HISTORY OF JOSEPH BAKER SONS & PERKINS LTD
History of Werner,
Pfleiderer & Perkins
The Background to the Merger
First talks about the possibility of closer collaboration had taken place between Werner, Pfleiderer & Perkins and Joseph Baker & Sons as early as 1913. The two companies were leading suppliers and manufacturers of machinery for the food industry and were serious competitors, but the Bakers had developed their export business to a point where half of their business came from overseas, whilst Werner, Pfleiderer & Perkins had concentrated on the home market – and even there their customer base was patchy – and had made no attempt to exploit the market potential in the British Empire. WP&P sold mainly bread machinery and ovens, while the Bakers offered a very comprehensive product line – sourced both internally and externally - to the biscuit, chocolate and confectionery industries as well.
Both had been investing heavily in buildings and plant but Ihlee's financial position was not as strong as that of the Bakers – all expenditure having to come out of current profits. The move to Peterborough had brought liabilities of more than £40,000 and it had taken some time to recover from this but, following the debenture issue of October 1912, during the period immediately prior to WW1, some £10,000 a year had been spent on improvements and extensions.
Following the incorporation of Joseph Baker & Sons in 1902, Willesden had spent £35,000 on new plant and tools. They never failed to pay dividends and spent a further £20,000 on capital items between 1911 and 1913. Few of the older men from WP&P's Regent Square factory, whose loyalty to the Perkins family had been severely tested during the Paul Pfleiderer era, migrated to Peterborough. This created a major problem for F.C. Ihlee who, as a result, had to spend time and money training local agriculture workers to be engineers. He had, however, the services of Josh Booth whose ability to make good engineers out of unpromising material became legendary – and he had John Pointon – "the most brilliant inventor of bakery equipment in the United Kingdom, if not in the world".
With its long and diverse record of production, Joseph Baker & Sons had many more skilled engineers. Willesden was therefore ahead of Peterborough in both equipment and working skills. It was clear that amalgamation would bring something of value to both sides and integration would bring strength.
The relationship had not always been smooth. In 1913, Werner, Pfleiderer & Perkins accused the Baker directors of infringing certain Pointon patents for the second time – the first had occurred in 1903 – and it concerned the Baker-Callow dough divider and dough moulder introduced to the Bakers by their inventor. The first claim was settled out of court by an admission of fault from the Bakers and the payment of a 5% royalty on each machine sold – the second claim resulted in what Ihlee had been hoping to experience for some time – a chance to sit with the Baker directors and talk about more momentous things than patent infringements.
Both parties had, for some time, been cutting prices until little or no profit was left. The meeting soon got down to the serious business of discussing how to put a stop to the cut-throat competition over automatic bread plant. Ihlee suggested that an understanding on prices was the best thing that he could suggest, "short of amalgamation". After some discussion, they agreed to meet later and come to a definite conclusion.
At the second meeting, the Bakers took a strong position, arguing that fixing prices would be more to Peterborough's advantage and, as Willesden had already won the competitive battle on biscuit and chocolate machinery – and had the resources to fight the bread plant battle – the outcome was not, in their opinion, in doubt. Ihlee was then challenged on what he meant by "short of amalgamation".
The Baker directors had already sensed that Ihlee was interested in some form of union between the two companies but were adamant that anything less than a take-over of WP&P by Willesden would not be acceptable. Ihlee quickly conceded, in principle, to the Bakers buying WP&P, an agreement was reached about automatic bread plant – the price was to be raised by £300 and neither firm would make any price cuts – and then the question of a valuation with a view to union was raised.
Although Ihlee agreed at once, J. Allen Baker and his brothers were not happy that the potential for their bakery plant activity in North America would be given its proper value. E.H. Gilpin argued that a valuation would not commit them in any way and an amalgamation would make possible an agreement with Cannstatt for the sale of their own machinery in Germany and would bring an end to the German infringement of Baker patents. The Bakers reluctantly agreed, a valuation of the assets of the two companies was organised, the results of which were awaited at Willesden with some trepidation. Ihlee, too, was concerned as to how Cannstatt would view the possibility of a union – the Werners held a third of the WP&P shares and a merger with Willesden without their consent would breach their Reciprocity Agreement.
As feared, the valuation report "burst like a bombshell" in the Willesden board-room. WP&P's shares were calculated to be worth more than those of Joseph Baker & Sons. The Bakers were convinced that their potential North American assets had been undervalued. Feelings ran high and the question of a merger was put on the back burner. However, future events were to play a part in bringing the possibility of amalgamation back onto the agenda.
A Catalyst For An Agreement – The Baker-Perkins Standard Army Bread Plant
Not many months after the outbreak of hostilities in 1914, the directors of Joseph Baker & Sons had tried to persuade the War Office to undertake, on a big scale, the mechanical preparation of dough and baking of loaves to feed the troops on active service. E.H. Gilpin was asked to set up a demonstration as soon as possible and, for speed, the Joseph Baker & Sons directors decided to invite F.C. Ihlee of Werner Pfleiderer & Perkins to join in. He jumped at the chance of collaboration.
The new plant, made partly at Willesden and partly at Peterborough, was ready in twelve weeks for the officials from Whitehall to inspect. A contract was drawn up between the War Office and Joseph Baker & Sons, and the Bakers entered into a sub-contract with WP&P. The two firms divided the manufacture, WP&P being allotted the mixing machines, final moulders and draw-plate ovens, while the dividers, the first moulders and provers were turned out at Willesden. The complete unit was named the Baker Perkins Standard Army Bread Plant.
This coming together of the two firms in their war effort could not have been more propitious. If any single step could be called the crucial one in the union of the two firms, it was the request from the Baker board that Ihlee would collaborate in the Army bread plant.
Preparations for the Merger
In Some Historic Correspondence will be found copies of some "Forms of Proxy". These refer to "An Extraordinary General Meeting" held on 17th July 1918. It was at this meeting that the final steps were taken to purge the Werner & Pfleiderer name from the Peterborough company and clear the way for the amalgamation with Joseph Baker & Sons.
One month after the above meeting, a joint directors' meeting of the two companies (Perkins Engineers Ltd. and Joseph Baker & Sons Ltd.) passed minutes approving "the principle of union". From the first day of January 1919, there was close co-operation between the boards and staffs of both companies and profits were being divided in an agreed proportion. It could be claimed that the businesses were working together from that date but another year and a half was to pass before Baker and Perkins were to be fully integrated as one company. The Contract for Sale was completed on 20th July 1920. The union was in fact a straightforward take-over by Willesden. Perkins Engineers, which had only been in existence since 1915, went into voluntary liquidation with its assets being merged into those of the Baker firm – which had changed its name but not its constitution to become Joseph Baker Sons & Perkins Ltd.
It had been suggested that if Joseph Allen Baker had lived, he would have been against the amalgamation because of his fear that the Baker assets in America would be undervalued. In the event, his misgivings might have been allayed somewhat as the two businesses were valued in a five to three ratio in favour of Willesden – their patents and business connections being reckoned to be more valuable and their buildings and plant worth almost one-third more than those at Peterborough. (At the time, Perkins Engineers Ltd carried loans, advances and Mortgage Debentures amounting to £215,587, this indebtedness naturally affecting the valuation).
The New Board of Management
Baker shares were allotted to members of the Perkins company in proportion to the relative valuation of assets following a decision by the Willesden board to double the capital of Joseph Baker & Sons from £200,000 to £400,000. The Perkins directors were elected to the board of Joseph Baker & Sons Ltd and at the first directors' meeting, Allan R. Baker continued as chairman with F.C. Ihlee as his deputy. Other appointments included:
The other directors were – W. King Baker, George S. Baker, W. Pelmore, R. Elmer Baker and J.Newman (secretary). The turnover of the combined businesses was estimated at approximately half a million pounds sterling, with a net annual profit of around £40,000 – some £10,000 more than the combined pre-War profits.
Work on reorganising both factories was begun, with Willesden concentrating on machinery for the biscuit, chocolate and sugar confectionery trades and with Peterborough specialising in equipment for the bakery and chemical industries. Peterborough was also responsible for the oldest section of the Perkins business – the Heating Department - which continued to operate from Collier Street, London.
Sent to Coventry
Recovering from the effects of the War years was not easy. Just to absorb the men returning from active service necessitated continual changes on the shop floor and in the offices. Claude Dumbleton recalled – "It was a time of unreality. We were licking our wounds from the Great War, changing Willesden from an Ordnance factory into one designed for peace-time production, with soldiers like myself trying to settle down in civilian life, while the orders were so heavy we had to sub-contract to keep abreast of our schedules". To ease the situation, the directors were offered the chance to take over an idle Cammell Laird Ordnance factory at Coventry. It was hoped that, by getting this into production quickly, they would be able to satisfy their impatient customers. In the event, the Coventry workmen were unable to cope with the precision work of Willesden and Peterborough – the drawings were not of a kind that they were used to and insufficient 'old hands' could be spared from Willesden to help in training. The Coventry experiment lasted two and a half years but had to be judged a failure.
Some machinery was moved from Willesden to Peterborough but the key question was how to ensure that two sets of men of strong character and trained in different business methods would work in harmony. The Willesden men were used to a democratic form of control, Ihlee's rule at Peterborough being much more autocratic. (In the period between the middle of March and the end of July 1913, Joseph Baker & Sons had held thirty-three board meetings, Ihlee only three).
It was F.C. Ihlee who put forward the idea of a Board of Management to run the new company, similar to that which he had created as the link between Werner, Pfleiderer & Perkins and his hastily formed Perkins Engineers. He described the main task of the Board as "to inspire and direct initiative and development, the 'brain centre' of the entire business, responsible for the efficient working of both Willesden and Peterborough. Its members must have sufficient leisure to undertake this paramount duty to the company. They must stand aloof from routine work; they must meet often and regularly; they must agree on the sub-division of work according to the qualifications of each member, so that their special talents and accumulated experience would have full rein. Overlapping of duties must be avoided, and flexibility must exist between members so that 'deputising' among themselves would be a simple matter. Thus both Willesden and Peterborough could carry on, in the absence of any particular member of the board, without any loss of efficiency."
The Baker directors unanimously agreed to this and it was decided that the Board of Management would consist of the Joint Committee that had smoothed the way to amalgamation: F.C. Ihlee (Chairman), Allan R. Baker (deputy chairman), E.H. Gilpin, John E. Pointon, J.H. Booth, Joseph S. Baker and G. Ralph Baker, with J. Newman as secretary.
F. C. Ihlee's position had changed dramatically – from a position of total autocratic control to one where every item of capital expenditure had to be approved by fourteen other board members. It is a measure of the man that despite his situation appearing somewhat delicate, he won the respect of his new colleagues and, as deputy chairman of a much larger business than that which his stubborn energy had transformed from a declining business into a modern, efficient manufacturing unit, was able to say: "To me, the new era is the true beginning of the future I have always hoped for and striven to make possible, and I regard our activities since 1893 as only a prelude".
The Credo Agreement
One of the important events in the early days of the new company was the signing of the 'Credo Agreement' between Joseph Baker Sons & Perkins and Savy Jeanjean et Cie of Paris, who manufactured chocolate and soap machinery. Later, in 1921, a further alliance was concluded with Werner & Pfleiderer, Cannstatt, for the exploitation of the world market for bread, biscuit, chocolate, confectionery and chemical machinery. This three-cornered arrangement lasted until the beginning of WW2 in 1939, and in a modified form until 1963 when the holding in Savy Jeanjean was sold – the investment in Werner & Pfleiderer being retained until 1986. (See also The European Limited Partnership)
The Agreement was somewhat unusual as F.C. Ihlee made clear in a report to his fellow directors:
"There is no legal contract or enforceable document, and no compulsion to continue in quasi-association beyond the day on which the desire to co-operate ceases to exist on the part of all the concerns involved. The wish to co-operate, therefore, depends purely on the continuance of a community of interest. Every contact between the three concerns should be controlled with the clear issue in mind that a community of interests should be kept in being – and not jeopardised by petty treatment of minor questions. If this spirit of association is maintained, I see no reason why such an association should not, in fact, be stronger in practice and of longer duration than any based upon a formal international contract in which the inherent difficulties would be insuperable – to say nothing of the problematical value of such a contract as an enforceable document".
The Acquisition of David Thomson Ltd.
Joseph Baker Sons & Perkins were agents for some of the peel-cutters and mixing and kneading machines of the Edinburgh firm of David Thomson. After WW1, the company ran into some financial troubles and was bought by Joseph Baker Sons & Perkins in 1922. The personnel and assets were absorbed into the company and David Thomson Ltd was liquidated in 1932. See also History of David Thomson Ltd of Edinburgh.
The Great Fire of 1922
The Westwood Works factory suffered a disastrous fire in March 1922 (for the full story see The Great Fire). As well as contemporary photographs and descriptions of the fire, this section contains correspondence between the Works Committee and the Works Manager at the time that gives some insight into the working conditions that existed after the Great Fire, during the time that the factory was being re-built. The fire coincided with the lowest point in the general trade depression and reductions were made in numbers of both staff and workmen. A new warehouse, paint shop, carpenters' shop and two new pattern stores were built, together with railway sidings to serve them, in a surprisingly short time, during which the company remained in production. The results – photographs taken only a year later – may be seen in Westwood Works in 1923.
A dispute between the Employers' Federation and the Trade Unions led to a fourteen-week lockout at Willesden in 1922. The Bakers (but not Perkins Engineers) had been members of the Employers' Federation and found themselves forced, against their will, to declare a lock-out of the majority of their men. This lasted one week longer than the 1919 moulder's strike had done. The demands upon the Willesden shop floor workers by the Amalgamated Engineering Union were considered by the Willesden Shop Steward's convenor to be out of line with Baker policy and the outcome was that Willesden withdrew from the Employers' Federation, a result which was not surprising in view of the enlightened views of the directors about the treatment of workpeople (see The Westwood Works Culture) .
Baker Perkins Ltd is Born
The company was renamed "Baker Perkins Ltd" in 1923.
History of Baker Perkins Ltd.
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