THE HISTORY OF BAKER PERKINS HOLDINGS LTD/ BAKER PERKINS PLC
For the history of the company before Baker Perkins Holdings Ltd was formed see:
The Origins of the
See also The Group in Summary.
Until 1962, Baker Perkins Ltd had dual responsibilities - both as the HQ of the group controlling the policy of all member companies and also as a manufacturing and trading company. In late 1962 came the announcement that a major re-organisation in the structure of the group would take place and that these two responsibilities were so important that they should be split between two separate managements. On 1st January 1963 the parent company changed its name to Baker Perkins Holdings Ltd and ceased to be involved in any trading or manufacturing activities. A new subsidiary company was formed, taking over the name Baker Perkins Ltd., to operate the Westwood and Bedewell factories.
The directors who had previously been on the board of Baker Perkins Ltd, (See History of Baker Perkins Ltd), became directors of the Holdings company, its board being strengthened by the addition of W.A.B. Brown, managing director of Forgrove; T.E.M. Douglas, managing director of William Douglas & Sons Ltd. and P.B. Harley, President of Baker Perkins Inc. John Hardy – who had followed R.H. Wilkins as company secretary of Baker Perkins Ltd, - became company secretary of Baker Perkins Holdings.
At the time of its formation, the Holdings Company Directors were:
A.I. Baker CBE, JP, MA, MIMechE, MIProdE – Chairman.
Inevitably the question was soon asked - "But what does the Holding Company actually do?" The reply came:
"Baker Perkins Holdings Limited is the parent company of the Baker Perkins group, as such directs the policy, and ultimately controls the activities of all the companies in the group. Its headquarters in Peterborough is near to, but quite separate from Baker Perkins Limited's factory and offices.
Baker Perkins Holdings Limited is the public company whose shares are quoted on the London Stock Exchange and it owns 100% of all the companies in the group throughout the world.
As well as deciding the objectives and strategy of the group, the board of the parent company is responsible for providing the money to finance the operations of all the companies in the group, for deciding how much money should be granted to each and for overseeing their performance.
Strategic matters include such things as deciding broadly what products the group should design, sell and make, and the industries and parts of the world on which we should concentrate our efforts."
(See also The Holdings Building for an Organisation Chart).
The Holding Company's staff, comprising approximately 60 people, provided a number of specialist services both to the Holdings Company and to the Group in general:
NOTE: For more information on these activities, see The Holdings Building.
For a list of those who were employed in The Market Research Unit/Group Marketing Services from 1973 to 1990, click here.
For a list of Holding Company staff in 1984, click here.
Inevitably, the number of people on the Holding company payroll at any one time was something of a bone of contention, the level of passion dependent on whether one was a member of the HQ staff or of a subsidiary company that "earned the money". Obviously, it made good sense to provide specialised services centrally both as a means of helping to spread good practice and to ensure that even the smallest subsidiary company had access to these resources. Although it was part of the central staff's responsibilities to 'sell' their expertise to the operating company managements, some degree of an 'us and them' feeling did persist. It will be seen that later, in 1985, even more functional specialists were transferred to the parent company, a development of management style that contrasted significantly with that espoused by APV at the time of the merger in 1987.
At the time of the formation of the Holdings Company, Group Turnover stood at £22.94m on which Profit after Tax was £315,582. The new company got off to a slightly shaky start with the United Kingdom companies reporting a loss but, by the end of the year, the figures showed that this had been more than offset by increased profits from the overseas companies. In the same year, the Group's investment in Savy Jeanjean et Cie, France was sold – (See also History of Baker Perkins Ltd for details of the 'Credo Agreement' of which Savy Jeanjean was a part).
At the same time as the creation of the Holdings company the group's corporate image underwent a major overhaul with the introduction of the ubiquitous "Pregnant Golf Ball". It is understood that the then Publicity Manager, Harry Giltrap, had been invited to design a Group symbol but part way through his deliberations it was discovered that Baker Perkins Inc. had developed a symbol of its own – which caused something of a hiccup in England. The solution was to adopt the American symbol for the whole Group. This became the most long-lived and perhaps most widely recognised symbol of the company. Introduced in around 1962, it remained in use until the time of the merger with APV in 1987. The associated "Baker Perkins Limited" typeface might have undergone some modification over the years but the logo remained virtually unchanged, appearing on just about everything that had any connection with Baker Perkins (See also Corporate Identity for a history of how the company identified itself over the years)
With the formation of the Holding Company in 1963 came a change in the group's management structure that had been in place since 1919. This recognised that the number of companies in the Group and the consequent load on the Board of Management presented too complex a task to be managed by a daily meeting in the Chairman's office. The Board of Management became the Group Management and the day-to-day management of the subsidiaries was carried out locally. Members of the Group Management, anxious not to lose touch with group companies, took upon themselves the chairmanship of various subsidiaries in order to provide a link with the Group Management, to give guidance on policy and, from their knowledge of parts of the group, to play their part collectively as the Group Management of the whole.
Group Pre –Tax Profit in 1964 was, at £1.659m, the highest in the company's history. Group Sales rose to £25.2m, the USA company receiving the largest single order in its history – more than $3.6m for baking equipment for Arnold Bakers Inc. Greenwich, Conn. Those group companies specialising in wrapping and packaging machinery employed some 2,500 people, contributed over 40% of the group's exports from the UK and increased their profits by 50% compared with the previous year.
It was announced that a new HQ building for Baker Perkins Holdings would be erected at Westwood and a new factory for Douglas Rownson was to be built at Basingstoke, a move brought about by the unsuitability of William Douglas and Sons' premises in Putney and the termination of the lease on Rownson Conveyors' factory at Maiden Lane, near King's Cross Station in North London. In a further rationalisation move, to concentrate the business in web offset litho printing presses and equipment in one establishment, design and production of Offset Litho printing presses was moved from Halley, West Bromwich to Westwood Works (See History of James Halley & Sons), To develop further the group's overseas business, Baker Perkins Far East A.G. was formed.
Improving Internal Communications
Because of the growing complexity of the Group and the need, in an increasingly difficult business environment, to ensure that communications between management and staff were as efficient as possible, it was decided that an internal newspaper should be distributed to all employees. The first edition of Baker Perkins "Group News" was issued in August 1964 and continued, with the odd gap created by the occasional pressure to reduce overheads (and a name change to "Contact" in 1973), up to and beyond the merger with APV in 1987. (See also Group Newspapers). The newspaper was produced and edited by the Group Publicity Department of the Holding Company. Early issues were printed on the first Halley-Aller web-offset litho printing press to be manufactured and sold by the group and which was installed in East Midland Litho Printers' works in Peterborough.
The UK Government's Prices and Incomes Policy began to impact on customers' investment plans in 1965 and had a significant effect on the results of the UK companies. However, total Group's sales and profits reached another record level (Group Turnover = £28.17m. Profit after Tax = £1.225m). Major contributions came from Baker Perkins Inc. USA that, once again, surpassed all previous achievements, and from BP (Exports) that achieved record turnover of £4m. Against the background of the growing threat from a worsening UK economy there was a telling comment from the board in the Annual Report that hinted at the potential for poorer results to come:
".... exporting is markedly less profitable then selling in the home market and, while we are grateful for the small increase in the export rebate, it is inadequate to cover the extra costs involved. If exporting is to be made attractive the Government needs to find a way, by differential taxation or some other means, to help industry to meet the extra burden of expense".
Half-yearly results were published for the first time in September 1965 and the chairman included the caveat – "I should like to repeat the warning I gave the stockholders with the 1964 Annual report that a year is a very short period over which to judge the profitability of the group. Its products require a long production cycle and a period as short as six months may be misleading". Agreement was reached with the AEU for a four-year Apprenticeship for certain categories of Craft Apprentice (See also Training at Westwood Works). J.S. Carolin resigned as a non-executive director from the board of Baker Perkins Holdings, owing to ill health. K.C.P. Barrington, a managing director of the company’s financial advisors, Morgan Grenfell & Co, took his place.
Planning for the future
The new building was opened in Westfield Road in 1966 to house the new parent company (see The Holding Company). It also became clear that there was a need to devote far more time to planning for the future and less to the day-to-day management of the individual companies. The services of management consultants, Urwick, Orr & Partners, were employed to examine a number of alternative courses of action. As a result, the Group Management was dissolved from December 1st 1967 and a system of straight-line authority and responsibility introduced. When announcing this Mr A.I. Baker said:
"The rapid development of international markets, and their increasing complexity and interdependence, means that we must take a worldwide view of them and of all our activities if the full potential of the group is to be developed. In order to increase our effectiveness, there is need for greater specialised knowledge of the markets available to the group and the requirements of these markets.
Since the end of the last century, Baker Perkins' overseas interests have continued to develop until today they match in importance those in the United Kingdom. It is, therefore, the board's intention to re-organise the group to operate on an international basis."
The Chairman – A.I. Baker – was to concentrate on long-term
plans and policy.
Each of the above ceased to act as chairman of individual group companies and the existing managing directors became chairmen of their respective companies.
The group's activities were re-organised on a geographical basis, with the world outside the United Kingdom divided into six regions:
Each region had a regional manager who reported to J.F.M. Braithwaite – executive vice-chairman responsible for overseas operations. The regional director was responsible for optimising group profits in his region. All exports from Baker Perkins' UK companies (almost one-third of their sales) were to be handled by the overseas organisations. The US and Australia were the only regions with significant manufacturing capabilities.
Urwick, Orr & Partners’ recommendations also included that the Group Five Year Plan should be disseminated as individual plans to Group Companies. These plans were to be converted into agreed Company Objectives and further split into objectives for the operating functions of Marketing and Sales, Design and Development, Production, Accounts and Personnel. At Company level it was applied to four levels of management down from MD.
1966 also saw the retirement of Harold Crowther who had been the driving force behind the growth of the company's export business over the previous 30 years. (See here).
In order to aid the achievement of the Five Year Plan, a process called ‘Management by Objectives’ was proposed, to be promulgated throughout the group. This American idea was based on some principles of management set out by an Industrial Journalist named Peter Drucker – an Austrian by birth. Drucker argued that if a Company did not adequately determine the nature of its business, its objectives, and effectively communicate these to and monitor achievement of its managers it would ultimately fail. He also argued on the principle of Pareto that 80% of a manager’s effectiveness resulted from 20% of his activity. So it was crucial this 20% was identified and a system of communication and reviewing achievement was introduced.
Urwick Orr and Partners led the implementation of the programme aided by four management advisors selected from Baker Perkins line managers who were trained to work along with Urwick Orr’s V.G.D.S Stokes. It took about 18 months to complete its introduction throughout the Group. The success of the introduction depended to a large extent on how well the Management Advisors did their job. They were present at initial discussions, drafted the Management Guides and sat in at the first review, basically setting the tone, and thereafter responding when requested.
Management guides were produced for each level of management at group and company level and checks were made to ensure that objectives and agreed levels of performance would achieve the aims and objectives first of the company and subsequently the group managers and their line manager had to agree:-
Performance reviews were conducted at intervals of six months with the jobholder being made aware how he had performed. The reviews started at the lowest management level moving up the levels to finish with the operating companies’ managing directors, who were reviewed, in turn, at Baker Perkins Holdings. Reviewers were required to take the reviews that they had conducted and any associated Job Improvement Plan to their own review, so that they could be examined and modified if required.
In general terms the process was reasonably well received by line managers. True some of the old hands, thought it all unnecessary at first – more paperwork – but after a while even they thought it had merit. Some managers thought it would apply constraint to their activity, when in reality it focussed their attention to the key elements of the job. Prior to the introduction of Management by Objectives it was not unusual for a manager to go through most of his employment without being informed by his superior exactly what his job was thought to be and how well he was performing.
It is difficult to determine whether it fully achieved its objectives Brian Howarth, one of the original Management Advisors and latterly with Rose Forgrove being subject to the system himself, commented that – "Sound management information was provided by the system - but information alone does not produce results. Some managers found that it helped them manage their time more efficiently." In around 1981 it was decided that MBO needed refreshing and the system was changed in that company directors would not now be reviewed, but line managers would on the basis of budgets.
The UK credit squeeze continued to have a negative effect on business and in 1966, for the first time, capital employed overseas exceeded that employed in the UK companies. The overseas companies continued to deliver good results with the USA, Canadian, Australian and New Zealand companies all showing significant improvement. A new branch of Baker Perkins A.G. was established in Tokyo.
By the end of the Sixties, these pressures began to show up some of the inadequacies of the new management structure that had been put in place only a few years before. While the division between home and overseas business enabled the company to focus attention on the special customer needs in foreign countries, it also posed problems for the UK companies. Norman Mountain who had become Managing Director and Chief Executive of Baker Perkins Ltd in 1966, was fully responsible to R.H. Wilkins for the manufacture and sale of products for the UK and for the manufacture of goods to be exported abroad. Mr Mountain saw two difficulties with this:
"Since we did not have direct contact with the customer abroad, we found it difficult to keep abreast of the needed design changes and to respond accurately and quickly to customers' demands.Another problem with the arrangement was that we had to credit the international company with 20.5% of the final sales figure. This severely restricted our profitability on overseas sales and, quite frankly, made them less attractive to us when compared to UK sales".
J.F.M. Braithwaite also recognised that some of the sales regions resisted
or even rejected introducing new product lines such as printing and laundry.
The relatively small and specialised marketing units abroad took the position
that they had all they could handle just to expand their market share
for the traditional lines.
Part of the rationalisation process that the group had been carrying out over a number of years had resulted in a reduction in the number of subsidiary companies from 16 in 1964 to 10 in 1966. A key part of this programme was, from 1st January 1966, a new company, Rose Forgrove Ltd, formed from Rose Brothers (Gainsborough) Ltd, The Forgrove Machinery Co. Ltd., The Northern Manufacturing Co Ltd and Job Day & Sons Ltd. with W.A.B. Brown as managing director and R.H. Wilkins as chairman. It was decided to build a new factory to accommodate under one roof the production previously carried on by Forgrove in two separate establishments in Leeds and to act as the HQ of the new sub-group. In the same year, to meet the demand for gravure printing presses, £70,000 was paid to acquire the factory adjoining the West Bromwich premises of James Halley & Sons Ltd. The death was reported of C.N. Brown, a Holdings Board director and member of the board of management of Baker Perkins Ltd.
The 1967 results were affected by a slow-down in Germany, the effect of which spread to the rest of Europe, depressing exports from the UK, and the UK monetary crisis that culminated in the devaluation of sterling. In North America, the Podbielniak centrifugal contactor business was acquired from Dresser Industries but the group's venture into plastic bottle blowing and filling equipment - the Granbull division of Steele & Cowlishaw - was disposed of after a period of sizeable losses. The minority 33.1/3% interest in Canadian Baker Perkins Ltd. formerly held by Union Steel Products Co. was purchased and the Canadian subsidiary became wholly owned by Baker Perkins Inc. A 45% interest was acquired in a new German partnership, Rudolf Lensing K.G., a producer of machinery for the thermoplastic forming of packages. After an association dating back over thirty-five years, the 28.5% holding in Graham-Enock Manufacturing Co. Ltd was sold off resulting in a profit on sale of close to £20,000.
Another view of the Company from the City - "The Director" magazine interviewed A.I. Baker in November 1967 and published an article:
Rolls-Royce, I.C.I., Marks and Spencer … what have they got in common?
Quality is an obvious answer : tradition and reliability another. When an enthusiastic welcome is given to new products and new companies, too often the rock basis of Britain’s prosperity is overlooked : the established concern that’s keeping well ahead of the times. Last month the Industrial Editor of THE DIRECTOR sought for a progress report on one of the solid, and none the less exciting, names of British industry : Baker Perkins Holdings of Peterborough. This is what he found
… AFTER MR BAKER MET MR PERKINS
BY W.G. NORRIS
Baker Perkins began with the brain drain – in the early nineteenth century. In those days bright young men came to England from all parts to make their fortune. Joseph Baker arrived from Canada to sell food machinery for the business he started when he invented a flour sifter for his wife. Jacob Perkins, born in Massachusetts in 1766, arrived from the U.S. to make plates to print bank-notes. Later he produced a high-pressure steam gun which he demonstrated to the Duke of Wellington. The Iron Duke turned it down; it was too lethal a killer for the gentlemanly warfare of the age. Food and printing machinery are still big business with Baker Perkins, but it was not until 1919 that the Baker and Perkins companies got together.
Getting companies together has been Ivor Baker’s job ever since he became chairman of the Board of Management of Baker Perkins Limited in 1956. There were several acquisitions before his time – a biscuit machinery maker in 1922, and a laundry machinery company in 1924. But since 1958 the pace has quickened and eight companies have been bought up.
Today the Group makes machinery and plant for bread, biscuits, confectionery and chocolate, printing, laundry and chemicals, paint, ink, plastics and rubber, bulk and mechanical handling, industrial refrigeration and foundry equipment, as well as engineering components such as gears, gearboxes and flexible couplings. And they are world leaders in wrapping and packing machinery. In Ivor Baker’s time at the top, Baker Perkins have more than doubled their world sales – to £28,600,000 – and have done this with less than 40 per cent increase in their payroll: they now employ just over 9,000 throughout the world. Regularly some 30 per cent of their U.K. production is exported. Recent visitors to Peterborough have included a Russian trade delegation, which toured the group and customers’ factories for a week. Sending salesmen to Brazil and Japan at an hour’s notice is routine business. Last year’s exports totted up to £6,200,000 with sales to Europe (Common market alone £1,700,000), Australasia, Africa and the Middle East, Far East, North America. South America and the Caribbean. Overseas they have companies, some of them manufacturing plants, in Australia, Canada, Germany, New Zealand, South Africa Switzerland and the U.S. Last year the overseas companies earned 21.8 per cent on capital employed and contributed more to profits than the U.K. companies.
Technically the Group is based on first-class engineering, turning out custom-made machinery. Raymond Wilkins, one of the four directors who make up the Group Management (the old Board of Management) comments that: “with our kind of establishment we can’t make money just bending metal.” One sees what he means walking round just a part of the 40-acre works at Peterborough, one of the Group’s main manufacturing plants which employs 3,000. It is stuffed full of the latest machine tools, many of them numerically controlled and linked to a computer.
The computer, in fact, is one of the key centres in this diversified factory, and with an advanced production control system, produces and issues shop instructions and paperwork for 90 per cent of the work.
Ted Thain, the works manager, explains briefly that the numerically controlled machine tools “assist us in getting precise repeatability on the hundreds of thousands of parts that are manufactured each year, and all without expensive fixtures. Our production techniques have also been improved by revising the factory layout – we have introduced ‘group technology’ in which different machine tools are grouped together to produce similar components. This has substantially reduced the cycle time between operations by shortening internal transport routes.”
For a company of its size Baker Perkins have a massive investment in production machinery and they make sure this investment is profitable by having a model apprenticeship training scheme t5o bring on their successive generations of engineers. In the East Midlands an apprenticeship at Baker Perkins is reckoned to be top training for a young engineer. Lads start at 15 or 16 (women are beginning to be admitted, too) and after four years they pass out as fully qualified tradesmen. Because of the Group’s advanced training methods they are the only engineering works where a four instead of the usual five year apprenticeship is permitted by the AEU. Similar large training schools exist at Rose Forgrove Limited (Leeds and Gainsborough) and in the smaller companies of the Group on a scale to suit their needs.
Managers, salesmen, executives and administrators are trained with the same care as apprentices. The Group uses programmed learning and has sent men (including Ivor Baker) on courses at the Harvard Business School, Henley, Ashridge, the Urwick Orr school, the London and Manchester Business schools and so on. Franklin Braithwaite, the vice-chairman, is now on an advanced management programme at Harvard.
Taking care of people clearly pays off. Ivor Baker is mildly surprised if he is asked how they get and keep their sales representatives. “We grow them ourselves,” he says, “and you could count on the fingers of one hand the number of really worthwhile people we’ve lost since the war.”
Norman Mountain, managing director of Baker Perkins Limited, who started as a bakery machinery salesman with the firm, adds “We try to make all our men feel like ‘sales managers’, in their areas, not just sales reps. We might interview 30 men and take on one. We train him for two years, starting on the factory floor. If he’s going to be able to meet the top managers among our customers he’s got to know what he’s talking about. So he really learns how the machines are manufactured, erected and commissioned. And he knows how they work, how to apply what might be a completely new process for a customer.” After they are trained and are selling, salesmen are kept in regular personal touch with the management. The aim is to make them feel they are ambassadors for a company that has a world reputation for integrity and quality. A rather grandiose attitude? But the point is that Baker Perkins is not just selling machinery. When they put in a plant they do not leave until it is working properly and to the satisfaction of the customer. The emphasis is on service. “One senior erector,” recalls Norman Mountain, “was in Australia three months commissioning a printing machine. When he came back we got an SOS from the customer and within 36 hours of coming home the erector was on a plane heading back to the customer. He put it right and left the customer happy.” (Normally the sort of story told about the Japanese or the Germans.) Having men ready to fly off at the drop of a hat means having people at the HQ ready to help the families of the men abroad. Baker Perkins prides itself on looking after these problems, from schooling to housing. It is good business as well as good human relations to relieve men of domestic worries.
Baker Perkins’ salesmen (they prefer to call them “technical representatives”) are paid fixed but progressive salaries, not commission. But in some subsidiaries there are profit-sharing schemes for the managing directors. The kind of impact such incentives can have is shown by the German subsidiary, Forgrove G.m.b.H., of Cologne, which has increased its sales in a few years from £100,000 to over £1 million.
“We try to be constantly inventive in finding new uses for our equipment,” Ivor Baker claims. “For example, a wrapping machine made for the bakery trade has been adapted for wrapping meat and stationery.” This inventiveness is most spectacularly shown in the latest enterprise of the Group, the manufacture of web-offset printing presses. Chocolate machinery requires cylinders finished to very close tolerances, so does printing machinery. So the Group’s expertise in making cylinders gave it a natural advantage when, five years ago, it began making web-offset presses of Scandinavian design. This was a return to a business they were in before the war when they made rotogravure machines. (Picture Post was printed on their machines). The web-offset presses were first marketed by a subsidiary company – James Halley of West Bromwich. The peculiar facility of the process, that of printing in full colour at very high speed on paper ranging from newsprint upwards, soon brought some big orders. So it was decided to move the marketing and policy-making from Halleys to Baker Perkins Limited. Norman Mountain was asked by the main board to personally supervise the development of the web-offset business, and a special printing machinery division was established at Peterborough, Reading, Stourbridge, Manchester, Windsor, Ketley, Harlow, Leeds, Coventry and many countries abroad, to whom more than half the presses are exported.
“We are really selling colour,” says Mountain, “that’s what newspapers and magazines must have to compete with colour TV. In five years we have sold 34 presses –over £4 million-worth of machinery delivered or on order in the last three years alone. We’ve done that from nothing. We shall double our sales next year to £1,750,000. We’re now the largest rotary web-offset machinery makers in Europe. We’ve even sold presses in the U.S. Web-offset is the first major printing revolution in the newspaper industry for 70 years and we’ve managed to get in on the ground floor.”
Mountain admits it has been very hard going, competing against established printing machinery giants like Crabtree and Goss. He estimates that the Group has invested a million pounds in printing machinery, all out of profits. “It’s knocked our profits £200,000 to £300,000 a year.” But he is quite certain of success. “The new AA magazine Drive is printed on Baker Perkins machines, so are new newspapers like the Reading Evening Post and the Shropshire Star. A prize overseas order was for machinery to print the Reader’s Digest in Australia.
Ivor Baker describes his business briefly as making equipment that caters for basic human needs, notably food, chemical and printing. “The spread of his Group’s markets is such that it can depend always on steady growth. When one market is down another is up. Thus when the U.K. market hit a stagnant patch in 1966, and the return on capital was only 3.4 per cent, the overseas companies were able to weigh in with a hefty 21.8 per cent return on capital. But progress must always be based on enterprise and risk taking. “We’ve had our flops,” he admits. “After we signed an agreement with the Israeli Government we spent years trying to perfect machinery for mineral ore dressing based on the use of a heavy liquid extracted from the Dead Sea and known as tetrabromoethane. But is all came to nothing and we had to write it off.”
Technical enterprise must be matched with management enterprise and there are constant efforts to rationalise the business to get the best out of the management skills available. Last year the number of U.K. subsidiary companies was reduced by amalgamation from 16 to ten. The problem is always the same, getting, training and keeping the right men. Ivor Baker told his shareholders that if the U.K. was to avoid a further brain drain to other European countries on entering the Common Market, “then the weight of direct personal taxation must be eased and greater incentives offered without leaving it to private industry to try to compete with higher but ineffective gross salaries which only burden costs still further.” Many other business leaders think the same, but the message comes with greater force from a man so obviously concerned with people and so conscious of the roll they play in business success.
“I have personally devoted a good deal of time to our management development programme and I am satisfied that we have a lot of first-class young men who will be a great strength to the Group in future.” After talking with Ivor Baker and with some of his fellow directors and executives, one senses that this will be his monument. Norman Mountain believes that, “Baker Perkins is Ivor Baker. He is a natural leader. His ideas and attitudes run through the Group. You join him and you stay.”
[Incidentally, it will be recalled that in fact Mr (Joseph) Baker never did meet Mr (Jacob) Perkins- see here.]
Profits in 1968 were the highest achieved so far with profit after tax of £1.282m. . A scrip Issue was made and £1 units of stock split into two shares of 10s. each "to reduce the unit price and increase marketability". Both profits at home and exports from the UK increased, helped to some extent by the effects of devaluation in November 1967. Sales outside the UK now represented 60.2% of group sales. In an attempt to obtain a proportion of the growing Japanese and Far East markets, an agreement was signed with Tokyo Kikai Seisakusho, Japan for manufacture and sale in Japan of printing presses. The company parted with another long-serving director, Harold Crowther, who had retired from active management at the age of 65 in 1966, but at the request of the chairman, remained a director, finally resigning from the board at the end of 1968 after 31 years service.The Holdings Building – Marketing)
Recognising the need to gain a greater understanding of customers' real needs and to more closely focus resources on the group's targeted markets, BISMARK, the first of three industry marketing headquarters was created in January 1970. This was developed out of Baker Perkins Ltd's biscuit division, which had been formed in 1966 and it recognised Baker Perkins Ltd's key position in the manufacture and sale of biscuit machinery. BISMARK's role was to act as the central point to co-ordinate the marketing work of regional offices of Baker Perkins International that sold machinery to produce biscuits, and of group companies that made and sold that machinery. The function of Bismark was an advisory one with the object of improving the quality, strength and profitability of Baker Perkins' worldwide biscuit machinery business. Five assistant sales managers, each with two sales assistants were each allocated to an overseas area and a section of the UK biscuit industry and, on the technical side, six process controllers dealt with day-to-day technical questions but also performed a marketing function by collecting and analysing information as to the kind of machinery which customers needed. BISMARK was housed in some temporary offices located behind the Apprentice School at Westwood.
CHEMMARK, a similar organisation to co-ordinate the marketing work of group companies making and selling chemical machinery, was formed in May 1970 and was headquartered at Baker Perkins Inc's factory in Saginaw, Michigan. The co-ordination of marketing of bakery machinery posed different problems. With no dominant manufacturing centre – bakery machinery being made in Peterborough, Saginaw and Melbourne, Australia – BAKEMARK was constituted as a committee under the chairmanship of A.I. Baker, having no permanent staff, and with the other members drawn from the senior staff of relevant operating companies.
1970 was the 100th Anniversary of the patenting by Joseph Baker of the flour sifter, an illustration of which together with a photograph of the patent itself, is to be found in How it Started. Pre-tax profits were at a record level being 28% up on the previous year. Baker Perkins International Ltd – with its head office in London - was formed in January 1969 as part of the re-organisation of the group's overseas activities on a geographical basis as described above. As a result, Baker Perkins (Exports) stopped trading after 18 years' life and over £47m worth of sales (See also - The History of Baker Perkins (Exports) Ltd).
The decision to axe the Export Company recognised that exporting British technology – a concept that had paid dividends in the post-war years – was no longer the right way. The task was to ensure that each supply company understood what overseas customers really needed by demolishing the internal organisational barriers between the supplier and the market place. It was, however, also recognised that the Export Company had served an important purpose by sowing the seeds of expertise in selling overseas.
In recognition of the need to have an appreciation at all levels of the business of the importance of efficiently marketing the group's products, D.T.L. Rettie was appointed to the parent company board with responsibility for group marketing. The new HQ building for Rose Forgrove at Seacroft, Leeds was opened by A.I. Baker, chairman of Baker Perkins Holdings Ltd. Baker Perkins, Australia bought Thermo Radiant Ovens Pty Ltd. and the remainder of the share capital of Gordon Brothers in which a minority interest had first been acquired in 1925.
By 1970, profits had reached another record. In the seven years since the Holdings Co. was formed turnover had nearly doubled, to £42.3m and after tax profit had increased from £315,582 to £1.485m. Efforts to cut costs and make the business more efficient continued - "We finished 1970 with 390 fewer employees than at the beginning and since the end of the year a further 600 have been given notice or have retired unreplaced, a total reduction of over 10%" – but at the same time, the UK group employees profit share increased from 2% to 3% of remuneration for all UK employees over 25 and with 5 years service or more. The growth in exports continued - over the four years from 1967 to 1970, exports from the UK had increased from £6.2m to £11.0m. In 1970, only 35% of total sales were made in the UK compared with 55% ten years earlier and, of the remaining 65%, almost half were in the USA. In recognition of this, a new subsidiary, Baker Perkins Printing Machinery Corporation, was formed in Chicago to further the sales of web offset printing presses to the region from the UK. As another part of the restructuring of the group's international operations that had begun in 1968, the HQ of Baker Perkins International was moved back to Peterborough from London in 1970.
The following year, the worsening international business environment really began to bite and the directors announced - "Conditions in 1971 turned out to be the most difficult with which we have had to cope since the depression years of the 1930s". Drastic action to reduce costs and expenses throughout the group in the light of the reduced level of activity resulted in a somewhat better than expected result for 1971, allowing payment of the same rate of dividend as the previous year. Group turnover fell to £38.96m and profit after tax to £926,615.The number of employees was reduced through redundancy by a further 1,050 or 12%".
One casualty of the economy drive was the group internal newspaper - "Group News", that had been launched in August 1964 (see - Improving Internal Communications - above). It ceased publication in January 1971 but the concept was revived two years later (see Group Newspapers).
The board's policy of investment in the future, particularly as far as training was concerned, continued and the Holdings Building was extended with more office space to the rear and a link at first floor level now connected it to the Management Training Centre that had been created above the Apprentice School. With the new concentration on marketing activities came C.R.A. (Bob) Senior's appointment as group marketing manager in place of D.T.L. Rettie who resigned in September 1970. Bob had joined Saginaw in 1967 from Dresser Industries when the Podbielniek Division of Dresser Industries was merged with Baker Perkins Inc.
In 1970, group management began to revive its discussions concerning changes in organisational structure, one reason being the impending retirement of Sir Ivor Baker, scheduled for the end of 1973. Sir Ivor would have held the post of chairman of the board of directors for 29 years by that time and his departure was certain to affect greatly the way in which top management would function. It was seen as an advantage to implement the next major step of the reorganisation before Sir Ivor's departure.
Another spur to reorganisation was that ,despite achieving record sales, the softening of the US economy was having a dampening effect on profits and this, coupled with the shock of the Rolls Royce collapse, was making many British companies contemplate their own future. Urwick Orr was called in again to restudy the organisational structure. It reported:
"The division of responsibilities between the two executive vice chairmen has often resulted in compromise decisions in order to reconcile conflicting interests. Moreover, this division of responsibility has interfered in the communication of information between manufacturing and the marketplace. This effect has tended to stifle innovation in the company. Finally, sectional interests were often pursued at the expense of the total group's goals".
These recommendations were accepted and, in October 1971, J.F.M. Braithwaite was appointed Group Managing Director and Chief Executive Officer. At the same time, R.H. Wilkins was appointed Director of Corporate Development to head all group services (apart from finance and accounting). R.H. Wilkins also had all but the four largest operating companies reporting to him so as to relieve the chief executive of first hand (but not final) responsibility for these smaller units.
At the same time, a number of changes were made with respect to the firm's international operations as experience had indicated that even better progress would be made when general trading conditions improved if the manufacturing companies were given direct access to, and control over, their markets and sales outlets. Each UK company accepted direct responsibility for the whole of its European market on 1st January 1972, in anticipation of the UK joining the European Economic Community. In June 1972, group management announced a full set of geographic marketing assignments. The directive stressed that each company was responsible for selling equipment which best suited the customer regardless of the supply source.
The adoption of a profit centre responsibility for each Baker Perkins company was also to change the relationships between sister organisations in the Baker Perkins group. Norman Mountain expressed it:
"Under the new profit centre arrangement, no manager owes any other manager a living. Naturally, we will continue to help each other where we can but our first responsibility, within group policy, is to our own company".
One result of this new sense of independence was that W.A.B. Brown decided that Rose Forgrove would assume full responsibility for marketing biscuit packaging machinery. Rose Forgrove came to an agreement with Baker Perkins Ltd on compensation for its previous efforts in developing market share and goodwill for packaging equipment. (See also - History of Baker Perkins in the Packaging Business).
A knighthood was conferred on the chairman, A.I. Baker, in the 1972 Queen's Birthday Honours List for services to export. As if in celebration, there was a significant bounce-back in the outcome for the year with an increase in turnover and a substantial improvement in profits. Plans were made for major items of capital expenditure, including a £2.5m integrated plan for factory re-organisation and major new machine tool purchases, together with a new multi-storey office block for Baker Perkins Ltd - all part of the board's commitment to – "meet the demand for greater output and to ensure that we obtain further productivity increases and improve the quality of our products and conditions for employees". To meet the last stated aim, the group pension scheme was improved, major changes including the adoption of the principle of pensions being generally based on pay in the last three years of service, the introduction of post-retirement widows pensions, the guarantee of some protection against inflation after retirement and the improvement for most employees of death-in-service benefits with all employees qualifying for entry within the first year of service.
In the overseas arena, plans were in hand to intensify the group's coverage of the South American market, see also – History of Baker Perkins in Latin America, where Baker Perkins was the foremost supplier of biscuit plant and equipment, by the secondment of F.H. Arscott – a director of Baker Perkins Ltd – to Brazil. Closer to home, I.H.G. Gilbert, chairman of British Match Corporation Ltd. was elected as a non-executive director in May 1972. Several other areas were designated for major development – the UK’s entry into the Common market signalled big opportunities for bakery, biscuit and packaging machinery in Europe and the level of biscuit consumption in the USA (three times that in the UK) provided an opportunity for expansion there. The wealth of the OPEC (organisation of Petroleum Exporting Countries) was seen as another major opportunity.
The early 70’s were characterised by rumours of take-over bids. This was the time of Slater Walker and Baker Perkins was considered a possible target. In November 1972, the Financial Times was reporting:
"..... it might be worth considering the takeover appeal of a group with a market capitalisation of £13.6m, net worth of £19.3m, dominating world market shares in baking and biscuit machinery and a sizeable presence in packaging machinery. Just over half group capital is employed overseas: a quarter is in the USA, which made £614,000 after tax in 1969. Income from the associates, £676,000 in 1971, remains on a firmly rising trend, and the prospective p/e may be just about 12 ½".
The FT made further comment in April 1973 commenting that – "some 4% of the equity has recently gone into nominee holdings not unconnected with Slater Walker", to which Franklin Braithwaite replied that he considered the news as a strong reminder that the company was being watched closely but – "I do not regard these goings on as a threat as much as a spur to obtain better performance out of Baker Perkins".
Pre-tax Profit was up 14% in 1973 on the previous year but fell short of the record level achieved earlier. High levels of inflation were making the Accounting task difficult and guidance was awaited from the professional bodies concerned and the Government committee charged with looking at this problem. Despite this, orders were at an all time high with 68% of total sales occurring outside the UK and several substantial acquisition opportunities, mainly overseas, were under investigation. The Holding company board was further strengthened by the appointment of another non-executive director - J.F. Holman – chairman of International Compressed Air Corporation Ltd.
1973 was the year of the energy crisis when rising oil prices pushed up inflation and sent the world into an economic tailspin. Britain was hit particularly hard at the time, suffering power cuts, rampant inflation and a three-day working week. The newly re-launched and re-named group newspaper - "Contact" (see Group Newspapers) was exhorting all employees to limit heating in the face of fears that the company's stocks of heating fuel could be exhausted. In a forerunner of today's concerns about "Global Warming", employees were asked to;
Unfortunately for Baker Perkins, the crisis came at a time when its order books were comparatively full and there were real fears that raw material supplies would create sever problems. In particular, the management expressed disappointment that the government had given no priority of steel supplies for companies that had a high export volume.
From the end of 1973, the group continued to suffer a considerable loss of volume of invoiced sales as a result of the short-time working in the UK, aggravated in particular by shortages of some types of bought-out supplies. These factors led to a substantial rise in work-in-progress, the financing of which, at the high interest rates current at the time, was an additional burden.
Borrowings were pushed up much higher than expected, productivity inevitably suffered and margins were squeezed, particularly on longer term contracts due to the much more rapid rise in costs of materials and labour than had been anticipated. However, these problems were surmounted, except in North America where Baker Perkins Inc. lost approximately £1.4m during the period, and by the end of 1974, most parts of the group were beginning to show strong signs of recovery.
More rationalisation took place with Baker Perkins Chemical Machinery Ltd. taking over the previous chemical machinery activities carried out at Peterborough, Kingston-upon-Thames and Hanley. The new subsidiary, to be owned by Baker Perkins Inc., had the principle objective of achieving a rapid increase in European business.
In 1974, a decision was taken to change the financial year-end from 31st December to 31st March. This was in part because – "In the past the publication of the annual report and accounts has had to be delayed longer than the directors wished to wait for the results of the important European Limited Partnership (Baker Perkins' investment holding in Werner & Pfleiderer GmbH) to be cleared by a general meeting of the partners".
The group finance director, William Sampson gave the following information on the ownership of Baker Perkins in 1974:
NOTE: Over 60% of the capital was held by banks, insurance companies and pension funds – a not uncommon pattern in British industry. Many of the ‘other individuals’ were employees.
Colin Joyce, deputy finance director was elected to the board in 1973, having earlier had experience of group operations in Brazil, Steel & Cowlishaw, Rose Brothers and Douglas Rownson. He was appointed as finance director on the retirement of Bill Sampson in 1974.
Sir Ivor Baker retired in 1975 and was succeeded as chairman by I.H.G. Gilbert. In his final review of future prospects, Sir Ivor reflected that - "Most of the countries which comprise the group's traditional markets are in a state of recession". There had been a greater than expected loss in North America and although the group had entered the financial year with a good level of orders and high hopes of breaking through to an altogether higher level of profitability, these hopes had been frustrated by the effects of the miners strike and short time working in the UK in early 1974, together with acute shortages of materials and components causing severe dislocation to manufacturing schedules both in the UK and USA. The rationalisation programme continued with the closure of the Basingstoke factory of Douglas Rownson in February 1975; management responsibility for James Halley & Sons Ltd was transferred to Peterborough in March 1975; the operations of Baker Perkins Developments Ltd. were transferred from Twyford to other group companies and the small Brampton, Ontario factory of Canadian Baker Perkins Ltd. was closed with production being transferred to the Saginaw factory of Baker Perkins Inc. P.B. Harley resigned as president of Baker Perkins Inc. and J.M. Peake, who had been managing director of the Australian Company since 1969, was seconded to Saginaw in his place.
All of this struggle to balance costs, particularly labour costs, against market opportunity began to pay off and profits rose significantly in 1975/76, nearly doubling at the pre-tax level compared with the fifteen months to March 1975 and sales increased by 11% over the same period - this despite a further devaluation of the pound sterling. North America was turned from a loss of £1.4m to a profit of £300,000. Sales of food machinery represented 55% of total group sales and produced 85% of group profit. Sales outside the UK accounted for 69% of total sales and 30% of total sales represented exports from the UK – another record.. The Rights Issue in early 1976 and an improved cash flow from trading enabled borrowings to be halved. £2.6m of capital expenditure authorised. The directors expressed concern about the effect on UK employee morale of the voluntary incomes policy, high inflation, high taxation and pay restraint. To help offset this, the directors made a special payment of £400,000 to the pension scheme to offset the effect of the UK Government's 'pay restraint' policy. On the negative side, it was announced that the James Halley, West Bromwich factory was to be closed and production transferred to Westwood Works. At board level, R.H. Wilkins retired after 28 years with the company, 22 as a board member. Sir Kenneth Barrington was appointed to be deputy chairman and Niall C. Macdiarmid, chairman of CompAir Ltd. was elected as a non- executive director in place of J.F. Holman who had died suddenly in 1974.
Inevitably, this history tells the story as seen from the inside of the company and it is worth taking a look at how key commentators at the time saw the company from the outside. One such was the deputy editor of the "Financial Times", Geoffrey Owen, who, in 1976, gave his opinion of the group’s progress in an article in the Baker Perkins’ group newspaper – "Contact":
"THE GENTLEMANLY ROAD TO CHANGE
THERE IS A WIDELY HELD VIEW THAT WHEN A COMPANY GETS INTO A RUT OF STATIC OR DECLINING PROFITABILITY, THE ONLY WAY OUT IS THROUGH SOME FORM OF SHOCK TREATMENT – AN INTERNAL COUP D’ÉTAT OR A TAKE-OVER FROM OUTSIDE, ACTUAL OR THREATENED. BUT THE PROCESS OF CHANGE CAN TAKE PLACE IN A LESS DRAMATIC, EVEN GENTLEMANLY FASHION, WITH THE OUTSIDE WORLD HARDLY AWARE OF WHAT IS HAPPENING. SUCH AN APPROACH MAY EVEN ACHIEVE BETTER RESULTS, SINCE IT AVOIDS THE MANAGEMENT UPHEAVALS WHICH SHOCK TREATMENT OFTEN INVOLVES.
BAKER PERKINS, WHICH HAS JUST ANNOUNCED RECORD PROFITS, HAS FOLLOWED THE GENTLEMANLY ROUTE. WITH ITS HEADQUARTERS AND LARGEST FACTORY IN PETERBOROUGH, AND EMPLOYING ABOUT 6,500 PEOPLE WORLDWIDE, IT IS IN MANY WAYS A TYPICAL BRITISH ENGINEERING COMPANY. ITS REPUTATION FOR HIGH-QUALITY PRODUCTS, LONG-ESTABLISHED OVERSEAS CONNECTIONS, AND A PROGRESSIVE APPROACH TO LABOUR RELATIONS (STEMMING PARTLY FROM THE QUAKER TRADITIONS OF THE BAKER FAMILY), SHOULD HAVE MADE IT ONE OF THE SUCCESS STORIES OF THE ENGINEERING INDUSTRY. YET, DURING THE 1960S IT SEEMED TO LOSE ITS WAY. IT MADE A NUMBER OF POORLY JUDGED ACQUISITIONS AND ITS RETURN ON CAPITAL EMPLOYED FLUCTUATED AROUND A MEAGRE 10 PER CENT.
A DOMINANT POSITION
FORMED BY A MERGER BETWEEN TWO COMPETING COMPANIES IN 1919, BAKER PERKINS HAS ALWAYS HAD A DOMINANT POSITION IN THE BREAD-MAKING AND BISCUIT-MAKING MACHINERY MARKET. BETWEEN THE WARS IT BUILT UP A SIZEABLE EXPORT BUSINESS, ESPECIALLY IN THE "OLD" COMMONWEALTH AND IN LATIN AMERICA: ITS FACTORY IN SAGINAW, MICHIGAN, MAKING SIMILAR PRODUCTS, WAS ALSO ACQUIRED IN 1919.
IN THE MID-FIFTIES THERE WAS A FEELING AMONG THE DIRECTORS THAT, ALTHOUGH THEY HAD DEVELOPED OTHER LINES OF MACHINERY – FOR CONFECTIONERY, PACKAGING AND PARTS OF THE CHEMICAL INDUSTRY – THEY WERE STILL TOO DEPENDENT ON BREAD AND BISCUITS. THE DECISION WAS TAKEN TO DEVELOP OR ACQUIRE NEW BUSINESSES WHICH WOULD USE THE COMPANY’S EXISTING MANUFACTURING SKILLS AND PROVIDE A BROADER BASE FOR GROWTH.
THE PLAN SEEMED LOGICAL ENOUGH, BUT MOST OF THE DOZEN OR SO ACQUISITIONS WHICH WERE MADE DURING 1958-62 MUST BE REGARDED AS FAILURES. SEVERAL OF THE COMPANIES WERE VERY SMALL, DOMINATED BY A SINGLE OWNER-ENTREPRENEUR, AND DID NOT FIT EASILY INTO A LARGER ORGANISATION: IN ONE OR TWO CASES THERE WERE SKELETONS IN CUPBOARDS THAT OUGHT TO HAVE BEEN DISCOVERED BEFORE PURCHASE.
OUTSIDE THEIR EXPERIENCE
THE BASIC ERROR WAS THAT BAKER PERKINS, THINKING OF ITSELF PRIMARILY AS AN ENGINEERING COMPANY, PUT TOO MUCH EMPHASIS ON THE PRODUCT IT WAS ACQUIRING RATHER THAN ON THE MARKET. IT BOUGHT A PLASTICS MACHINERY BUSINESS FOR INSTANCE; THE TECHNOLOGY OF THE PRODUCT PRESENTED NO PROBLEMS FOR THE BAKER PERKINS PEOPLE, BUT THEY DID NOT REALISE THAT THE MARKET WAS QUITE OUTSIDE THEIR EXPERIENCE. THE PLASTICS FABRICATING INDUSTRY IS FRAGMENTED, WITH MANY SMALL, UNDER-CAPITALISED CONCERNS – A DIFFERENT WORLD FROM THAT OF THE BIG BAKERS AND BISCUIT MAKERS WITH WHICH BAKER PERKINS WAS FAMILIAR.
WHAT WAS NOT APPRECIATED WAS THAT BAKER PERKINS’ STRENGTH IN FOOD MACHINERY LAY NOT SO MUCH IN ITS ENGINEERING PROWESS AS IN ITS UNDERSTANDING OF WHAT ITS CUSTOMERS WANTED; THEY KNEW THE PROCESSES AND THE MARKETS BACKWARDS. HENCE ACQUISITIONS, WHICH WERE DESIGNED TO EXTEND AN ESTABLISHED MARKET POSITION, WERE MORE LIKELY TO BE SUCCESSFUL. THIS WAS CERTAINLY THE CASE WITH ROSE BROTHERS OF GAINSBOROUGH, WHICH FOR MANY YEARS HAD BEEN THE MAIN COMPETITOR OF BAKER PERKINS’ FORGROVE SUBSIDIARY IN WRAPPING AND PACKAGING MACHINERY; IT WAS BOUGHT IN 1961 AND THE TWO COMPANIES WERE MERGED TO BECOME ROSE FORGROVE.
ANOTHER GOOD BUY WAS A GLASGOW LAUNDRY MACHINERY BUSINESS, NOW KNOWN AS BAKER PERKINS JAXONS. BUT THESE WERE EXCEPTIONS. A LOT OF EFFORT HAS BEEN SPENT ON SORTING OUT WHAT WENT WRONG; SOME PRODUCT LINES HAVE BEEN DISCONTINUED AND SEVERAL FACTORIES CLOSED DOWN.
IN THE MEANTIME OTHER WEAKNESSES HAD BECOME APPARENT. FOR 50 YEARS THE COMPANY HAD BEEN RUN BY A BOARD OF MANAGEMENT: FOUR OR FIVE EXECUTIVES, INCLUDING THE CHAIRMAN, SHARED RESPONSIBILITY FOR KEY DECISIONS. AS THE GROUP BECAME MORE COMPLEX, A NEW TOP COMPANY, BAKER PERKINS HOLDINGS, WAS FORMED, BUT RETAINED THE SAME TYPE OF BOARD. THEN, IN 1967, IN ORDER TO STREAMLINE THE DECISION-MAKING PROCESS AND SHARPEN UP ACCOUNTABILITY, A MORE ORTHODOX STRUCTURE WAS ADOPTED. UNDER THE CHAIRMAN, MR IVOR BAKER (LATER SIR IVOR), TWO EXECUTIVE VICE-CHAIRMEN WERE APPOINTED, ONE (MR FRANKLIN BRAITHWAITE) LOOKING AFTER THE EXPORT SUBSIDIARY AND ALL THE OVERSEAS COMPANIES, THE OTHER (MR R.H.WILKINS) TAKING CHARGE OF THE U.K. OPERATIONS.
LIKE MANY BRITISH FIRMS, BAKER PERKINS HAD FORMED A SEPARATE EXPORT SUBSIDIARY AFTER THE WAR AND IT SERVED ITS PURPOSE WELL. BUT THE DANGER WITH SUCH SUBSIDIARIES IS THAT THEY CAN BECOME REMOTE FROM THE PEOPLE WHO ARE DESIGNING AND MAKING THE PRODUCTS – THE FORMAL DIVISION OF RESPONSIBILITIES IN BAKER PERKINS INCREASED THIS DANGER.
IT SOON BECAME CLEAR THAT WHAT WAS NEEDED WAS A DIRECT LINE OF AUTHORITY AND THE REMOVAL OF BARRIERS BETWEEN U.K. PLANTS AND OVERSEAS CUSTOMERS. SO IN 1971 MR BRAITHWAITE WAS APPOINTED MANAGING DIRECTOR AND, IN EFFECT, CHIEF EXECUTIVE FOR THE GROUP AS A WHOLE. HE IS A GRANDSON OF JOSEPH ALLEN BAKER, MP, ONE OF THE GREAT FIGURES IN THE COMPANY’S HISTORY WHO WAS CHIEFLY RESPONSIBLE FOR BUILDING UP THE BAKER COMPANY BEFORE THE 1919 MERGER.
A FEATURE OF THE NEW STRUCTURE IS THAT THE THREE MAIN MANUFACTURING COMPANIES – BAKER PERKINS INC. IN THE U.S., BAKER PERKINS LTD AND ROSE FORGROVE IN THE U.K. – HAVE A WORLDWIDE RESPONSIBILITY FOR MAKING AND SELLING THEIR MACHINERY, WITH NO ARTIFICIAL DISTINCTION BETWEEN HOME AND OVERSEAS BUSINESS. THE U.S. COMPANY, FOR EXAMPLE, LOOKS AFTER CHEMICAL MACHINERY, WHICH IS LOGICAL SINCE THE U.S. TENDS TO SET THE STANDARDS FOR THE REST OF THE WORLD IN THIS FIELD; IT CAN DECIDE WHETHER A PARTICULAR ORDER SHOULD BE HANDLED IN SAGINAW – OR IN ONE OF THE U.K. FACTORIES – STOKE OR PETERBOROUGH.
WHILE THE MANAGEMENT STRUCTURE HAS BEEN TIDIED UP AND THE BOARD STRENGTHENED WITH SEVERAL NON-EXECUTIVE DIRECTORS, THE GROUP STILL HAS A FAIRLY WIDE RANGE OF PRODUCTS, SOME OF WHICH DERIVE FROM THE 1958-62 ACQUISITIONS. FOR INSTANCE, BAKER PERKINS HAD SOME EXPERIENCE OF PRINTING MACHINERY BEFORE THE WAR AND IN 1961 IT BOUGHT JAMES HALLEY OF WEST BROMWICH, A MANUFACTURER OF LITHOGRAPHIC AND ROTOGRAVURE PRESSES. THE WEST BROMWICH FACTORY HAS RECENTLY BEEN CLOSED AND PRODUCTION CONCENTRATED IN PETERBOROUGH. ALTHOUGH THIS BUSINESS LOST MONEY LAST YEAR, THE MANAGEMENT IS CONVINCED THAT THE PRODUCT RANGE IS A GOOD ONE AND HAS EVERY INTENTION OF PERSISTING WITH IT.
WHAT CAN CERTAINLY BE RULED OUT IS ANY SPECTACULAR MOVE TO DIVERSIFY FURTHER. BRAITHWAITE BELIEVES THAT THERE IS SCOPE FOR GROWTH IN, OR CLOSE TO, THE TRADITIONAL LINES, BOTH IN THE U.K. AND OVERSEAS. FOR INSTANCE, IMPORTS OF WRAPPING AND PACKAGING MACHINERY INTO THE U.K. ARE EMBARRASSINGLY LARGE. THERE ARE GOOD PROSPECTS FOR EXPORTS IN THE DEVELOPING COUNTRIES (A £3.5M. CONTRACT FOR A COMPLETE BISCUIT-MAKING PLANT WAS RECENTLY WON IN ALGERIA), BUT BRAITHWAITE BELIEVES THAT THE COMPANY HAS NOT YET DONE ENOUGH IN EUROPE OR EVEN IN NORTH AMERICA, DESPITE THE PRESENCE OF THE U.S. SUBSIDIARY.
CONTINENTAL BASE SOUGHT
A CONTINENTAL MANUFACTURING BASE, PREFERABLY WITH COMPLEMENTARY PRODUCTS, WOULD BE USEFUL AND BRAITHWAITE IS LOOKING AT ONE OR TWO POSSIBILITIES. BAKER PERKINS HAS A LONG-STANDING 25 PER CENT STAKE IN A CONTINENTAL FOOD AND CHEMICAL MACHINERY MAKER. BUT DESPITE THE SHAREHOLDING THE TWO COMPANIES ARE COMPETITORS AND IT SEEMS UNLIKELY THAT THIS INVESTMENT WOULD PROVIDE THE ROUTE INTO EUROPE WHICH BRAITHWAITE SEEKS.
THERE IS, IN ANY CASE, A GREAT DEAL TO DO TO IMPROVE THE PROFITABILITY OF THE EXISTING BUSINESSES. PRODUCTIVITY HAS BEEN INCREASED IN RECENT YEARS (THE TOTAL LABOUR FORCE HAS BEEN CUT FROM MORE THAN 9,000 IN 1969 TO 6,500 IN 1975-76) AND RETURN ON CAPITAL EMPLOYED ROSE TO 14.7 PER CENT LAST YEAR. ALTHOUGH THIS IS SOME WAY SHORT OF THE COMPANY’S TARGET AND THERE ARE STILL WEAK AREAS OF THE BUSINESS, THE MANAGEMENT APPEARS TO HAVE A CLEARER IDEA OF WHAT ITS STRENGTHS ARE AND HOW THEY SHOULD BE USED.
WHAT BROUGHT ABOUT THE CHANGE? THERE WAS NO INTERVENTION BY THE INSTITUTIONAL INVESTORS (THEY WERE PRESUMABLY CONTENT WITH BAKER PERKINS’ STEADY DIVIDEND RECORD) AND EVEN THE APPEARANCE OF SLATER WALKER AS A SUBSTANTIAL SHAREHOLDER DID NOT, IN ITSELF, CAUSE THE COMPANY TO ALTER ITS POLICIES. FOR SEVERAL YEARS THE MANAGEMENT HAD MADE A PRACTICE OF MEETING REGULARLY WITH INVESTMENT ANALYSTS. THE QUESTIONS RAISED AT THOSE MEETINGS, AND THE UNFAVOURABLE COMPARISONS DRAWN WITH SIMILAR ENGINEERING COMPANIES, MADE AN IMPACT. THE DIRECTORS’ GROWING DISSATISFACTION WITH THE COMPANY’S PERFORMANCE AND REPUTATION WAS REINFORCED BY THE LIQUIDITY PROBLEMS OF 1974 WHEN THERE WAS A REAL DANGER THAT THE COMPANY MIGHT RUN OUT OF CASH. THIS IN TURN LED TO A MORE RIGOROUS ATTENTION TO CASH FLOW, WORKING CAPITAL AND PROFIT MARGINS.
ALL THESE PRESSURES HAVE BROUGHT ABOUT CHANGES WHICH INVOLVE NO VIOLENT BREAK WITH TRADITION BUT GIVE THE COMPANY A MORE MODERN LOOK AND PERHAPS A MORE PROFESSIONAL APPROACH TO THE BUSINESS. THE NEXT FEW YEARS WILL SHOW WHETHER THIS NEW APPROACH CAN BE TRANSLATED INTO A SUSTAINED IMPROVEMENT IN PROFITABILITY".
The company continued to perform well in a hostile environment. Pre-tax profit rose again in 1977, from £4.4m to £7.9m despite continued depression in the world business environment. Group sales were up by 18% with sales outside the UK rising again to represent 72% of the whole. Sales of food machinery (including packaging equipment) rose again to represent 64% of group sales compared with 60% in the previous year. The sudden death was announced of Leslie Simpson, a member of the board since 1960. Described as one of the country’s most able production engineers, he had served the group for 25 years.
The printing machinery business came very close to making a profit for the first time. Investment continued, Baker Perkins Holdings increasing its interest in Baker Perkins Inc., Saginaw from 72.4% to 100% at a cost of $US 4m. The factory at Bedewell was extended by the purchase of a number of industrial buildings adjacent to the existing works. A new factory was planned at Skegness for Rose Bearings. The group expended £1.75m (1975/75 - £1.4m) on research and development with a further significant increase planned for the following year. The first of a major investment in Computer Aided Design equipment was installed at Peterborough (See The Drawing Office).
To strengthen the group's presence in the chemical industry, the mixing machinery manufacturers, Malaxeurs Guittard of Paris, was acquired in late 1977 and, as part of the strategy of concentration on core activities, the loss-making laundry machinery business of Baker Perkins Jaxons Ltd was sold. There were fears of higher inflation in both the UK and USA. The UK bakery market remained depressed and a severe blow was dealt to the group's bakery machinery business when the Spillers Group pulled out of bread production in the UK.
A number of changes occurred in the make-up of the Holdings Company board in 1977/78 – Niall Macdiarmid, a non-executive director, died suddenly; M.R.H. (Mike) Smith, a director of Baker Perkins Ltd, joined the board as an executive director and Bernard Cotton was elected as a non-executive director. J.M. Peake returned from the USA to take up the appointment of deputy group managing director. The untimely death occurred in February 1977 of L.P. Simpson, member of the Holdings Company board and deputy managing director of Baker Perkins Ltd.
The chairman stated in the 1978/79 Annual Report that - "Despite generally depressed business conditions the group put up an excellent performance with a return of over 20% on capital employed for the third consecutive year" and "Over 2/3rds of the goods sold by the group were produced in the UK but 71% of all group sales occurred outside the UK". £3.5m was raised by means of a rights issue of ordinary shares in February 1979 which supported the continuation of a high level of both capital and research and development expenditure. As a boost to the high-performing food machinery business, the cookie machinery business of Werner Lehara, Grand Rapids, Michigan, USA was purchased in September 1978 and immediately contributed to a 16% increase in trading profit form this sector. More promotion from inside occurred with R.F. Kelley, president and CEO of Baker Perkins Inc., and J.S. Hardy, parent company secretary, being elected to the board in 1978.
Sir Franklin Braithwaite succeeded Ian Gilbert as Chairman in 1980 and John Peake became Managing Director. All of the major group companies except one (Rose Forgrove Ltd.) earned a profit similar to or greater than the previous year. Difficult trading conditions existed in the UK with a strong sterling exchange rate and very high domestic inflation. The UK national engineering strike cost the group about £1m in lost profit. Packaging m/c orders were at a low level but confidence in the future for this sector remained and a new factory was being built at Gateshead for Rose Forgrove. More investment was made in the key bakery machinery business when Pavailler. France, manufacturers of retail bakery equipment was acquired.
The difficult business climate of previous years continued in 1980/81 with severe recessionary conditions in the UK and an increasingly competitive environment abroad but, despite this, orders on hand were up from £50m to £57m. However the main impact was felt in the two main UK companies whose combined output fell by 16% with trading profit falling from £4.576m to £433,000. Authorisation was given for a new bakery machinery factory to be built at Goldsboro, North Carolina. Another long-serving director - Norman Mountain retired from the parent company board in 1980 and as chairman and managing director of Baker Perkins Ltd. whilst George Law, a director of Morgan Grenfell Holdings Ltd., joined the board as a non-executive director following the retirement of Sir Kenneth Barrington.
Profits improved in the following year but overseas prospects looked less bright. A strengthening pound and high inflation continued to make exporting from the UK difficult. Profits were also affected by the cost of moving the bakery business from Saginaw to the new facility at Goldsboro and the completion of the Rose Forgrove factory at Gateshead. The group's retail/in-store bakery business was strengthened by the acquisition of Willett Industries, Australia. Another non-core activity - Gordon Brothers, Australia's refrigeration business - was sold. The total number of employees in the group continued to fall – 6760 compared with 7372 in 1980 – the UK total of 6760 being 612 less than two years before.
The parent company's name was changed from Baker Perkins Holdings Ltd to Baker Perkins Holdings plc early in 1982. All other group companies in the UK retained their existing names ending in the word "Limited". This change was requirement of the Companies Act, 1980 and was one aspect of the continuing programme for harmonising company law within the EEC and made clearer the distinction between public companies – those allowed to raise money from the public - and private companies.
(It is interesting to note that the necessity to change the name of the parent company at this time generated much discussion. One consideration was whether it was possible to get away from the confusion, both locally and internationally, that had existed since the early part of the century with the other Peterborough-based 'Perkins' - Perkins Diesel. Here it is pointed out that no member of the Perkins family had been directly involved with the company since the 1890s, (see - History of Werner Pfleiderer & Perkins Ltd). On the other hand, was felt to be a pity to drop the name of one of the company's founders. In the event, after juggling various combinations of - "Baker", "Holdings", "Engineering", "International", "Group" and "PLC", the name Baker Perkins Holdings plc was accepted).
In 1982, “Engineering Today” interviewed a number of senior Baker Perkins executives, and this provides another opportunity to obtain some idea of what the company looked like from the outside. (The conclusions reached here might be compared with those reached by Geoffrey Owen of the "Financial Times" in 1976 above):
DOING NICELY AT BAKER PERKINS
BAKER PERKINS IS A SUCCESSFUL INTERNATIONAL COMPANY, SO YOU MIGHT THINK THAT WHATEVER WORDS WERE USED TO DESCRIBE IT, "NICE" WOULD NOT BE ONE OF THEM. ITS PHILOSOPHY IS STILL INFLUENCED BY ITS QUAKER FOUNDER, JOSEPH BAKER, AND OWES MUSH TO HIS, AND HIS SUCCESSORS’, WORK ETHIC AND TRADITION OF PHILANTHROPY. BAKER PERKINS IS STRONG ON ETHICS, THEN, BUT IT IS ALSO STRONG IN ITS MARKETS: AS ONE KEY EXECUTIVE SAYS, "YOU CANNOT CONFUSE 'NICE' WITH 'SOFT'".
THE REORGANISATION OF BAKER PERKINS’ MARKETING CONTROL IN 1968 CAME AFTER THE GROUP REALISED THAT HAVING ONE EXPORT COMPANY IN LONDON TO CATER FOR SEVERAL COUNTRIES AND PRODUCTS WAS NOT WORKING. SAYS MIKE SMITH, MANAGING DIRECTOR OF THE BRITISH BAKER PERKINS SUBSIDIARY: "EXPORTING BRITISH TECHNOLOGY WAS NO LONGER THE RIGHT WAY". AFTER THE SECOND WORLD WAR, THERE WAS A SELLERS’ MARKET FOR A GOOD 10 YEARS, HE SAYS. THAT, PLUS THE STRONG TRADING LINKS FOSTERED BY THE EMPIRE, SEEMED TO MAKE IT SENSIBLE IN 1951 TO SET UP AN EXPORTING COMPANY. BY THE LATE 1960S, THOUGH, "WE HAD TO TAKE A BROAD LOOK AT OURSELVES, AT THE EEC AND THIS NEW DISCIPLINE CALLED MARKETING," SAYS SMITH.
GROUP MANAGING DIRECTOR JOHN PEAKE FEELS THAT, DESPITE THE GRUMBLES AIMED
AT THE LONDON EXPORTING ARM, WITHOUT IT THE GROUP MIGHT NOT HAVE GOT GOING
AS WELL AS IT DID DURING THE 1950S. AND THE GROUP CERTAINLY GREW. BY 1963,
THROUGH ACQUISITIONS AND ORGANIC GROWTH, ITS INTERESTS HAD SPREAD BEYOND
BREAD AND OTHER FOODS TO INCLUDE PRINTING MACHINERY, REFRIGERATION AND
LAUNDRY, PLUS SOME FOUNDRY ACTIVITY. THE ORIGINAL COMPANY AT PETERBOROUGH
(BAKER PERKINS LTD) HAD HELD THE REINS, BUT NOW A HOLDING COMPANY WAS
SET UP OVER THE 20 OR SO SUBSIDIARIES. BY THE 1970S, HAVING SPREAD ITS
NETS TOO WIDE, THE GROUP CUT OUT NON-PROFITABLE ACTIVITIES TO CONCENTRATE
ON THE INDUSTRIES IT KNEW BEST: BREAD, BISCUITS, PRINTING AND PACKAGING.
EMPHASIS ON DECENTRALISATION IS NOW EVIDENT BOTH IN THE RELATIONSHIP OF THE HOLDING COMPANY TO THE SUBSIDIARIES AND IN THE SUBSIDIARIES THEMSELVES. IN PETERBOROUGH-BASED BAKER PERKINS, THE LARGEST AND OLDEST GROUP MEMBER, THE THREE MAIN ACTIVITIES – BAKERY (BREAD AND CAKE), BISCUITS (PLUS CONFECTIONERY AND SNACK FOODS) AND PRINTING PLUS SOME FOUNDRY – ARE EACH RUN AS A MINI-BUSINESS WITH A DIVISIONAL MANAGER AND SALES FORCE UNDER THE UMBRELLA OF THE CENTRAL MANAGEMENT SERVICES. THIS DEVELOPMENT, BELIEVES MANAGING DIRECTOR, M.R.H. SMITH, HAS MADE THE COMPANY MORE MARKET-ORIENTED BY DEFINING THE BUSINESS IN TERMS OF CUSTOMERS RATHER THAN PRODUCTS.
BECAUSE THE COMPANY’S PRODUCTS GO INTO MATURE INDUSTRIES, THE PUSH TO BECOME LEANER AND MORE COMPETITIVE HAS REVOLVED AROUND THREE KEY ELEMENTS: INNOVATION, BOTH WITH NEW AND IMPROVED PRODUCTS; EMPLOYING THE LATEST MANUFACTURING TECHNIQUES TO GET MANUFACTURING CYCLE TIMES DOWN; AND AN UP-TO-DATE ADMINISTRATIVE SYSTEM ("LESS PAPER", STRESSES ONE DIRECTOR). THE COMMON THREAD IN ALL THREE AIMS IS THE USE OF COMPUTER AIDS WHEREVER POSSIBLE.
THE COMPANY HAS ALSO BEEN "DOWNSIZING" ITS PRODUCTS TO MAKE THEM MORE EFFICIENT AND LESS EXPENSIVE, AS WELL AS MEETING MARKET NEEDS MORE PRECISELY. SMITH ADMITS FRANKLY THAT BAKER PERKINS’ PRODUCTS ARE STILL 30% LESS COMPETITIVE THAN THOSE MADE BY ITS ARCH RIVALS, THE WEST GERMANS. THE COMPANY IS HAMPERED NOT ONLY BY THE EXCHANGE RATE AND THE INFLATION RATE, BUT ALSO BY HIGHER WAGE COSTS AND LOWER PRODUCTIVITY LEVELS. SO THE ANSWER, APART FROM GETTING COSTS DOWN, IS BETTER DESIGN AND GIVING VALUE FOR MONEY, HE DECLARES.
IT IS VITAL TO KEEP A KEEN EYE ON THE MARKET BECAUSE PEOPLE’S TASTES IN FOOD VARY REMARKABLY. THAT CALLS FOR DIFFERENT TYPES OF MACHINES. BREAD IN PARTICULAR IS "DIFFICULT", SIGHS SMITH, AND THE MOVE AWAY FROM SLICED WHITE BREAD TO "MORE NATURAL" LOAVES MADE IN THE BACK OF THE SHOP HAS MEANT A RETHINK. THE OUTCOME IS THE RECENTLY LAUNCHED "MASTER BAKER" CAMPAIGN TO SELL MACHINES TO THESE INDEPENDENT BAKERS. "A LARGE PROPORTION OF OUR FUTURE BUSINESS WILL BE IN SMALL MACHINERY," RECONS SMITH, "SO WE ARE RETURNING TO OUR ROOTS IN A WAY." IT WILL ALSO MEAN A MORE DIRECT SALES APPROACH THAN THAT USED WITH THE GIANT BREAD MAKERS, THE COMPANY’S TRADITIONAL CUSTOMERS.
THAT WILL RUN IN PARALLEL WITH A MOVE TO SECURE A FIRMER FOOTHOLD ON THE CONTINENT, "A RICH MARKET WE HAVE SOMEWHAT NEGLECTED," SAYS SMITH – RICH IN THE SENSE THAT THERE ARE 36,000 SMALL FRENCH BAKERS. BECAUSE THE FRENCH LIKE TO BUY FRENCH, BAKER PERKINS HAS RECENTLY ACQUIRED PAVAILLER, A FRENCH MAKER OF SMALL BAKERY EQUIPMENT, SOME OF WHICH WILL BE USED IN THE BRITISH "MASTER BAKER" CAMPAIGN. THAT PURCHASE, AND A SIMILAR ONE IN AUSTRALIA, IS INDICATIVE OF THE GROUP’S ACQUISITION POLICY OF BUYING COMPANIES THAT HAVE "SYNERGY", A BUZZ WORD DISLIKED BY GROUP MANAGING DIRECTOR J.M. PEAKE BUT DESCRIPTIVE OF THE STRATEGY.
THAT THIS POLICY IS WORKING CAN BE JUDGED BY THE RECENT COMPANY RESULTS, WHICH WERE BETTER THAN EXPECTED, SAYS PEAKE. TURNOVER OF £137 MILLION WAS UP FROM £116 MILLION, WHILE PRE-TAX PROFITS ROSE FROM £2 MILLION TO £6.6 MILLION. RETAINED PROFIT MOVED FROM A LOSS OF £1.5 MILLION TO A GAIN OF %1.3 MILLION. HOWEVER, IN CURRENT COST TERMS, THE GROUP’S POSITION LOOKS WORSE, WITH PROFIT BEFORE TAX SINKING TO £2.8 MILLION. SO THE COMPANY IS KEEPING A SHARP EYE ON CASH FLOW AND IS TRYING TO REDUCE COSTS.
ABOUT ONE-THIRD OF BAKER PERKINS’ PROFITS COME FROM EUROPE. ANOTHER THIRD COME FROM THE US, WITH THE REMAINDER COMING MAINLY FROM AUSTRALIA AND A WEST GERMAN COMPANY WITH WHICH THE GROUP HAS HAD A COMPLEX ASSOCIATION FOR YEARS. OF THE TRADING PROFIT OF £8.6 MILLION, FOOD PROCESSING AND PACKAGING MACHINERY CONTRIBUTED ABOUT £4 MILLION, PRINTING ABOUT £3 MILLION AND CHEMICAL PROCESSING MACHINERY £1.6 MILLION.
THE SUCCESS OF THE PRINTING MACHINERY THIS YEAR – "FOR THE FIRST TIME IT HAS MADE A VERY SIGNIFICANT CONTRIBUTION TO GROUP PROFIT", ACCORDING TO THE ANNUAL REPORT – HAS BEEN A PLEASING SIGN THAT THE CONCENTRATION ON "DESIGNING WHAT THE MARKET WANTS" IS PAYING OFF. BEFORE THE BRITISH SUBSIDIARY HAD LAUNCHED ITS G16 WEB OFFSET PRESS THREE YEARS AGO, THAT SIDE OF THE BUSINESS WAS IN THE DOLDRUMS. NOW, HAVING SOLD 23 G16S (THE MACHINE HAS BECOME A MARKET LEADER IN THE TOUGH US MARKET), THE COMPANY HAS JUST LAUNCHED A SMALLER VERSION TO BROADEN ITS SCOPE ("IN AN EFFORT TO SELL FORDS AS WELL AS ROLLS-ROYCES," DECLARES SMITH). THE NEXT AIM IS TO TAKE CONTINENTAL BUSINESS FROM WEST GERMAN COMPETITORS FOLLOWING THE SUCCESSFUL LAUNCH OF THE SMALLER PRESS AT A BIG EXHIBITION IN DUSSELDORF, WHERE IT ATTRACTED £9.5 MILLION WORTH OF ORDERS AND HAS SINCE WON MORE.
BISCUIT MACHINERY HAS BEEN A "STAR PERFORMER", ACCORDING TO SMITH, AND ALTHOUGH THIS YEAR IT PROBABLY WON’T BE QUITE AS GOOD, HE IS CONFIDENT THAT THE SECTOR WILL STILL BE HEALTHY, WITH THE GROUP GETTING ABOUT A THIRD OF THE WORLD MARKET. "BASICALLY WE ARE IN BUSINESSES WHERE THE END MARKET IS STATIC," HE EXPLAINS. "THE INDUSTRIES ARE MATURE, BUT CHANGE CAN BE DRAMATIC. PRESSURES CAN CHANGE AS COMPANIES MERGE AND MOVE INTO NEW AREAS LIKE BISCUITS OR SNACK FOODS." THAT HAS BEEN THE IMPETUS BEHIND BROADENING THE CUSTOMER BASE IN THE US, WITH THE ACQUISITION FIVE YEARS AGO OF AN AMERICAN MANUFACTURER OF BREAD, BISCUITS, CONFECTIONERY AND SNACK FOODS. THAT COMPANY’S SUCCESS HAS BOOSTED THE FOOD DIVISION’S PERFORMANCE.
BREAD IS IN DISARRAY IN BRITAIN BECAUSE OF THE DISCOUNT WAR AMONG THE LARGE COMPANIES, ALTHOUGH BAKER PERKINS HAS A COMMANDING POSITION IN THE MARKET. GOOD RESULTS IN AUSTRALIA AND NEW ZEALAND HAVE BOOSTED THE BAKERY-EQUIPMENT FIGURES, WHILE NORTH AMERICA’S PROFITS HAVE BEEN CUT BY HIGH COSTS. THAT IS ONE REASON WHY THE FOOD DIVISION OF BAKER PERKINS INC IS BEING MOVED FROM HIGH-COST MICHIGAN TO LOW-COST NORTH CAROLINA. THE CHEMICAL MACHINERY OPERATION – MAINLY MIXING AND SEPARATING EQUIPMENT – WILL REMAIN IN SAGINAW. THE MARKET IS IN A SHOCKING STATE, SAYS PEAKE, ALTHOUGH SALES IN BRITAIN AND FRANCE HAVE GONE SOME WAY TO COMPENSATING FOR THE POOR SALES IN THE AMERICAN MARKET.
LIKE MOST OF THE BRITISH INDUSTRY, BAKER PERKINS HAS HAD TO REDUCE ITS WORKFORCE. OVER THE LAST TWO YEARS, THIS HAS FALLEN FROM 7,372 PEOPLE TO 6,285. MOST OF THE LOSSES HAVE BEEN IN BRITAIN, AND SEVERAL FACTORIES HAVE BEEN CLOSED. REDUNDANCY AND RATIONALISATION HAS COST £1.5 MILLION OVER THE LAST TWO YEARS.
THE LATEST VICTIM IS THE PACKAGING MACHINERY SUB-GROUP ROSE FORGROVE, WHICH HAS HAD TO MAKE 500 PEOPLE REDUNDANT. PACKAGING MACHINERY IS SOLD EITHER JOINTLY WITH THE GROUP’S FOOD-PROCESSING MACHINERY OR SEPARATELY, INTO AREAS LIKE TEA, PHARMACEUTICALS AND COSMETICS. AT LEAST 70% OF ROSE FORGROVE’S BUSINESS IS DONE OUTSIDE BRITAIN, ENABLING THE DIVISION TO COME THROUGH THE RECESSION SLIGHTLY BETTER THAN EXPECTED. ROSE FORGROVE ALSO MAKES BEARINGS. THEY ACCOUNT FOR ABOUT A FIFTH OF SALES AND ARE AIMED AT BOTH MILITARY AND COMMERCIAL MARKETS. BEARINGS MANUFACTURE, IF USED AS A BELLWETHER FOR THE ECONOMY AS A WHOLE, GIVES SOME BASIS FOR OPTIMISM.
ROSE FORGROVE IS A BLEND OF DIFFERENT COMPANIES. ONE OF THESE COMPANIES, FORGROVE, BEGAN ITS RELATIONSHIP WITH BAKER PERKINS BACK IN THE 1920S. FORGROVE WAS STARTED BY TWO ENGINEERING LECTURERS IN LEEDS WHO THOUGHT THERE MUST BE A BETTER WAY TO WRAP SOAP THAN TO HAVE GIRLS SLAVING AWAY BY HAND. TOGETHER THEY BUILT UP A SUBSTANTIAL BUSINESS, FORMING AN ASSOCIATION IN 1928 WITH BAKER PERKINS, WHICH HAD ALSO BEEN TRYING TO BREAK INTO PACKAGING MACHINERY.
THE OTHER PRONG, ROSE, WAS THE BRAINCHILD OF A BARBER/TOBACCONIST IN THE LATE 19TH CENTURY WHO INVENTED A MACHINE TO WRAP TOBACCO INSTEAD OF PARCELLING IT OUT IN LITTLE BAGS. THAT BUSINESS WAS BUILT UP SUCCESSFULLY OVER THE YEARS BY HIS FAMILY, COMPETING WITH FORGROVE IN SWEET WRAPPING. ALTHOUGH THE ROSE FAMILY WAS STAUNCHLY INDEPENDENT DESPITE ADVANCES FROM BAKER PERKINS (WHICH BY THE 1940S HAD FORGROVE UNDER ITS WING) IT FINALLY GAVE IN 1960, BRINGING ITS BEARINGS BUSINESS TO BAKER PERKINS AS WELL, PLUS A THIRD TEA-PACKING COMPANY WHICH HAD JOINED FORCES WITH ROSE FIVE MONTHS EARLIER.
MANAGING DIRECTOR TONY BROWN SHARES THE ENTHUSIASM OF HIS COLLEAGUES THROUGHOUT THE GROUP FOR THE MARRIAGE OF MARKETING AND DESIGN. HE WAS RELIEVED WHEN THE LONDON EXPORT COMPANY WAS CLOSED IN 1968, AND HE BEGAN TO GO TO HIS MARKETS DIRECTLY. HE BASHES AWAY AT THE FIERCE COMPETITION WITH THE FIRMLY HELD BELIEF THAT THE BEST MACHINE IS AS UNOBTRUSIVE AS POSSIBLE: "IF IT COMES TOO CLOSE TO ANYONE’S ATTENTION, IT FAILS."
BROWN IS AN EXAMPLE OF ONE OF THE GROUP’S MAJOR CHARACTERISTICS: LONG-SERVING MANAGEMENT. HE JOINED IN 1950, PEAKE IN 1951, SMITH IN 1958, STEPHEN HARGREAVES, THE GROUP PLANNING DIRECTOR, IN 1947. PEAKE CALLS IT "A BIT OF A CLUB, WITH A PHILOSOPHY ROOTED IN PEOPLE. WE HAVE GOT SOMETHING HERE, ALTHOUGH IT IS DIFFICULT TO DEFINE – BUT PEOPLE DO STAY A LONG TIME." BUT, HE STRESSES, IT HAS CHANGED FROM THE PATERNAL ERA WHERE PEOPLE HAD JOBS FOR LIFE: "THERE NOW HAS TO BE A PROFESSIONAL MANAGEMENT TYPE." HE SPENDS A GREAT DEAL OF TIME TRYING TO GROW SUCCESSORS, WITH A CHART ON HIS OFFICE WALL TO SHOW HIM INSTANTLY THE MANAGEMENT PICTURE. IN THEORY THERE IS GROUP MOBILITY, BUT, IN PRACTICE, WITH SUCH A COLLECTION OF DIFFERENT COMPANIES, THERE IS NOT TOO MUCH OF IT (THOUGH PEAKE HAS WORKED FOR THE GROUP IN THE US AND AUSTRALIA).
PEAKE IS ALSO THE FIRST MANAGING DIRECTOR NOT CONNECTED TO THE BAKER FAMILY. DESPITE THE STRONG FAMILY THEME OVER THE YEARS, IT HAS NOT DOMINATED THE BUSINESS, ACCORDING TO PEAKE. WHAT LEGACY THERE HAS BEEN CAN BE SEEN BOTH IN THE REPUTATION IT ENJOYS WITH ITS CUSTOMERS FOR HONEST DEALING AND IN THE ENLIGHTENED WAY THE COMPANY HAS TREATED ITS EMPLOYEES. IT HAS BEEN A PIONEER IN WORKS CONSULTATION AND PENSION SCHEMES, AND ALWAYS PUT A STRONG EMPHASIS ON TRAINING. AS BROWN POINTS OUT, "WE ARE MOTIVATED BY THE FEELING THAT, IF YOU KEEP PEOPLE IN THE PICTURE, YOU GET THE BEST RESPONSE", SO THE MANAGEMENT PRODUCES AN ASTONISHING AMOUNT OF FINANCIAL INFORMATION FOR ITS EMPLOYEES IN COMPARISON WITH A LOT OF BRITISH COMPANIES.
THE HOLDING COMPANY MAINTAINS A CERTAIN ALOOFNESS FROM THE DAY-TO-DAY OPERATIONS OF THE SUBSIDIARIES (PEAKE TRIES TO EMPHASISE THIS, DESPITE THE FACT THAT HOLDING COMPANY IS AT PETERBOROUGH WITH THE MAIN SUBSIDIARY). ALTHOUGH A FORM OF PLANNING IS DONE, IT IS MORE A THINKING AHEAD ON GROUP STRATEGY, WITH THE SUBSIDIARIES CARRYING ON WITH THEIR BUSINESSES. (IN FACT, PEAKE WAS THE GROUP’S FIRST PLANNING DIRECTOR IN 1966.) IF PROBLEMS DO ARISE, THE BOARD DOESN’T SEND A "FLOATING POSSE", AS PEAKE PUTS IT; BECAUSE THE SUBSIDIARIES ARE DECENTRALISED THE MAIN BOARD DIRECTORS DO NOT HAVE FUNCTIONAL RESPONSIBILITIES.
BAKER PERKINS HAS BEEN THROUGH A LOT OF BELT TIGHTENING. IT IS NOW LOOKING FOR GROWTH FROM A SMALLER BASE WITH THE SAME NUMBER OF PEOPLE. PEAKE SAYS, "THE CRYSTAL BALL IS CLOUDY AND EVEN WITH SOME RECOVERY, IT WILL BE HARD WORK." BUT HE AND HIS COLLEAGUES HAVE A CONFIDENCE BASED ON FAITH IN PEOPLE THROUGHOUT THE GROUP AND THEIR ENTHUSIASM. BAKER PERKINS’ MODERN APPROACH TO DESIGN AND MANUFACTURING HAS ALSO MADE IT A FAVOURITE WITH STOCKBROKERS. PERHAPS BEING MORE CUT-THROAT WOULD HAVE GIVEN IT AN EASIER PASSAGE THROUGH THE RECESSION BUT THAT HAS NEVER BEEN THE BAKER PERKINS STYLE".
1982 was a time when Baker Perkins appeared to be the centre of interest to the City in general. Following hard on the heels of the assessment by "Engineering Today" came this by the British Institute of Management. (Click here).
A year later, the total number of employees had fallen further to 6,083 but the developed world appeared to be moving slowly out of recession. Orders were at a high level – up 18% in value and 5% in volume - but the cost of relocating the bakery machinery business in the USA from Saginaw to Goldsboro ($7m) and a low level of demand for chemical machinery severely impacted profits. The Group benefited from the steady flow of deliveries of tea packaging m/cs to Russia but packaging orders generally continued at a low level. B.H. Nicholson, a director of Rank Xerox, and D.A. (Don) Jones, managing director of Baker Perkins Proprietary Ltd. Australia, were elected to the board.
The opportunity was taken, in December 1981, to hold a three-day Planning Conference attended by a number of directors from around the Group, at which potential growth opportunities suggested by SRI (Stanford Research Institiue) would be discussed and their appropriateness to Baker Perkins' future evaluated. To some extent, this had parallels with the discussions of the 1954 "Future Development Committee" - (See History of Baker Perkins Ltd - The Fifties - "Planning for Growth").
It was agreed that Baker Perkins should look in further depth at food processing systems, heat exchangers and aseptic systems, plus electronic weighing and particle/moisture sensors. It is interesting to view this growth opportunity consensus against the later merger with APV and its strengths.
Sir Franklin Braithwaite retired as chairman in 1984 and was succeeded by John Peake. Sir Franklin was able to report - "Our operating companies generally have seen a return to a more reasonable level of demand during the past year and this has enabled the group to achieve a considerable profit recovery from the depressed 1982/83 level". Pre-tax profit rose form £1.6m to £6.8m and sales were up 17%. Packaging m/c orders remained at a low level and Rose Forgrove Ltd. reduced its labour force by a third and reported a loss. It proved more difficult than expected to build up satisfactory output rates at the bakery machinery company in Goldsboro, N.C. and Saginaw suffered from lack of demand for chemical equipment.
On 1st October 1984 the foundry machinery business was sold to A.W.D. Ferns (the division's previous manager) – see also History of Baker Perkins in the Foundry Industry. B.H. Nicholson left the board in October 1984 and S.C. Hargreaves retired after 32 years service on 30th April 1985. J.C. McCaskie, technical director of Baker Perkins Ltd, was appointed as technical director of the parent company and Dr. G. Winfield, chief executive of the overseas Division of the BOC Group, joined the board as a non-executive director.
J.M. Peake retired as group managing director on 31st March 1985 but agreed to continue as chairman. M.R.H. (Mike) Smith was appointed to succeed him as managing director. Sales were up 27% over the previous year with pre-tax profit nearly doubled to £13m. At the same time the group structure was modified. The operating companies were organised to serve six industry segments on an international basis with a simpler, more direct, focus. These regroupings comprised Industrial Bakery; Retail Bakery; Biscuit; Confectionery and Snack Foods - together with Packaging machinery these represented the group's food processing and packaging machinery interests - Printing machinery and Chemical machinery. Baker Perkins Ltd was re-organised into three separate companies. At the same time, Westal Ltd, Redditch (Chocolate moulding equipment) and Stickleber & Sons, Kansas City (Bakery M/c) were acquired.
HOLDING COMPANY PERSONNEL - 1984 (Not including Board Members)
Ex-members of the Holding Company might be surprised that the names of the staff of the patents Department - B. Wescombe, W. Atkinson and P. Ashley - do not appear here. This is because the responsibility for the Patents Department had reverted to Baker Perkins Ltd at this time - see here.
The parent company underwent yet another name change in April 1985. With the reorganisation of its largest subsidiary, Baker Perkins Ltd., the company's former name of "Baker Perkins" without the addition of the word "Holdings" had become available. The directors therefore recommended that the parent company's name be changed to Baker Perkins plc.
“Central Technology Group” formed
With the appointment of J.C. McCaskie as technical director, a central technology group was formed within the parent company to co-ordinate the development and effective dissemination of innovation and technology throughout the group. It encompassed the disciplines of Computers & Systems, Operations, Quality Assurance, Technology Development, Systems Engineering, Industrial Design and Process Technology with relevant personnel being transferred from elsewhere in the group.
Disposal of Trade Investments
By 1986, most of the group's trade investments had been sold off, including that in Werner & Pfleiderer of Stuttgart – held since 1927 (see also Baker Perkins and Werner & Pfleiderer - The European Limited Partnership). There had been a good response to the Rights Issue announced on 21st June 1985 and the authorised share capital was increased from £20.42m to £27.42m. Earnings per share on the enlarged capital increased by 21%. Sales rose again to £262m. The group's stake in plastics machinery market was strengthened by the acquisition of the Sterling Extruder Corporation, USA. The problems associated with the packaging machinery business continued and the Rose Forgrove factory at Gateshead was closed. The group's investments in South Africa were disposed of and Baker Perkins South Africa Pty ceased to trade (See also History of Baker Perkins South Africa Pty). W.A.B. Brown and R.F. Kelley retired from the board.
Informal discussions had taken place between APV and Baker Perkins over many years, even as far back as 1935. The logic of a merger seemed inescapable – Baker Perkins served the dry foods industry while APV concentrated on the liquid foods sectors. One of the major stumbling blocks was that the two companies' philosophies of doing business were considered so incompatible that it was impossible to see them working together. In essence, Baker Perkins believed that a company's management should be organised into product groups worldwide whilst APV's management was divided in terms of geographical regions.
Mike Smith, for Baker Perkins, and Fred Smith, for APV, discussed in depth a potential solution that combined parts of both philosophies. The outcome was that Mike Smith went back to Baker Perkins and sold the idea to his Board
In the financial year before the merger with APV, Baker Perkins plc's results were:
The boards of Baker Perkins plc and APV Holdings plc announced on 16th January 1987 that they had agreed the terms of a merger between the two groups of companies. The terms of the offer were revised on 6th February 1987 – an extract from the press announcement of that day, issued with the consent of the Panel on Takeovers and Mergers set up by the Bank of England and other City authorities reads:
"Following the announcement of the original offers, the Board of Baker Perkins became aware of new information relating to the UK operations of Baker Perkins' biscuit, confectionery and snack-food ("BCS") division. This division has grown rapidly over the last three years and has taken on some exceptionally large long-term contracts. These contracts, some of which were outside the division's usual fields of activity, necessitated the large-scale use of sub-contracted and temporary labour. As a consequence of the overall expansion of its activities and of these exceptional contracts, the divisions systems of financial control became overstretched and its ability accurately to estimate contract costs was reduced. Following the near completion of the exceptional contracts in the year ended 31 March 1986, substantial provisions for further costs were made at the time of the interim results. Management believed that these were adequate, but following the completion of an internal investigation it has become apparent that further cost over-runs have occurred or may be expected to occur both on the exceptional contracts and in other areas of the division's operations.
As a result, the division is not expected to make any significant contribution to profits for the year ending 31 March 1987. The management accounts for the quarter ended 31 December 1986 also indicated that the profit performance of certain other parts of Baker Perkins' business have been towards the bottom end of the range of previous expectations and accordingly the profit projections for the group as a whole for the year have been very substantially reduced.
Price Waterhouse has now completed a detailed report on the management and financial systems of the BCS division. The recommendations of this report are currently being implemented and the division's systems have already been significantly strengthened. BCS has a strong order book and the Baker Perkins Board is confident that the division will return to profitability in the year ending 31 March 1988.
The Boards of APV and Baker Perkins remain convinced of the underlying strength of the Baker Perkins' business and the benefits of the proposed combination."
The modified terms recommended by the directors of Baker Perkins were that shareholders should exchange two of their company's ordinary shares for one APV ordinary share and accept 105p in cash for every Baker Perkins preference share.
Subsequently the new APV Baker plc chairman, Sir Ronald McIntosh reported:
"The problem areas have all been identified and the necessary remedial action set in train:
Soon after the merger the name of the new company was changed from APV Baker plc to APV plc, APV Baker being used to describe an amalgamation of the old Crawley based company APV UK, the Baker Perkins food machinery business at Peterborough and the APV Hall refrigeration and freezer business at Dartford, Thetford and Derby. Administration of APV Baker was concentrated in a corporate office in the Holdings building at Westwood Works, Peterborough, all of the Rose Forgrove packaging machinery activities were focused into one factory at Leeds and the Bedewell factory was turned into a dry food machinery manufacturing facility.
1987 was the year of assimilation and rationalisation as APV, Baker Perkins and two other recent acquisitions - Rosista and Pasilac - were formed into a single entity. The chairman of APV, Sir Ronald McIntosh announced - "APV is now the undisputed world leader in the supply of process plant to the food and beverage industries". "In mid-1987 the group had 57 factory sites occupying 5 million sq. ft.. By January 1988 this had been reduced to 39 factories occupying 3.4 million sq. ft". Of the previous Baker Perkins facilities, the huge factory at Saginaw, Michigan, purchased by Joseph Baker Sons & Perkins in 1919, was closed and as part of the new management's first priority "to initiate action to eliminate losses, to improve margins in low return activities and to ensure that proper attention was paid to profitability throughout the enlarged group". Rose Bearings and Sterling Davis were sold. See also History of Baker Perkins BCS, History of Saginaw, History of Sterling Davis and History of Rose Forgrove.
In the year after the merger, pre-acquisition problems came to light at ex-Baker Perkins companies Rose Forgrove and Pavailler. The printing machinery business was sold to Rockwell International for £85.3m.in March 1989. Westwood Works was part of the sale and a new £30m factory to house the ex-Baker Perkins food machinery businesses was to be built at Paston, Peterborough. APV Plate Heat Exchangers production was moved into the ex-Baker Perkins factory in Goldsboro, NC.
In 1989, APV Baker comprised the ex-Baker Perkins businesses plus some packaging and refrigeration operations from the previous APV organisation. The food machinery business, particularly bakery equipment, was still seen as a growth opportunity and Tweedy, Burnley (Bread mixing equipment), Moffat Appliances Ltd., New Zealand (In-store bakery equipment) and Lanham, USA (baking plant) were acquired. During 1990, worsening economic conditions were experienced in the UK. The Special Projects Division shipped the first of 10 breakfast cereal plants for Russia.
The majority of the original Baker Perkins plc staff had begun, within a year or so of the merger, to relocate to the new APV HQ. This was centrally but neutrally located in Lygon Place, Victoria, London rather than in Peterborough or Crawley - where, as suggested at the beginning of this history, the management attitude towards the number of staff employed at the centre of the business differed significantly from that of Baker Perkins, being seen primarily as a cost rather than a potential benefit.
The group chairman stated in 1991 - "With continuing recession in the UK, the USA and Australia and signs of slowdown in the German economy, economic conditions in 1991 were generally not such as to encourage investment". Turnover was 18% lower and pre-tax profit 23.4% lower than in 1990. Fred Smith retired as CEO. The new factory for APV Baker at Paston, Peterborough was completed.
In July 1991, the last of the personnel working in the Holdings Building moved to the new Paston facility together with the remainder of the ex-Baker Perkins Ltd food machinery manufacturing resources. At the end of 1992, Westwood Works produced its last printing machine and the factory closed. Production of 'Dry Food' equipment continued at the new APV Baker factory at Paston, Peterborough.
Clive Strowger was appointed as Group Chief Executive in 1992. Turnover rose by 8.4% but Profit after Tax was halved. The rationalisation and disposal programme continued. A new "more meaningful" segmental analysis was used to describe the Group's development.
In 1997, the APV group was acquired by Siebe.
In closing, much has been made both on this Website and on its companion, www.westwoodworks.net, about the unique culture that existed within Baker Perkins. Just how much of this culture lingered on in the company after the retirement of the last direct connections with the founding families is difficult to determine. Certainly, the feeling of belonging to a ‘family’ is still strong in a majority of ex-employees many years after the merger with APV, the closure of Westwood Works and the disposal of the majority of the subsidiary companies. This is evidenced by the number of people who have enthusiastically supplied the memorabilia and memories used to construct these websites and by those who turn up to the various ‘reunion’ events, (See Reunions), nearly two decades later.
It is appropriate to record here the statements which appeared in the group newspaper, "Contact", on the retirement, in 1975, of Sir Ivor Baker and of Sir Franklin Braithwaite in 1984:
Sir Ivor Baker
When he reached the age of 65, Sir Ivor announced that he had agreed to stay on as Chairman of the Group for a further two years on a part-time basis. Having now reached the age of 67 he has decided that it is time to hand over.
He is the great grandson of Joseph Baker, the Canadian founder of the Baker side of the business.
Sir Ivor was educated at Bootham School in York, King’s College, Cambridge and the Harvard Business School. Joining Baker Perkins Limited at Peterborough in 1931, he worked in the foundry, pattern shop, plate, sheetmetal, machine and fitting shops and other subsidiary departments. He then spent a year on outdoor erection work. In 1934 he worked for a time as a ratefixer before moving to Baker Perkins Inc in Saginaw to study planning, ratefixing and production methods in the USA.
On his return to Peterborough he became head of the planning and ratefixing department and in 1938 was made assistant works manager, with particular responsibility for planning and production of wartime armament work. In 1942, he became works manager and the member of the board of management responsible for production. In 1944 he became Chairman of the Company, a position his father Allan Baker had held for 24 years. In that same year he was awarded the CBE in recognition of the Company’s war work.
He has been a director of the Eastern Regional Board of Lloyds Bank since 1953 and its chairman since 1973, when he was also appointed to the main board of Lloyds Bank. Sir Ivor was appointed a Justice of the Peace in 1954 and since 1973 has been chairman of the Peterborough Bench. He was High Sheriff for the County of Huntingdon and Peterborough in 1968 and was appointed a Deputy Lieutenant of the County of Cambridgeshire in 1973. He was a member of the East Anglian Economic Planning Council from 1965 to 1968, when he was appointed to the board of the newly formed Peterborough Development Corporation.
Sir Ivor is a Fellow of both the Institution of Mechanical Engineers and the Institute of Production Engineers. He is also a Fellow of the British Institute of Management. He has for many years been involved in the work of the British Mechanical Engineering Confederation and serves on its Council.
Sir Ivor was awarded a Knighthood in 1972 in the Queen’s Birthday Honours, in recognition of the Group’s services to exports. One man who has knew Sir Ivor since his early days with the company is Maurice Seago, who retired from Baker Perkins Ltd at the end of July 1975.
Maurice first remembered Sir Ivor working in the machine shop and recalls how much he seemed to enjoy the work and how well he got on with everyone. Later Sir Ivor became Maurice’s boss in the planning and ratefixing department (since re-named the production engineering department) and he said that Sir Ivor was an excellent man to work for – a real champion of the department. "As you can imagine, because of the nature of the work, ratefixing departments are constantly under fire. Sir Ivor would always stand by the people who worked for him."
Sir Ivor’s year in the United States had introduced him to scientific workstudy methods then being developed and on his return to Westwood he took steps to introduce these methods at Peterborough. This was the first time that stopwatches came out on the shop floor and jobs were timed and assessed in a scientific manner. After a short test run a mass meeting of union members was held and Sir Ivor put the case for scientific workstudy methods. A vote was taken and the system was adopted for Westwood works.
Sir Ivor Baker will undoubtedly go down in the history of the company as the man who, during his long period as Chairman, steered the Company from the bleak days of the war to the extensive international group it is today. But as Maurice Seago points out, to those who worked for him he will always be known as a man who never had to drive people. "He had a way of making people want to work for him," says Maurice.
When he first joined Baker Perkins, the Company had a turnover of some £2m a year. It grew into an international group and the figures for 1975 showed a turnover of over £77m for a 15 month period.
Extract from "Contact" No17 – August 1975).
An earlier assessment of A.I. Baker appeared in the Investors Chronicle dated 6th March 1959, under the heading - "Men Who Matter":
"Some successful businesses are dominated by a forceful individual whose word is law. Baker Perkins provides the complete contrast. Tradition is one reason. Another is undoubtedly the personality of Mr Allan Ivor Baker, C.B.E., J.P., M.A., M.I.Mech.E., chairman since 1944. Contrary to the usual practice, the day-to-day conduct of the business is entrusted to a Board of Management. This arrangement distinguishes a firm which aims to distil the essence from a collective wisdom and offer wider scope for individuals of ability. And it works – largely because Ivor Baker is an admirable team leader and co-ordinator.
Quietly spoken, apparently rather shy, he has the rare quality of being a good listener. His sympathy with, and liking for, others is obviously so genuine that people cannot help liking him in return. Subordinates invariably do what he asks simply because it seems unthinkable to let him down. In order words, Ivor Baker rules by consent.
Naturally in demand for other jobs, he is a local director of Lloyds Bank, a Justice of the Peace and currently deputy president of the British Engineers’ Association. Characteristically, he regards his C.B.E. not as a personal honour, but as a reward for Baker Perkins which did such a fine job in gun carriage production during the war.
Despite the modest manner, he is a firm, clear-minded chairman. He knows how to keep the discussion on the rails, see that every viewpoint is fully expressed and pick out the sound ideas in the course of even a “brain-storming” session.
By upbringing and training he is well qualified to head a large and growing engineering concern with some 5,000 employees and world-wide ramifications. The merger between the founder companies, Joseph Baker & Sons and Perkins Engineers, took place in 1919. Great-grandson of the founder on the Baker side, as chairman, Ivor Baker follows in direct succession after his father and grandfather. He is steeped in the family tradition which puts the emphasis on being a good employer and upholding a reputation for rectitude and fair dealing.
Born in 1908, he graduated in engineering at King’s College, Cambridge, spent a year at Harvard School of Business and joined the company in 1931. He worked in various departments at home and spent some time in the USA and in Germany before being appointed to the board in 1936.
Although Baker Perkins believes in teamwork, the main burden of control falls, inevitably, on the chairman. Major issues, whether it be sorting out a difficult situation in a subsidiary overseas or negotiating a new acquisition, tend to land on his plate. For these tasks a quiet friendly manner which inspires trust is evidently very effective. And, indeed, while being a good negotiator with a keen business sense, an able engineer and team leader, Ivor Baker’s true genius lies in his capacity for getting on with people. Because of this preoccupation with the importance of people, he takes a deep interest in welfare in its widest sense. At Baker Perkins this covers a very broad range from good canteens and sports clubs to pension and profit-sharing schemes. Yet it is usually the spirit of the thing – the way people are treated as human beings – that counts most. Here Ivor Baker excels. Although temperamentally retiring, he is thoroughly at ease at gatherings of employees, past and present. It is plain to all that he genuinely enjoys presiding at works functions. The quiet, unpretentious manner of speaking seems to inspire a trust and affection which must be pretty rare these days. Here Baker Perkins has something which many firms more in the public eye must envy.
The right choice of people is the key to Baker Perkins’ success. If a business is going to grow it pays to back youth and encourage it. Right away the chairman will tell you: “The future of this company depends on the people we attract into it.” Even objectives, as seen by the current management, are subordinate to the men who are coming along. “If we get the right people even the lines of future development will automatically be right.” Baker Perkins looks for quality also in the management of the businesses it acquires.
This policy is bringing results. The place is humming with ideas and drive. To the traditional bakery, biscuit and confectionery machinery have been added new developments in wrapping machinery, chemical and plastics plans. New acquisitions last year added equipment for the paint and colour industries and a designing firm which adopts a refreshingly new approach to engineering development work. The chairman maintains a lively interest in all developments and makes it his business to be well known personally to as many customers as possible.
It is not surprising that Baker Perkins has developed a comprehensive and efficient youth training policy. The group prefers to train and promote its own people, and in few firms does the able young man stand a better chance of rapid advance. Average age of the full-time directors is 48. this policy of attracting and encouraging youth of ability brings its rewards in terms of energy and imagination. Yet Mr Ivor Baker believes that it should be pursued still more vigorously as opportunity widens."
Sir Franklin Braithwaite
Sir Franklin has been with the company for 38 years, nearly all of which has been spent in senior management positions in the parent company. He has made a distinguished contribution to the worldwide development of the group and this was recognised in the award of a knighthood in 1980 for his services to export. Besides this he found time to devote his talents to other interests, notably as president of the Process Plant Association, deputy-chairman of Peterborough Development Corporation, a member of the Eastern Counties Regional Board of Lloyds Bank, founder chairman of Peterborough Independent Hospital and as a member of industry committees at national level. For relaxation, he plays golf and is interested in the arts, particularly music.
A few years ago Sir Franklin was up in the north of England and saw a notice chalked up on a factory gate – ‘hands wanted’. After a career spanning 38 years at Baker Perkins, he could not help but contrast this stark announcement with the philosophy he has lived with throughout his time with the company.
"Human beings are our greatest asset", he said. "You can buy machine tools and computers but it is people who make a business. More than at any other time the Baker Perkins philosophy has been put to the test during the last few years and not found wanting. We have striven to give fair treatment to people. This philosophy goes back to the founders of the company, who were horrified by the terrible conditions in London bakeries in Victorian times and philanthropically, set themselves the task of trying to improve things".
This is one of the themes dear to the heart of Sir Franklin. Two others are the value of strength in sales and the vital importance of innovation, particularly in the creation of new products.
He said: "Baker Perkins has been strong on sales and exports since its early days and without these strengths we would be dead. As long ago as 1908 Joseph Baker & Sons of Willesden supplied the world’s first travelling oven for bread to Harrison Brothers of Montreal; and four years later the first fully automatic bread plant to Ward Baking in Chicago. These two installations were quite revolutionary and put Bakers years ahead of the competition. It is the sort of spirit that lives on today".
When Sir Franklin was demobbed in 1946, he was interviewed at Peterborough. There were opportunities either in Sales or in the Secretariat. The detailed, legalistic nature of the Secretariat did not appeal to Sir Franklin, though he had a law degree from Cambridge, and his pre-conceived image of a salesman’s job was not flattering to the profession.
Today, of course, he speaks enthusiastically of his days as a representative and still refers to himself as a salesman. As a graduate trainee he was initiated into Baker Perkins ways by being told to see the manager of the Outdoor Department who promptly told him to report to one of our engineers at a biscuit factory in Grimsby. He worked with service and erection engineers all over the north of England and the Midlands. There were many discomforts – the extremely cold winter of 1947, for example – and port-war shortages. But he had the asset of experience, having been in the army in North Africa, Italy and Greece. Looking back, his one regret is that he never worked in the factory, but he did spend three months in the drawing office on layouts and three as a sales correspondent.
During the war years Baker Perkins had been fully engaged on contracts for the Ministries of Defence and Supply. Many salesmen had left, never to return, leaving an ageing workforce. It was a time of rapid promotion. The biscuit machinery representative for the Midlands was moved to Australia, Giving Sir Franklin the opportunity to work in the filed as a salesman. However government controls gave priority to the replacement of bread machinery, which had "been tied together with sealing wax and string" during the war. Soon after the war Baker Perkins built up production to five complete Uniflow plants a month.
In Biscuit, it was a seller’s market where demand could not be satisfied, as Sir Franklin found when he became manager of the Biscuit Department in 1949. The government, who still had close control over steel supplies, gave priority to exports, and thankfully there were plenty of chocolate and confectionery customers overseas.
In 1950 Sir Franklin was elected a director of Baker Perkins Ltd, then the parent company. By that time the biscuit and chocolate and confectionery departments had been merged to handle home sales, with the newly formed Baker Perkins (Exports) making the group more export minded than ever and ensuring that the group was completely represented either by our own men or by agents throughout the world.
In the fifties, after the post-war boom, when customers were coming to the end of re-equipment programmes, it was seen that the company could not live by bread alone, thought the greater part of profits had come from the bakery industry. It was forecast that domestic demand would fall, yet the company had to grow.
One way was by acquisition, and Sir Franklin recalls the purchase of Steele & Cowlishaw, Packman Machinery, Granbull, Yates Plant, Douglas, Alfred Porter, Rownson. William Jack, Rose Brothers and James Halley.
It was the company’s entry into the printing industry that he considers most significant. "We had made printing machinery for others before the war and we decided to get back into it2, he said, "Printing has a ‘high entry hurdle’ with advanced technology and precision engineering. Once into it with success it is extremely difficult for a competitor to start up against you from scratch".
The formation of Baker Perkins Holdings in 1963 he sees as a major milestone, allowing the parent company to concentrate on the policy of the group as a whole. Closely allied to this Sir Franklin thinks the return in 1971 of export sales to operating companies or divisions was one of the most important steps of recent years. The Export Company had served its purpose by spreading Baker Perkins’s name and its products to the far corners of the earth. But it had become something of a ‘post office’ and the people who designed and produced our machinery and plant in the UK felt cut off from our customers overseas.
Since then the whole business has been developed and decentralised. So far as possible maximum delegation to companies and divisions has become the order of the day. Where once there was a board of management of four or five individual directors at the centre each responsible day to day for sales, design, manufacture, export, finance, secretariat and personnel, there is now a single chief executive. It was Sir Franklin who was appointed the group’s first managing director in 1971.
Some personal impressions from Sir Franklin:
"Before I joined Baker Perkins I had the same view of industry that many academics still have today : those dark satanic mills. At first I could not believe that there were so many nice people in business and industry. I’ve made marvellous friends and had great experiences.
Compared with many other companies, each unit of our group works as a first-class team. There is tremendous loyalty emanating from good leadership. I believe that this is all tied up with our strong sense of service to our customers.
The greatest danger to any business is when you forget to listen to the market place and become arrogant. I’ve done it, we’ve all done it in our time, but it is vital to remember always ‘ the Customer is King’."
(Extract from "Contact" – No 71 – Summer 1984)
Sir Franklin Braithwaite died on 12th June 2005. His son, Peter, produced a Memoir, a copy of which is filed in the Baker Perkins Archive in Peterborough Central Library.
NOTE: For more information on the way in which the Baker Perkins Group developed over the years, its origins, its growth and how it presented itself to the outside world see The Group In Summary.
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