Innovation and Corporate Failure: Cyril Lord in U.K. Textiles, 1945–1968

This article is a response to Patrick Fridenson’s call for more research into the life cycle of enterprises and especially into business failure. Its subject is the textile group established in 1945 by Cyril Lord, which went on to encompass merchanting, manufacturing, retailing, and finance, operating in the United Kingdom, the United States, and South Africa. Using unpublished records as well as the financial and trade press, the article explains the nature of Lord’s financial, mercantile, and manufacturing networks, and his rapid growth, based on product innovation, novel sales techniques, and massive advertising. The article then examines his subsequent insolvency and receivership in 1968. It contributes to our understanding of corporate failure and the role of the receiver, financial institutions, and government in that process.

outnumber successes, but for any failed firm, a period of success usually precedes failure. The life and death of firms should be a major research area for the business historian. If failure progresses as far as bankruptcy, we need to explain the process of receivership, what transactions take place during that period when a firm "navigates" failure, and what role is played by internal and external stakeholders such as financial institutions and other bodies including government. Moreover, bankruptcy can be viewed as a political process, and who wins and who loses in the process matters. 1 In addition to studies of large enterprises, we also need to consider small-and medium-sized business, where the transience of many firms, although empirically established, has never been adequately reflected in the business history literature. 2 This article draws extensively on unpublished business and government records, as well as the financial and trade press, to provide a case study that addresses some of the issues raised by Fridenson. It focuses on entrepreneurship and strategy and also contributes to our limited knowledge of post-1945 regional policy at firm level, including the role of government in assisting the growth of, then ultimately brokering a rescue deal for, a substantial manufacturing enterprise. Furthermore, this article throws new light on the critical question of business finance to an enterprise over the course of its life cycle. Steven Toms and Igor Filatotchev have recently suggested that despite the growth in research into business networks, empirical and conceptual gaps remain. Very little work has been done on "the possible roles of such governance elements as ownership structure, interlocking directorships, and the involvement of financial institutions." 3 The article examines the support of financial institutions, both in the growth phase of the enterprise and during receivership.
The focus for analysis is the textile group founded by Cyril Lord in 1945, which went on to encompass merchanting, manufacturing, retailing, and finance, operating in the United Kingdom, the United States, and South Africa. 4 An enterprise characterized by rapid 2. For a review of some of the evidence on the birth and death of firms, see "An Economic Survey, 1971," in Bolton 20 Years On: The Small Firm in the 1990s, ed. John Stanworth and Colin Gray (London, 1991, 10-12; David Jeremy, A Business History of Britain, 1900-1990s (Oxford, U.K., 1998 3. Steven Toms and Igor Filatotchev, "Corporate Governance, Business Strategy, and the Dynamics of Networks: A Theoretical Model and Application to the British Cotton Industry, 1830-1980," Organization Studies 25, no. 4 (2004: 630. 4. For biographical information, see Rhys David, "Cyril Lord," in Dictionary of Business Biography, vol. 3, ed. David Jeremy and Christine Shaw (London, 1985), 852-55; David Hunt, "Lord, Cyril (1911-1984," in Oxford Dictionary of National Biography; viewed 9 Jan. 2006. URL: http://www.oxforddnb.com/view/article/38991. growth, diversification, innovation in products, and in sales techniques, the group at its height in the mid-1960s employed between 4,000 and 5,000 people. Originally a private limited company with just two shareholders and a capital of £70,000, it became a public company ten years later with a workforce of 3,500, when its authorized capital had grown to £2.5 million, and this in a sector of U.K. industry where employment was falling significantly on trend. When Cyril Lord went into receivership in November 1968, with debts of £7 million, the firm was a household name and his corporate failure was one of the most highly publicized events in the country since the end of the Second World War. 5 In the United Kingdom, Lord had major manufacturing capacity in Lancashire and Northern Ireland, both areas with structural problems caused to a significant extent by a secular decline in their traditional textile sectors. 6 As far as Northern Ireland was concerned, Cyril Lord was the region's most prominent failure between the end of the war and the collapse of the short-lived car-producing plant of former General Motors' Vice President John Z. De Lorean in 1982.
The article is divided into four main sections. The next section examines the early history of Cyril Lord, his acquisitions in the Lancashire cotton industry, dependence on financial institutions, and appetite for innovation and for publicity. We then explain his move into carpet manufacture, the expansion of his manufacturing capacity in Northern Ireland, and his support from the Belfast government. Some important weaknesses, including poor market research and inadequate product testing, are also identified. The crisis that engulfed the company in 1968 is the subject of the next section. This includes a discussion of receivership and the role of government and financial institutions in that process, including the sale of a substantial part of Lord's manufacturing assets to Viyella International. In the final section, we consider Lord's experience in light of Fridenson's agenda and, for comparative purposes, briefly examine in that context two other U.K. enterprises which were closely identified with their founders and which, although initially successful, like Lord failed within a single generation: Rolls Razor in 1964 andBrentford Nylons in 1976. 5. Lord's debts of £7 million were set out before the High Court in Belfast in January 1969: Belfast Telegraph, 13 Jan. 1969 6. As in Northern Ireland, there were areas of growth within the general context of decline in the traditional textile sector in Lancashire. For an important example, see Mike Parsons and Mary B. Rose, "The Neglected Legacy of Lancashire Cotton: Industrial Clusters and the U. K. Outdoor Trade, 1960-1990," Enterprise & Society 6 (Dec. 2005: 682-709.

Cyril Lord: Origins and Growth
Cyril Lord was established as a private limited company in Northern Ireland in June 1945. Lord himself, born in Lancashire in 1911, had worked for Ashworth Hadwen Ltd., cotton spinners and weavers in Manchester, during the late 1920s and attended night school classes on dyeing, printing, and finishing. In the mid-1930s, he added to his experience through employment with Scott and Son, one of the first London firms to combine textile wholesaling with merchant converting. 7 Before the war, he worked with Mitsubishi and Mitsui on textile technology and gained valuable expertise in the German worsted industry. 8 He had gone to Belfast during the Second World War as Technical Adviser to the Cotton Control Board at the request of Sir Thomas Barlow, then Director General of Civilian Clothing, to help resolve technical problems of spinning and weaving rayon on flax machinery. Lord's prewar and wartime experience established his reputation as a creative technical specialist and, most importantly, provided him with entry into manufacturing, mercantile, financial, and government networks in Belfast. His association with Thomas Barlow, Chairman of cotton firm Barlow and Jones, a former President of the Manchester Chamber of Commerce, and Chairman of the Manchester-based District Bank between 1947 and 1960, was to be of very considerable financial advantage to him after the war.
By 1954, the company was described as "spinners, weavers and converters of cotton, rayon and synthetic fibres." 9 As contemporaries noted, Lord's reputation rested not only on the exceptionally rapid growth of his business, underpinned by product innovation in natural and synthetic textiles, but also on the high public profile he maintained. 10 Much of the latter was fueled by his political obsession to protect U.K. textiles against cheap imports. 11 At the end of the war, he lobbied hard for  , 1945, -1970, (Oxford, U.K., 1991, chap. 6; Mary B. Rose, "The Politics of Protection: An Institutional Approach to Government-Industry Relations in the British andUnited States Cotton Industries, 1945-73," Business History 39, no. 1 (1997): 128-50;and David Higgins and Steven Toms, "Public Subsidy and Private Divestment: The Lancashire Cotton Industry, c.1950c.1965," Business History 42, no. 1 (2000: 58-84, esp. 69-71. German and Japanese textile machinery to be seized and operated by the United Kingdom to help its own producers, pressing government officials hard on this issue, with scant regard for reparations protocol. 12 In subsequent years, Lord's national profile rose not only because of his business success but also because of his continuing national campaign against textile imports from commonwealth countries, especially Hong Kong, India, and Pakistan, as well as from Japan. For example, in the acute textile recession of 1952, he launched the "Save Lancashire Through the Empire" campaign in Manchester. 13 Employing an American public relations consultant, Lord's strategy included mailing spindles to every Member of Parliament (MP), with two pieces of gray cloth, with pictures of grinning Japanese and Indians. 14 His campaign in the 1950s also included sending MPs Indian and Japanese currency notes, and even gramophone records of angry and worried Lancashire textile workers, sometimes those in his own factories, complaining about British trade policy. 15 He took particular exception to Peter Thorneycroft, the Conservative President of the Board of Trade from 1951 to 1957 whom, at the Harrogate Conference of the Cotton Board in 1955, he dubbed "the hangman of Lancashire." He added that "[a]fter the oriental locusts had had their pick, everybody in Lancashire had to fight for what was left." 16 His campaign included a half-page advertisement in the Financial Times (FT) "to state the case for Lancashire." More controversially, with the assistance of the Daily Express, he disguised himself as an Express reporter to harangue Toby Law, a junior minister at the Board of Trade, a move that earned him a vote of censure from the Manchester branch of the National Union of Journalists. 17 Lord's public demand for protection for U.K. textiles continued well into the 1960s. 18 Although he started in textile merchanting, Lord began to acquire cotton mill properties in Lancashire, as well as retailing and further merchanting capability, mainly in a concentrated five-year period from 1949. 19 These are outlined in table 1. Beginning with Brindles Ltd. and their two weaving mills at Chorley in February 1949 costing £123,000, Lord's acquisitions toward the end of 1951 included three spinning mills, two at Lily Mill and one at Devon Mill, with a price of £1.2 million. These were made possible only with very substantial assistance from financial institutions, most of which came from a number of banks, including Bank of Ireland, Coutts, and Williams Deacons. Indeed, Lord Glenavy, a director of Bank of Ireland, was also on the board of Cyril Lord Ltd., possibly at the insistence of the bank to monitor and safeguard its interests. 20 Duncan Ross, "The Unsatisfied Fringe in Britain, 1930s-1980s," in Banks, Networks and Small Firm Finance, ed. Andrew Godley and Duncan M. Ross (London, 1996, 21-23; W. A. Thomas, The Finance of British Industry, 1918(London, 1978, 121-28. Research has indicated that only a small percentage of small firms wish to grow rapidly, that owner-managers will often not expand their firms to a point which entails loss of personal control, and that those owners who do opt for expansion cannot do so because of an inability to raise the necessary external finance. 22 Cyril Lord, however, not only wished to grow rapidly and maintain personal control, he was also able to raise external finance for the purpose.
The scale of the financial support that Lord was able to secure surprised some insiders in the cotton industry, including Sir Raymond Streat, Chairman of the Cotton Board, but it owed much to the longstanding support of Sir Thomas Barlow. 23 Streat, who had many dealings with Lord during the 1950s, provided this assessment of him in 1955: Cyril is in his early forties and is a compact mass of unquenchable energy-physical and mental-with a most stupendous self-confidence, ready to buy and sell anything at a moment's notice, and commanding the apparently unlimited confidence of the joint stock banks on both sides of St George's Channel, from whom he must now be holding overdrafts well above seven figures. 24 Streat also noted Lord's "excessively luxurious" lifestyle, his ruthless pursuit of publicity, and high-profile social life, which included many visitors from the worlds of politics, business, and entertainment.
As table 1 illustrates, Lord continued to acquire properties in Lancashire where all his manufacturing units were located. These acquisitions were part of a merger activity that was the dominant characteristic of British textiles in the 1950s and 1960s. 25 Among many financial consequences of this activity, two were of great significance. First, as companies changed hands, banks found themselves with new customers who in different circumstances they would not necessarily have chosen to support. Second, the period saw the creation of many new textile groups, where growing organizational complexity meant that accounting practices made it correspondingly difficult for outsiders, or even shareholders, to make a judgment about financial information, raising some fundamental questions for corporate governance. The scope for opportunism and information asymmetries was correspondingly increased. Moreover, the precise relationship between constituent companies in a group was not always clear, and this was particularly important when government or banks required financial guarantees from a "parent" company, or when a company ran into serious trouble.
In May 1954, Cyril Lord Ltd. became a public company with an authorized capital of £2.5 million. In the first instance, only £1 million in preference shares was offered to the public. All the equity was retained by Lord (£900,000) and his business partner since 1945, and fellow director since 1948, William McMillan (£100,000), thus guaranteeing Lord decisive control of the company. This pattern of equity ownership continued until the ordinary shares were offered to the public in 1964, so there was no real separation of ownership from control. Even after the equity was issued to the public, Lord and his family trusts retained by far the most important shareholding, so throughout the life cycle of this enterprise, Lord remained the dominant influence. 26 Before the preference share subscription lists opened, there was considerable favorable comment in the influential financial press about the company. The FT, for example, applauded Lord's policy of writing down the value of unsold stocks at the end of every accounting period. Given the track record of product innovation, average profitability of £363,000 over the previous four years and the fact that proceeds from the preference share issue would be used to reduce bank borrowing, the FT concluded that the shares represented "a reasonable investment in a textile group which is established in the normal range of goods and at the same time prefers to take its place in the development and application of the new synthetic fibres." 27 The preference issue was handled by the Ocean Trust and by Hoare's Bank. 28 The former's chairman, Major E. Beddington Behrens, was also Chairman of Gray's Carpets & Textiles Ltd., to whose board Lord had been appointed in March 1954. 29 The issue was oversubscribed by twelve times, but within two months the shares were trading at a discount. 30 A possible explanation for this is that investors began to consider Lord's indebtedness too large, and 26. Lord owned, or controlled through family trusts, some 37 percent of the equity in Oct. 1968. See Note on Cyril Lord Ltd., 25 Oct. 1968, PRONI COM 63/1/ 466B. 27. Financial Times, 14 May 1954. 28. Economist, 17 April 195422 May 1954, p. 642. 29. The Linen Trade Circular, 19 June 1954, p. 11. 30. Sunday Express, 1 Aug. 1954 this in turn was a consequence of his continuing program of acquisitions. The most important of these were the three mills collectively known as Ensor Mill Ltd., bought in September 1954 for £1.45 million, "all with up to date machinery and with around £800,000 net cash assets" mainly stocks of raw material and yarn. Bank support to the extent of £650,000 over seven years was used to buy these mills and this was the main reason why Lord's declared intention to use the proceeds from the preference issue to reduce secured bank borrowing by £930,000, incurred in the acquisition of Lily Mills and Soudan Mills (Holdings) Ltd., did not take place. 31 Indeed, so far from a reduction, total bank borrowing that had been around £1.35 million in November 1953 increased to £1.7 million a year later. 32 These figures seem very large by the standards of a private firm in the early 1950s, and a loan for seven years was certainly untypical of postwar English banks. 33

Innovation and Advertising
Although registered as a Northern Ireland company, Cyril Lord did not begin to develop manufacturing capacity in that region until the mid-1950s. Unlike most other U.K. regions after 1945, Northern Ireland had failed to achieve full employment and normally had a considerable excess of male unemployment. 34 The generation of work for men thus became a top economic and political priority for the devolved government that operated in the region. 35 Lord and McMillan were well placed to use their network of government and business contacts to take advantage of Northern Ireland's relatively generous financial assistance schemes to develop the next phase of his business expansion. McMillan was a Belfast solicitor who had strong connections with Bank of Ireland, and it was this bank that became Lord's principal financial support in the crucial early years of expansion, whereas McMillan himself provided much of the expertise in negotiating financial assistance with government. 35. On regional policy after the Second World War, see R. I. D. Harris, Regional Economic Policy in Northern Ireland, 1945-1988(Aldershot, U.K., 1991. Moreover, given the localized nature of devolved government in Northern Ireland, it was relatively easy for businessmen like Lord to gain access to senior civil servants and ministers. Shortly after the successful preference share issue, Lord applied for a grant of £32,500 from the Northern Ireland government toward the cost of a new factory to make specialist quilted products. Each application for assistance had to be considered by an Advisory Committee and be supported by both the Ministry of Commerce and the Ministry of Finance. Negotiations could be highly protracted, sometimes continuing well over a year. The government, and its Advisory Committee, needed adequate guarantees of male employment within a reasonable time period; it also required appropriate security for its advances. Between the first application in May 1954 and the spring of 1955, Lord made radical alterations to his development strategy and decided to move into carpet manufacture. It was typical of him to make a press announcement about this decision before informing the Northern Ireland Ministry of Commerce and also characteristic that he formed a new company, Cyril Lord Carpets Ltd., to undertake the business. Lord's diversification into carpet manufacture was unquestionably decisive for his business career and for the U.K. carpet industry in general, and it was prompted by a major technological innovation-the introduction into the United Kingdom of "tufted" carpets from spun yarn rather than manufacture by traditional weaving techniques. The tufting process originated in the United States, and its rise in market share had been impressive. 36 It revolutionized carpet manufacture and opened up for the first time the prospect of a mass market not least for lower-income households. A tufted carpet could be made in about 5 percent of the time required to make a traditional Axminster or Wilton carpet and relatively little skilled labor was required. 37 Tufted carpets were first "shown to the trade" in London in October 1955, having been made experimentally for some time previously. 38 The government officials who handled Lord's application for assistance sought advice from a number of sources as to whether they should proceed. One of these was a local senior banker and former Chairman of the Industrial Finance Company (Northern Ireland) Ltd., the regional equivalent of the ICFC that operated in Britain. In this advisor's view, Lord's balance sheet was "poor in showing borrowings up to the hilt against assets of doubtful value (old cotton mills useless for any other purpose; stocks which for banking practice are considered at 50% of their book value, and outstanding debts usually accepted at 80% of their book value)." 39 Lord's application was thus an example of opportunism based on the physical asset specificity of mill properties that, when offered as security, were often of great concern to bankers and to government departments involved in industrial support. The balance sheet seemed to indicate a company, which could well prosper when the cotton industry was buoyant, but which was very vulnerable to recession in that industry. He also raised a number of other questions, including the need to secure a guarantee from the parent company for Cyril Lord Carpets Ltd., whose nominal capital was a mere £100, but subject to satisfactory guarantees concluded that the Northern Ireland government should back the project. 40 Lord and McMillan argued that their overdraft with Bank of Ireland then stood at £750,000 and that with Midland Bank at £550,000; the former was pressing for a reduction of £150,000 and the latter for a reduction of £100,000. The credit squeeze and the uncertainties in money markets created by the Suez crisis meant that a plan to float Lord's equity capital to fund bank borrowing could not take place. They were confident that they would do this over the next five years; in the meantime, his company intended to reduce stocks and sell their retail shops. 41 After further, sometimes difficult, negotiations Lord took advantage of the improvements in government financial assistance available under the Capital Grants scheme from 1954 and, after promising to do his best to employ 200 mainly male workers, was provided with a new factory in Donaghadee, County Down, costing £320,000 as well as a grant of £35,000 toward machinery. Lord assured a Ministry of Commerce official that once the business was established, it would "develop like a prairie fire." 42 The factory opened in 1957 and had the immense advantage of being not only new but also purpose-built. This distinguished it from most U.K. textile mills, which were old and often ill-suited to technical innovation and organizational change. Built and equipped to Lord's specifications, the new factory would form the basis of his carpet business over the next ten years, during which period it became for a time the largest of its kind in Europe and the fourth largest in the world. The factory itself was extended three times between 1960 and 1966, each time with Government support, and the Ministry of Commerce also provided further assistance to Lord to enable him to operate factories at Carnmoney from 1959 and Rathgael from 1966. In addition, the Ministry provided substantial capital grants toward new plant, machinery, and equipment. Eventually, the assistance he received totaled some £7 million. 43 Lord and McMillan were tough negotiators, pushing their claims for assistance to the limit, and sometimes beyond. Although there was at least one warning about overexpansion, the Ministry of Commerce regularly monitored Lord's business and supported him throughout his business career in Northern Ireland.
The U.K. carpet industry during the 1950s was a stable structure dominated by a relatively small number of firms which, typically, were family-owned and run or at least had a substantial family presence on boards of directors. 44 Cyril Lord was an outsider in this industry, and the growth of his business owed nothing to family connections. The introduction of the tufting process not only lowered barriers to entry into carpet manufacture but also presented long-established producers with a potentially serious challenge to part of their market. Tufted and woven carpets were not perfect substitutes; initially, the former were plain and aimed at the lower end of the market, hitherto dominated by linoleum. In just a few years, however, improvements in quality, and the introduction of patterns, did begin to compete with low-grade woven carpet. Although Cyril Lord was able to gain some first-mover advantage, the entry of new producers was impressive and by the late 1960s would lead to problems of excess capacity. In 1958, only seven establishments manufactured tufted carpet in Britain, rising to 24 five years later and to 37 by 1968. 45 If technological change threatened the established structure of the industry from the mid-1950s, so too did competition policy in the form of the Restrictive Trade Practices Act of 1956. The industry had become increasingly cartelized from the end of the Second World War with two agreements, operated by the British Carpet Manufacturers and the Wholesale Floor Covering Distributors' Association, respectively, to regulate production, distribution, and sales. These wide-ranging agreements stabilized the industry before, and in the early years immediately after, the introduction of the tufting process. However, under the 1956 legislation, they were open to legal challenge. When the case was heard in 1958 and 1959, the court struck down the agreements and dismissed the industry's arguments that quality and exports would decline, distribution suffer, joint advertising stop, and promotional costs increase. 46 Traditional manufacturers responded to the introduction of tufted carpet in three ways. First came the formation of a consortium to manufacture it for themselves. Initially five firms, Bond Worth, Brinton, Carpet Manufacturing, Crossley, and Templeton, were involved in producing the "Kosset" brand of tufted carpet. 47 Second, an extensive advertising campaign was mounted to differentiate woven from tufted products, exemplified in the slogan "Axminster and Wilton-Real Carpet." This seems to have been effective, and the contrast with the U.S. market is striking. By 1969, in the United States, tufted carpet had about 95 percent of the market; in the United Kingdom, where the retailer and consumer still regarded them as inferior products, the proportion was 52 percent. 48 Third, after the Restrictive Practices Court ruling, the traditional manufacturers showed more willingness to blend synthetic with natural fibers to produce innovative products and designs. 49 Lord's carpet business developed using a combination of novel direct selling methods and "eardeafening, image-building," including television commercials using his slogan "Here is luxury you can afford, by Cyril Lord." 50 Nothing did more than commercial television to raise Lord's profile and he was one of the most publicity-hungry businessmen of his time. 51 The radical nature of Lord's marketing methods was well appreciated: 49. Swann et al.,Case Studies,133. In another study, these same authors argued that the ruling of the Restrictive Practices Court encouraged lower-cost producers, eliminated some excess capacity, and improved distribution and that these benefits were furthered by competition from tufted carpets and the use of synthetic fibers: Swann et al., Competition in British Industry (London, 1974), esp. 168-69, 185. 50. Sunday Times, 18 May 1969. This included a cameo role in a 1967 television episode of Batman, as the "Karpet King of Europe." Some idea of Lord's appetite for publicity can be gained from the autobiographical account provided by his second wife: Shirley Lord, Small Beer at Claridge's (London, 1968).
It was the first company to make serious attempts at marketing carpets and in penetrating the former linoleum trade. To do this it swept aside all the traditions of the trade, selling direct to the public through newspapers, showrooms and agents, and boycotting the retail outlets. It was a system with high overheads and geared to high-capacity operations. 52 Lord's innovative sales techniques enabled him to bypass the wholesaler-sometimes seen a weak link in traditional marketing practice in this industry. By doing so, he also assumed much more of the risk in his retailing operations. 53 However, by selling exclusively his own products, Lord needed to stock a huge range of goods, and this would prove to be a serious problem in the longer term. By 1965, he had over fifty showrooms and more than 160 shops operated under agency arrangements selling exclusively Cyril Lord carpets. Apart from his forward integration into retailing, Lord's sales depended on the success of an army of amateur, local, part-time agents working on commission who followed up coupon enquiries from advertisements in the press. Their number may have reached some six thousand by 1965, and they were supported by a full-time sales staff of about two hundred. 54 Lord's expansion during the early and mid-1960s always relied on extensive credit from a variety of sources, not always purely domestic. Thus, in 1961, he borrowed $2.8 million from Burlington Industries in the United States, then the largest textile group in the world. Burlington put three men on the board of Cyril Lord for the duration of this loan, and they resigned as directors early in 1964 once it had been repaid. 55 To increase turnover, Lord decided to move into the specialist area of hire purchase finance, exemplified by the creation of Cyril Lord Finance early in 1964. This company emerged from Toutella Finance, a wholly owned, but dormant, subsidiary of Edinburgh-based Capital Finance with which Lord had an association for many years. 56  assume some of the risk of bad debts, including the cost of debt collection, which at the lower end of the market could be considerable. In March, the following year, he finally decided to offer equity to the public. Lord had suffered net losses in three of the years since 1956, and the equity issue of 2.4 million shares at 10 shillings (10s) handled by Old Broad Street Securities was undersubscribed by 5 percent, although the shares quickly began to attract a premium as group pretax profits hit a record level of £1.3 million in the year ending June 1966. This in turn helped with the successful offer of £1.5 million 7¼ percent debenture stock in March 1967, in retrospect one of the last occasions when Lord stood a reasonable chance of raising capital from the public. 59 During this period, however, it is possible to identify two particular weaknesses in Lord's business expanding business operations that would damage the company's reputation: a lack of market research and inadequate testing of new products, both of which derived from Lord's insatiable desire to expand and innovate.
During the early 1960s, the South African government began to be increasingly active in seeking to develop industry in the so-called homelands. Taking advantage of the substantial funding on offer, Lord moved in quickly and decided to set up another company, Cyril Lord (S.A.) Pty Ltd., to operate a new factory costing £750,000 at East London in the largest homeland, the Transkei, for the manufacture of poplin. In 1963, in a blaze of publicity, he stripped out three of his mills in Lancashire and shipped all the machinery, much of it quite old, to the new factory, a move underwritten by the South African Industrial Development Corporation in its pursuit of industrial decentralization. 60 Some of the employees and their families went as well, in specially chartered aircraft. However, the market for poplin had been exaggerated by the South African government, and Lord had not given sufficient time to market research, or competition from local producers or imports, and stockpiling followed. Over the next few years, despite successfully lobbying for tariff protection, Lord reduced his stake in the venture, handed more control over to the South Africans, and switched production to coarser calicoes and linen. 61 Again in 1963, 59. Ibid., 1 April 1965, 24 Aug. 1966, 21 March 1967 Lord was one of 168 businessmen who took part in a goodwill visit to the Soviet Union, organized by newspaper proprietor Roy Thomson. After this visit, Lord took an abrupt decision to buy two machines for the manufacture of artificial astrakhan, having apparently undertaken no market research and having put no sales organization in place. This venture too was a failure. 62 Inadequate product testing was evident in the introduction of Lord's "Chunky" carpet range at the end of 1966. This range of "sculptured" carpet had long fiber, but, as one of his colleagues closely involved with its launch recalled, once Lord "had made up his mind, he could not wait to see the project completed. It was all rush, rush, rush. There was seldom time to get the product properly tested." The consequence was that the fibers did not spring back once they had been trodden on and, after many customer complaints, Lord had to offer refunds on all the carpet sold. A product designed to sell for 55s 6d per square yard in the home market had to be sold abroad at less than a third of the price. 63 Lord's passion for rapid innovation, his self-confidence in overcoming technical problems, coupled with a massive appetite for publicity seeking could be a dangerous combination. After a visit to the Astrodome in Houston, he had the idea of producing his own version of Monsanto's Astroturf. With the brand name of "Cyrilawn" it was made on the tufted principle, rather than woven as Astroturf was. He thought all the production problems had been solved, and the debut was arranged at the London Hilton in April 1967 when the entire ballroom was covered in Cyrilawn and decked out to look like Wimbledon at a cost of £6,000. The event, with four hundred guests and appearances on court from fashion designer Hardy Amies, actress Barbara Kelly, former Conservative Chancellor Reginald Maudling, and the Marquess of Dufferin and Ava, generated much press coverage but the product itself was seriously defective and insufficient time had been given to product testing. It not only turned from green to blue, it also developed a slime which made it almost unusable. As a result, the first and only 100,000 square foot of Cyrilawn had to be given away. It may be that these two high-profile failures contributed to the forced resignation in October 1967 of William McKee, a joint manager at Cyril Lord Carpets and regarded as the "technical wizard behind the company." 64 Also in 1967 Lord purchased the entire chain of loss-making paint and wallpaper shops trading under the 62. The Times, 4 and 11 May 1969. 63. Sunday Times, 18 May 1969. 64. Ibid., 17 Nov. 1968 Kyle brand. The problem here was that most of these were simply too small to be suitable as carpet retail outlets, because potential customers could not unroll the carpet to see what it looked like. Moreover, many of the shops were not well sited, being "tucked away in the corners of under-used shopping precincts put up by over-enthusiastic developers." 65 Lord's pathological optimism began to look questionable in the spring of 1967, as the gap between projected and actual profitability became enormous. Lord and McMillan had assured a firm of London brokers that pretax profits for the half year ending May 1967 would probably be £636,000 and would not fall below a "guaranteed minimum level" of £412,000. The actual pretax profit for this period was £46,000-some 93 percent short of the expected figure although sales had only declined by 6 percent. Profit forecasting at Cyril Lord was indeed a "rather hit-and-miss affair," because, as explained below, there was no full-time financial controller in the group until spring 1968. 66 To put this in perspective, in the record year of 1966, profits of £1.3 million had been made on a turnover of £10.8 million; in the next three years, while turnover declined by just £500,000, profits fell by £1.8 million. 67 Turnover had been built on the massive advertising campaign. In 1958, Lord's advertising budget ran to £50,000; eight years later it was almost £800,000, more than four times that of his nearest competitor (Kosset). 68

Crisis and Receivership
The fall in net profits of almost two-thirds in the years 1966-1967 resulted in both Lord and McMillan taking a 50 percent salary cut and also waiving their rights to dividends. 69 This was the first public acknowledgment that actual performance had fallen well short of expectations and it was the start of a period of decline from which Cyril Lord never recovered. About the same time, rumors began to circulate in the City that Cyril Lord Finance, in which Cyril Lord and Edinburgh-based Capital Finance each had a 49 percent stake, had debts of £3 million. "the buzz of speculation" about the company's future, and especially its management, had become "a deafening hum." 71 Optimism was, however, still evident in the upbeat forecast for sales and profitability issued in February 1968. Even the financial press was prepared to envisage a possible return to previous levels of profitability in the near future. 72 It is difficult to know how well the long-established business relationship between Lord and McMillan withstood the increasing pressure on the group. One indicator that suggests Lord may not always have consulted with his Deputy Chairman came in February 1968 with the announcement in the Estates Gazette that one-third of Lord's retail shops, some ninety-one properties, were being offered for sale with vacant possession. McMillan denied he knew anything about this drastic move, nor had it been mentioned in Lord's half-year statement the previous week. 73 How many of these shops made a profit is an open question, but most were leasehold and sited in expensive locations. Rents on them must have contributed significantly to the increasingly unbearable costs that Lord faced. Thus the rent on the London's Oxford Street shop amounted to £22,500 per annum and that on Birmingham's Corporation Street premises to £12,000. 74 Later that year one widely quoted estimate put the total annual rental cost of Lord's shops at around £600,000. 75 By March 1968, however, under pressure from government, bankers, and shareholders, and apparently on doctor's advice, Lord was forced to retire as chairman and managing director, going to the Bahamas, a location more suited "to his blood pressure and taxation problems." 76 One possible candidate for managing director was Lord's close friend Eric Crabtree, Chairman of Hardy Amies, Director of Hepworths outfitters, and who had been responsible for building up the Cresta group that became part of Debenhams. Crabtree, in McMillan's judgment, was "one of the greatest merchandizers in the country" and already acted as a consultant for the group. In fact, negotiations with Crabtree broke down and McMillan himself became chairman and managing director but indicated that Crabtree would have a more active role in merchandizing and sales. 77  of a full-time financial controller, something which, surprisingly, the company had never had before. Julian Richardson, financial controller at A. E. I. Switchgear Division and before that accountant at Price Waterhouse, took up his post in April. As late as April 1968, the strengthened management, together with a prebudget consumer boom and the impact of devaluation, was seen as making the prospects of recovery good. 78 The lack of financial control within the group had, however, allowed costs to rise to critically high levels, but by the time Richardson, who had a particular interest in cost accounting and computerization, took over, it was too late to pull the company around. The scale of the crisis at Cyril Lord became clear over the next five months. A first draft of group accounts to June 1, 1968, indicated a loss of £196,000. This would have been serious enough given the optimism of Lord's statement in February. However, the auditors' second draft set the loss at £491,000 and is summarized in table 2. The major item in the revised set of accounts was the writing back of a £163,000 credit from Lord's two main yarn suppliers, Courtaulds and British Enkalon, who had paid Lord for advertising their brand names on his carpets. 79 Moreover, as sales fell, these two suppliers were no longer prepared to continue special price discounts negotiated by Lord. 78. The Economist, 6 April 1968. 79. Cyril Lord had been able to negotiate favorable terms with Courtaulds for the supply of "Courtelle" that became significant as a fiber in tufted carpets. See D. C. Coleman, Courtaulds, an Economic and Social History: Volume III -Crisis and Change, 1940-1965(Oxford, U.K., 1980, 189. The analysis of turnover from January 1966 to summer 1968 indicates that apart from exceptional discount promotions, sales had a tendency to be below the levels of the corresponding month the previous year. While sales did not collapse, they stagnated compared with Lord's competitors many of whom were experiencing buoyant demand. Lord's relatively poor performance in sales was attributed to three key factors, all of which reflected the chairman's strategy and style. First, the company's products were, according to Richardson, in the wrong price and color range, "matters of this kind were decided by Mr. Lord and his hunches were wrong in relation to recent decisions." 80 Second, Lord had managed to alienate all the key elements in his sales force. By purchasing the Kyle chain of shops, those agents who had traditionally been responsible for most of the sales felt their market was being taken away. Once it became known that Lord was planning to sell the shops, then this clearly had a negative impact on sales staff working in them. Third, productive capacity in Northern Ireland had been further increased in 1966, but given declining orders, underutilization increased and so did unit cost. Moreover, Lord's rather cumbersome arrangements for warehousing and distribution, coupled with the distance of Northern Ireland from British markets, meant that orders could take six or seven weeks to reach the customer. As competition increased, this began to diminish Lord's competitive edge. 81 In response, the firm reduced both the range of colors and of qualities of carpet; it also introduced a new range of "Rathgael" carpets. The need to repair the damage done to relations with sales staff was recognized by the payment of better rates of commission.
If all these were positive moves, the firm had to negotiate continuing assistance from its four bankers who began to press for a reduction in accommodation. Some data on bank overdrafts and finance house accommodation in August are provided in table 3. In addition, the company had written some £500,000 worth of unpresented checks which, had they been presented, would have pushed bank borrowing to about £2 million.
One of the many areas identified by Fridenson as deserving of more attention in business creation and survival is the role played by specialist institutions offering "information, advice and knowledge services." 82 As its difficulties increased, the Cyril Lord group belatedly sought professional advice and approached Rothschild's to act as their merchant bankers and advisers, but Rothschild's declined the business. 83 Hill Samuel did accept, but only on condition that Cyril Lord himself played no further part in the group's activities, and considered that in any case they had been brought in about six months too late to save Lord's enterprise as a going concern. 84 Before considering the role of Hill Samuel, it should also be noted that a further pressing need was to explain the group's change of fortunes to institutional investors, and especially to the Commercial Union Insurance Company that acted as trustee for Lord's debenture holders. One of McMillan's fears was that if any of the company's checks was dishonored, then Commercial Union would be likely to place the Lord group in the hands of the receiver. 85 Given the large financial commitment that the Government of Northern Ireland had made to Cyril Lord, it was only to be expected that government officials would be closely involved with all parties who might be able to prevent the complete collapse of the group. Indeed, not unlike the very much larger crisis which began to unfold at Rolls Royce from 1968, where shareholders were reassured by optimistic chairman's statements that gave little hint of the  company's problems, government officials and financial institutions began to assume responsibility for the future of the company. 86 The Ministry of Commerce made it clear to Hill Samuel that the following minimum conditions would have to be met before they could consider further assistance: the appointment of new and competent top management; some kind of government control over the group of the kind that had recently been applied to Belfast shipbuilders Harland & Wolff; a viable business plan with an indication of when profitability might be restored; and commitment of continuing support from the banks, because "there could be no question of Government assistance being used merely to bail out the banks." 87 At one level, these stipulations were both logical and politically defensible. There was always the danger, however, that drift would set in and a rescue become impossible. Good fortune and skill were required to get the pace of any rescue bid just right, especially given the number of interested parties and the speed with which circumstances changed from day to day. Both Courtaulds and Hill Samuel had expressed the view that if the Ministry "did not intervene, anyone who might be interested in the undertaking will wait in the hope of picking up bargains after liquidation." 88 Lord's two principal raw material suppliers in the region were Courtaulds and British Enkalon, who also supplied carpet manufacturers in Britain. Despite their status as competitors, both firms were initially receptive to the idea of joint intervention to keep their major customer in business.
In a wider context, the collapse of Cyril Lord needs to be viewed against the simultaneous rise in profitability in the industry as a whole during 1967-1968. Blackwood Morton (BMK), Homfray, AW (Securities), Thomas Bond Worth, and Shaw Carpets were examples of firms, which all turned in impressive figures in 1968. The improvement in profitability was especially marked amongst traditional producers, which had been slow to invest in new plant and therefore did not suffer the same kind of overcapacity that was evident in the tufted carpet sector. 89 Table 4 is an index of profitability of selected firms and illustrates the sharp increase in profitability in 1968, with the exception of the tufted producer Kosset. To some extent, the general improvement reflected postdevaluation and prebudget booms, but they also symbolized a change in the status of 86 carpets as consumer goods: "carpets have finally shrugged off that luxury tag and . . . most manufacturers are now able to squeeze fatter margins out of sales." 90 In addition, barriers to entry in tufted carpet manufacture were not particularly high. Although the industry came to be characterized by larger units, the small firm with low overheads could remain highly competitive. 91 Even so, the data in table 4 suggest that Kosset continued to suffer after 1968 and that the profitability of many traditional producers also declined. Hill Samuel's report, compiled using data from Lord's accountants, Peat Marwick and Mitchell, is essential to understanding how the outlook for Lord became critical in the November of 1968. The increasing losses revealed by successive draft accounts have been shown in table 2. The net loss for the year ending June 1, 1968, was finally calculated at £766,000, some £600,000 more than indicated in the first draft of the accounts, and even £277,000 more than the second draft, largely because of the need to adjust the value of stocks downward by £210,000. The company still traded at a loss, and Hill Samuel calculated breakeven point at carpet sales of £12.5 million, a figure that seemed quite unattainable in the short term. 92 The key recommendations of the report can be divided into four sections, 90. Sunday Times, 24 Nov. 1968. 91. The Observer, 9 Dec. 1968. 92. Hill Samuel Report on Cyril Lord Ltd., 1 Nov. 1968Financial Times, 16 Nov. 1968.  three of which would provide substantial additional finance. First, the Ministry of Commerce should defer rents due in 1968 and 1969 on the Donaghadee and Rathgael factories until after 1977, thus effectively providing the company with a loan of £280,000. A new Executive Chairman should be appointed, but the Ministry should have the power to vet the appointment and to "appoint, remove or replace any Director" after consultation with the Chairman. Second, additional support to the extent of £430,000 was sought from the banks: an extra £250,000 from Coutts and £90,000 each from Bank of Ireland and Williams Deacons. Third, both Courtaulds and British Enkalon were asked to increase their credit limits for raw material supplies to between £500,000 and £800,000 each. A fourth section was designed to prevent Cyril Lord from attempting to control the group through his still substantial shareholding. What the report demonstrated was the interdependence of all the parties concerned-raw material suppliers, banks, and government. Because this was so, it was unlikely that the rescue plan could have withstood refusal of any one of them to participate fully. It soon became clear, however, that such a positive outcome was not feasible. Having discussed the report, the Courtaulds board unanimously agreed that they could not possibly provide the additional credit facilities sought, but if a firm were to take over the Lord group and introduce new management and an improved sales network, then they might reconsider. Courtaulds' initial response was, however, a severe blow to the Hill Samuel proposals and led the Ministry of Commerce to declare that in the circumstances they could not agree to deferred rentals as proposed. The Ministry did emphasize that they might revisit the decision if all parties except Courtaulds agreed to the Hill Samuel proposals. As for the banks, a joint meeting of Bank of Ireland, Coutts, and Williams Deacons on November 5 concluded that they would not agree to the proposals, nor would they bring about the collapse of the Lord group. Rather, they were inclined to hold the position until the end of the year during which time negotiations with possible buyers could continue. 93 Fridenson has asked if bankruptcy is a political process. 94 Given the relationship between the government and Cyril Lord, and the political context of Northern Ireland in the later 1960s, political factors were key determinants of the government's response to Lord's failure. In both the Northern Ireland and the British Parliaments, 93 MPs from constituencies where Lord's factories were situated pressed the President of the Board of Trade, Anthony Crosland, for a public enquiry into his failure. 95 The imperative for the Ministry of Commerce was to protect the 1,700 jobs it had nurtured at the Cyril Lord factories. Workers from the factories led by the general manager marched on the parliament buildings in Belfast. 96 After difficult meetings following the completion of the Hill Samuel report when for the first time the scale of the crisis had become apparent, and the refusal of key parties to provide the requisite assistance had become known, the Belfast government decided to ask Courtaulds to make a bid for the group. The accounts still had not been published, but the Lord group was being increasingly pressed by small-and mediumsized creditors, and a bid from Courtaulds would at least bring in a large firm with an established commitment to the region. Initially Courtaulds made a bid which valued the group at some £400,000, or £7 million less than the stock market valuation of a year before, together with a cash injection of between £1 million and £1.5 million and new management. 97 Lord's shares had continued to trade at around 6s until the accounts had been published on November 15, after which they declined to 2s 10½d, but the offer gave the shareholders stark choice of "a nominal sum from Courtaulds or nothing following liquidation." 98 Amongst the shareholders who had seen the value of their investment in Cyril Lord collapse were Pilkington Brothers Superannuation Fund, Imperial Tobacco Pension Trust, and the Hoover Trust. Some of their Fund Managers had been invited to Belfast only some two years before in a very Lord-style publicity event. 99 One potential problem was that, given the crisis the company faced, shareholders might legitimately raise questions about the optimistic circular distributed by Lord in February. Hill Samuel's view was that since the statement was made by Lord himself and that since he was no longer in charge of the company, this particular difficulty could be sidestepped. 100 If Courtaulds had gone through with the bid, they would have become the largest business employer in Northern Ireland, but the bid ran into immediate opposition from British Enkalon who 95. Daily Telegraph, 29 Nov. 1968. The request was rejected. 96. Belfast News Letter, 22 Nov. 1968. 97. Daily Telegraph, 16 Nov. 1968. 98. Cyril Lord Ltd., Note for the Minister, 15 Nov. 1968 claimed that it contravened an earlier gentleman's agreement with Courtaulds that neither would bid for the Lord group. 101 Moreover, the prospect of Courtaulds' entry into carpet manufacture clearly distressed many established producers. 102 Only three days after their nominal bid, Courtaulds withdrew, stating that the assistance required was much greater than they believed. The same conclusion was reached by British Enkalon which, having discussed the Hill Samuel report with Courtaulds, admitted that the financial position of Cyril Lord was much worse than both had feared so that neither could "with any degree of commercial prudence take part in any rescue operation." 103 At this point, the entire position of the Cyril Lord group changed since within twenty-four hours of Courtaulds' announcement, Commercial Union called in the receiver, in the person of Donald Chilvers of Cooper Brothers accountants. 104 One of Chilvers' first tasks was to organize drastic cut price sales at Lord's shops just to raise enough money to pay wages and keep the factories open. 105 He also had to arrange emergency supplies of fiber from Courtaulds to supply Lord's Lily Mills near Oldham where stocks were almost gone. 106 By late November 1968, however, there was not even enough money to maintain a share list, so trading ceased and the company disappeared from the Stock Exchange List, on which it had been quoted since 1954. 107 The final "deathbed" share prices were 3½d for ordinary shares and a mere 1½d for preference shares. 108 Capital Finance, which had held 49 percent of the equity in Cyril Lord Finance Ltd., was hit significantly by Lord's failure, as it had been by Rolls Razor. In addition to the cost of the shares (£300,000) which had to be written off, it had advanced loans in the sum of £390,000 and guaranteed another £218,000. The difficulty here was that the debts of Cyril Lord Finance were guaranteed by Cyril Lord Ltd. and that this guarantee became worthless once the latter went into receivership. 109 Capital Finance was supported through a very difficult time by the Standard Life Assurance Company and was bought in 1969 by Bank of Scotland through its hire purchase subsidiary, North West Securities Ltd. 110 The impact of Lord's factories in Northern Ireland was enormous especially given that they were established in small towns. Not only were they relatively labor intensive but they provided employment for a largely male workforce, which was otherwise unemployed or underemployed. In Donaghadee, for example, more than half of the eight hundred employees lived in this town of 3,700 people and its surrounding area. 111 They were also in an overwhelmingly Protestant area, thus providing work for employees who were likely to be unionists rather than nationalists, and this would no doubt have been a material consideration for the Unionist government, under pressure from its own supporters and a civil rights campaign. In 1968, the political implications of closure were disproportionately great. In that sense, the government was in a similar position to Lord's bankers-the choice was to shut down and get nothing back or to carry the firm in receivership for as long as possible hoping for a buyer for the business as a going concern. It was also the case that in the struggle to attract and retain employment, Northern Ireland now had to face more competition from British regions since the Labour Government had placed greater priority on regional policy in Britain from 1966. At the same time, its own attractiveness as a host for inward investment was declining as a result of growing political unrest, uncertainty, and violence. 112 The political imperative to save the Lord factories could not have been stronger, and Brian Faulkner, the Minister of Commerce, made it clear that he would be available "day and night" to talk to any prospective buyer recommended by the receiver. 113 After weeks of uncertainty, Lord's three factories in Northern Ireland and his Lancashire mills were bought by Viyella International, then led by its aggressively acquisitive chairman, Joe Hyman. Viyella already had three shirt factories in Northern Ireland, all in County Londonderry, and among their products were the strong brand names of Peter England, Evvaset, and Rocola. 114 The Rathgael factory, hitherto used to store, cut, and dispatch carpet, would be turned over to warp knitting under Gainsborough-Rathgael Ltd. Because Rathgael was outside the main clusters of textile production in Northern Ireland, Viyella considered that it would be easier to 110. Ibid., 18 April 1967, 4 March 1969. 111. Financial Times, 29 Nov. 1968. 112. The Economist, 7 Dec. 1968, 61-62. 113. Financial Times, 29 Nov. 1968. 114. "Viyella in Northern Ireland," Viyella International (1970 introduce four-shift working in warp knitting since the employees had "no textile tradition to unlearn." 115 Viyella declared its intention of investing £7 million at Rathgael rather than in England, a move which, it was hoped, would bring between five hundred and seven hundred jobs within three to five years. 116 Through its acquisition of Bradford Dyers' Association in 1964, Viyella owned the license for the carpet printing machinery in Lord's Donaghadee factory, a point that had considerably increased its bargaining power in talks with government. Viyella intended to drop the Cyril Lord brand in favor of a new range of "Donaghadee" carpets and hoped to double Lord's share of tufted carpet market to 20 percent. For the government of Northern Ireland, Viyella's decision was the best possible outcome. During the crisis, it had rejected calls from some local politicians to take Lord's factories into public ownership and had defended its substantial financial assistance on the grounds that profitability and employment had justified the financial assistance. The cost per employee had been within the normal range for government-aided enterprise. 117 Brian Faulkner, himself from a textile background, when asked how such a crisis could have occurred, was quite philosophical: "One could say that it was an error of judgment, and perhaps it was. It was one of the risks of commercial activity." 118 With regard to Lord's Lancashire mills, Viyella was already the largest customer for Ensor Mill, which made yarn for flanelette sheets as well as furnishing fabrics, whereas Lily Mill's output fitted in well with Viyella's plans in polyester spinning. 119 No other firm in the U.K. textile sector was willing or able to takeover these two key parts of Lord's business. Viyella did not, however, buy either the shops or the direct selling operation. Hyman argued that textile manufacturers should be independent of both fiber producers and retailers and that forward integration into own-brand retailing put manufacturers at a "grave disadvantage." 120 The view that Lord had made a major strategic error when he integrated forward into retailing was a common one: 116. The Economist, 14 Dec. 1968, 64. 117. Belfast News Letter, 28 Nov. and 5 Dec. 1968. 118. Ibid., 22 Nov. 1968. 119. Financial Times, 25 Nov. 1968. 120. The Guardian, 11 March 1968 To succeed these days, retailers need a wider range than one manufacturer could provide and Lord was caught between two stools, since its production was based on a range too wide to be economic. To get the profits it needed an extremely high throughput and to get the throughput it advertised at hefty cost on TV. But the conglomeration of tufted manufacturers and the upsurge of small, specialised retailers made that impossible. . . . Cyril Lord got left behind in a market which it had itself created. 121

Conclusions and Comparisons
A life-cycle perspective allows the identification of both longer-term and short-term factors, which together precipitated crisis and failure at Cyril Lord in 1968. Lord's "most stupendous self-confidence," noted by Sir Raymond Streat in 1955, underpinned by undoubted technical expertise, was evident throughout Lord's career and led to a certain hubris in business affairs. In the long term, his three fundamental errors were his move into own-brand retailing, his massively expensive advertising campaign, and his lack of effective cost control. It may well be that, collectively, Lord's competitors benefited more than he did from his advertising which, although it made Lord "a household name . . . was more instrumental in introducing tufted carpets to the British public than selling its own designs." 122 In a highly competitive industry with low barriers to entry and excess capacity, the increasingly tight margins made extensive advertising deeply unattractive for most of Lord's competitors by the mid-1960s. One of the latter, John Murray, chairman of Bond Worth, confirmed this in 1968: "No carpet is sold on its name. We've done a lot of advertising but found it's not worth the candle-there's not the room to build in advertising margins." 123 In addition to the above, a number of Lord's own policy decisions concentrated in the period from 1963 to 1967 progressively weakened his business. His move into the area of hire purchase finance seemed unnecessary given there were so many specialist providers in the market. Inadequate product testing, as in the case of "Chunky" carpets and "Cyrilawn" outdoor covering, was serious and did much to damage the firm's public image. The lack of market research, as in the artificial astrakhan and the South African poplin ventures, suggests a willingness to rush into new markets without sufficient thought and, again, casts doubt on Lord's judgment just at the time the U.K. market for his core product, tufted carpet, stagnated and competition became intense. Similarly, just before the crisis of the firm, Lord had decided to move into the large-scale manufacture of vinyl floor to take on the market leader, Marley, but that business was disappointing. Indeed he could only contemplate this move because of the large vacant space available in his recently extended, but underutilized, factory at Donaghadee. At the same time, supported by the Northern Ireland Ministry of Commerce, he added a luxurious office block, and a £100,000 computer system at his warehouse, neither of which was really necessary and the latter in particular seemed to be inappropriate for the task. 124 The purchase of the loss-making Kyle chain of shops in 1967 was a further aspect of Lord's strategy that seems hard to justify. However, it is also the case that both the equity and debenture issues, in 1965 and 1967 respectively, provided the finance to prevent the scale of the firm's problems from becoming public at an earlier date.
The Government of Northern Ireland backed Lord consistently, monitored its large financial stake regularly, and, despite occasional warnings of overexpansion, supported the enterprise on the basis of its performance. In a regional economy without full employment, where staple industry was in decline, jobs for men were increasingly hard to find and with more competition from British regions, an enterprise like Lord's was an attractive proposition and it was very difficult to deny funding for expansion in these circumstances. Only when the crisis came did the Ministry of Commerce refuse a request for substantial additional funding. Moreover, it showed considerable skill in negotiating with Lord, his suppliers (Courtaulds and British Enkalon), and bankers to devise a rescue plan led by Viyella International. The expertise of government officials was critical to this. The banks, especially Bank of Ireland, Coutts, and Williams Deacons, had also provided Lord with support over the long term but, given the number of banks involved and the distance between them, it may well be that none of the banks individually could monitor the total level of support that Lord received, especially when his financial position could deteriorate so rapidly in between annual financial reports. Had monitoring been easier, the banks may well have intervened at an earlier date. When the full extent of Lord's problems became known, they agreed to support the enterprise for a period until a buyer could be found. They were thus instrumental in the successful attempt to bring in Viyella.
Fridenson asks the question, who wins and who loses in the case of business failure? In Lord's case, as a large shareholder, his personal financial loss was very great, and so was that for the private and institutional investors who had so recently bought the equity and the debenture stock. Advertising agencies, his sales representatives, and some employees were casualties too. If the business had failed to find a buyer, then all the employees, the Northern Ireland government, Courtaulds, British Enkalon, and a number of banks would have been the principal losers, but acquisition by Viyella very much limited the damage.
Even when Cyril Lord was a large public company, Lord took all the key decisions himself, and the history of this enterprise emphasizes again the crucial role of the individual, not only in successfully establishing and building the firm but in being largely responsible for its decline and failure. What of his legacy? The extent to which his personality and business methods differed from those characteristic of the industry into which he had entered was acknowledged by contemporaries. For "Mammon" in the Observer, carpets had been "a lack-lustre industry for centuries, but Cyril Lord gave the trade glamor and introduced a personality cult where before there were only the anonymous men with family faces." 125 His legacy, moreover, was quickly appreciated. In the words of one business journalist: "Almost single handed Lord had changed the entire character of the British carpet market, transforming it from a cottage industry to a mass market organisation." 126 Although Fridenson has called for more case studies of business failure, he has also stressed the need for comparisons of company trajectories. We now turn to compare Lord with two other U.K. enterprises that grew to prominence but subsequently failed, within a single generation, during the 1960s and 1970s, and that were very closely identified with the founder. These two firms were John Bloom of Rolls Razor, which failed in 1964, and Kaye Metrebian of Brentford Nylons, which collapsed in 1976. Both of these shared the same receiver, Kenneth Cork of Cork Gully, whose verdict on the former that the "company concentrated on sales and production to the exclusion of finance and the lack of up-to-date knowledge of the serious position was only realized when it was too late" could be applied to the other two. Like Lord, Bloom took on established 125. The Observer, 24 Nov. 1968. 126. Sunday Times, 4 May 1969 manufacturers such as Hoover and Hotpoint and built and supplied twin-tub washing machines via massive direct advertising. Again, like Lord, in the face of renewed competition from established firms, Bloom diversified from the core products, in his case into areas ranging from cosmetics and central heating to Bulgarian holidays and television rental. None of these proved successful. 127 In fact, only a few months before the receiver was called in, Bloom announced his intention to develop a chain of some five hundred television rental shops. 128 Brentford Nylons was a private company with almost all the equity owned by the Metrebian family. It created a huge domestic market for nylon sheets with a heavy initial emphasis on mail order, backed by massive advertising, which combined to write "a highly original chapter in textile marketing." 129 As had been the case with Lord, Brentford became the most advertised firm in its sector, with an advertising budget of £3.3 million on profits of just under £1 million two years before failure. Like Lord, Brentford developed highstreet retail shops stocking their own products, some seventy of these were in operation on the eve of the company's collapse. The skepticism that had accompanied Lord's own-brand retailing was seen again in the case of Brentford, questioning once more the strategy of forward integration into retailing, especially where it was difficult if not impossible for any one manufacturer to provide a sufficient range of own-brand goods to attract custom in sufficient volume. A longerterm problem for Brentford was that nylon, which accounted for half of the U.K. shirt market during the 1950s, declined in popularity to reach only a fifth by the mid-1970s, forcing the firm to move into polyester cotton manufactured in a costly new factory in Northumberland. 130 The heavily qualified accounts by Price Waterhouse showed that between 1973 and 1974 the amount owed to creditors rose from £6.79 million to £9.28 million, whereas in the same period bank overdrafts increased from £1.9 million to £5.1 million. 131 Bloom, Lord, and Metrebian were to a large extent responsible for both the rise and the decline of their extensive businesses. Each showed significant entrepreneurial flair in exploiting new markets by developing innovative products and in selling techniques; each placed great, but ultimately unwarranted, faith in advertising to sustain sales in the face of growing competition. None paid sufficient attention to cost control or to financial management more generally 127. The Times, 27 Feb. 1976. 128. Ibid., 1 Feb. 1964. 129. Financial Times, 24 Feb. 1976. 130. The Times, 24 and 27 Feb. 1976. 131. Financial Times, 26 Feb. 1976.