Essington Lewis

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Essington Lewis

Essington Lewis (1881-1961) was chief executive of Broken Hill Proprietary Co. Ltd., Australia's largest steel company (1921-1950), director-general of munitions (1940-1945), and director-general of aircraft production (1942-1945). As the most powerful leader of Australia's newly emerging heavy industry after World War I, Lewis's career embraced some of the most important changes in 20th-century economic development in that country.

Essington Lewis was born on January 13, 1881, at Burra Burra, South Australia, the third son of John Lewis, a native-born livestock and pastoral station agent, and Martha Anne, nee Brook. His mother was an English-born daughter of a Bristol excise inspector whose widow migrated to South Australia with her children soon after her husband's early death. Essington Lewis was the third of six children and spent his childhood and adolescence in modest prosperity under a vigorous patriarchal regime. His primary education was undertaken at the government school at Burra Burra. At the age of 13 he was sent to St. Peter's College, Adelaide, to complete his secondary education. Lewis's school career was generally undistinguished except by its length, which resulted from sojourns spent on the family cattle property, and by his prowess in physical education.

In 1901 Lewis decided upon a career as a mining engineer and enrolled at the South Australian School of Mines. He was awarded his diploma in 1905, having completed his practical training in the employ of the Broken Hill Proprietary Co. Ltd. (BHP) at Broken Hill in the far west of New South Wales. Lewis joined BHP in 1904 as an underground miner in the company's silver-lead-zinc mine and by mid-1905 had progressed to the position of shift boss in the surface treatment plants. Later that year he was transferred to the company's lead smelter at Port Pirie on the Spencer Gulf in South Australia. There he undertook a variety of managerial jobs, rising to the position of assistant manager in 1913.

Mining Engineer to Corporate Executive

It was during this period that BHP took some decisions which were to have a significant bearing on Lewis's future. Faced with the seemingly irreversible decline of its once spectacularly rich mine at Broken Hill, BHP began to consider diversification to prolong the company's life. In 1912 the company committed large resources to the construction of a steelworks. Because the economics of steel production favored a port location close to suitable supplies of coking coal, the works were built at Newcastle in the northern New South Wales coalfield. They began production in 1915.

Lewis's horizons within the company expanded with this decision. Initially he was given the responsibility for developing supplies of material for charging the blast furnaces. With the opening of the steelworks, Lewis moved to BHP's head office in Melbourne as the unofficial assistant to Managing Director G. D. Delprat. Delprat had been increasingly impressed by Lewis's organizing ability and had actually intervened with the Commonwealth government to prevent Lewis joining the army during World War I. In confirmation of Lewis's rising prestige, he was appointed assistant general manager of BHP in November 1919, and with Delprat's resignation in February 1921 he became general manager.

For the next 20 years Lewis presided over the destiny of Australia's largest industrial organization, steering the company through the fluctuating fortunes of post-war reconstruction, depression, and re-armament. The source of Lewis's unusually strong influence on the company lay partly in his personal qualities—his thoroughness, dedication to work, and open aggression ensured him mastery of men and situations—and partly in his ready access to a trusting board of directors presided over by his confidant, Harold Darling, whose partnership with Lewis was to be a source of great stability and strength throughout the interwar years. This relationship was cemented by Lewis's appointment as managing director and his elevation to the board in 1926.

For Lewis, the key to BHP's survival as Australia's premier steel producer depended upon comprehensive efforts to drive down costs to enable the company to compete with its domestic and foreign rivals. To this end Lewis embarked upon a policy of vertical and horizontal integration based upon the retention of sizable amounts of company profits to finance new plant and equity participation. This was to lay the foundation for an impressive expansion of the company's interests. Between 1919 and 1925 the company became independent of outside shipping through its purchase of a small fleet of ore carriers to transport ironstone from South Australia to Newcastle. In the mid-1920s BHP also purchased collieries in the northern New South Wales coalfield, and in 1935 it secured mines on the southern and western coalfields as well.

In an important reversal of Delprat's policy, Lewis also encouraged BHP to take a direct interest in a number of iron and steel fabricating industries which had grown up in response to Australia's increasingly protected domestic market for industrial manufacturers. Important purchases were made at cheap prices during the Depression. Where outright control was not possible or desirable, Lewis encouraged co-operation through joint share ownership with important British and American steel manufacturers in specialized areas of steel production such as tubes, industrial containers, and machine tools.

Management by a Firm Grip

Lewis's policy also involved an expansion of the basic iron and steel industry, which resulted in geographical diversification of production centers and the merger of its main rival within the BHP group. In 1935, suffering under the joint impact of the Depression and problems with a new plant, BHP's main competitor, Australian Iron and Steel Co. Ltd., agreed to a take-over of its operations by BHP. This gave BHP a monopoly of domestic steel production. The consequent increases in efficiency and fall in costs which resulted by 1939 gave BHP a major advantage over its foreign competitors as well. By the outbreak of World War II under Lewis's direction BHP had effectively secured control of all aspects of the Australian steel market except the production of tin plate. It was also in a position to pursue a vigorous export trade. Such a commanding position also prompted Lewis to reconsider the economics of pig-iron smelting at the South Australian ironstone site. Encouraged by the prospect of back loading its iron ore vessels with coal and faced with increasing demand for pig iron as a result of its market position, the company began construction of a new blast furnace in 1938.

Lewis's obsession with cost control, rationalization, and increased efficiency also had a major impact on industrial relations within the iron and steel industry. As general manager and then managing director, Lewis inherited the burden of BHP's unenviable reputation as an employer, derived from its intransigent hostility to unionism among its mining and smelting employees at Broken Hill and Port Pirie. Never afraid to lay off labor, demand increases in productivity, or contemplate temporary plant closure, in 1922 and 1923 and again during the Depression Lewis seized his chance to restructure the work force and introduce new plant technology.

Aided by acute unemployment after 1929, Lewis was able to drive down average wage levels in the steel industry below their pre-Depression level and keep them there at least until 1937. The result was a considerable increase in productivity and a remarkable reduction in costs. The price was a lasting bitterness between the company and its work-force. This atmosphere was not dispelled by Lewis's continuing opposition to trade unionism and his general and open distrust of the arbitration system, which he saw as promoting union preference and an interference with the company's ability to determine its cost structure. Only in the late 1930s was there any noticeable change in either Lewis's or the company's position on these matters as a result of the increasingly powerful and profitable position secured by BHP in an expanding market.

Lewis's opposition to the arbitration system was a manifestation of his hostility to interference in the operation of the company's affairs. In other areas, such as tariff protection, Lewis positively favored state initiatives. He was one of several members of BHP management who were active in the Australian Industries Protection League formed at the end of World War I to secure higher tariffs for Australian industry. BHP benefitted from the introduction of protective tariffs in many areas of steel production in the 1920s and 1930s, as well as from government financial policy in the 1930s, most particularly in the area of currency management. In other areas of government economic policy, such as overseas borrowing (a prominent issue after 1929), Lewis was highly critical.

Directing Australia's War Production

Lewis's ambiguity towards state intervention in economic affairs was intensified in the 1930s by international political developments. A visit to Japan in 1934 convinced him of the inevitability of a war with Japan in which Australia would be inextricably involved. Upon his return he began the active promotion of BHP's involvement in a range of defense initiatives which were to culminate in his appointment as director-general of munitions in 1940. Thus, he helped promote the Commonwealth Aircraft Corporation in 1936 with a view to establishing Australia's capability in aircraft production, and in the same year he secured the building of a pilot munitions plant at Newcastle. In 1937 Lewis took steps to make Australia virtually self-sufficient in special steels for war purposes, and in 1939 BHP agreed to enter the shipbuilding industry for defense purposes.

The Commonwealth government was increasingly aware of the significance of Lewis's contribution to Australian defense capability. In 1938 he was made chairman of the newly established Advisory Panel on Industrial Organization. In September 1939, together with Norman Myer, he was appointed business consultant to the Defense Department. In May 1940, faced with the need to mobilize industry on a broad front to prosecute the war, the Commonwealth government appointed Lewis to the office of director-general of munitions. In what was arguably the most responsible job held by an Australian up until that time, Lewis was given ultimate control over the production of all ordnance, explosives, ammunition, small arms, aircraft, and vehicles and of all machinery and tools used in producing such munitions.

In January 1942 Lewis's powers were extended still further by his appointment as director-general of the new Department of Aircraft Production. The extraordinary variety of materials produced by Lewis's two departments in the war years not only provided Australia with a considerable part of her means of waging war against Japan and Germany but also introduced a range of industrial techniques that were to have a profound effect upon Australian manufacturing industry in the post-war years. With support from all political groups, Lewis was awarded the Companion of Honour (CH) in 1943 in recognition of his services.

It was the apogee of his career. Although he returned actively to the position of chief general manager of BHP in 1945 and did much to promote the company's adjustment to peace-time conditions, he retired as chief executive of the company only five years later following the death of his long-time friend Harold Darling. He took the chairmanship of the board in 1950, but in 1952 he finally retired from a full-time position with BHP and occupied the part-time position of deputy chairman until his death at his country property in Victoria on October 2, 1961. Lewis married Gladys Rosalind, nee Cowan, in 1910. She died in 1954. He was survived by three daughters and two sons.