Foreign direct investment policy, multinationals, and subsidiary entrepreneurship success and failure in post-war Scotland

Abstract

Scotland was a premier destination for American direct investment from the 1940s to the 1970s. Multinationals were attracted by regional policy inducements that sought to develop modernised engineering sectors. This paper examines the evolution of four American-owned manufacturing subsidiaries between the 1940s and 1980s using correspondence between plant managers and policymakers. Reconciling existing Scottish subsidiary literature, success and failure are both documented. Subsidiary entrepreneurial behaviour was displayed in each case, but developmental outcomes were inhibited. Centralised American management exercised power over Scottish plants, including stripping subsidiaries of innovative products that were developed in Scotland. However, corporate product market competitiveness, a subsidiary’s existing strength within a multinational’s global region presence and business governance structures coalesced to condition success and failure. Policymakers must attempt to embed competitive advantages within localised linkages, but their ability to do so is strongly conditioned by the domestic industrial structure’s capacity to respond favourably to these challenges.

Keywords:

• Subsidiary
• policymaking
• inward investment
• FDI
• Scotland

Acknowledgements

The author thanks Duncan Ross and Jim Phillips for reading earlier versions of this research and Liam Turbett for providing him with links to relevant newspaper articles.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 University of Glasgow Archives, John Firn’s University of Glasgow research projects, Scottish Development Agency, Firn Crichton Roberts Ltd (hereafter ACCN 3700) 8/5/3 John Firn, SDA, Edinburgh ‘Confidential note to the Chief Executive and Chairman [of the SDA] ‘How the west was lost article’, 22 February 1982; John R Firn ‘John R Firn CV’, Scottish Government <http://www.scotland.gov.uk/Resource/Doc/921/0048410.pdf> [accessed 3 April 2020].

2 Gordon Thomson ‘The End of a Dream: It was the Heart of Silicon Glen, Employing 2500 ­worker: Now the Motorola Factory is a Heap of Rubble’, Evening Times, 25 April 2009 <http://www.eveningtimes.co.uk/news/the-end-of-a-dream-it-was-the-heart-of-silicon-glen-employing-2500-workers-now-the.17390384> [accessed 16 April 2020]. Historical investment value, £250 million in 1994.

3 National Records of Scotland (hereafter NRS)/Scottish Economic Policy (hereafter SEP)4/585/8A R.L. Meier, University of Chicago, ‘Industrial Planning in Scotland: The Role of New Technology in The Economic Development of a Region’, 9 June 1950.

4 NRS/SEP 4/1827/21 Sarah C. Orr, Paper 45 (1962).

5 Historical export values, £75 million in 1964 and £367.1 million in 1972.

6 NRS/SEP/4/13 Secretary of State for Scotland, Hector McNeil, to Lord Bisland, 27 July 1950; NRS/SEP/4/13/22 letter from D.D. Mills, Board of Trade and Ministry of Supply to J.B. Fleming Dept of Health for Scotland, Edinburgh (1950).

7 NRS/SEP/4/1629 ‘Non-Stop Hoover will Lead’, Phase, May 1974, p. 2.

8 NRS/SEP 4/13 press cuttings folder, ‘100 new jobs at Cambuslang’, The Financial Reporter, 28 January 1970.

9 NRS/SEP/4/13/15 Extract from the minutes of the 110^th meet of the Distribution of Industry Panel for Scotland held 15 September 1950.

10 NRS/SEP 4/13 press cuttings folder, ‘Hoover to expand at Cambuslang’, Glasgow Herald, 18 September 1969.

11 NRS/SEP4/3706/1 A comparative Study of Corporate strategies of Manufacturing MNEs operating in high levels of regional assistance in UK and Eire (1980) annex E and annex F.

12 ‘Hoover to Close Scots Plant’, BBC News, 8 October 2003 <http://news.bbc.co.uk/1/hi/scotland/3173484.stm> [accessed 20 April 2020].

13 ‘The Hoover Company’, Reference for Business <https://www.referenceforbusiness.com/history2/93/The-Hoover-Company.html> [accessed 26 October 2020].

14 NRS/SEP/4/1629, press cutting folder, ‘Common Market’s effect on Factory’s Expansion’, Glasgow Herald, 29 May 1962.

15 NRS/SEP/4/1629 press cutting folder, ‘New Jobs Book for Scotland’, Scotsman, 21 November 1962.

16 SEP 4/1629, J.H. McGuiness, ‘Honeywell’, note for Mr Fraser and Mr Hendry, 4 March 1971.

17 NRS/SEP/4/1629 J.H. McGuiness, note for Mr Fraser and Mr Hendry, ‘Honeywell’, Scottish Development Department, 4 March 1971; SEP/4/1629 press cuttings folder ‘Honeywell Giants in Scotland’, Glasgow Herald, 19 April 1972. Order was £75 million in 1972 value.

18 NRS/SEP 4/1629 Department of Employment, Honeywell Ltd: Outline of Scottish Operation and Manpower Details (1974).

19 NRS/SEP/4/4075/5 Application for Assistance under the Non-Ferrous Foundry Scheme Honeywell Limited, SEPD, 24 April 1979.

20 Ibid.

21 NRS/SEP/4/3791/26/3 Background note for the meeting between the Minister for Industry and Mr R.W. Macdonald, President of the Burroughs Corporation to take place on 24 July 1972.

22 NRS/SEP/4/3791/27/4, Briefing on regional aspects for the Minister of Industry’s meeting with the US and UK Management of Burroughs Machine Limited on 26 January 1972.

23 NRS/SEP/4/3791/28/5 Note for Minister for Industrial Development, 5 May 1972.

24 NRS/SEP/4/3791/22 A.G. McKenzie, SEPD Industrial Development Division, Note for the File: Burroughs UK Limited, 30 June 1978.

25 NRS/SEP/4/3791/23 J.S. Robertson, Note for File: Burroughs UK Ltd, 6 June 1978. Historical profit values, £4 million in 1976 and £10 million in 1978.

26 ‘Sunbeam-Ostler Co’ Reference for Business <https://www.referenceforbusiness.com/history2/20/Sunbeam-Oster-Co-Inc.html> [accessed 26 October 2020]. Historical value of over $1 billion in 1981.

27 NRS/SEP/4/567/18 C.J.A. Whitehouse to Mr Macbeth, Board of Trade, ‘Sunbeam Electric Limited’, 12 December 1960.

28 NRS/SEP/4/568/1 E.M. Smith, Board of Trade, Sunbeam Electric Limited, 12 May 1966.

29 NRS/SEP/4/568/38 Miss D O’Callaghan, File Note: Sunbeam Electric Limited, East Kilbride, 20 May 1971.

30 HC Deb 17 February 1981 vol.999 cc.169 Hansard <https://api.parliament.uk/historic-hansard/commons/1981/feb/17/talbot-linwood> [accessed 4 May 2020].

31 ‘Sunbeam to close Scottish Factory’, Guardian, 5 April 1983, p. 3.

32 NRS/SEP/4/2337 A.W. Teel to Mr Grant, SEPB, Edinburgh, ‘Redundancies and Unemployment Change’, 6 September 1967.

33 NRS/SEP4/3791 SEPD Industrial Development Division, Burroughs Machines Limited Scotland, 18 December 1975.

34 NRS/SEP/4/5667/12 ‘How the Burroughs Programme just Failed to Add Up’ Scotsman, 7 August 1981.

35 NRS/SEP4/3791/29 Miss D O’Callaghan, SEPD, Ministerial Visit to the USA Sep/Oct 1980, 4 November 1980.

36 NRS/SEP/4/3791/45 Burroughs: Cumbernauld (1982); NRS/SEP 4/5667 E.M. Henderson, General Manager, Burroughs, Cumbernauld to G. McCrone Secretary and Chief Economic Advisor SEPD, Edinburgh, 22 December 1981.

37 NRS/SEP/4/3791/10A Department of Industry for Scotland, Burroughs Machines Limited, 1 April 1974.

38 NRS SEP/4/3706 SDA Strategic Planning Unit, SDA Strategy for the Development of the Electronics Industry in Scotland: A Synopsis of the phase 1 report prepared by Booz Allen Hamilton, December 1978.

39 NRS/SEP/4/567/18 C.J.A. Whitehouse to Mr Macbeth, Board of Trade, ‘Sunbeam Electric Limited’, 12 December 1960.

40 Douglas Dickie, ‘End of an Era’, Daily Record, 27 August 2008 <https://www.dailyrecord.co.uk/news/local-news/end-era-demolition-work-2630044> [accessed 20 April 2020].

41 NRS/SEP/4/3791/22 A.G. McKenzie, SEPD Industrial Development Division, Note for the File: Burroughs UK Limited, 30 June 1978.

42 NRS/SEP/4/3791/31 Letter from J.F. Hardwick to Miss ME Shanks SEPD, Edinburgh, 5 February 1981.

43 NRS/SEP/4/4070/30 + 1 Written Answer Hansard; NRS/SEP/4/4070/14 Glasgow Herald, 8 January 1986.

44 CBR Staff Writer, ‘Unisys Shuts Livingston’, Computer Business Review, 7 October 1991.

45 ACCN 3700/8/5/3 John Firn, note to Ken Smith, ‘Electronics Company Problems’, 26 May 1981.

46 NRS/SEP/3791/64 Burroughs Machines Limited: Scottish Operations, 1 October 1982.

47 NRS/SEP/4/4075/11 G. Skelton, SEPD, File Note: Honeywell Limited, Newhouse Meeting at Newhouse, 10 January 1979, 15 January 1979; SEP 4/4075/26 J. Thomson, SEPD, File Note: Honeywell Process and Control Newhouse, Motherwell, 26 May 1979.

48 ACCN 3700/8/5/3 SDA Planning and Projects Directorate ‘The Scottish Electronics Subcontractors and Components Suppliers Industry’ (1981).

49 Andrew McGilvary, ‘80 More Jobs go as Honeywell is Hit by the Credit Crunch’, Hamilton Advertiser, 15 January 2009 <http://www.hamiltonadvertiser.co.uk/news/local-news/hamilton-news/2009/01/15/80-jobs-to-go-as-honeywell-is-hit-by-credit-crunch-51525-22694825/> [accessed 20 April 2020].

50 NRS/SEP/4/3791/16 Burroughs Machines Ltd Scotland, 18 December 1975.

51 NRS/SEP/4/3791/22 A.G. McKenzie, Note for the File: Burroughs UK Ltd, 30 June 1978; SEP/4/3791/23 J.S. Robertson, Note for file: Burroughs UK Ltd, 6 July 1978.

52 ACCN 3700/8/5/3 SDA Planning and Projects Directorate, The Scottish Electronics Subcontractors and Components Suppliers Industry (1981).

53 Ibid.

54 ACCN 3700/7/15 3700/7/15, Labour Performance of US Plants in Scotland (Edinburgh: Firn Chrichton Roberts Ltd, 1986).

55 ACCN 3700/10/2 John Smith to Ken Smith, 24 June 1980.

56 ACCN 3700/10/2 Note to SDA Chief Executive, Edward Cunningham, 18 June 1980.

57 NRS/SEP/4/1118 The Electronics Industry in Scotland: Current Issues and Future Prospects, 25 August 1978.

58 NRS SEP/4/3706 SDA Strategic Planning Unit, SDA Strategy for the Development of the Electronics Industry in Scotland: A Synopsis of the phase 1 report prepared by Booz Allen Hamilton, December 1978.

59 ACCN 3700/10/2 J.R Firn to Jim Gorrie, subject: Amdhal’s Move to Eire (1980).

60 James Watson, ‘The ‘Red Clyde’ Image Haunts Scotland’, Evening Times, 10 March 1980, p. 1.

Additional information

Notes on contributors

Ewan Gibbs

Ewan Gibbs is Lecturer in Global Inequalities within Economic and Social History at the University of Glasgow. He is a scholar of Scottish and international energy, business, labour and policymaking. Ewan has published research on workplace and community protest, memories of industrial work and experiences of multinational divestment. His monograph, Coal Country: The Meaning and Memory of Deindustrialisation in Post-war Scotland, was published by the University of London Press in 2021.