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Blue Circle: cementing its place in history

Associated Portland Cement was the largest manufacturer of cement in the world throughout much of the twentieth century. It became best known for its Blue Circle brand.

At the turn of the twentieth century the British cement industry was faced with increasing competition from Continental and American producers. Henry Osborne O’Hagan (1853 – 1930) arranged for the merger of 24 British cement manufacturers, mostly based in the Thames area, to form Associated Portland Cement (APC) in 1900. O’Hagan was appointed vice chairman of the business, which was the largest cement company in the world.

APC held a 45 percent share of the British cement market and employed 6,147 people in 1903. It had the eighth highest capitalisation of any publicly-quoted company in Britain in 1905, ahead of Guinness, Dunlop and Lever Brothers.

APC made its first overseas investment when it acquired the Tolceta works in Mexico in 1909. Before the First World War works were also acquired in South Africa and British Columbia.

APC acquired a further 33 British competitors in 1911, giving it control of 80 percent of the productive capacity of the British cement industry. The company was a cartel designed to maintain prices in the domestic market at just below those of foreign imports.

APC received large orders for the construction of trenches during the First World War.

O’Hagan stepped down in the post-war period, after he opposed the proposed further expansion of the company.

Alfred Cecil Critchley (1890 – 1963), a board member in the post-war period, suggested that the company use a single brand name, Blue Circle, for its cement products.

Alfred Cecil Critchley (1890 – 1963) in 1942

APC controlled 75 percent of British cement production in 1922.

Due to increasing sales of concrete, APC established the largest cement works in Europe at Northfleet in 1926. The works was well-sited for the raw materials of clay and chalk, and the location on the banks of the River Thames allowed for convenient export of finished product.

APC was the 15th most valuable public British company in 1930, with an estimated market value of £13.9 million.

The Red Triangle cement and brick group was acquired for over £2 million in 1931. Following the acquisition APC held 70 percent of the British cement market.

APC employed 6,720 people in 1935. The company had 16 managing directors, and no central chairman. Instead, each managing director was allocated responsibility for a committee within the company, i.e. sales or finance. Because APC was comprised of numerous component companies, there were an additional 40 ordinary directors .

APC acquired Alpha Cement in 1938. Following the takeover APC controlled 84 percent of the British cement market, and directly employed about 8,000 people.

P L Payne argued that the company failed to turn its monopoly power to its advantage. It has been suggested that the APC acquisitions destroyed, rather than added, value.

The economist George Stigler (1911 – 1991) calculated that between 1900 and 1960 APC acquired 125 percent of British cement production capacity, yet its market share had declined to just 70 percent by 1960.

Post Second World War period
Cement works in Australia and New Zealand were acquired after the Second World War. A new cement plant was established at Selangor, Malaysia, in 1954.

Two new cement works were established at Cauldon in Staffordshire and Westbury in Wiltshire in 1954. Each site had an annual capacity of 175,000 tons, and the total cost amounted to £5 million. Following their construction, APC operated 26 cement works in Britain.

APC employed 11,000 people in 1955. It was the largest cement group in the world, and claimed to offer the product at the lowest cost.

APC enjoyed a huge growth in profits between 1955 and 1965. APC was the 15th largest public company in Britain in 1965, with a market capitalization of £138.3 million. It controlled two thirds of the British cement industry.

APC built plants overseas, and became known for its expertise in low-cost cement manufacturing. A notable APC contract was the Aswan Dam in Egypt, which used 150,000 tons of cement.

APC established a new cement works at Northfleet in 1968. The plant cost £35 million and had an output of 3.5 million tons a year.

APC employed a capital of £246 million in 1974, and had a British workforce of 18,325.

Difficulties, diversification and sale
APC struggled when the 1970s oil crisis led to increased fuel prices, due to the highly energy intensive nature of cement production. It was also overly dependent on a shrinking domestic market which accounted for over half of profits.

John Milne (born 1924) was appointed managing director from 1975. Faced with a declining domestic cement market, Milne hired McKinsey & Co, management consultants, in 1975.

APC changed its name to Blue Circle from 1978.

The Aberthaw Cement Works, Wales in 2009. The site was acquired by Blue Circle in 1983.

The British workforce was reduced by more than half to 6,500 between 1974 and 1982. It was announced that a further 1,200 jobs would be lost in 1983.

Blue Circle was the 74th most highly-valued public company in Europe in 1982.

Milne relocated company headquarters from London to Berkshire, on the basis that it was closer to his own home. The site chosen, at Aldermaston, also housed the Ministry of Defence’s nuclear weapons research facility. The company staff association protested such a risky move during the Cold War. Milne stood up at the annual general meeting and declared that if nuclear war was announced, he wanted to be under the first bomb, and the relocation went ahead.

A declining British cement market saw Blue Circle consolidate; it acquired Aberthaw Cement Works, the fourth largest cement manufacturer in Britain, for £26.3 million in 1983.

Following advice from McKinsey, Blue Circle also began to diversify. It acquired Armitage Shanks of Staffordshire, the largest manufacturer of ceramic baths, sinks and toilet bowls in Britain, for £35 million in 1980.

Bermid Qualcast, a cooker and lawnmower manufacturer, was acquired in a hostile takeover which valued the company at £217 million, in 1987.

Diversification aided profits in the short term, but disguised the fact that cement sales were declining. Blue Circle spent £58 million to reduce its cement production capacity by 15 percent in 1992.

Blue Circle had declined to become the third largest cement manufacturer in the world by 1991. That year the bathrooms business was sold to American Standard for £253 million, and the heating business was sold to Baxi for £480 million.

Blue Circle employed 19,690 people in 1992.

Blue Circle was forced to leave its Aldermaston headquarters in 1993, following a nuclear leak from the MOD facility.

Blue Circle invested £700 million to expand its presence in Asia. However subsequent price wars depressed the company’s share price, and rendered the business vulnerable to a takeover.

Blue Circle was the sixth largest cement manufacturer in the world when it was acquired by Lafarge, its French rival, for £3.4 billion in 2001. The merger created the largest cement manufacturer in the world.

The Northfleet Cement Works were closed with the loss of 240 jobs in 2005. The site had exhausted its raw materials. All workers were offered jobs at other Lafarge sites.