Competitors
C. A Vandervell Ltd. and Rotax (Motor Accessories Ltd.)
PAGE 2
The
following businesses which were competitors in the manufacture or
supply of the goods specified in the reference, or of component parts
of such goods, or were potential competitors in this field, were
acquired by Lucas in the inter-war period 1924 Brolt Ltd=.1925 E.I.C.
Co. Ltd.=1926 C. A. Vandervell Ltd.=1926 Rotax (Motor Accessories)
Ltd.=1927 B.L.I.C. Ltd.=1929 A. Rist (1927) Ltd.=-1929 Powell &
Hanmer Ltd.=1930 M.L. Magneto Syndicate Ltd.=1930 North & Sons
Ltd.=1937 Globe & Simpson Ltd.=1937
Bosch Ltd
= 1939- Express Magneto- (Repairs) & Electrical Co Ltd. - Brolt
Ltd.-In 1924 Brolt Ltd. which had started in business in 1911as a
manufacturer and factor of motor electrical equipment, was in financial
difficulties and offered its business to Lucas who purchased it for
about £50,000. This purchase enabled Lucas to extend its initial
equipment business, particularly for commercial vehicles, as Brolt had initial equipment contracts with certain vehicle manufacturers, including
Beardmore and Jowett.
One of the reasons given to Lucas's shareholders for the purchase was
that if Lucas did not take over the business someone else might, which
could be to Lucas's disadvantage in the future. In 1925, E.l.C. Co. Ltd.
was' manufacturing motor cycle magnetos and was about to start the
manufacture of magnetos for cars. However, following the death of the
majority shareholder the business was offered to Lucas who purchased it
for about £35,000.69. The next businesses to be taken over by Lucas, C. A. Vandervell Ltd.and Rotax (Motor
Accessories) Ltd., were at the time its principal competitors in the supply of electrical equipment to the motor industry. C. A Vandervell Ltd was
formed in 1916 with a share capital of £350,000 to takeover a business
carried on by Mr. C. A. Vandervell at Acton. The products of the
company included Batteries, Magnetos Dynamos, Starters, Lamps Horns and
other motor goods. Mr Vandervell was one of the pioneers in the
manufacture of batteries and dynamos for motor vehicles, having started
manufacture of these items well before the time when Lucas first began
the manufacture of electrical goods, and he had made particular
progress in the development of electrical equipment for the heavier
commercial types of vehicles. By 1922 the supply of electrical
equipment for commercial vehicles was largely in the hands of C A.
Vandervell Ltd. and Rotax (Motor Accessories) Ltd. was formed
in 1917 by the brothers Eugen and Hermann Aron with a nominal share
capital of £175,000 to carry on business as a manufacturer of and
dealer in all types of motor goods including batteries and other
electrical items. In 1917, Rotax acquired the business of H T Saunders & Co., Birmingham. In 1921 over one-third of the issued capital of Rotax was acquired by Kynoch Ltd. In the same year Rotax amalgamated with Newton Electrical Works Ltd., Taunton
a company in which the Aron brothers already had an interest. Lucas's
records show that at about this time it was meeting keen competition
from Rotax hi the supply of electrical equipment for cars. Nobel Industries Ltd., through Kynoch Ltd., held a substantial interest in the reformed Rotax (Motor Accessories) Ltd.
and Sir Harry McGowan (later Lord McGowan) joined the Board. Sir Harry
McGowan is understood to have offered the Rotax business to Lucas.
There is evidence that in 1923 Lucas and Rotax established some
sort of working arrangement. In 1925 the Arons suggested that Lucas and
Rotax should jointly take over C. A.Vandervell and in 1926 an offer to
C. A Vandervell was made by Sir Harry McGowan on behalf of
Lucas. The offer was accepted for a consideration of £321,745 in cash.
Lucas took the view that joint management of C A Vandervell by Lucas and Rotax would not be successful and it decided to take over Rotax also. The consideration of £707,217 for the purchase of Rotax
was satisfied partly in cash but for the most part by the issue of
Lucas £1 Ordinary shares. Lucas decided to concentrate manufacture of
equipment for the heavier types of vehicles in C A Vandervell and to
develop Rotax for the manufacture of equipment for aircraft. In
1931, following a manufacturing and markets haring agreement made
between Lucas and
Robert Bosch A.G., Stuttgart it has been ascertained that I.C.I, (the successors of Nobels) now has no shares in Lucas.
(Bosch)
the well known German manufacturer of electrical
equipment for motor vehicles (see the name of C A Vandervell (In which
Bosch had acquired a 49 per cent, interest from Lucas) was changed to C.A.V.-Bosch Ltd. In 1937 Lucas bought back for £294,000 Bosch's
interest in
C.A.V. Bosch Ltd.
which hi 1939 changed its name to C.A.V. Ltd.
This company is still concerned almost entirely with the production and
supply of electrical and other equipment for heavy vehicles. Rotax Ltd is now concerned principally with the production of equipment for aircraft. In 1927, Lucas acquired B.L.LC. Ltd.,
a company whose principal product was Magnetos but which had also
developed a lighting and starting set. This latter project is said to
have been unsuccessful and Lucas purchased the business for £9,000 on
the general grounds that although there might be a loss on the
realisation of the assets acquired it was desirable to keep other
people from obtaining the trade name and developing competition to a
small but irritating extent.. A. Rist (1927) Ltd. was formed in
1927 to take over a business originally founded in 1916 by the late Mr.
D. A. Rist and in which Lucas had taken an increasing financial
interest.
PAGE 3
Its
products included Ignition coils, Horns, Lamps and other electrical and
non-electrical equipment for motor vehicles. By 1929, Lucas had
acquired a controlling interest in the company, through nominees, and
by 1934 complete ownership. In 1934 A Rist (1927) Ltd. acquired Flexible Electric Cords Ltd., a small company manufacturing electric cable for motor vehicles and other uses; this company then changed its name to Rists Wires & Cables Ltd.
Lucas has said that it financed this development in order to safeguard
the supply of cable for use with its electrical equipment as it wanted
to have a source of supply outside the cable manufacturers' "ring" that
existed at that time. A Rist (1927) Ltd. was wound up in 1936 and its
business in Ignition coils and other motor goods was taken over by Rists Wires & Cables. In 1931 Lucas had formed, through Rists The Beacon Lamp Co. Ltd.
for the manufacture of filament bulbs for motor vehicles. At that time
Lucas was largely dependent for its requirements of such bulbs on
members of the Electric Lamp Manufacturers Association (E.L.M.A.). When eventually E.L.M.A. learned of Lucas's ownership of the Beacon Company the latter was in production and Lucas was consequently in a better position to negotiate terms. In1939 E.L.M.A.
made a new 10 year agreement with Lucas under which Lucas obtained very
favourable terms for its purchases of bulbs but agreed to dispose of
the Beacon Company to members of E.L.M.A. for the sum of
£100,000 and to buy its requirements of bulbs exclusively from the
members. Lucas's connection with the Rist companies, which has always
been through nominees, was not publicly disclosed.
Powell & Hanmer Ltd.,
which Lucas acquired in 1929, was at that time its principal competitor
of non-electrical equipment for cycles and motor cycles. When a
director of that company joined the board of Austin, Lucas feared that
he might encourage
Powell & Hanmer to produce electrical equipment for supply
to Austin and that the association might also affect Lucas's
quotations to other large vehicle manufacturers. Lucas made an offer to
Powell & Hanmer and purchased the business for £500,000.M. L. Magneto Syndicate Ltd. was a Lighting Starting and Ignition business owned by Smiths.
Its sale by Smiths to Lucas in 1930 for the sum of £116,250 was related
to a general trading agreement made between Lucas and Smiths in 1930. North & Sons Ltd.
then one of the leading manufacturers of Magneto’s and also a
manufacturer of speedometers and other instruments for motor vehicles,
was purchased by Lucas in 1933 for £22,347. Lucas subsequently
recovered half the purchase price from Smiths. Lucas took over the Magneto side of the business and Smiths the instrument side. Globe & Simpson Ltd.
was a wholesaler, retailer and repairer of electrical and other motor
goods, was formed in 1921 to acquire an existing business. In 1937, the
whole of the share capital of the company, which was then a Lucas
Battery Service Agent operating a number of outlets in Yorkshire and
elsewhere, was purchased by Lucas, through nominees, for
£64,708.According to
Globe & Simpson's Board
minutes, its Managing Director had understood from Lucas that all Lucas
wanted was "sufficient control to be in the position to determine
policy and prevent the operation of any policy detrimental to Lucas
interests". Shortly after this purchase, the shares in Lucas's
subsidiary company, County Electrical Services Ltd were transferred to Globe & Simpson in 1939 Through Globe & Simpson, Lucas purchased Express Magneto (Repairs) & Electrical Co. Ltd., for the sum of £2, 542 this company became a subsidiary of
Globe & Simpson. Also in 1939, Lucas formed two new companies as subsidiaries of Globe & Simpson Express Electrical Services Ltd and Irvine Electrical Services Ltd.
Each of these subsidiaries operated a number of outlets. That later
history and activities of this group of subsidiary companies, whose
ownership by Lucas has remained undisclosed. In 1924
Bosch Ltd. was formed as a wholly owned subsidiary of Robert Bosch A.G. to distribute
Bosch
products in the United Kingdom. By the agreement made in 1931 between Lucas and
Bosch Ltd was transferred To C.A.V Bosch Ltd. In 1937, therefore, when Lucas regained complete control of
C.A.V. Bosch Bosch Ltd. became Lucas's wholly owned subsidiary. In1954 Lucas sold
Bosch Ltd. back to
Bosch
for the sum of £25,000.Agreements. Between 1926 and 1939
Lucas entered into a number of agreements which were concerned with the
manufacture and supply of one or more of the items of equipment
specified in the reference. The following agreements related solely to
batteries 1926 Joseph Lucas Ltd and
Peto & Radford 1926 Joseph Lucas Ltd and Batteries Ltd 1928 Joseph Lucas Ltd - and Batteries Ltd.-1929 Joseph Lucas Ltd. Svenska Ackumulator Aktiebolaget Jungner
Pritchett & Gold and E.P.S Co. Ltd and Batteries Ltd 1933 Joseph Lucas Ltd - Chloride Electrical Storage Co. Ltd - And Oldham & Son Ltd. The last named agreement governed the activities of the British Starter Battery Association (the B.S.B.A.),
formed in 1933, and provided for the adoption of uniform trade terms
and common prices for replacement Batteries. It also regulated the
distributive trade in replacement batteries and provided for the
marketing by members of a cheap fighting brand, the "Jewel" Battery, to
meet competition by the smaller manufacturers of batteries that were
cheaper than the standard ranges of the
B.S.B.A. members. Lucas's Board minutes record that this competition was "intense" in 1933. The history and activities of the B.S.B.A. and Lucas's relations with Chloride over the years, including the other four agreements noted above.
PAGE 4
The
following three agreements, each covering a wide range of motor
electrical equipment, which were entered into by Lucas in this period
are Joseph Lucas Ltd. and S. Smith & Sons (Motor Accessories)
Ltd 1931 Joseph Lucas Ltd. and Robert Bosch A.G., Stuttgart-1937 Joseph Lucas Ltd. and
The Electric Auto-Lite Company U.S.A.
By a number of other agreements entered into in the period, Lucas
obtained rights in certain patents and designs and access to
manufacturing knowledge relating to single items of equipment or to
component parts. The other contracting parties included Delco Remy
& Hyatt Ltd. (General Motors) - A. H. Hunt (Safetisigns) Ltd Sparks Withington Co U.S.A., and Trico Folberth Ltd a subsidiary of
Trico Products Corporation, U.S.A. The agreement with Delco-Remy & Hyatt Ltd. was concluded in 1932 and terminated in 1950. Delco Remy
granted Lucas rights to manufacture and supply in the United Kingdom
vacuum control units (component parts of distributors) to a design
owned by
General Motors. Lucas agreed to pay Delco Remy the sum of 3 cents each for the first 50,000 vacuum control units manufactured to General Motors'
design, and 2 cents each for numbers exceeding 50,000. The arrangement
was to continue for an initial period of three years and would then be
reviewed.
Delco Remy agreed to supply Lucas with all the information it
had on the design provided such information was not the subject of any
new patent application. The agreement with A. H. Hunt (Safety signs) Ltd
was concluded in 1932 and terminated in 1946. Hunt granted Lucas rights
in the British Commonwealth in four patents relating to Trafficators.
Lucas undertook to pay Hunt royalties of 6d.for every pair of
Trafficators sold to vehicle manufacturers and, for a period of five
years, 2s. 6d. for every pair sold for replacement or as accessories up
to 10,000, with provision for varying the amounts after five years. The
parties agreed to maintain the retail prices and the trade and factors'
discounts fixed by agreement between them. Hunt undertook not to supply
Trafficators for initial equipment. A series of agreements with Sparks Withington
relating to Electric Horns, the first of which was concluded in1934 The
agreement with Trico Folberth was concluded in 1937 and terminated in
1950. Trico granted Lucas rights for the United Kingdom in
three patents relating to Trafficators, for a consideration of £2,200.
Trico and Lucas agreed not to undercut each other's prices to their
respective initial equipment customers for goods embodying the patented
inventions. Each party was to quote for and supply such goods at
prices which were exclusive of any other articles and were not to
include any allowances, rebates or discounts other than the usual terms
" which might be adjusted in consideration of the supply of other
goods. Lucas has told us that, in general, when it grants licences for
patents or know how "to other manufacturers clauses are inserted in the
agreements to prevent competition with Lucas, and that licences granted
by foreign manufacturers contain similar provisions. Exclusive
manufacturing rights for the United Kingdom and as many overseas
countries as possible are generally obtained. Joseph Lucas Ltd. and
S Smith & Sons (Motor Accessories) Ltd.
Three agreements were concluded on 20th May 1930 two sales agreements
and one general trading agreement which enabled Lucas and Smiths to
concentrate their respective resources in separate fields of the motor
electrical industry. At that time Smiths, in addition to its interests
in instruments and sparking plugs, had a Lighting, Starting and
Ignition Department which held contracts for the supply of initial
equipment to some of the smaller vehicle manufacturers and for ten
years had also been supplying, under its own trade name,
Automotive Batteries which it obtained from Peto & Radford it also owned the share capital of M. L. Magneto Syndicate Ltd By the first of the sales agreements with Lucas, Smiths
sold to Lucas all the assets of its Lighting, Starting and Ignition
Department, for a total of about £5,000 and undertook for a period of
20 years from the date of the agreement not to engage in the
manufacture, supply or distribution of Lighting, Starting or Ignition
equipment (except sparking plugs) for mechanically propelled vehicles
(whether for land, sea or air) or for stationary engines, except in so
far as such equipment was manufactured by or purchased from Lucas. It
was further provided that the two companies should enter into a trading
agreement for the purpose of regulating their future working
arrangements. This sales agreement provided for the sale by Smiths to
Lucas of the whole of the issued share capital of M.L. Magneto Syndicate Ltd.
The consideration for the sale was £116,250 which was satisfied by the
Allocation to Smiths of 31,000 Lucas Ordinary shares of £1 each. The
trading agreement between Lucas and Smiths was expressed to be for a
term of 15 years and there after to continue until determined by either
party at six months' notice. Three lists were appended to the
agreement. List A, the "Smiths List", comprised products then manufactured by Smiths
List B, the "Lucas List", comprised products then manufactured by Lucas
List C the "Outstanding List", comprised products not included in Lists
A or B. Lucas undertook that it would not during the existence of the
agreement manufacture or supply any of the products in the Smiths List
without the consent of Smiths, and Smiths gave a similar undertaking in
respect of the Lucas List. The products in the Outstanding List were
reserved for future consideration.
PAGE 5
The
items in the Lucas List were predominantly electrical and included
Starting, Lighting and Ignition equipment (but not spark plugs),
Ammeters, Batteries, electric windscreen-wipers, Lamps and Electric
Horns. Amongst the other goods were Bulb Horns, Mirrors and Instrument
panels containing Switchgear (in which provision would be made when
required for the It has been ascertained that Smiths now has no shares
in Lucas. (Fitting of Smiths' instruments) The items in the Smiths List
included Clocks, Petrol Gauges Pressure Gauges Oil Gauges, Dashboard
Thermometers Sparking Plugs and Mechanical Wipers as well as a number
of other items of car equipment and certain aviation instruments,
Smiths was to continue to obtain its requirements of Bakelite mouldings
from M.L. Magneto Syndicate Ltd. until such time as it decided to
manufacture such mouldings for its own consumption only, and it agreed
not to compete with M.L. Magneto. Car heaters, which in 1930 were
practically unknown hi this country except for much specialised uses,
were not mentioned in any of the lists. All products in the Lucas List
dealt hi by Smiths and manufactured by Lucas were to be obtained by
Smiths only from Lucas and were to be resold by Smiths at prices fixed
by Lucas. Lucas undertook to supply such products to Smiths at its best
trade prices so as to enable Smiths to resell at the prices fixed by
Lucas and make a reasonable profit. If Lucas was unable to meet Smiths'
requirements of such products, Smiths was to be free to meet its orders
from retailers or Service Agents by obtaining supplies from other
sources There were special provisions enabling Smiths to make dashboard
and
Spot
lamps and a combination of Clock and Mirror. Lucas undertook to supply
Smiths with Batteries at such prices as would enable Smiths to resell
them to garages, Service Agents, factors and for export (but not to
vehicle or aircraft manufacturers) at the same prices and terms as
Lucas and leave Smiths a reasonable margin of profit. Lucas's terms to
Smiths for batteries were to be 2 % off Lucas's retail list prices.
Smiths have said that the intention of these arrangements was
admittedly to remove the competition between the two companies in
connection with magnetos, lighting and starting ". Certain of its Board
minutes of the period confirm that it took this view of the
arrangements. On the other hand, Lucas has told us that it considers
the arrangements to have been of no particular importance: it bought a
section of Smiths 'business which Smiths wanted to sell and the
agreements covered the conditions of the sale. Joseph Lucas Ltd and
Robert Bosch A.G., Stuttgart. Bosch Ltd. was formed in 1924 by
Robert Bosch A G to distribute Bosch
products imported from Germany and to act generally as
Bosch's agent
in the United Kingdom. The products imported included Sparking Plugs
Starting, Lighting and Ignition equipment and spare parts for repairs.
We understand that before 1931 some
Bosch
products were supplied to United Kingdom
vehicle manufacturers for use as initial equipment, including tractor
magnetos to Ford, magnetos to certain motorcycle manufacturers and some
sparking plugs. In 1930 the shares in Bosch Ltd were transferred to
Bosch's associated company,
Industria Kontor Switzerland. Lucas's Board minutes record that in 1928
Bosch told
Lucas that it was considering manufacture outside of Germany There
clocks and some of the instruments included in the Smiths List fall
into class (vi) of the reference when electrically actuated. At the
time of the agreement, however, those made by Smiths were mechanical.
Offers to come to England: it recalled that Lucas had suggested that if
Bosch
had any new products for which a market could be found in England Lucas would be willing to go into it with Bosch
in order to avoid unnecessary competition. Bosch
proposed that the two companies should work
together in supplying Lighting - Starting and Ignition equipment for
the heavier commercial vehicles and in heavy duty and aircraft Magnetos
and other items. It suggested that it should purchase from Lucas a half
share in C A Vandervell Ltd and that there should there-after be some
form of demarcation between the products to be manufactured by Lucas
and by C. A. Vandervell (which had by then begun the manufacture of
fuel injection equipment for diesel engines). The negotiations which
followed Bosch's
proposals resulted in the conclusion in
October 1931 of three agreements which provided for the exchange of
patents and technical information, for certain market sharing
arrangements and for the sale to
Bosch of 49 per cent, of the issued capital of
C. A. Vandervell Ltd. The name of C A Vandervell Ltd was changed to C.A.V. Bosch Ltd. and
Industria Kontor transferred to C.A.V. Bosch its shareholding in
Bosch Ltd
The Principal Agreement was to operate from 1st April, 1931 until31st
March, 1946. It was provided that subject to any statutory provisions
affecting the respective parties, the agreement should not be
terminated on account of war and that on Restoration of commercial
relations the period of suspension should be added to the remaining
term. The arrangements applied to an Agreed Area defined as Great
Britain and Ireland the Dominions (except Canada and Newfoundland) and
the British Empire and Mandates (except Palestine and Iraq), and to
three schedules of products which included all the goods specified in
the reference and Other goods, including diesel engine fuel injection
equipment, for vehicles And for other uses (e.g. for aircraft, marine
and stationary engines).
PAGE 6
In
terms of the reference goods only, the arrangements provided that in
the Agreed area the manufacture and sale of equipment for cars and the
manufacture of all lamps, horns and batteries for commercial vehicles
were to be exclusive to Lucas and the manufacture of other equipment
for commercial vehicles and the sale of all equipment for commercial
vehicles were to be exclusive to
C.A.V.-Bosch.
Lucas undertook not to manufacture equipment for cars outside the
Agreed Area (except in the U.S.A. and Canada) and not to sell equipment
for cars and light commercial vehicles in Germany except for use as
replacements for Lucas products, and not to sell in competition with
Bosch in any part of the world outside the Agreed Area (except in the
U.S.A. and Canada) beyond what was the ratio of its sales to
Bosch's sales in 1930. C.A.V. Bosch was not to manufacture or sell equipment for commercial vehicles outside the Agreed Area.
Bosch
undertook not to manufacture in the Agreed Area equipment or cars and
light commercial vehicles (or any other goods except Sparking plugs for
cars and commercial vehicles were included in the list of products the
manufacture of which was to be exclusive to C.A.V.-Bosch but there is
no evidence that such manufacture was, in fact, contemplated. In 1935
an agreement between Smiths and
Bosch was concluded which provided for the manufacture by Smiths (K.L.G.) of ceramic plugs to Bosch patents. Appended to this agreement are letters from Lucas and C.A.V. Bosch
waiving
C.A.V. Bosch's rights under the 1931
Lucas Bosch agreement to manufacture and sell sparking plugs in the Agreed Area. Be agreed) and to ensure that
United American Bosch
and its Canadian subsidiary would not do so either. Bosch undertook not to sell any products in the Agreed Area except through
Bosch Ltd. or direct to Ford, Cork. Bosch Ltd. undertook not to engage in any manufacture, and not to sell at prices less than the prices fixed by Lucas or by
C.A.V.-Bosch
for comparable items: the intention was that
Bosch Ltd should not compete for business which was intended by the agreement to be exclusive to Lucas or
CA.V.-Bosch.
The agreement included comprehensive provisions for the exchange
between Lucas and Bosch of patents and know-how. Briefly, the First
Supplemental Agreement covered the transfer of 49 per cent, of
C.A.V.-Bosch's issued capital to Industria Kontor, and the rights and
obligations of the parties in the event of termination of the agreement
including the winding-up of
C.A.V.-Bosch. The Second Supple-mental Agreement covered arrangements for the management and control of
C.A.V. Bosch and for the distribution of profits between Lucas and
Bosch.
The shares in
C.A.V.-Bosch numbered 1 to 153,000 were "A
"shares and were allotted to Lucas and the shares Numbered 153,001
to300, 000 were "B” shares and allotted to Bosch. It was provided that
the first charge on profits was to be a cumulative preferential sum of
£12,000 a year payable to the "B " shares the next £38,000 was to be
allocated to the "A" and "B" shares in the ratio of 51:49; the next
£50,000 to the "A" and "B" shares in the ratio of 31:19; and the
balance of profits in the ratio of 51:49. The agreement also provided
that any profits retained by way of reserve were to be placed to the
credit of two special reserve funds, Reserve Fund "A " and Reserve Fund
B In 1937 after long negotiations, Lucas purchased
Industria Kontor's 49% interest hi
C.A.V.-Bosch
for a total consideration of £294,000. Lucas has said that it was the
approach of the 1939 war which enabled it to do this. The purchase was
dealt with in two agreements dated 26th May, 1937. The first of the
1937 agreements was between Lucas
Industria Kontor and an associate of
Bosch in Holland, and was to operate until 31st March, 1946. It provided for the transfer to Lucas of the "B "shares in
C. A. V Bosch
and for their conversion into 147,000 10 % Cumulative Preference shares
of £1 each, without voting rights. Lucas was to receive the amount in
Reserve Fund A (£45,000) and
Industria Kontor the amount in Reserve Fund B(also £45,000).As from 1st April, 1937 Industria Kontor was to be remunerated by
C.A.V.-Bosch out of the latter's profits for services to be rendered by
Bosch in
accordance with the provisions of the 1931 agreements. The second
agreement dated 26thMay 1937, was described as supplementary to the
three 1931 agreements and was to run from 1946 until 1966, unless s
otherwise terminated, and there after for periods of five years subject
to notice of termination. Besides the remuneration provisions, it also
covered the position on termination of the agreements and cancelled the
Second Supplemental Agreement of 1931. Lucas has said that all its
agreements with
Bosch were automatically cancelled when war broke out in 1939. In that year, the name of
C.A.V.-Bosch Ltd. was changed to C.A.V. Ltd.
which in the following year took over Bosch Ltd. trading activities,
such as they were. Lucas has said that its 1931 agreements with Bosch
were of far greater importance than all its other agreements. From this
agreement we had complete access to
Bosch's technical knowledge and experience. It could also be said that the agreement helped
Bosch
considerably as they had access to Lucas's technical knowledge in
connection with electrical equipment. However, the most important point
of all was that
Bosch joined with Lucas in setting up a joint company
C.A.V.-Bosch
to whom they passed on the know how for manufacturing diesel engine fuel injection equipment.
PAGE 7
Fuel
injection equipment is not, however, within our terms of reference
Joseph Lucas Ltd. and The Electric AutoLite Company, U.S.A .In the
early 1930's AutoLite one of the largest suppliers of motor electrical
equipment in the world, was a major supplier to Ford and other motor
manufacturers in the U.S.A. and also supplied a part of Ford's
requirements in the United Kingdom. According to Lucas's records,
in1931 AutoLite was considering starting production in the United
Kingdom and Lucas was apprehensive about the effects not only on its
share of the Ford business but also on its business with General Motors
(Vauxhall) and with the wholly British manufacturers. A working
agreement between Lucas and AutoLite was negotiated which was intended
to enable Lucas to secure, with AutoLite's full manufacturing
assistance and its undertaking to stay out of the United Kingdom, the
whole of the Ford business in the United Kingdom in return for minimum
annual payments of £20, 000. However, in 1932 before the agreement
could be finally concluded, AutoLite lost the Ford contracts in the
U.S. In 1933 a further draft agreement was prepared. A Lucas Board
minute of 20th June, 1933 recorded that this followed "the original
lines which were that the Autolite Company and ourselves have an
interchange as they bind themselves not to manufacture in England and
we agree of course not to go into America: they place all their
manufacturing experience at our disposal and we pay them, not the sum
originally agreed, but £12,000 for the first year, £15,000 for the
second year and £17,000 for the third year ".The minute goes on The
AutoLite Company are giving us the fullest information to enable us to
hold the Ford business on this side on our own. The reasons which
justified this agreement two years ago are equally applicable to-day.
We have taken the figures out and this proves that if AutoLite came to
England to manufacture for Ford only which was what they were prepared
to do and we lost half our Ford business to them, it would cost us
about two or three times as much as we are paying them under the
agreement. It will be realised there fore that the bargain we have made
is quite a good one on these grounds only but when the effect which
their presence would have on Vauxhall to commence with and the All
British group as time went on is understood, it will be seen that the
Ford position is only one side of the question, and their presence here
would force down the Ford prices on which the above calculations are
based." However, the proposed agreement was not concluded and fresh
terms were again discussed in 1934 and in 1935. Eventually, in1937, an
agreement was concluded for a term of three years whereby Lucas
purchased for the sum of $50,000 per annum, payable in quarterly
instalments during the life of the agreement, AutoLite's complete
knowledge And the exclusive right to use AutoLite's machines,
processes, patents and designs relating to the manufacture of ignition
coils, distributors, starter motors and current-voltage control units.
AutoLite agreed to keep Lucas informed of all relevant research and
development through drawings visits, exchanges of engineers, etc., and
there were reciprocal arrangements for use by AutoLite of Lucas
designs. Lucas was debarred from manufacture of the goods in question
hi the U.S.A. and Canada and from supplying such goods in these
territories except as parts of complete exported vehicles or as
replacements for Lucas equipment. AutoLite was similarly debarred from
manufacture and supply in the United Kingdom. Lucas has said that "at
the time this agreement was made America undoubtedly dominated the
automobile trade and their prices for components were lower than they
were in this country in spite of their higher wage scale. This was due
partly to volume and partly to their production engineering. Because
they have high wages in America they had to put special efforts into
devising labour saving machines. If, therefore the British Motor Trade
was to survive and progress in the worlds markets it was necessary for
us to be able to supply our components to the British motor
manufacturers at lower prices than were currently do. We therefore,
wanted to have knowledge of the way they did it. Our materials would
cost no more and labour would cost less. We wanted to know how to
produce a smaller volume at equal prices or lower than were current in
America. This agreement gave us access to AutoLite's production
technique and was well worth the money. Trading arrangements Initial
equipment. from the time shortly after the first world war when Lucas
began to supply a range of starting lighting and Ignition equipment,
its contract prices for these goods to the vehicle manufacturers for
use as initial equipment were usually negotiated on the basis of a
comprehensive price for the set of equipment to be supplied for a
particular model of vehicle. Lucas has told us that the custom of
pricing in sets was not introduced from America: there was no
comparable situation there as both Ford and General Motors made many of their own components. In Germany, however,
Bosch's
arrangements were very similar to those of Lucas. The
importance to Lucas of close liaison with vehicle manufacturers, from
the drawing board stage onwards, is underlined by the statement of the
then Managing Director in a report to the Board dated 21st September,
1921 that" once our models are designed into the car we can hold the
business ".Wherever possible Lucas obtained orders for other items
(such as switches, Horns Cable, etc) to be included in the sets and a
Board minute of 18th February 1925records that "it is part
of our principle to push wherever we can for any of the general lines
as soon as we have fixed up the contract for Lighting and Starting, or
Magnetos.
PAGE 8
The
initial equipment contracts were negotiated individually at the highest
levels and were subject to hard bargaining on both sides. Lucas has
told us that its negotiators might have indicated to the vehicle
manufacturer that if he bought from Lucas an item which he was then
obtaining from a competitor a favourable adjustment would be made to
the comprehensive price of the set; or, to take another example,
special reductions might have been offered in return for promises of
increased volume of business. The vehicle manufacturer, on his side,
might have attempted to get lower prices from Lucas by offering more
business, whether by numbers of sets or increased range of items
purchased.96. Shortly after Lucas’s acquisition of C.A.V. and Rotax a Lucas Board minute of 25th August, 1926, recorded, that “we have successfully arranged for the whole of next year’s business with the
Austin
Co.
for all their models. This is very gratifying, as it will be remembered
that this was the one place where there was a possibility of our having
difficulty, due to their attitude over amalgamations. We have
completely changed this, and have shown them that we are able, by
cooperative action, to put forward reduced prices for a composite Set,
when C.A.V. alone would have been quite unable to meet them.”
Lucas has told us in explanation of this record that “the motor trade
was very upset about the amalgamation of C.A.V. and Rotax
with Lucas. It was a creation of a monopoly it was not really of our
seeking, which is also clear from the records. We did say to them we
would be able to give them the benefits of the amalgamation, which were
benefits of reduction. Mr. Lucas was able to go along and say that by
reason of the amalgamation they would get better service than they
would merely with C.A.V. in other words, it would work to there
advantage. Austin had been entirely C.A.V. customers before the
amalgamation, and Austin were the most resistant and most awkward about
it. Their bitterest enemies in those days, Morris, were entirely in the
Lucas camp, and Austin did not welcome it at all. Sir Herbert Austin
was a very bitter man about it.” Lucas added that it brought its prices
down very materially when it acquired
C.A.V. and Rotax. We have quoted Lucas above as saying that the acquisition of C.A.V. and Rotax
established its monopoly position. This was of course in its particular
field in the motor electrical industry., namely in starting, lighting
and ignition equipment other competitor of any significance existed in
this field, particularly as regards initial equipment, from 1926 until
after the end of the last war. Lucas has told us that in the 1920’s and
1930’s initial equipment prices were a matter of “catch as catch can “
between the negotiators, and that it tried to make each of its big
customers feel that he was getting” favoured nation treatment”.
Initially, a bargain was struck on a comprehensive price for the set of
equipment for a particular model of vehicle. The set was never
delivered as such but in its constituent parts. For the purpose of the
invoicing of these various parts, the comprehensive contract price of
the set was split up, more or less arbitrarily but with some relation
to the cost of each item, and these invoices were stamped “nominal
prices for invoicing purposes only “.Lucas has said that in the early
days these pricing arrangements caused trouble on some occasions and
that subsequently efforts were made to ensure that the nominal prices
were more or less consistent as between one customer and another so
that if invoices went astray or the details otherwise became known
customers would not be alarmed at apparent discrepancies. In any case
where the price details became known and a customer complained about
apparent discrepancies, Lucas was able to reassure him by pointing out
that the invoice prices were purely nominal and were only part of an
overall arrangement. It appears that after the bargain had been struck
on a comprehensive price for a set of equipment, there was frequently
some reduction in that price which took the form of a confidential
rebate or allowance. These rebates were allowed for a wide variety of
reasons e.g. because the vehicle manufacturer was offering increased
volume of business, or to assist him in marketing a cheap car. From
time to time a vehicle manufacturer would suggest that he should be
allowed a special rebate on the basis of “ 100 percent, loyalty “ (i.e.
on condition that he placed all his business with Lucas) but Lucas says
that it never granted rebates on this basis. Generally the rebates
allowed were round sums off the price of each set but sometimes they
took the form of a percentage reduction at the end of the year
according to the number of sets purchased. Lucas has told us that the
arrangement with each initial equipment customer was a matter of
personal bargaining by individual directors. At that time Lucas’s costs
were decreasing rapidly due to the increased scale of production
following the amalgamation with Rotax and C.A.V., and it
had “money to give away at the end of the year “whether this was done
by rebates or by overall cuts in prices was a matter of individual
bargaining.
Replacements and spare parts
In the late 1920’s and the 1930’sLucas continued to build up its
service arrangements, both by the appointment of additional wholesale
distributors and by increasing the number of its own outlets which it
operated first through its subsidiary,
County Electrical Services Ltd. and, after 1937, through the
Globe & Simpson
group of subsidiaries ( Lucas’s wholesale distributors comprised its
appointed Battery Service Agents, who were generally stockists and
repairers of electrical equipment and many of whom were distributors of
motor vehicles.
PAGE 9
The
factors of general motor goods and to a limited extent, certain of the
vehicle manufacturers, notably Ford who wished to distribute
replacements and spare parts for their vehicles through their own
vehicle distribution organisations. Lucas, in common with most if not
all concerns of any size in the motor industry generally, has always
practised resale price maintenance at all stages of the supply of its
products for the replacement and accessory trade. For enforcement, it
relied largely on the collective sanctions which were provided by the
machinery of the Motor Trade Association (later the British Motor Trade
Association), which was the sole disciplinary body in the motor
industry. These sanctions included fines, removal from approved lists
and, in the last resort, stop listing. Lucas also introduced agreements
with certain individual wholesalers which required the wholesaler to
under-take to maintain Lucas's approved prices and discounts Battery
Service Agency Agreement. In 1926 Lucas introduced a form of agreement
covering the appointment of its Battery Service Agents. These Agents
were generally wholesale stockists and repairers of electrical
equipment and many of them were distributors of motor vehicles. The
individual agreements signed by the Battery Service Agents prohibited
them from selling batteries or battery parts other than of Lucas
manufacture and required them to supply the batteries and parts at the
prices and discounts laid down by Lucas. They were also required to use
only Lucas parts for the repair of Lucas batteries and to provide
certain specified services in connection with the supply and repair of
batteries. A clause in the agreement relating to goods other than
batteries was first introduced in1932: this required the Agent "to
stock and sell only genuine Electrical Spare Parts supplied by the
Principals [Lucas], for equipment of the Principals' Manufacture. The
agreement of 1933 between Lucas Chloride and Oldham which set up the
B.S.B.A. laid down the discounts to be allowed to Service Agents who
signed the usual Battery Service Agents Agreement". Lucas retained hi
its agreement the clause relating to goods other than batteries. The
bulk of Lucas's supplies of replacement batteries, other electrical
replacements and spare parts were distributed through this network of
Battery Service Agents, whose sales were made mainly to local retailers
(garages, repairers, etc.) but who themselves generally also had some
retail trade.
Preferential
Spares Discount Agreement. Lucas also made use of other classes of
wholesalers the factors of general motor goods, specialists to
stockists of electrical equipment and motor vehicle distributors. (The
last two classes would have included Service Agents for other battery
manufacturers.) For these classes of wholesalers, Lucas introduced
about1933 a form of agreement called the Preferential Spares Discount
Agreement which provided that in consideration of the granting of terms
in excess of the normal trade discounts on spares, the signatories
undertook to buy, whether for resale or for use in repairs, only
genuine spare parts " for electrical equipment manufactured by Lucas
and to send All armatures requiring rewinding to Lucas. The term
genuine spare parts meant those spare parts originally supplied by
Lucas. Lucas has said that its object in introducing this agreement was
to ensure that its spares were actively sold by the signatories and
used for the repair of Lucas products. The B.90 Factory Exchange
Service Lucas has told us that up to1935 or there bout’s it was
customary in the motor trade for repairs undertaken by the
manufacturers or electrical specialists to be assessed on a time and
materials basis, and that the traders were allowed a discount of 15 per
cent, off these charges. Where Lucas units were sent to a specialist
electrical repairer or were returned to the Lucas factory, the time
taken in obtaining reports on the defects and estimates of the cost of
repair caused much dissatisfaction both to traders and users
particularly when the users were transit customers or were operators of
goods Delivery vehicles. These difficulties led to considerable
correspondence in Motoring and trade journals. Flat rate repair charges
were tried but were not a success. Lucas has explained that in 1937 it
received representations on these matters from the Motor Agents'
Association and discussions followed on ways and means of improving the
existing system to the benefit of all concerned manufacturers,
wholesalers, retailers and users. The discussions resulted in the
introduction of a price formula covering fixed net prices at each stage
of distribution of a range of factory rebuilt units to be supplied in
exchange for worn or damaged units handed in by users. For the most
part, wholesalers and retailers were to be allowed approximately the
same cash profit margins. Lucas has said that this scheme, or the "B.90
Factory Exchange Service " as it came to be called, had the merit that
traders and users alike knew precisely what the charges were going to
be and disputes and contentious correspondence were there by avoided.
The new system is said to have be well received by the trade press, and
the new price list was introduced in January, 1938.The Motor Agents'
Association has confirmed its part in the negotiations with Lucas, and
has added that negotiations on these matters continued until early in
1939 and were resumed in 1940 when the discount to retailers
represented by the net prices of the B.90 units was increased from 15
per cent, to 25 per cent.
PAGE 10
He
B.90 Service applied to Distributors, Magnetos, Dynamos, Starter
Motors, Current-Voltage Control Units, Horns, Trafficators and
Armatures for Dynamos and Starter Motors. Lucas has also told us that
some time between 1937 and 1939 the vehicle manufacturers introduced a
fresh class of trade grading fleet operators and that this raised new
problems not only for Lucas Agents but also for motor distributors
handling this class of trade. Lucas ultimately conceded that it would
be only equitable for the profit margin or differential to be shared on
sales of its products to fleet operators and special discount rates
were introduced. The B.90 units were permitted to be supplied to fleet
operators at a discount of approximately 10 per cent, off the net
retail list prices. Lucas considered that as sales to fleet operators
were a relatively small part of the total trade, the fundamental
principle of the supply of B.90 units at fixed net prices at each stage
of supply was not invalidated. The alternative would have been to issue
special lists of the prices of these units for fleet operators and this
was considered impracticable.106. In its earlier days, Lucas published
a Master Parts catalogue covering large numbers of popular spare parts
for repairs and also of complete replacement units, such as
distributors, Dynamos, Starter Motors, etc. In 1938, Lucas brought out
a new form of catalogue the Master Price List. This covered all the
spares, replacements and accessories which it supplied to the trade,
apart from B.90 units for which separate price lists were introduced.
Included in the Master Price List were some new units of the same
descriptions as units covered by theB.90 Service that is, some
windscreen-wiper motors, Magnetos, Trafficators, Current Voltage
control units and armatures but the Master Price List did not include
any new Distributors, Dynamos or Starter motors Products As we have
mentioned in paragraph 41, the 1920's and, more particularly, the
1930's saw new and important developments in the range of electrical
equipment for motor vehicles, including the introduction of coil
ignition, Electric Horns, Current-Voltage Control Units and
Trafficators. Most of these innovations were first developed in the
U.S.A. and these and new developments in established items such as
distributors, Dynamos, Starter Motors and lamps, were the subject of
patent licence and know-how arrangements between Lucas and certain
American concerns ( As regards Windscreen-Wiper devices, Lucas has told
us that mechanical suction wipers, using the suction of air to the
engine by taking a connection to the air inlet manifold, were first
developed and became almost universal in the U.S.A. Lucas developed a
suction wiper using the same principle. There were constant
difficulties over the American-owned patent and Lucas has said that it
experimented with an electric motor and successfully developed this
type of apparatus which was eventually adopted by most of but not all
its initial equipment. By 1939, Lucas was producing the following goods
specified in the reference :Class (i) Batteries (lead acid automotive
only);Class (ii) Ignition coils - Magnetos - Distributors ;Class (iii)
Dynamos - Current voltage control units - Starter motors ;Class (iv)
Windscreen-wiper motors Class (vi) Ammeters Class (vii) lamps of
various kinds, Trafficators Horns and relay units for Horns. Work on
the standardisation of components for motor vehicles had begun in the
early 1920's, but relatively little progress had been made by 1939 as
regards the electrical equipment manufactured by Lucas. Lucas was
virtually the sole supplier of Dynamos, Starter Motors and Distributors
for initial equipment. For the year 1937-38, Lucas production of
Starting - Lighting and Ignition sets for supply as initial equipment
averaged 9,100 a week. The Period from1939 Wartime Production
Throughout the war, Lucas produced electrical equipment for military
and civil vehicles and for aircraft. Many of its standard products were
adapted for war uses: for example, its Windscreen-Wiper Motors were
used to operate Aerial Cameras and its Starter Motors were adapted for
the electrical control of tank Gun Turrets. Outside its normal fields
Lucas produced a wide variety of military requirements including Gun
Turrets aircraft wing sections, primers, fuses, anti-aircraft shells,
bombs of various kinds, control and release mechanisms and metal
pressings. It also under-took research work for the Government,
including research and development work on jet propulsion in factories
it took over especially for the purpose.Acquisitions111. The following
is a list of the businesses concerned with the supply of goods
specified in the reference which have been acquired by Lucas since1939
with, in each case, the year of acquisition and the price paid:
David B. Irvine (Edinburgh) Ltd – £1943
Avon Electrical Services Ltd £15,066
1945 Bon Accord Electrical Repairs Ltd
Butlers Ltd £350,000
1949 - Auto Services Electrical Co. (Falmouth) Ltd. £21,000
1953 The Wrexham Motor & Electrical Engineering Co. Ltd £65,000
1954 Starting, Lighting & Ignition Services (Midlands) Ltd £1,875 1954
Auto Electric Services (Stourbridge) Ltd. £11,000 1958
Cox & Co. (R.W.) £250,000
1960 Harry Rawlings & Co. Ltd £39,500
1962 Gravesend Car Electrical Co. Ltd £12,500
PAGE 11
In addition, Lucas acquired in 1957 a 50 % per cent, interest in Siba Electric Ltd. Butlers Ltd.
the only manufacturer of reference goods acquired since 1939 was formed
in 1911 as a family business of brass-founders at Smallheath,
Birmingham, and had developed as an important manufacturer and supplier
of motor vehicle lamps. At the time of its acquisition by Lucas in 1948
60% per cent, of its production was represented by its sales of lamps
of various types to Ford and Vauxhall and Simms (who sold the
lamps to heavy vehicle manufacturers) for use as initial equipment. At
this time, Butlers was supplying the whole of Ford's requirements of
lamps for initial equipment. Butlers also had a substantial business in
the supply to wholesalers of accessory lamps, mainly fog lamps and
spare tail-lamps of various sizes. Lucas has told us that although it
knew that Ford Vauxhall and Simms would not like the purchase
and that it did not want to upset them, it nevertheless decided to
accept the offer it received from Butlers on the general ground
that it would be a mistake to refuse the additional capacity,
particularly for short orders and obsolete types of lamps. The purchase
of the share capital of Butlers was affected through nominees, and
ownership by Lucas was not made public until 1952 when the company was
listed as a subsidiary in Lucas's Annual Report. Lucas has told us that
its directors had informed
Ford Vauxhall and Simms in 1948, and that its reason for keeping the purchase otherwise secret was that it did not want to disturb Butlers'
wholesaler customers or upset its own wholesalers at home and abroad
some of whom had territorial franchises: also Lucas did not want to
bring the spares side of
Butlers' business into the Lucas distribution and service
network but wished to study it and find out how it worked. Lucas also
said that it did not want to add to current press criticism of it self
as a monopolistic giant which absorbed competitors. The other seven
companies acquired between 1943 and 1954 were wholesale motor
electrical businesses: all were Lucas Battery Service Agents and some
operated a number of separate branches. By 1954, the shares in these
companies and in the Globe & Simpson Company and its subsidiaries
were held by Lucas through a nominee holding company. Robert Guthrie Ltd.
Cox & Co. (R.W.} Ltd., an old established family business
distributing and repairing motor vehicle equipment and operating in
1958 from eight addresses mostly in the London area, had a long
connection with Lucas as a Battery Service Agent.
The original founder had been the General Manager of Rotax when Lucas acquired that company in 1926, and when he wanted to start in business on his own account he took over from Lucasthe C.A.V.
Battery Service Station at Camden Town. Lucas has told us that it was
clearly understood by all concerned that Mr. Cox's interest in this
business was to be a life interest only and that on his death it was to
be sold back to Lucas on an asset basis. Mr. Cox's bad health and
considerations of death duties prompted his family to press for early
implementation of the understanding and in 1958 Lucas purchased the
shareholding through nominees. Lucas has said that it did this
reluctantly as it had hoped it would not have been necessary to make
the purchase during the course of our inquiry. An additional reason for
keeping the purchase secret was that Lucas did not want the retail
trade or its other Service Agents to know that there was any change in
ownership Harry Rowling’s & Co. Ltd Catford, a Lucas Service Agent operating from two addresses, was acquired by Cox & Co. (R.W.) Ltd in February 1960. Lucas has told us that Cox was already negotiating with Rawlings before Lucas took over Cox, and that it told Cox not to negotiate for any further businesses. In April, 1962 the principal shareholder of the Gravesend Car Electrical Co. Ltd.
a Lucas Service Agent, offered the business to Cox as he wished to
retire and was anxious to secure continued employment for his staff.
Lucas has told us that in the special circumstances it thought it best
to let Cox take over the Gravesend business. Siba Electric Ltd. This
company, which was formed in 1954 supplies a combined starter generator
unit for use on motor cycles, scooters and mopeds. The units were at
first imported from Siba Elektrik G.m.b.H., which had a 50 %
per cent, interest in the company, but by 1957 the company was itself
manufacturing a substantial number of the component parts and importing
others from
Robert Bosch A.G. Lucas has told us
that in 1957 it was approached by the Chairman of Siba Electric (who
owns the other 50 % per cent, interest in the company) as Siba Elektrik
had sold its business in Germany to
Bosch
who did not wish to have any interest in the small British company.
Lucas has said that although at that time it was being asked to make a
similar combined starter generator unit it had not considered that, for
Lucas, the future for such units was sufficiently attractive. It
decided, however, to take up the offer of a 50 % per cent, interest in
Siba Electric and purchased the shares, through a nominee, for a
consideration of £8,578. It has since lent the company a total of
£37,500.Agreements111. Since the end of the war the position regarding
certain of the agreements has been as follows. The agreement of 1929
between Joseph Lucas Ltd., Svenska Ackumulator
Aktiebolaget Jungner, (Sweden) = Pritchett & Gold and E.P.S. Co. Ltd. and Batteries Ltd. is still operative. The trading agreement of 1930 between Joseph Lucas Ltd and S Smith & Sons
(Motor Accessories' Ltd) remained in effect until 1956.
PAGE 12
Until 1950 Smiths
was debarred from making lighting, starting or ignition equipment
(other than sparking plugs) not only by the mutual obligations in this
trading agreement but also by the undertaking in the agreement for the
sale to Lucas of its Lighting, Starting and Ignition Department. Smiths
has told us that between 1950 and 1956 it considered more than once the
possibility of terminating the trading agreement but took "no positive
action which might have been regarded as ' hostile'" until1956, when
the agreement was terminated by common consent. This was done in a
letter from Smiths to Lucas, endorsed by Lucas, which stated that
Smiths felt the agreement had ceased to serve any useful purpose. The
position regarding competition between the two companies since the end
of the war is dealt with in earlier pages. We understand that there has
been no renewal of the pre-war agreement between Joseph Lucas Ltd. and Robert Bosch A.G Lucas has told us that there is no understanding with
Bosch
about spheres of influence for sales of initial equipment or replacements. A Board minute of 28th April, 1955, of the Lucas management company recorded that the Chairman reported "that the purpose of his visit to
Bosch on 7th
April was to re-establish the good Relationship which existed pre-war
and to emphasise that, notwithstanding the competitive situation to
which the two Companies must now accustom themselves there was no
reason whatsoever why they should not collaborate in anyway which would
be of mutual advantage to their respective organisations. He reported
that these sentiments were reciprocated by
Bosch
and a frank discussion on several matters of
direct concern had taken place." As regards competition between the two
companies since the end of the war, Lucas has told us that it hoped
that if it did not irritate
Bosch by attempting to obtain initial equipment business in Germany,
Bosch
in turn would not irritate Lucas in this country however the two
companies compete keenly for initial equipment business Elsewhere for
example in Sweden The agreement of 1937 between Joseph Lucas Ltd. and The Electric AutoLite Co. terminated on 1st
January 1940, and Lucas has entered into no further agreements or
patent licensing arrangements with AutoLite After 1939, Lucas entered
into a number of agreements which were concerned with the manufacture
or supply of one or more of the components specified in the reference.
The more important of these are described in earlier paragraphs below
1942 Joseph Lucas Ltd. and Chloride Electrical Storage Co. Ltd. 1948 Joseph Lucas Ltd. and Ducellier France.1949 Joseph Lucas Ltd. and Sparks Withington Co U.S.A. 1949
C.A.V. Ltd. and Ateliers de Construction Lavalette France.-1953 and 1955 Joseph Lucas Ltd. and Ducellier, France.-1960 Joseph Lucas Ltd. and Chloride Electrical Storage Co. Ltd.-1962 Joseph Lucas Ltd. and Ducellier France. Joseph Lucas Ltd and Chloride Electrical Storage Co. Ltd
Although this section deals specifically with the period from 1939, the
history of the relations between Lucas and Chloride from 1914 to 1960,
as ascertained from the documents available to us and from the evidence
of the companies themselves by the early 1920's Lucas had become the
principal supplier of lead acid storage Batteries to vehicle
manufacturers for initial equipment. Lucas has maintained this lead
although Chloride has always held a proportion of the initial equipment
market, principally as a supplier to Ford Vauxhall, Rolls Royce
and some commercial vehicle manufacturers. Some measure of co-operation
between Lucas and Chloride appears to have been established as early as
1914 when Chloride granted Lucas a licence to use patents relating to
wood separators. In 1926 an agreement was made between Lucas and Peto & Radford (then controlled by Chloride through Pritchett & Gold and E.P.S. Co.,
see early paragraphs relating to moulded Battery boxes which provided
for exchange of technical information and a pool and quota arrangement
The pooling arrangement we not until 1931 and the exchange of
information until 1936 Lucas's Board minutes record its view that this
arrangement avoided the suggestion of the formation of a jointly owned
company and also, that Lucas would be able to cooperate with a French
concern, Societe" des Accumulateurs Electriques which had a similar
working arrangement with Peto & Radford. In the same year there
were conversations between Lucas and Chloride about the prices of
replacement batteries. Chloride's Board minutes of 16th
September, 1927, record that co-operation had been obtained from the
more important manufacturers of portable batteries on the regulation of
discounts to be granted to the trade and that an agreement had been
approved. This agreement appears to have been the forerunner of the
B.S.B.A. agreement of 1933.121. Since 1926, Lucas has had certain
exclusive selling rights for auto-motive alkaline batteries
manufactured by Batteries Ltd. This company had been set up by the
Swedish company, Jungner in 1919. Chloride obtained an interest in it in 1923 and control in 1933 In 1926 Batteries Ltd.
gave Lucas sole selling rights in the United Kingdom and British Empire
for its alkaline batteries for lighting purposes on commercial
vehicles. This was followed in 1928 by an agreement which gave similar
rights for motor cycles. In both, Lucas agreed not to trade in alkaline
accumulators other than those of Batteries Ltd. In 1929, under an agreement between Lucas, Jungner Pritchett & Gold and E.P.S., and Batteries Ltd.
PAGE 13
Lucas acquired shares in Batteries Ltd
with the right to appoint two directors. a share holder and the earlier
agreements remained in force, not to have trade in other Alkaline
Batteries, and, so long as it was a shareholder, not to acquire any
interest in any other concern making them. In explaining its reasons
for making those arrangements Lucas has said that "it was felt at the
time that there was the danger of the alkaline type of accumulator
becoming the more popular type for use on road vehicles. This would be
to the disadvantage of the lead acid battery business in which Lucas Chloride Oldham
and other firms had invested money in plant and buildings and built up
big business. Experience has shown that this danger did not really
exist Co-operation between Lucas and Chloride in the replacement market
for lead acid automotive batteries was effected through the B.S.B.A.
of which they were both members and which fixed common prices and
discounts and regulated the distributive trade As regards the B.S.B.A.
arrangements for the manufacture and supply by members of a cheap
fighting brand called the Jewel" battery Lucas has told us that it
manufactured "Jewel "Batteries from 1933 to 1942. In 1942 the two
companies made an agreement the object of which, Chloride says, was to
reduce to the terms of a legal document the position which had been
built up over the years Where by Lucas had concentrated on the supply
of electrical equipment, including Batteries, for motor vehicle and had
established connections with a number of British car manufacturers
while Chloride had concentrated on the supply of Batteries for all
purposes and had established connections with certain other car
manufacturers, particularly those with foreign connections. The
principal provisions of the agreement, which are of some complexity,
may be summarised as follows:
(1)
the position of each company in regard to its "exclusive clients "
(i.e. those vehicle manufacturers to whom it had supplied all their
automotive Battery requirements for the previous two years) was
safeguarded by requiring that sales by one company to the other
company's exclusive clients should only be made at prices agreed
between the companies these were to be no higher than was reasonably
necessary to ensure the continuance of supply by the established
supplier to that client.
(2)
Trade with non-exclusive clients (both in initial equipment and
replacements) was to be shared, so far as possible, equally between the
two companies if necessary by adjusting prices. Lucas agreed (a) to
supply secondary Batteries other than automotive only for certain
specified purposes (emergency lighting on underground trains, G.P.O.
and military signalling purposes and radio reception) and subject to a
restriction to 25 per cent, by value of its pre war sales, and not to
be interested in any concern supplying Batteries for other purposes
except Life Batteries to refer all requests for traction Batteries to
Chloride
.(3)
Chloride agreed in respect of electrical equipment for road vehicles
other than Batteries (a) to restrict its supplies of non Lucas
equipment to 25 % by value of its pre war sales to obtain the
requirements of those of its Service Agents who were also subsidiaries
(the permitted quota apart) from Lucas and to try to persuade its other
agents for "Exide Batteries to deal in Lucas equipment; (c) not
to become interested in any concerns manufacturing electrical equipment
in competition with Lucas other than M.C.L. & Repetition and Rothermel Chloride
says that the operation of the agreement was academic rather than
actual". In September, 1944, it was cancelled by mutual consent;
according to Chloride this was done "in view of a feeling of hostility
in Parliamentary quarters to trading agreements. Lucas has told us
that, at various times, previous attempts had been made to conclude
such a written agreement. It has pointed out that the agreement of 1942
was concluded during the war when there was, for all practical
purposes, no opportunity for either party to attack the other's initial
equipment customers as virtually all work was for the Government, and
that the agreement was very soon torn up. It is clear that, in
practice, the line of demarcation between Lucas's and Chloride's
established customers for initial equipment was maintained during and
after the term of the agreement. A Sales Report made on 25th June,
1953, to the Board of Lucas's subsidiary company concerned with
batteries recorded that Chloride wished" to clarify the trading
arrangements with ourselves and that a memorandum on the initial
discussion would be available shortly. The memorandum in question, a
copy of which we have seen, is an agreed record of an informal meeting
which took place on 5th June1953 on questions of technical
collaboration and regulation of trading in replacement business and
initial equipment business. As regards the latter, the memorandum state
so far as initial equipment business was concerned, it was thought that
a useful clarification of the present-day understanding would be
achieved by Chloride and Lucas respectively preparing and exchanging
formerly
Batteries Ltd.
Detailed lists of those customers whom they considered to be their
particular interest, and each of them preparing and exchanging lists of
those customers whom they considered to be outside the particular
interest of either of them. As soon as those lists were ready, it was
thought that there should be a further meeting so that with the
detailed data on the table a clear appreciation of the understanding
between Lucas and Chloride could be achieved.
PAGE 14
The
hope was expressed that thereafter provision would be made for at least
annual consultations with immediate reference the one to the other in
case any difficulty might arise Chloride has told us that no further
meetings were held to follow up these proposals because it was not
prepared to proceed with the technical collaboration with Lucas which
had been the primary object of the discussion. Lucas has told us that
the policy discussed in the memorandum was not subsequently agreed as
Lord Bennett had lain down that in no circumstances were there to be
"any discussions with Chloride or anyone else about original equipment
prices or any other arrangements affecting original equipment business.
The only subjects we were prepared to talk over with them were the
problems associated with replacement Batteries and Resale Price
Maintenance, etc., and the implications of the various Acts of
Parliament on Monopolies, etc. Nevertheless, Chloride has told us that
hi the post-war years there was a mutual desire on the part of itself
and Lucas to maintain the status quo as regards initial equipment
customers Chloride refrained from supplying Lucas's customers and it
believed Lucas followed a similar policy.
There had been from time to time discussions with Lucas, and subsequently with Lucas and Oldham,
about the prices to be charged for initial equipment to certain
customers principally heavy vehicle manufacturers and the Ministry of
Supply but no formal agreements were reached. Chloride says that it was
not clear how far the various understandings would have been
registrable under the 1956 Act. Chloride decided to set at rest any
doubts on the matter and on 21st February 1957 a letter was
sent to Lucas which the latter was asked to accept as the formal
termination, the B.S.B.A. arrangement apart, of "all Agreements,
arrangements and understandings express or implied which unless
terminated would require to be registered under the [1956] Act. At the
same time we would record that it is agreed that none of these
Agreements, arrangements or understandings is or was attended by or
gives or gave rise to any legal relationship at anytime between our two
companies." In a reply of 25th February, Lucas accepted the
letter and expressed agreement with its terms.126. In 1939 Chloride had
granted Lucas non-exclusive rights in a Patent relating to the
manufacture of Battery box lids in return for a royalty of I d (old
money) for each lid embodying the patented invention and sold by Lucas.
The agreement was terminated by common consent in 1958 as Chloride had
decided that it was not worth while to continue to pay fees for the
extension of the patent in question. In 1957, Lucas approached Chloride
with a view to making reciprocal arrangements whereby each company
would manufacture certain types of batteries for the other. Lucas has
told us that it was prompted to initiate these discussions by its
desire to supply its depots and Battery Service Agents with certain
non-standard types of car and commercial vehicle batteries, many of
which it does not supply for use as initial equipment and which because
of the small quantities it would find uneconomic to produce.
Arrangements for such reciprocal supply were duly concluded but no
written undertakings were given and the discussions were not recorded
or confirmed. Over the period 1957-60, Lucas purchased some 119,000
batteries from Chloride under these arrangements. Chloride's purchases
from Lucas were made on one isolated occasion only and comprised
approximately 500 batteries for use in a particular model of foreign
car. Supplies are made from factory to factory by each company and the
user could not normally identify the actual manufacturer. An agreement
concluded between Lucas and Chloride on 9thDecember, 1960, provided for
the setting up of manufacturing companies in overseas countries to be
controlled by British Batteries Overseas Ltd a company formed
for the purpose, the control and capital of which are divided equally
between Lucas and Chloride for Chloride's further observations on this
subject. Joseph Lucas Ltd. and Ducellier France. For a number of years Lucas has had business dealings with Bendix Corporation U.S.A. in connection with matters with which we are not concerned: it has also had business relations with Ducellier
the largest manufacturer of electrical equipment for motor vehicles in
France, which for some years up to 1962 was a division of D.B.A
(Ducellier-Bendix Air Equipment S.A.) In 1948 Lucas made an agreement with Ducellier
effective for three years, Providing for exchange of information and
patent licences relating to Dynamos Starter Motors - Current-Voltage
Control Units Lamps and Horns for use in cars. Each party was precluded
from supplying in the other's home territory, except as replacements
for its own initial equipment. Two agreements were concluded in 1953
and are still operative, by which Lucas granted Ducellier
non-exclusive licences to make and supply Flasher Units and Stop and
Tail-Lamps in France and its Colonies in consideration of the payment
of royalties and of an undertaking by Ducellier not to export
devices manufactured under the agreement except for use as replacements
for its initial equipment. In 1955, a further agreement was concluded
between Lucas and Ducellier for a term of 20 years whereby Lucas under-took to give Ducellier
technical assistance in battery manufacture. An agreement, with
complementary working and patent licensing agreements concluded in 1962
between Lucas and D.B.A. set up in France a joint undertaking Ducellier
et Cie with capital contributed as to 40% by Lucas and as to 60 % by
D.B.A. to acquire D.B.A.'s Ducellier division.
PAGE 15
The agreements apply generally to electrical equipment of the descriptions manufactured by Lucas in this country. Lucas and Ducellieret Cie
are each precluded from supplying in the other's territory, without the
other's consent, except as replacements for its own initial equipment.
Lucas's territory is the United Kingdom, the Irish Republic, the
Common-wealth and British Colonies. Joseph Lucas Ltd. and Sparks Withington Co U.S.A. Sparks Withington
is an old established manufacturer of Horns for motor Vehicle and
Lucas's association with this concern dates from an agreement of 1934
whereby Sparks Withington undertook to supply Lucas with its
complete know-how, including patent licences, on Electric Horn
manufacture for a consideration of $25,000. Lucas undertook to supply
Horns manufactured to Sparks Withington's designs only in the United Kingdom and Ireland and
Sparks Withington
undertook not to supply its horns in the United Kingdom and Ireland
except as already fitted to America made vehicles. By an exchange of
letters in 1940, Lucas agreed to pay
Sparks-Withington
a nominal sum for continuation of the rights granted in 1934 which had
expired in 1939. In 1949, an agreement similar in effect to the 1934
agreement was concluded between the parties, to be retrospective to
1945.Lucas agreed to make Sparks Withington an annual payment
of $5,000 during the term of the agreement. Lucas has told us that when
the agreement terminated in 1955, it offered to renew it but
Sparks Withington
was willing to co-operate without any further agreement or payment.
C.A.V. Ltd. and Ateliers de Construction Lavalette, S.A., France. An
agreement concluded in 1949 between C.A.V. and Lavalette provided for
the exchange of non exclusive patent licences and of designs and
technical information relating to electrical and fuel injection
equipment for heavy commercial vehicles and other applications. The
arrangement precluded competition by either concern in the other's home
territory. Standardisation. To the fact that up to 1939 there
was relatively little standardisation of electrical equipment of the
descriptions manufactured by Lucas. In 1945, Lucas prepared a long term
plan" for more than doubling direct operator productivity through
further standardisation of product design and it then estimated that
the improvements planned would permit of an average reduction of 20 %
in cost. In 1946 the Ministry of Supply invited the National Advisory
Council for the Motor Manufacturing Industry to address itself to the
concentration of the industry on a limited number of models of vehicles
and, as a means to that end, to greater standardisation of components.
In 1949, the Big Six set up a Standardisation Committee of their own.
Lucas attended those meetings at which its products were being
discussed some of the results of these various efforts to increase
standardisation. Another outcome of the meetings of the Big Six
Standardisation Committee was the introduction by Lucas of a
standardisation rebate. Lucas has told us that the Big Six had
suggested that to encourage standardisation a rebate should be given
off the prices of standard equipment and/or prices should be raised for
non-standard equipment. Lucas's Board minutes of 20th July
1950 record that "to provide manufacturers with a tangible incentive,
we announced a rebate of 4 %, on the value of Standard equipment taken
over the past year.
This
was particularly well received as the first saving in cost recorded by
the Committee and arising out o fits Standardisation programme the
rebate, which did not apply to Batteries was later extended to certain
other vehicle manufacturers. Lucas has said that hi the following year,
1950-51, when costs rose considerably, it decided in consultation with
its principal customers to keep its standard equipment prices
stabilised but warned them that there would be no standardisation
rebate at the end of that year. An exception was made for one customer
who had not taken much standard equipment in 1949-50 but whose efforts
to do so become more pronounced from 1950-51 onwards. This customer was
accordingly given a special rebate which amounted to about 5 % of the
value of standard equipment supplied in 1950-51, and two further
special rebates for 1951-52 and 1952-53 in consideration of its
continued progress in adopting standard equipment. This particular form
of standardisation rebate then ceased Lucas's efforts to introduce a
greater degree of standardisation of initial equipment appear to have
met with considerable success as its Board minutes record that by July,
1950 55 % of total direct operator time was occupied in making standard
products and that by July, 1951 the figure had risen to 60 %. Its Board
minutes of 28th October 1954 record" an outstanding example
of productivity success which can attend thorough going rationalisation
of product design. An old type set of car lamps with five lamps to a
set and pre-war type separate headlamps occupied 205 direct operator
minutes to make. A seven lamp set including flush fitting Head Lamps
now requires 30 minutes. The gain is nearly seven fold. However on 25th
October, 1956 it was recorded that "against an objective of 82 % for
the proportion of direct labour engaged on standard products the
present figure is 60% and this has worsened progressively since 1953 It
is due to some extent to the motor car stylist's insistence on more
individuality in his creation but all of the deterioration cannot be
ascribed to this cause. With reduced outputs, this lack of
standardisation becomes an even greater handicap as manufacturing lines
have to be run at out put rates which are too low to make economic the
applications of known and proved manufacturing techniques.
PAGE 16
Lucas
has told us that in 1957 it created a comprehensive combined Standards
Organisation covering all its activities, and that in addition to the
standardisation of particular items of equipment it has had a general
standardisation programme for materials and components aimed at
reducing for instance the number of different thicknesses of metals
purchased and the number of moulding powders used. Since 1949 Lucas has
issued for the use of the vehicle manufacturers a book of "Electrical
Equipment Standards” giving the specifications o fits standard items of
electrical equipment for cars, tractors and light commercial vehicles.
Items are classified either as (i) Standard Models or (ii) models not
the standard range which for brevity are called Additional Models. A
Standard Model complies with the following conditions (a) it has been,
or is likely to be, accepted for use by most of the large volume
vehicle manufacturers. It is manufactured, or is likely to be
manufactured, by full flow production methods. The peak was stated to
have been 70 per cent, in 1953. The figure for 1960 was 58 % as a
Standard Unit by type and not for any specific customers. It is stated
that models complying with these conditions will have economic
advantage over all others, and that the prices of models in the
additional range, which fall short of one or more of the conditions,
will be strictly related to their quantities and methods of production.
Details of the present ranges of Standard Models and Additional Models
of reference equipment with an indication of the current production
standard are given C.A.V. has issued for the use of heavy commercial
vehicle manufacturers a Sales Engineering Manual of electrical
equipment containing technical information about items defined as
standard models with when available alternative mounting, direction of
rotation etc. These models are in relatively large quantity production
and should be regarded as 'preferred types. Trading arrangements
Initial Equipment. Lucas has told us that the pre-war form of
negotiation of set prices and the nominal split up of set prices
between the items included was abandoned after the war and that in
general, it gave up using the rubber stamp "nominal prices on the
invoices It has explained that it had decided to clear up the involved
position which had developed by 1939 by meticulously quoting the actual
price for each individual item and that this new procedure was closely
linked with its standardisation programme. It remains the normal
practice, however, to settle in one negotiation the prices of all the
items the vehicle manufacturer proposes to buy from Lucas for a
particular model. The practice of making rebates to vehicle
manufacturers has continued. From time to time the company has also
made round sum payments to certain vehicle manufacturers who bought
exclusively or almost exclusively from it. Apart from the
standardisation rebates. The confidential rebates and other special
payments made to car, heavy vehicle and motorcycle manufacturers over
approximately the 15 years to July, 1959, amounted to over £3 million
Except for the round sum payments, nearly all there rebates were
calculated on the basis of a given sum per set delivered, or per car or
machine sold (either in relation to particular models or to all the
customer's vehicles. Two customers in recent years, however, have been
allowed volume rebates which, though deemed to be a concession on
initial equipment generally, are calculated on selected standard items
(Dynamos Starters Distributors Coils Current Voltage Control Units
Headlamps and Wipers in one case and Dynamos Starters Distributors and
Headlamps in the other). A third customer was allowed a straight
turnover rebate from1958 until 1961.
Replacements And Spare Parts
No great changes were made by Lucas in the post war years in its
arrangements for the supply of electrical equipment for the replacement
market, and it has said that it has not the nominal prices rubber stamp
continued to be used for certain sets supplied for motor cycles, where
the invoice prices of individual items represented a splitting up of an
agreed price for the set.
Lucas
claims that this figure represents less than 1 % of the total value of
its initial equipment sales over the period in question in fact, varied
its discounts significantly since 1937-38. After the war Lucas
continued to make Battery Service Agency agreements and Preferential
Spares discount agreements with its wholesalers. Certain provisions in
the first named agreement were varied from time to time in accordance
with changes in the B.S.B.A. arrangements most of which were made as a
consequence of the Restrictive Trade Practices Act 1956. In 1956 the
British Motor Trade Association (B.M.T.A.), the disciplinary body in
the motor trade charged with the prevention of price-cutting revised
its arrangements so as to obviate the necessity of registration under
the Restrictive Trade Practices Act: it thereafter provided a service
to individual manufacturers to assist them to secure the observance of
the irrespective conditions of sale, including those as to price. Lucas
has told us that in July 1957, in order to indicate to the trade its
belief in resale price maintenance and to be in a position to enforce
its prices, it issued, on the advice of the B.M.T.A. a letter to all
its known wholesalers and traders together with a form of agreement for
signature and return which set out Lucas's Conditions of Sale. We
understand that the majority of the wholesalers and traders signed and
returned the agreement to Lucas but that no follow up letters were sent
to those who did not sign it. Lucas has said that the continued supply
of its products was not conditional on signature of the agreement. .
PAGE 17
Since
the war Lucas has increased the number of its depots from11 to 16.
Between 1957 and April 1960, the B.S.B.A. arrangements limited the
number of Lucas Battery Service Agents to 400 and Lucas has told us
that throughout the period since the formation of the
B.S.B.A.
in 1933 it has not materially added to the number of its Agents. Since
the war it has acquired a number of wholesale motor electrical
businesses which at the time of acquisition were already Lucas Battery
Service Agents By 1959 or thereabouts, 94 separate outlets owned
through the nominee holding company, Robert Guthrie Ltd. (including Globe & Simpson) was designated as Lucas Battery Service Agents. Taking these with Cox & Co. acquired in 1958 and Harry Rawlings and the Gravesend Car Electrical Co
acquired in 1960 and 1962, respectively, it follows that 105 of the 400
appointed Lucas Battery Service Agents are, in fact, owned by Lucas.
This is not known in the trade. Lucas has told us that it has kept
Globe & Simpson
" entirely independent: we have merely been shareholders and treated
them as Agents. There is no organisational control of Globe &
Simpson what ever by the Lucas organisation although there are
occasional meetings at director level. Globe & Simpson and the other companies owned through
Robert Guthrie Ltd
are subject to Lucas's central financial control and obtain supplies of
Lucas products on special terms. Lucas has also told us that it thinks
that Chloride and possibly other members of the B.S.B.A. were,
at some stage, made aware of its ownership of a number of its Battery
Service Agents. A development in the replacement market that was not
welcomed by Lucas was the increasing tendency of the larger
manufacturers of vehicles to distribute replacements and spare parts
for their vehicles through their own dealer organisations. Ford was the
leader in this development before the war in its case the practice
originated in the early days when the great majority of components for
Ford vehicles were made to Ford's own specification and their supply
for use as spare parts and replacements was exclusive to Ford. From the
time when Ford began to make more use of Lucas's standard equipment it
increasingly purchased such equipment and spare parts for resale
through its dealer organisation which had been trained to distribute
Ford parts. Lucas has told us that exclusive items now represent only
about "10 % of our present business with Ford. The remainder, which is
a growing proportion, is standard in the true sense and is everywhere
available including B.90 replacements. "However although Lucas has for
some considerable time published specifications of the initial
equipment it supplies for the vehicles of other initial equipment
customers, it is only now beginning to do so for Ford vehicles this
former exception, made by arrangement with Ford, dates from the early
exclusive arrangements referred to above. Lucas has told us that the
other larger manufacturers of vehicles, principally B.M.C. (BRITISH
MOTOR CORPORATION) and Vauxhall (GENERAL MOTORS) followed Ford's lead
in the distribution of spare parts for Their vehicles, but that
commercial vehicle manufacturers did not show any tendency to adopt the
practice. Lucas dislikes the practice mainly because the replacement
market is a profitable part of its business and the vehicle
manufacturers are in a position to drive hard bargains on terms: in
fact, they receive better terms from Lucas than any of Lucas's other
wholesalers. Lucas has also had to face complaints from its other
wholesalers, particularly from the factors, about the diversion of
trade from the established trade channels. By 1959, Lucas's total home
sales of replacements and spare parts of all descriptions (including
non-reference goods) for motor vehicles amounted to over £10 million of
which sales to vehicle manufacturers for resale amounted to about £1
million. Demand for the B.90 Service factory rebuilt exchange units
increased rapidly after the end of the war and in 1947 Lucas's Board
minutes recorded that the scheme was a strong counter to the sale of
what were generally known hi the trade as pattern spares. These are
spare parts manufactured by other suppliers and designed and supplied
specifically for the repair of equipment made by Lucas and other
manufacturers. This trade had increased substantially as a result of
the post-war shortages of replacement units and of spare parts for
repairs. Lucas has described these pattern spares as "non-genuine" or
"spurious" parts and the manufacturer of pattern spares as a "Gyp"
manufacturer" who deliberately lives by trying to get replacement
business for some other people's products In 1949, Lucas's Board
minutes recorded that wholesalers, retailers and repairers (for whose
convenience the published specifications were designed) who are not
Ford Dealers have not hitherto been in a position to identify Lucas
standard replacements and spare parts for Ford vehicles except from
their own observation and knowledge of the trade. the turnover in B.90
units was below expectation partly because of there Agents who
preferred to do their own repairs but by 1955it was being noted that
the scarcity of skilled electricians and the difficulty of Agents and
traders in competing with other trades in wages and hours were factors
favourable to the B.90 Service, which was described as one of Lucas's
best mediums for restricting the spares business" of its competitors.
In the following year, it was recorded in the Board minute that
competition in ignition spares appeared to have been checked by our discounts and the B.90 Scheme.
PAGE 18
Lucas
has told us that the intention is that all the units supplied under the
B.90 Service should be repaired or rebuilt units, and that in order to
make the scheme economic the greatest possible use is made of any
material in the returned units that is up to specification. It has also
explained, however, that there are occasions when new units from the
main assembly lines are fed into the scheme, e.g. to create a float of
stock or where new stocks are not likely to be required for initial
equipment because of a modification in design or because of recession
in the motor trade. Another factor is said to be the difficulty in
obtaining skilled and semi-skilled labour at the company's central
repair shops in Birmingham. No price or other distinction is made under
the B.90 Service between any new units fed into the Scheme and the
rebuilt units: both are supplied under the designation "factory rebuilt
exchange units Details of prices, terms and conditions of supply, and
of the proportions of new units fed into the Scheme in recent years,
are given in Chapter 9.Research and development144. It was notuntil1953
that a co-ordinating secretariat was set up and the practice was
instituted of making an Annual Report on Research and Development to
the Board of the management company for the group. The Second Research
and Development Annual Report presented on 25th February
1954 reported that expenditure on fundamental research for the group
for 1952-53 had been £466,000 of which £25,000 related to work for the
motor electrical division and £21,000 for C.A.V. Development work
undertaken in agreement with customers had cost a total of £752,000
(excluding work on aircraft and for the Ministry of Supply) of which
£214,000 related to work at the motor electrical division and £195,000
to work at C.A.V. Lucas has told us that by May, 1958, a total of 536
employees were concerned with research and design relating to goods
specified in the reference. In 1959, the company set up a central
research establishment which was additional to the separate research
departments operated by certain of the subsidiary companies or
divisions. The estimated total gross expenditure on research design and
development, covering work at the major subsidiaries in the United
Kingdom and in Canada and Australia averaged £4,108,000 or 4-6 % of
total turnover over the four years 1954-55 to1957-58. Over the same
period, net estimated expenditure in the United Kingdom on research and
development on reference goods averaged about £481,000 or 1-7 % of
turnover in reference goods. Lucas has pointed out that after allowing
for recoveries mainly from the Government in connection with aircraft
development this figure would be reduced to 3 •1 % net Lucas has told
us that its expenditure on research on electrical equipment has been
made with the aim of achieving leadership in the development of better
and cheaper products. The company accepts that in the past, when the
U.S.A. and Germany were the leaders in this field it obtained through
its various agreements with foreign concerns more technical know-how
than it gave, but it claims that hi the last five years the position
has changed. It considers that it is now ahead of Germany technically
and of both Germany and the U.S.A. in producing an equivalent article
at lower cost. It has told us that it is in constant negotiation with
all the major motor electrical manufacturers in the U.S.A. Germany and
elsewhere and that the kind of information it is able to give or sell
to the Americans or Germans generally relates to manufacturing know-how
and not to product design. The tendency is for details of design to be
freely exchanged without being the subject of formal agreements.
Patents
Lucas owns a number of patents relating to reference goods or details
of reference goods. It has told us that nowadays there are few patents
of major importance in electrical equipment. It has patents on various
details and sometimes these are infringed by the manufacturers who copy
its products: from time to time Lucas draws attention to such
infringements but the patents do not restrain copying, they only make
it more difficult because slight alterations have to be made in order
to avoid infringement.
Sealed-beam light unit
We understand that all-glass sealed-beam light units have been in
general use by vehicle manufacturers in the U.S.A. for over 20 years.
The pre-focus headlamp which has been in general use here since the war
contains a separate detachable filament bulb. The all-glass sealed-beam
unit does not contain a separate
Filament
bulb it is itself of the nature of a bulb, and cannot be repaired. A
minute of a meeting of the Management Policy Committee of the Lucas
Electrical Company held on 18th September 1951, records that
Lucas had decided, at least for the time being, not to take up
manufacture of sealed-beam units and that this decision had been
influenced by three considerations. The first was the high cost of
manufacture of sealed-beam units. The second was the fear that if the
lamp bulb manufacturers were faced with a reduction in then:
replacement business in bulbs they might retaliate by themselves
manufacturing sealed-beam units. Finally, Lucas had understood that the
American manufacturers had had a difficult time introducing sealed-beam
units to the American market and had been forced to offer them at low
retail prices with low margins. By 1957 however, Lucas realised that
the technical advantages of the sealed-beam units might lead to a
demand for them in this country and that other companies might be
planning to make them.
PAGE 19
Already there were rumours that General Motors
had such plans in mind, and there was also the possibility of
manufacture by continental manufacturers and by the Japanese. The
patents for sealed-beam units were controlled by the Inter- General Electric Co., U.S.A national. and
Associated Electrical Industries Ltd had the use of these and had established a small Plant. A E I
appears to have expressed the hope that it would eventually be able to
sell sealed beam units to Lucas. Lucas explained that since the light
unit was a vital part of its headlamp business it might insist on
making this new type of unit itself. A.E.I, then proposed the formation of a joint company, and the project was also discussed with the General Electric Co. Ltd. In May 1959, a new company, British Sealed Beam Ltd was formed by
A.E.I. Lucas and G.E.C.
The share capital owned as to two-fifths, two-fifths and one-fifth
respectively. Lucas now obtains sealed-beam units from British Sealed
Beam for incorporation in Head lamps. Vauxhall was the first of
the vehicle manufacturers here to fit the all glass sealed-beam lamp on
some of its models, and was soon followed by Ford And B.M.C.
At the present time about 50 % of headlamps fitted as initial equipment
in this country are of this type. Lucas has told us that even in
quantity the all glass unit is very much more expensive to manufacture
than previous types, mainly because of the very high capital cost of
the plant.
Competition
One of the reasons given by Lucas for its present dominant position in
the motor electrical industry is its acquisition in the 1920's and
1930's of a number of its competitors. Lucas has told us that although
it has received take over approaches from competitors in recent years,
its policy is to refrain from acquiring any further businesses
concerned with motor electrical equipment. Apart from any political
considerations and the practical difficulty of absorbing smaller
concerns into its organisation, the tendency of its present policy is
towards further diversification of its interests and to "consider
buying businesses in other fields with a view to spreading its base. In
a Board minute of the Lucas Electrical Company, dated 19th
July, 1955, the Chairman of the Board is recorded as having stated that
it was not the company's intention to drive out competitors by making
and selling cheap and inferior products. . The aim should be to confine
competitors to the part of the business which we did not desire to
hold. Lucas has told us that this statement represents a continuing
policy: that is, the policy is to hold on to its own initial equipment
contracts once it has got them and not to provoke competitors by
seeking to disturb their contracts. Lucas has said it would be
difficult to define the part of the business it did not want: it could
mean the business already held by competitors; it could also include
business, such as that in roof lamps which Lucas would prefer to lose
rather than supply an inferior product. Lucas would consider the loss
of an initial equipment contract as a major disaster not least because
of the consequent disturbance to the essential service organisation at
home and overseas. In considering these statements of policy in
relation to the classes of reference goods which Lucas supplies and its
attitude to its principal competitors past and present the matters.
Smiths have not been in competition with Lucas in any field within our terms of reference.
Smith’s clocks instruments and Sparking Plugs Lucas has told us that it never had any intention of attacking Smiths' lines it made the agreement principally to secure Smiths
as a powerful ally in the component industry. Since 1956, when the
agreement terminated, the line of demarcation between the two companies
has persisted. Lucas has told us that for its part, it would not, as a
matter of policy; wish to disturb the position though there has been no
understanding or discussion with Smiths on the subject. Smiths' comments on these
Chloride
Chloride's view that there was a mutual desire on the part of itself
and Lucas to maintain the status quo as regards initial equipment
customers. For its part, Lucas has said that it made no secret of the
fact that it did not consider it good policy to try to take Chloride's
initial equipment contracts and that It hoped Chloride reciprocated its
only weapon was Chloride's certain knowledge that Lucas could and would
retaliate. Lucas has agreed that there is no real competition between
it and Chloride on initial equipment. As far as competition in
replacement batteries is concerned, prices were regulated by the
B.S.B.A. from1933 until 1956 and discounts and trading
arrangements from 1933 until 1960 Current retail prices of standard
batteries for replacement are identical or almost identical but there
is said to be competition in quality, service and guarantee
General Motors Ltd., AC-Delco Division
(AC-Delco)
is now Lucas's chief competitor in ignition coils and distributors in
class (ii) and Windscreen Wiper Motors in class (iv) and one of its
competitors in Horns in class (vii). Although it produced a few coils
before the war, it has taken up the manufacture of all these products
in quantity only in the last ten years, and the reactions of Lucas (as
ascertained from its records and evidence) to this developing
competition in the case of ignition coils are described below.
PAGE 20
AC Delco
laid down plant for the quantity production of an Oil-filled Ignition
coil of American design in 1951. Lucas has acknowledged that this type
of coil, which had not previously been produced on a large scale in
this country, was an improvement on the existing bitumen type in as
much as it could be made more cheaply and was reasonably efficient for
its purpose. By December, 1952 Lucas knew that AC Delco was
quoting prices for Oil-filled Coils which were a few pence below
Lucas's prices for bitumen type coils. In April 1953, Lucas reduced its
price for the latter type to Vauxhall but did not succeed in
retaining the contract. At various subsequent dates during 1953 and the
early part of 1954 it reduced its prices to its other principal initial
equipment customers by varying amounts, and at the same time it was
preparing to market its own Oil-filled Coil. By December, 1953, the
reduced prices were, in Lucas's view, uneconomic for the existing
bitumen type but sufficient to earn a small margin when the new type
came into production. Lucas's first deliveries of the new type were
made in April1954. The company retained the greater part of its initial
Equipment contracts for coils, apart from that of
Vauxhall.
The company's explanation of its price reductions is that, having
regard to the fact that vehicle manufacturers were aware that a new and
cheaper coil was available it Since the war, the small Ignition warning
lights and oil pressure warning lights Have largely taken the place of
ammeters and Oil pressure dials. Lucas and Smiths have both taken up
manufacture of warning lights. Adjusted its prices for the old type to
the price it would eventually charge for the new type. Lucas's records
show, however, that its prices we re reduced because
AC Delco's
activities were regarded as a "threat" to its business. Lucas incurred
losses on its sales of coils for initial equipment from 1954 to1957
inclusive But in the company's Board minutes we find it recorded in
1955 that the loss on coils was due to the low selling prices agreed as
a policy in order to keep Delco Remy (AC Delco) out of the field. Simms Motor & Electronics Corporation Ltd. (Simms)
is the only other supplier of any significance of Dynamos Starter
Motors and Current-Voltage Control Units in class (iii). Simms
manufactures this equipment only for buses and other heavy vehicles; a
dim comparison with Lucas is a very small supplier (it was responsible
for only 3% per cent, of total supplies in class (iii) in 1960 as
compared with Lucas's 95 per cent.). Simms also has a little business
in Magnetos in class (ii) and Lamps in class (vii). Simms has
complained to us about Lucas's trading methods. At one time Lucas had a
minority shareholding in Simms Wipac Properties Ltd. (Wipac) which at one time had a connection with the American Wico Electric Company
took up after the last war the manufacture of electrical equipment for
the motor industry. Wipac's principal business is the supply of initial
equipment in classes (ii) and (vii) to certain motor cycle
manufacturers and Lucas's records indicate that by 1952 it was making
its presence felt in this field of competition.
Organisation
The structure of the company since the last war the company has
increasingly diversified its interests both in the manufacture of
equipment for the motor industry and in other directions with which we
are not concerned. In 1951, the Structure of the Lucas group of
companies was reorganised and the present position in terms of the
goods specified in the reference, is set out below. Some of the
subsidiary companies referred to below are also concerned with goods
outside the reference, such as fuel injection equipment for diesel
engines and a range of electrical and non-electrical goods for motor
vehicles and spare parts for repairs. Lucas has a number of
Manufacturing
subsidiaries in the United Kingdom whose activities lay wholly infields
outside the reference, such as in brakes, cycle equipment, aircraft
equipment, gas turbine equipment and electronics. Overseas subsidiaries
concerned with motor goods are registered in Australia, New Zealand
India Pakistan Canada, U.S.A., Switzerland, Western Germany, South
Africa Brazil Southern Rhodesia, Panama and Malaya; some of these are
manufacturing companies, notably those in Australia, New Zealand,
India, Pakistan South Africa, Brazil and Southern Rhodesia, and the
activities of others relate solely to the distribution and servicing of
Lucas equipment.158. Joseph Lucas (Industries) Ltd. (Lucas), the parent
company of the group has an authorised capital of £15 million of which
£14 million has been issued. It is organised into divisions which trade
in certain types of equipment in the names of subsidiary companies
which are themselves none trading. The principal subsidiaries
concerned, actually or nominally with reference equipment is
Joseph Lucas Ltd.- Joseph Lucas (Electrical) Ltd. Joseph Lucas (Sales & Service) Ltd. Joseph Lucas (Batteries) Ltd
C.A.V. Ltd and Butlers Ltd.
The number of factories controlled Lucas has announced its acquisition
of premises at Liverpool to provide additional manufacturing capacity.
Joseph Lucas Ltd.
acts as Management Company for the whole group. The Board of five
comprises the Chairman, who is also the Chairman and Managing Director
of the parent company; the Deputy Chair-man, who is also Deputy
Managing Director of the parent company; the Sales Director, who is
Chairman of four of the subsidiary companies and Deputy Chairman of two
others, and there are two other directors each of whom is Vice-Chairman
and General
Manager of two of the principal manufacturing subsidiaries and is on the Boards of other subsidiaries.
PAGE 21
Joseph Lucas (Electrical} Ltd. (the Electrical company)
is a non-trading company whose name is used by the division of the
parent company responsible for the manufacture of electrical equipment,
including practically all the reference equipment produced by the group
except that made by
C.A.V.
Ltd. and Butlers Ltd.
The division sells initial equipment, including Batteries, for cars,
light commercial vehicles and motor cycles direct to the vehicle
manufacturers; the rest of its production is sold by the Sales&
Service division or is transferred to C.A.V. Ltd. It controls the main
electrical equipment factories at Shaftsmoor Lane Hall Green Birmingham (which produces Dynamos Starter Motors and various descriptions of Lamps) and at Great King Street,
Birmingham (which produces Ignition Coils Distributors Current Voltage
Control Units Windscreen Wiper Motors Horns and Horn and Flasher
Relay Units). It also controls a number of other smaller factories at
Cannock, Sutton Coldfield, Burnley, Kingstanding and London, some of
which are "service" factories only (in that they are used for the
production of component parts for items of electrical equipment) while
others are used for the production of complete items. Reference
equipment accounts for about three-quarters of the sales, excluding any
Inter company sales made in the name of the Electrical Company. Lucas's
Production
of Starting - Lighting and Ignition sets in 1959-60 averaged 46,775 a
Week. This figure may be compared with the figures of average weekly
production of sets in1925-26 (2,000) and in 1937-38 (9,100). Joseph Lucas (Sales & Service) Ltd.
(the Sales & Service company) is a non-trading company whose name
is used by the division which sell all equipment for the replacement
market other than that sold by the Battery Following the company's
practice, the names of the non-trading subsidiaries are used else where
in this report in describing the activities of the relevant divisions
of the parent company. Sales to the Sales & Service Company for resale as replacements and sales to
C.A.V. for resale as initial equipment and replacements.
Company C.A.V. and Butlers.
It manages a central warehouse and a factory at Great Hampton Street,
Birmingham, a smaller factory at Hednesford and 16 depots in different
parts of the country. Sales from the central warehouse or from the
depots are made to vehicle manufacturers for resale through their
dealer organisations, to Battery Service Agents and other wholesalers,
to retail traders and to certain large users including Government
Departments, Nationalised Industries, local authorities and commercial
fleet operators, and also to a small extent direct to the public. It
also operates the B.90 Service most of the rebuilding of the worn or
damaged units handed in by users is carried out at Great Hampton
Street. Reference equipment accounts for from one-third to one-half of
the sales, excluding any inter-company sales, made in the name of the
Sales & Service Company. A substantial part of the rest of the sales consists of spare parts for repairs.
Joseph Lucas (Batteries) Ltd. The Battery Company) manages the Battery factory at
Formans Road Spakhill Birmingham
though the Electrical Company has an over-riding responsibility. The
batteries bearing the Lucas trade name are sold by the Electrical
Company for initial equipment or by the Battery Company for
replacement; those bearing the "C.A.V." trade name are sold for initial
equipment by C.A.V. Ltd. or for replacement by the Battery
Company. Relatively small quantities bear the Smiths " trade name and
are sold to Smiths for resale as replacements C.A.V. Ltd (C.A.V.)
is an operating company which makes equipment in class (iii) Dynamos
Starter Motors and Current Voltage Control Units and class (vii)
(Trafficators, Flasher Units and Relay Units only) for heavy commercial
vehicles. It operates a factory at Warple Way Acton, W.3.It
sells its own products and those made by the parent company for heavy
commercial vehicles, both for initial equipment and (except in the case
of Batteries) for replacements. (Until 1956-57 it also made
Windscreen-Wiper Motors (class (IV).) Reference equipment accounts for
about one quarter of the sales, excluding any inter-company sales of C.A.V. Butlers Ltd. (Butlers)
is an operating company which makes and sells ammeters and certain
types of lamps for initial equipment and for replacements and
accessories. It operates a factory at Grange Road, Birmingham.
Reference equipment accounts for about nine-tenths of the sales
excluding any inter-company sales of Butlers other subsidiaries (which
have some concern with reference equipment are the Robert Guthrie Group and
Cox & Co. and its subsidiaries Harry Rowlings and the
Gravesend Car Electrical Co which wholesale and retail
electrical equipment principally of Lucas manufacture e.g. sales to
overseas subsidiaries and to home subsidiaries for own consumption.
Until August 196 Lucas" and "C.A.V." replacement batteries were sold by
the Sales & Service company. E.g. sales to The Electrical Company
for resale as initial equipment and to the Sales & Service Company
for resale as replacements e.g. sales to home subsidiaries for own
Consumption and to the Sales & Service company for resale as
replacements. Rists Wires & Cables Ltd., with a factory at
Newcastle-under-Lyme which until 1962 manufactured Ignition Coils but
whose principal product is cable harness which is used in conjunction
with reference equipment; K.X. Lamps Ltd., formed by Lucas in 1949 as a
subsidiary of Rists with a factory at Middlesbrough, and which
manufactures filament bulbs which are component parts of equipment in
class (vi) (Oil and Ignition warning lights) and class (vii)
(Lamps).Production.
PAGE 22
Batteries.
As has already been stated, Lucas manufactures lead acid automotive
batteries principally for cars and light commercial vehicles but also
for heavier vehicles for supply under the "C.A.V." trade name. The
great majority of batteries produced are 12-volt, the capacity being
varied by altering either the size of the plates or the number of the
min each cell. A number of semi-automatic machines used in the
manufacture and assembly of the component parts are of Lucas's own
design. The raw materials used include lead, lead oxide and red lead,
pitch, asbestos china clay and plastic and rubber moulding materials.
Lucas purchases some of its requirements of separators and moulded
containers from outside sources including Chloride. After the end of
the last war, Lucas started the manufacture of a micro-porous rubber
separator (which it had developed under an American patent) to take the
place of wood separators. In 1956 it started the manufacture of a new
type of separator made from glass fibre and kieselguhr, and this is the
type it now uses. Lucas's standard model12-volt battery for use in cars
and light commercial vehicles is made in three types of different
capacities and hi varying shapes, to fit different models of vehicles.
The majority of replacement batteries have a new type of cover which is
not fitted to batteries supplied for initial equipment: other wise the
standard batteries supplied to both markets are identical, model for
model. Lucas has told us that 85 per cent, of its production of
batteries for initial equipment is made up of standard types. It also
manufactures a wide range of non-standard types for the replacement
market
Ignition coils Magnetos Distributors Ignition
Suppressors .Since 1954 Lucas's ignition coils have been of the
oil-filled type. (The oil-filled coil was a development first
introduced in this country by Runbaken Electrical Products and in 1951, on a larger scale, by General Motors (AC Delco) Special
types of coils are produced for use on motor cycles as well as for
racing cars and other specialised vehicles. Two main types of Magnetos
are produced one with stationary magnets and a rotating coil for use on
motor cycles and one with a rotating magnet and a stationary coil for
other uses. While the bulk of production of distributors consists of
standard types there are wide variations in the non-standard types to
suit particular engine requirements. A range of miniature distributors
is produced for use on motor cycles and small cars. Lucas has told us
that nearly all its production of Ignition coils for cars is covered by
two standard types of which one accounts for 85 % of Production. In the
case of distributors, 76 % of production is covered by two standard
types. Raw and semi-manufactured materials used in the production of
the equipment in this class and in classes (iii), (iv), (vi) and (vii)
include brass, iron, steel, copper, aluminium, phosphor bronze and
tungsten in various forms (rod strip, wire, castings, stampings,
forgings and sections) and moulding materials. For the production of
class (ii) equipment, parts which are purchased in manufactured form
include springs, Ball Bearings – Carbon Brushes - Bearing Bushes -
lubricators and Carbon Resistors. Class (ui), Dynamos Starter Motors
Current Voltage Control Units. Sub-assembly and main assembly of the
items in this class are carried out on continuous flow production
lines. In the case of Dynamos there is no appreciable non-standard
production; in the case of Starter Motors a Pre-engaged type of Drive
is made for high compression and diesel engines; and in the case of
Current-Voltage Control Units there are minor variations which
nevertheless permit of continuous flow production. Lucas has told us
that about 95 % of production of Dynamos is covered by two standard
types and one of these covers 90 % of the whole; 80 % of production of
starter motors is covered by three standard types; and the bulk of
production of Current-Voltage Control Units is in two types, of which
one accounts for 80 % Manufactured parts purchased include Springs,
Screws Washers Rivets Ball Bearings Carbon Brushes Insulating parts and
Carbon Resistors. Class (/v), Windscreen-Wiper motors. The main
assembly is carried out on continuous flow production lines. Variations
from the standard type are governed by the requirements of individual
vehicle manufacturers for example, some require centre windscreen
mounting and others the two-speed self-parking type. Lucas has told us
that about 90 per cent, of production of windscreen-wiper motors is
covered by one basic type. Manufactured parts purchased include needle
rollers, thermostats, bearing bushes, Carbon brushes and Bundy
tubes.170. Class (v/), ammeters and ignition and oil warning lights.
Sub-assembly and main assembly of ammeter movements are carried out on
continuous flow production lines. Apart from the movement itself, there
is little standardisation of parts such as dials, back plates, type and
allocation of terminals, etc., as variations of these are required for
different models of vehicles. Lucas has told us that for almost the
whole of its production of ammeters only two basic types of movement
are used and for the greater part only one of these two. Manufactured
parts purchased include spindles magnets and filament bulbs .Class
(vii), Headlamps - Side Lamps - Stop Lamps - Tail Lamps Fog Lamps Spot
lamps Number Plate Illumination Lamps Flasher Indicator lamps
Reversing Lamps Horns Trafficators Relay Units for Lamps or Horns -
Flasher Units for Indicator Lamps or Trafficators. Having regard to the
number of lamps required for initial equipment for a modern car seven
or more and to the degree of standardisation of the main components,
this is a field which lends itself to mass production.
PAGE 23
Main
assembly of standard lamps is carried out on synchronised continuous
conveyors, with overhead conveyors for line feeding of Light Units,
Rims and Bodies. Side Lamps and Flasher Lamps are identical manufacture
apart from the colour of the lens, and Spot Lamps and Fog Lamps are
identical in manufacture apart from the different types of lenses. For
non-standard models required in smaller quantities, tooling is of
simpler design and function but continuous flow conveyors can
nevertheless be used for most of these types. Standard Wind-Tone Horns
are designed or 12-volt systems with variations for 6-volt and 24-volt
types, the voltage Variations being achieved by differing numbers of
turns and gauges of wire on the coils. The bulk of non-standard
production is of the high-frequency type of horn. In general, assembly
of horns, Trafficators, Relay units and Flasher Units is carried out on
continuous flow production lines. Lucas has told us that although the
Headlamp rim (which lends itself to is only standardised for a limited
range of vehicles, the mounting and the mechanical form of the optical
unit are standard for the bulk of production: as regards other types of
Lamps, apart from certain common parts standardisation cannot be
carried far as the vehicle manufacturers wish to make distinctive
features of some of these items. Lucas has said
that the whole of its production of Horns is in two types and the whole
of its production of relay units and flasher units in one type for
each. Manufactured parts purchased include all requirements of glass
lenses and glasses the great bulk of filament bulbs and also some
rubber parts, screws washers, rivets, bulb holders and resistors.
Lucas's subsidiary, K .X. Lamps Ltd., produces only a very small
proportion (about 7 per cent.) of Lucas's total requirements of
filament bulbs.61.3100003 per year.