Secondly, the steel works had the financial backing of the Richardson family – which is important to any business. In 1839 a mineralogist, John Nicholson discovered iron ore samples in the area. He approached a Sunderland businessman with his discovery, who along with his brother saw the potential and invested £10,000 in an iron ore mine. By 1841, the brothers had joined forces with the Bigges family who owned the Redesdale Ironworks over at Shotley Bridge and together they had formed the Derwentside Iron Company. By lucky coincidence both parties had connections with the Northumberland and Durham District Bank – Jonathan Richardson was managing director – and massive loans were secured to develop the steel plant. However, as happens with many new businesses trying to find their feet the steel works racked up a debt of £750,000 which saw the bank go bankrupt and almost saw the downfall of the plant itself. Despite the London banks urging the company to sell its assets in order to recover the losses, the Richardson brothers came up with a deal to ensure the steel works remained open. They renamed the plant the Consett Iron Company and agreed to repay the debt annually at a payment of £10,000. The brothers then sold shares in the company to the Northumberland and Durham District Bank’s creditors worth £825,000 and finally negotiated a deal whereby, the plant would pay a further £425,000 by 1864 out of the company’s profits. It is fair to say that at this point Consett Steel works was not considered to be a success having accumulated massive debts that had almost forced them to close due to bankruptcy – despite having the raw materials needed, despite rapidly growing in size and despite the huge production demand.
A third factor in the success story of Consett Steel Works is the involvement of the Stockton and Darlington Railway. As already mentioned, the plant nearly went bankrupt in 1857. The deal struck with the London Banks may never have come about without the insistence of the railway company. They had invested in the area due to the iron works and transported cheap coal and limestone from the Wear Valley to the plant. The Stockton and Darlington Railway further expanded in the area setting up more railway lines which attracted the growing passenger trade – similar to other industrial parts of Britain. As a result, the closure of the Iron Works would have been a financial disaster to the Railway Company.
A fourth factor in the success of Consett Steel Works was cheap supplies of coal. The Consett Iron Company purchased massive amounts of high quality coal from mine owners who could not ‘shift’ their produce due to high transport costs and therefore had to slash their prices in order to encourage trade. The Iron Company benefited from its links with the Stockton and Darlington Railway Company as this enabled them to transport the coal at a low rate. The Company also bought in bulk saving them from further expense. (They were paying a third of the price compared to their competitors.) This saving in cost gave them an advantage over any business rivals especially as it’s recorded that in 1858 the Company were using 600,000 tons of coal.
The final success factor is in the cheap labour that was on offer to the Company. As already stated, the population of Consett was under 200 people in 1841 but in a mere ten years, the populace had increased to 20,000 – either living in Consett or its surrounding areas. This flood of people to the area was due to the expansion of the Iron Company; be it working directly for the steel works or indirectly like for the railway lines, all the inhabitants relied upon Consett Iron Company. Industrial Britain promoted cheap labour as there were no laws regarding wages and conditions – the Industrial Revolution had brought about a massive change in employment and as the population increased so did the demand for jobs and as people were desperate to be employed Companies could pay what they wanted. Consett Iron Company was no exception and benefited from this cost saving. Another advantage to them at this time was the huge wave of Irish immigrants looking for work in Britain due to the potato famine in Ireland during the 1840’s. They were prepared to work for a pittance as they were also desperate for employment.
In conclusion, Consett Steel Works was not always considered to be a success due to minor ‘hiccups’ such as furnace explosions. Or indeed due to the increasing debt which almost forced them to close altogether. These were only teething problems in the early stages and after 1864 the Consett Iron Company saw a change in fortune, due to having all the elements required to become a successful business. For example, Consett had a history of steel making not to mention John Nicholson’s discovery of iron ore samples – evidence that both the raw materials and skills were available in the area. The investments and commitment of the Richardson brothers in the project ensured the development and continuation of the plant. The business links with the Stockton and Darlington Railway meant that the London Banks did not close the Iron Company. These reasons alone did not ensure Consett was a success.
The two most important reasons as to why Consett Steel Works was able to become so successful was the fact that the plant had cheap supplies of coal and cheap labour. By buying huge quantities of coal in bulk and keeping transportation costs low, they were able to spend a fraction of the cost compared to their competitors - which enabled them to reinvest this saving into expanding the plant. By employing cheap labourers – such as the Irish – again the plant could save money which consequently increased their profit. These two factors made it possible for the plant to expand in size and production giving them the edge over any competition and ensuring that Consett Iron Company became the biggest and most successful steel works of the time.
