The Mersey Docks and Harbour Company

Maritime Centre
Port of Liverpool
Liverpool L21 1LA
United Kingdom
(44) 151-949-6000
Fax: (44) 151-949-6338
Web site: http://www.merseydocks.co.uk

Public Company
Incorporated: 1970
Employees: 1,211
Sales: UK£180 million (US$298.2 million) (1998)
Stock Exchanges: London
Ticker Symbol: MDK.L
NAIC: 488310 Port Facility Operation

The Mersey Docks and Harbour Company is the United Kingdom’s second largest port operator, controlling the Port of Liverpool on the River Mersey, and Medway Port, on the River Medway. In the Port of Liverpool alone, Mersey handles more than 30 million tons of cargo per year, with a growing emphasis on high-margin cargo such as fruit, containers, and grains, while also serving as an important port for oil shipments (from Shell Oil), lumber, and steel. The Port of Liverpool’s location also makes it a primary hub linking England and Ireland, both for cargo shipments and for passenger ferry and other passenger transport vessels. In the late 1990s, Mersey started an extensive £60 million investment program, including a vast expansion of existing light direct rail-linked industrial and warehousing facilities, new roll-on roll-off facilities, and participation in the construction of an office tower—Liverpool’s first since the 1980s—and hotel complex. Mersey Docks and Harbour Company is also the U.K.’s leading harbor management and consulting company, through its overseas port management subsidiary, Portia Management Services Ltd. Mersey also operates its own shipping subsidiaries, BG Freight Line Holding B.V., based in the Netherlands, and Coastal Container Line Inc. Mersey Docks and Harbour Company is led by Chairman Gordon Waddell. CEO Trevor Furlong has announced his intention to retire in the year 2000, naming Peter Jones, current head of the Port of Liverpool division, as his replacement.

Mersey Beaten in the 1960s

When the Beatles, Gerry and the Pacemakers, the Searchers, and others brought the name Mersey to the world’s attention in the 1960s, the Port of Liverpool on the River Mersey had already left its best days far behind. The Liverpool harbor had played a major role in the United Kingdom’s industrial development, and served as one of the country’s principal ports during the 18th and 19th centuries. Less gloriously, the port also played a principal role in the 18th century slave trade, functioning as one of the largest slave ports. By the time of the abolition of slavery in the United Kingdom, however, the Liverpool port had already turned to industrial activities, and became a primary port of call in the rapidly developing industrial economy, as well as a key player in the U.K.’s rise to dominance on the world’s oceans.

At the height of the port’s activities, the Port of Liverpool served more than 20,000 ships per year; Liverpool also became one of the United Kingdom’s chief centers of shipbuilding activities, and provided the base for such shipbuilding and shipping giants as White Star Lines, who sailed the Titanic, and Cunard, which still remained in operation in Liverpool in the 1990s. The importance of Liverpool and the Mersey shipping route was recognized in the 1850s, when the British government created the Mersey Docks and Harbour Board to oversee port activities in 1857.

Liverpool continued to play a major role in the country’s industrial growth and development. Yet by the 1890s Liverpool had already begun to fade as a major port. The chief cause behind the harbor’s slump was the shallow river basin. As shipbuilding technology increased, and especially with the switch to iron and steel shipbuilding techniques, the ships themselves were growing larger, with greater and greater displacements. By the turn of the century, the ships were simply too big to dock in Liverpool; larger vessels were forced to anchor at the harbor’s deep water points. Cargo shipments became increasingly difficult to bring to shore; more and more shippers turned away from Liverpool, in favor of the United Kingdom’s deeper and more modern docks.

Liverpool declined through the first half of the century. Its northern location, however, protected it from the Nazi bombing raids of World War II, and this fact helped bring new activity to the port. Yet the renewed activity lasted only for the duration of the war. With the end of hostilities, Liverpool slipped once again into its now-minor port status. By the end of the 1950s, the United Kingdom’s shipping focus had moved from its west coast to the eastern coast—closer to the U.K.’s newly developing European Community trading partnerships. Meanwhile, fewer and fewer cruise ships were using the harbor; even Liverpool’s own Cunard ended its Liverpool departures by the middle of the 1960s.

Conditions deteriorated still further, sparking a violent dock workers’ strike in 1967. Over 9,000 workers joined the picket lines. In the end, the workers won out, and the government introduced the National Dock Labour Scheme of 1967. The principal highlight of the scheme: guaranteed lifetime employment contracts for all dock workers.

The National Dock Labour Scheme came into play at a time when new technologies and manufacturing methods were producing more sophisticated cranes and cargo handling systems, reducing the number of laborers needed. With dwindling cargo activity and shrinking revenues, the Mersey Docks and Harbour Board could ill-afford to maintain the level of its workforce. Yet, under the National Dock Labour Scheme, the board had no choice.

By the end of the 1960s, the Mersey Docks and Harbour Board was sinking fast. The government finally released the money-losing body, selling it to the private sector in 1970—one of the first of Britain’s nationalized businesses to be privatized—while listing the Mersey Docks and Harbour Company on the London stock exchange. The new company entered business without its debts—as the government forgave it more than £100 million. The British government, meantime, kept a 20 percent share of the company.

Mersey’s fortunes seemed to be picking up in the first years of the new decade. But the Arab oil embargo and a resulting worldwide recession swiftly ended any cause for optimism. Mersey Docks and Harbour staggered through the rest of the decade, watching harbor activity dwindle to next to nothing. Nonetheless, the company had not quite given up, putting into place, in the late 1970s, a modernization effort designed to make the Port of Liverpool once again a major competitor on the U.K. and international shipping scene. Mersey also began to explore other activities, launching its Portia harbor management subsidiary in 1978.

Rebuilding in the 1990s

By the mid-1980s, Mersey Docks and Harbour Company had succeeded in raising its cargo handling tonnage to ten million tons per year. More efficient handling technology and facilities also enabled the company to improve its margins on its revenues. At last, in 1989, the Conservative government, led by free market economy disciple Margaret Thatcher, relieved Mersey of the National Dock Labour Scheme. The abolition of guaranteed lifetime employment enabled Mersey Docks and Harbour Company to trim its payroll. By 1990, the company had cut out some 600 Mersey dockyards jobs—with the government providing severance pay funding.

The slimmer port company began looking for expansion. In the early 1990s, the British government began the process of privatizing the rest of its ports and harbors. One of the first of the new wave of harbor privatizations was that of Medway Port, on the River Medway, which was bought up by a group of venture capitalists, who promptly fired its union dock workers and replaced them with non-union and contract workers. The Medway management also forced the fired workers to sell back their shares—at only £2.50 per share. Yet several months later, in 1993, Medway Ports agreed to be acquired by Mersey Docks and Harbour Company, for the price of £37.25 per share. Moreover, it was learned that the former Medway chief executive had privately purchased some 100,000 shares in the months prior to the Mersey acquisition.

The dock workers sued Mersey for unfair dismissal. In a surprise settlement, Mersey agreed to pay £10,000 to each of the 270 workers (this settlement did not address the share price issue). Meanwhile, the former Medway chief executive—along with the rest of Medway’s top management—resigned from their positions, leaving Mersey in the difficult position of having no one at the helm of its newly acquired subsidiary. Mersey faced more problems later in the year, when its bid for a £20 million expansion project was turned down in favor of a larger real estate development project which, according to Mersey, would restrict its ability to expand the Port of Liverpool’s operations.

By then, however, Mersey had already begun to look farther afield for its own expansion. With its Portia subsidiary taking a leadership role in international harbor management, Mersey began to bid for operations contracts of foreign ports. Portia meanwhile had achieved a substantial position around the world, leading to port operations consulting contracts in Argentina, Bangladesh, Kazakhstan, Malaysia, Russia, and South Africa, among others. The company also announced its interest in acquiring other U.K. port operations, as they became privatized.

Company Perspectives:

“The Mersey Docks and Harbour Company owns the Port of Liverpool and is the Port Authority for Liverpool, but we see our primary role as one of working with our many partners within the community to bring yet more business to the Mersey —and to the city and region for whom the port is a key generator of work and wealth.”

—Trevor Furlong, CEO

Mersey faced a different kind of labor problem in 1995. When union stevedores at another company operating out of the Port of Liverpool went on strike, 600 of Mersey’s dock workers refused to cross the picket lines. Mersey in turn fired its union workers, who promptly set up their own picket lines to demand back their jobs. The result was a highly publicized battle between strikers and management that lasted more than two years. After strikers rejected an early offer from Mersey, which included back pay compensation and the restoration of some jobs, Mersey held firm. The strike finally ended when the workers capitulated, accepting a £10 million settlement in back pay.

The failure of the strike was said to spell the end of the United Kingdom’s once powerful industrial unions, especially as Mersey Docks and Harbour Company revealed that the strike, while embarrassing for the company, had not had a great impact on its revenues—or on its profits. Indeed, during the strike, the company was able to announce a new record in annual cargo handling, topping 30 million tons for the first time in 1997. The end of the strike, meanwhile, meant that Mersey could turn its full attention to its ambitious plans for development of the Liverpool port.

In 1998, the company announced a £60 million development effort, including £35 million to be spent on two new roll-on roll-off facilities, as well as construction of an office tower and participation in construction of a four-star harborside hotel. The company also launched construction of a vast new industrial and warehousing site, the Liverpool Intermodal Freight Terminal (LIFT), which, with 860,000 square feet of new warehousing and light industrial plant facilities, ranked as one of the United Kingdom’s largest private-sector industrial construction projects. Mersey also announced its intention to bring cruise ships back to Liverpool, planning to dredge the harbor to provide new deep-water berths for cruise ships and passenger ferries.

The company hoped to attract more than 500,000 passengers to the harbor by the turn of the century. At the same time, Mersey continued to boost its own moves abroad. After forming a partnership with Rolls Royce subsidiary Clarke Chapman to win, in 1996, a $155 million contract to oversee the development of and provide management operations for a new private port in Argentina, Mersey took part in a consortium bidding for construction and management contracts for a new port in Chile. The company’s African operations were also boosted in 1999, as the company started construction of a grain terminal at Kenya’s Port of Mombasa.

Mersey Docks and Harbour Company had raised tonnage to nearly 35 million tons per year, despite a temporary loss of business while its Shell Oil facility was under renovation, and despite the difficult economic climate following the crash of the Asian stock markets in the late 1990s. With revenues rising to £180 million, and profits at a healthy £52 million, Mersey clearly had the wind at its back in more ways than one: in 1999, it started operation of a £2.5 million windmill power generating farm built on its sea wall.

Principal Subsidiaries

Portia Management Services Ltd.; BG Freight Line Holding B.V. (Netherlands); Coastal Container Line Inc.; Medway Ports Ltd.; Mersey Docks Property Developments Ltd.; Mersey Docks Property Holdings Ltd.; Neptune Insurance Ltd.; Portia World Travel Ltd.; Sheerness Produce Terminal Ltd.; Wood-side Business Park Ltd.

Further Reading

Gribben, Roland, “Mersey Wins £100 Million Port Contract in Argentina,” Daily Telegraph, October 1, 1996.

Hellier, David, “Vincent Resigns at Mersey Docks: Former Medway Chief Quits,” Independent, April 14, 1994, p. 33.

Osborne, Alistaire, “Mersey Docks on the Alert for Buying Opportunities,” Daily Telegraph, February 16, 1999.

_______, “Mersey Plans New Generation in Windmills,” Daily Telegraph, August 18, 1999.

Potter, Ben, “Sound Value on the Mersey Beat,” Daily Telegraph, February 16, 1999.

Shah, Saeed, “Mersey Docks Beats Forecasts,” Times, August 18, 1999.

Yates, Andrew, “Cruise Liners to Return to Liverpool’s Pier Head,” Independent, January 15, 1998, p. 26.

—M. L. Cohen