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.
Thi