BUSINESS DEVELOPMENT – Growth through good and bad times.

In Summary

INDEX:

Bearing in mind the stated intention of using this Website to gather as much relevant information together in one place as possible, this section ends with a brief summary of the business development information contained in each Annual Report. However, the casual reader might welcome a simpler resume of the growth of the Company through the turbulent external environment of the last century and we start with this:

NOTE: The early Annual Reports did not provide information on Total Sales (Turnover) or the number of employees. Turnover data is available from 1956 – around the time that the Company’s shares were first quoted on the Stock Exchange – and the number of employees only available from 1957.

Snapshot– What sort of Company was Baker Perkins?

At the end of 1972, the company employed 7,670, down from a high of 9,920 in 1962. Around 44% of its income was spent on wages, salaries and employee benefits. 2,900 of the total employees were located at Westwood Works, Peterborough, where the company HQ and its largest manufacturing unit were located. Other major plants existed at Newcastle, Leeds and Gainsborough in England, Saginaw in Michigan, USA and Melbourne, Australia.

The largest units sold for producing bread, cakes or biscuits were sold for about £300,000 each (at 1972 prices), the smallest units at around £50,000. Baker Perkins prices were 10% to 15% higher than those of its competitors for similar capacity equipment. As one executive put it - "We have traditionally manufactured the Rolls Royce of baking equipment". The larger plants, usually made to individual customer’s specifications, took on average about six months to construct.

Baker Perkins’ equipment had a typical operating life of between 20 and 30 years and therefore represented a relatively small part, typically less than 1.5%, of a bakery’s costs.

The operating reliability of Baker Perkins equipment was considered to be a major selling point because of the importance to the customer of quality performance day after day. An extensive after-sales service was a key part of the company’s business.

Employees

Not much is known about employee levels in the first half of the century. We do know that, at the time that the new factory at Westwood was being built, it was expected to employ 300 to 350 men and that this would be increased soon after the factory was in production. Not many of the 145 men employed at the Werner, Pfleiderer & Perkins factory in London agreed to transfer to Westwood but the numbers were made up from local recruitment, causing Mr Ihlee significant stress at the time. These were soon joined by approximately 150 men from the rapidly growing Lewis & Pointons Panification Ltd in Shropshire. (See also The Pointons).

Inevitably, reductions in staff had to be made in the aftermath of the fire that destroyed much of Westwood Works in 1922 (See also The Great Fire). It is believed that this was only a temporary measure and staffing levels returned to normal following the rapid re-building work. (See also Westwood Works in 1923).

In WW1, around 100 Willesden employees were called to the colours but no mention is made in Annual Reports of women ‘dilutees’ taking their place. We do have a photograph taken outside the Willesden factory in 1918 that includes a large number of ladies – see Before Westwood - perhaps these are ‘dilutees’. There is clear evidence from both photographs and lithographs of the period of women taking over from men at Westwood Works (See also Westwood Works at War).

Pre-WW2, the number of employees was about 2,500 on a two-shift system. During WW2, the factory worked right round the clock but still needed a further 750 employees. Of these, most were women. (See also Westwood Works at War).

In the early 1960’s, as a result of the aggressive growth by acquisition programme started in 1958, total employment in the Baker Perkins Group reached nearly 10,000, of these 8,000 worked in the United Kingdom. Significant programmes of redundancies occurred in the early 70’s, in 1975 when Douglas Rownson was closed, and again in the early eighties. By 1986 – the year before the merger with APV – the total stood at 5,724, with 3,685 in the UK. Of these just over 2,000 were at Westwood Works.

Following the merger in 1987 the new group employed 6138 in the UK and 12,800 in total. By the time APV were acquired by Siebe in 1997, redundancies and divestments had left only 1509 employees in the UK, 7487 in total.

Group Turnover had increased from £30.4m in 1967, when UK employment stood at 7890, to £772m in 1997 but the total number of employees in the UK had fallen to 1509 – over 500 less than were employed at Westwood Works in 1986.

In 2005, APV Baker, Paston (and its subsidiary in Grand Rapids, Michigan), effectively the only remaining part of the Baker Perkins’ empire, employed less than 500. APV Baker’s activities – bread, biscuit and C+C equipment – mirror those of Baker Perkins as it was before WW2.

Sales/Turnover Growth

NOTE: Sales/Turnover figure are not available for the years prior to 1956 but some indication of the trend can be obtained from the yearly Directors’ Report.

After becoming a Limited Liability Company in 1903, Joseph Baker & Sons’ sales rose steadily and were at a record level in the year before the onset of WW1. In 1922, output was affected by the major fire at Westwood Works that also coincided with the lowest point in the general trade depression. Further problems were experienced in 1926 - the year of the General Strike and the dispute in the Coal Trade. However, 1929 was a record year for output and this level was not surpassed until 1938. The severe world depression of the early 1930s affected business generally and the overseas businesses in particular.

Things improved in 1934 when – "The rapid increase in orders, maintained through 1934, required a full night shift in the machine shop and large numbers of new men and staff to cope. Turnover was higher than for years". Output increased again in 1935 to just under the record level of 1929 and by 1938 invoiced turnover was the largest in the Company’s history. Following the difficulties of the immediate post-war period, Turnover began to rise again and by 1950 exports were the highest ever achieved and represented about one third of Turnover.

In 1956 Baker Perkins Group Turnover stood at £14.3m. By the time of the merger with APV in 1987 it had risen to £262m - a figure somewhat distorted by the rampant inflation of the mid-70’s.

APV Group Turnover reached close to £1 billion in 1990 but, when in 1997 the APV Group was acquired by Siebe, it was down to £772m, a figure close to that achieved at the merger with Baker Perkins.

Profit Growth

Profits inevitably fluctuated from year to year – the period covered included two World wars, the Great Depression, the General Strike of 1926, the miners’ strike and short time working of the mid-70’s as well as numerous slumps in demand in the industries served in both the home and international markets.

The first year’s net profit for the newly incorporated Joseph Baker & Sons Ltd in 1903 was a little over £17 thousand. After the merger with Perkins Engineers Ltd in 1919 net profit had increased to just over £40 thousand. By the beginning of World War Two it had reached nearly £100 thousand. Profit growth continued to rise steadily through the ‘50s and ‘60s but entered a period of rapid fluctuation following the 1973 OPEC oil price increases with the consequent world recession and high inflation.

The 1970’s were a time of ‘funny money’ with much debate as to the ‘real’ value of profits and ‘money’ values increased rapidly. After Tax Profit rose steadily during the second half of the 70’s to a record level of £7.5m in 1979. A strong sterling exchange rate, high domestic inflation and a UK engineering strike hit profits hard in 1980, falling further in 1981to under £1m. Profit growth then recovered quite rapidly (with the exception of 1983 when high costs and difficult market conditions in the USA impacted results) and stood at £12.27m in 1986, the year before the merger with APV.

It is worthy of note that despite all of the pressures created by the hostile business environments experienced over one hundred years of business activity a loss was not recorded in any year until 1994, three years before APV was itself acquired by Siebe.

DIVIDEND POLICY

THIS PART OF THE SITE IS STILL UNDER CONSTRUCTION

ACQUISITION POLICY

Growth by acquisition was nothing new. Prior to the merger, Werner, Pfleiderer & Perkins had joined with Lewis & Pointon Panification Ltd. (See also The Pointons) and in 1922 David Thomson of Edinburgh was acquired. However, it was much later, during the mid 50’s and early 60’s as the demand for baking equipment began to slacken (see "Growth of Group Companies/Divisions – Bakery, Biscuit and Chocolate & Confectionery Machinery" below), that Baker Perkins began to pursue an aggressive acquisition policy. This programme lasted about 10 years and involved around 10 companies. Some failed to produce satisfactory results and were divested, those that remained moved the company further into packaging, chemical mixing, food ingredients bulk handling and, notably, into printing machinery.

Virtually all of these companies had been sold or closed by the time that APV was bought by Siebe in 1997. What remained of the ex-Baker Perkins businesses was broadly similar to what existed prior to WW2.

EXPORTS

Despite having an agreement with Werner & Pfleiderer, Canstatt for sales to the British Empire, the home market was the main focus of Werner, Pfleiderer & Perkins’ activities. The Bakers were, however, export orientated from the start, their most important outlet for machinery being North America where they were represented by a cousin, Joseph Edward Baker, from 1891 via an office in Brantford, Ontario. By 1913, half of their machinery went to overseas customers.

From the start, Bakers exhibited in most of the major Exhibitions around the world – Amsterdam in 1886, Adelaide in 1887 (See also Trade Exhibitions), and their show at Melbourne in 1889 was such a success that a sales office was opened there.

Baker Perkins also had a knack of attracting exceptional salesmen – the story of Bruce Hay (see Augustus Muir’s "The History of Baker Perkins" pages 42-43), is worthy of note.- as is that of Harold Crowther and E.H. Gilpin (see Augustus Muir – "Exporting to Live"– page 134).

The acquisition of the ex-Werner Pfleiderer factory in Saginaw Michigan in 1919 significantly increased the opportunity to obtain more overseas business and it soon had a full order book.

Following the disruption caused by WW2, exports reached a record level in 1950, representing one third of total turnover. During the 50s, a background of increasing import restrictions and currency difficulties in world markets put a brake on the growth of exports. A move on the part of foreign governments to encourage local manufacture forced the Company to create local manufacture and service facilities in key markets – Australia, New Zealand, South Africa, Canada and Brazil, together with local licencing agreements in India, Argentina and Spain. Despite this exports from the UK were again at a record level in 1962 with 27.4% of total UK turnover being exported and a total of 53% of all group sales, or £12.5m, coming from overseas countries.

Both exports and overseas sales increased rapidly through the 60’s and in 1970 exports from the UK reached £9.1m and production from the group’s overseas factories £16.4m.

By 1976, Sales outside the UK (£47.7m) accounted for 69% of total sales, of which £20.6m or 30% of total sales represented exports from the UK – a record. The results for 1980 showed further growth with sales outside the UK, including £37.8m of exports from the UK, reaching £76.6m.

The final Baker Perkins Annual Report – 1986 – showed further rapid growth in overseas business to £222.4m or nearly 85% of total group sales, £120m being exports from the UK.

The Group received six Queen’s Awards for Exports between 1977 and 1991 – two for Biscuit machinery, two for Printing machinery, one for Special Projects and one for Packaging machinery. (See also Queen’s Awards for Industry).