Wedgwood

Last updated 6th May, 2009

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THAT Stoke-on-Trent became the world capital of the ceramics industry is in no small part down to master potter Josiah Wedgwood, writes Richard Ault.

Wedgwood was only a boy when he first began working with ceramics, and the business he created went on to become one of the most famous of all pottery producers.

But now Josiah’s legacy and the group of companies it became stands on the brink of collapse. On January 5, 2009 it was announced that Waterford Wedgwood – which also owns the Royal Doulton brand – had gone into administration, placing the jobs of 1,000 people at risk.

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Barlaston-based Wedgwood’s sad demise is a far cry from its foundations, during the boom era of the industrial revolution.

Josiah Wedgwood was born in Burslem, Stoke-on-Trent’s Mother Town, in 1730, and he was the youngest son of potter Thomas Wedgwood.

He joined the family firm at the tender age of nine, after his father’s death, and worked as a thrower, serving as an apprentice under his eldest brother, Thomas Wedgwood IV.

But a childhood bout of smallpox left Josiah with a permanently weakened knee, which made him unable to work the foot pedal of a potter’s wheel, and ultimately led to his leg being amputated.

Not one to remain idle, the young Josiah spent his time researching the craft of pottery, and by 1754 he returned to the industry, starting a company with Thomas Whieldon, the foremost potter of the day.

Five years later, Wedgwood left to start his own business in Burslem, first renting the Ivyhouse Works, before moving on to the nearby Bell Works.

There, the 33-year-old Wedgwood produced white pottery he called Creamware and played his first master-stroke, sending a breakfast set to Queen Charlotte as a gift. The Queen was delighted with it and ordered a complete service. Wedgwood was permitted to changed the name to Queensware and call himself ‘Potter to her Majesty’. He was on his way up.

Wedgwood realised the value of the canal system before most of his contemporaries. In 1766, he joined with the Duke of Bridgewater and James Brindley to start building the Trent & Mersey Canal. When complete in 1777, it brought in Cornish clay by barge and allowed finished goods to be shipped from Liverpool.

In 1769, Wedgwood bought the Ridge House Estate and set about building a brand new works and village for his workers. The industrial village was called Etruria.

It was there that Wedgwood made huge strides in improving quality and increasing output. In marketing he was greatly helped by a new partner, Thomas Bentley, an astute Liverpool merchant.

Bentley knew how to sell to top people and to foreigners. Wedgwood showrooms were opened in Bath and Dublin, as well as London. Free deliveries were offered to customers in Canada.

At Etruria, Wedgwood insisted from the beginning on separate workshops for different processes. As well as improving skills and efficiency, this also acted as a safeguard against workers who might want to pass on his secrets to rivals.

By the time he went to his new works, Wedgwood had already made his first black basalt pieces, having shrewdly recognised that black teapots enabled ladies to show off their white hands.

Having established his reputation with Queen Charlotte, he then pulled off another major coup in 1773 when Empress Catherine of Russia commissioned Wedgwood to make a dinner service which eventually ran to 1,282 pieces.

This became known as the ‘Frog service’ because every single item had a frog motif stamped on it. This one-off collection also comprised hand-painted scenes showing more than 1,000 stately homes.

However, Wedgwood's big commercial breakthrough came in 1774 with the introduction of Jasper ware, perfected by Wedgwood’s artist John Flaxman. This ornamental stoneware has retained its popularity to the present day.

Wedgwood was proud of his vases, too, and the most famous of them all, his copies of the Greek Portland Vase, followed in 1789.

Besides being an outstanding businessman, he was a good and thoughtful employer, promoting cleanliness, health and hygiene on the works.

However, Wedgwood insisted on high standards from his workforce. A regular habit of his was to tour the works with a stick after everyone had left. Anything he didn't like he smashed and the message was always the same: “That won't do for Josiah Wedgwood”.

When he died, on January 3, 1795, Wedgwood left over half-a-million pounds, a huge fortune at that time. He also left behind eight children, one of whom was the mother of another great Englishman, Charles Darwin.

Wedgwood’s legacy is the most famous pottery company in the world.

His factory at Etruria set the industry standard until the 1940s, when the company moved lock, stock and barrel to Barlaston.

The Etruria factory finally stopped work in 1951.

Marie Bayliss joined Wedgwood’s in Etruria in 1934, aged 14, and went with the company to Barlaston.

In April, 2008, she told The Sentinel: “You didn’t dare be late, and once you were at work, you had to do as you were told.

“An old lady supervised us youngsters, and we used to call her ‘Auntie’. If you didn’t do your job properly, you would get a smack on the hand.

“You even had to ask to run to the toilet in those days.”

Now, all that remains of the old Etruria factory in the enigmatic Roundhouse, which is part of site housing The Sentinel’s offices and print works at Forge Lane.

In the period that followed Josiah Wedgwood’s death, the company grew and changed. By the end of the 20th Century, it had expanded to include a number of other pottery businesses, such as Coalport and Johnson Brothers.

Then, in 1986, it became part of Waterford Wedgwood, after being taken over by the Irish crystal group Waterford for more than £250 million.

This was £100 million more than a hotly-opposed bid from condom maker London International Group earlier that year.

Funding the £250 million takeover deal left the merged company weighed down with debt that saw it cutting jobs within a year and eventually led to the effective assumption of control by Sir Anthony O’Reilly's Fitzwilton group.

In the early years, it was the Waterford Crystal operation which made the headlines for all the wrong reasons and it was the profits from the Wedgwood operations that kept the group afloat.

The first misstep at Waterford was the 1987 redundancy programme. It sought 750 jobs, but the terms were so generous that more than 1,000 took the deal. Provisions for the redundancy payments plunged the group into the red and the company lost the very staff it could least afford to do without.

In early 1989, accounting errors emerged at Waterford. A £15 million overvaluation of crystal stocks saw the glass operations record losses of £20.5 million and signalled the departure of three senior directors. Only Wedgwood’s profitability rescued the group from overall losses, as it had done since the deal.

After years of successive rationalisations and poor industrial relations, the crystal division finally found its feet in 1992, recording its first operating profit since the merger. Ominously, this coincided with a decline in the performance of Wedgwood.

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A slowdown in global demand for luxury goods at the china division forced the closure of one of Wedgwood’s three Johnson Brothers plants in December 1992.

The immediate cause of Wedgwood’s difficulties was a downturn in the key Japanese market, which accounted for about a fifth of the fine china unit’s sales.

By the late 1990s, Wedgwood was struggling with a trend away from formal tableware, economic downturns in both Britain and Japan — two of its three most important markets — and the continuing losses at Johnson Brothers, which was ultimately doomed by its inability to cut costs to levels that would allow its goods compete with cheap imports.

In 1997, Wedgwood broke a tradition by scrapping the Potters’ Fortnight for its workers and giving them the freedom to go away when they wanted. It was also granted permission to build a new £10 million distribution centre in Stone.

The company then announced it was spending £35 million on buying German porcelain maker Rosenthal.

But, as the year ended, Wedgwood announced it was to axe 560 staff and close two factories, meaning one in seven of its 4,200 workforce in Stoke-on-Trent would lose their jobs.

There was even worse news to follow in October 1998, when the company revealed its restructuring process would actually cost 720 jobs.

In 1999, another 150 jobs were lost as Wedgwood announced a 35 per cent slump in operating costs and prepared to close the Coalport Minerva works at Park Street, Fenton, and the Wedgwood jewellery factory at Pyenest Street, Shelton, moving operations to Barlaston.

Wedgwood sales had fallen by one per cent from £168.4 million to £166.7 million. Operating profit fell by 35 per cent from £15.6 million to £10.1 million.

Taking over Royal Doulton

After the dust settled on its restructuring process, Wedgwood was in a healthy position to start the 21st century.

Sarah Ferguson, The Duchess of York and an ambassador for Wedgwood in America, arrived at Barlaston to open a new £4.5 million Visitor Centre, while Wedgwood’s turnover was up 22 per cent, to around £100 million. That figure included a 78 per cent rise in sales to the Asian market. Waterford Wedgwood as a whole posted a record turnover of £270 million and pre-tax profits of £11 million.

In 2001, the company relaunched itself into the airline catering market by supplying in-flight ceramic ware to 350 airlines across the globe. Meanwhile sales were up again – Waterford Wedgwood announced its group sales, for the six months to July, were £289 million, a 3.4 per cent rise on the previous year’s record turnover.

But while Wedgwood was coping with the changing global climate, its great Potteries rival Royal Doulton was in trouble. With an eye on a takeover, Wedgwood began buying into Doulton.

A global slump, exacerbated by the September 11 terror attacks in 2001, hit both companies, with Wedgwood announcing it would slash 500 jobs by 2003. However, Wedgwood continued to stalk Royal Doulton.

It increased its stake in Doulton to 21.65 per cent, even as it announced that pre-tax profits for the year to December 31, 2001, had halved, plummeting from £52.5 million to £25.3 million.

On a black day for North Staffordshire in June, 2003, Wedgwood announced it would shut its Eagle Pottery in Hanley and Alexandra Pottery at Tunstall by the end of the year, at a cost of more than 1,000 jobs. The announcement saw a third of the company’s workforce in the region culled in one move.

In June 2004, shares in Waterford Wedgwood fell to a 10-year low, to 12.75 pence, and the group posted annual losses of almost £30 million amid a 12 per cent fall in sales of ceramics.

In 2005, Wedgwood succeeded in its takeover bid of Royal Doulton, paying £90 million for the ailing brand, prompting some commentators to warn Waterford Wedgwood had placed its own future in jeopardy.

The acquisition led to a £60 million restructuring plan, which saw Waterford Wedgwood announce it would shed 1,800 jobs, including 150 jobs in North Staffordshire over the next two years.

In June 2005, Waterford Wedgwood posted annual losses of £99 million and a fall in sales of 12 per cent.

More redundancies were announced in 2006, with 240 people losing their jobs between November and March, 2006.

By June of that year, the group was losing £2.4 million-a-week, with pre-tax losses of £129.8 million on the back of sales of £530 million in the year to April.

Sales were boosted by the first 12 months of turnover from Royal Doulton, although the acquisition failed to improve profitability within the company’s ceramic division.

In response, Wedgwood set aside a further £15 million to spend on restructuring its operations in North Staffordshire, which included shutting its Tuscan works, in Longton, in 2007, with a loss of more than 200 jobs

It was also reported that Waterford Wedgwood was investing £12.5 million to double production in its Indonesian factory, increasing staff from 1,350 to 2,000 at the Royal Doulton plant in Jakarta.

The restructuring saw Wedgwood reporting it had cut losses by £80 million in June 2007. It made a £47.6 million loss in the year to March 31, compared to a £127 million loss the previous year.

The beginning of the end of Wedgwood?

2008 will go down as arguably the most difficult in Wedgwood’s history, as the credit crunch and mounting debt took hold.

In August, the group posted losses of almost £190.1 million for the year to April 5, compared to a £55.7 million deficit the year before. Following the announcement, Waterford Wedgwood warned up to 250 manufacturing jobs could be axed, with more work to be transferred overseas.

Then, auditors signing off Waterford Wedgwood’s accounts raised fears the firm could cease to be a going concern unless more money was raised.

So, in September, the group announced plans to raise £121.9 million through a share issue, to help with debts which had reached £377 million. It raised £63.3 million towards its mammoth debts after a 78 per take-up of the share offer – the majority of which came from billionaire chairman Tony O’Reilly and deputy Peter Goulandris.

More job losses followed, with 96 Wedgwood workers axed, then Wedgwood confirmed 346 workers would be axed from the Barlaston plant over 2009.

As the year ended, Waterford Wedgwood told investors it didn’t have enough cash to honour two agreements with lenders, including a £139 million bond.

The group warned it could shut down unless investment was found after half-year losses hit £66 million.

Waterford Wedgwood even took the step of relinquishing its listing on the London Stock Exchange to cut unnecessary overheads.

250 – and out?

With the dawn of 2009 – Wedgwood’s 250th year in business – the company’s future hung in the balance.

Wedgwood is still a formidable brand name, with its most popular collectibles including the Coalport Snowman range, featuring the much-loved cartoon character from the Raymond Briggs children’s story. There is also the Coalport Heart to Heart range, and the Vera Wang Love Knots collection, by the designer of Victoria Beckham’s wedding dress.

However, struggling to pay off mounting loan repayments, Waterford Wedgwood failed in a bid to sell a controlling stake to a U.S. private equity fund for £575 million. There was speculation that the new owners could move the company’s management and possibly headquarters to Indonesia.

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Fearing for their futures, the 1,000 remaining workers at Barlaston could perhaps only wonder what founder Josiah would have made of the crisis if he were still running Wedgwood – and what he would do to drag the company out of the mire.

At one minute past midnight on January 5, 2009, administrator Deloitte was called in, raising fears that this was the end for this world-famous business.