Very few people have been privileged not only to live through a period of great industrial growth in their country but to have been a major contributor to that growth. Sir Ian Munro McLennan, KCMG, KBE was one such man. He died in Melbourne on 25 October 1998 aged 89 years. Some years earlier, at a retirement dinner given in his honour by the Hoskins family in October 1977, Mr Ken Hoskins suggested that the four decades of intense growth in the Australian iron and steel industry spanned by Sir Ian's career with the Broken Hill Proprietory Co. Ltd (BHP) might be called the 'McLennan Era'. Mr Hoskins was the grandson of Charles Henry Hoskins who brought the early steel works from Lithgow to Port Kembla, New South Wales, in the 1920s. These works later became Australian Iron and Steel (AIS) and were acquired by BHP in 1935.
Ian Munro McLennan, son of Ruben Beaton McLennan and his wife Claudia Octavia, neé Thomas, was born at Stawell, Victoria on 30 November 1909 to a hard-working, country, Scottish Presbyterian family. His early upbringing was in Mooroopna, a small town with a few thousand people on the Goulburn River not far from Shepparton in north-eastern Victoria, where he attended the Mooroopna Primary School. His father had a flour-milling business in the town that he took over following the death of his older brother William in the Great War in 1916. The family name is remembered by McLennan Street off the Midland Highway. The mill was close to the family house, an immaculately kept home with very tidy grounds and clipped lawns overlooking the river. As the eldest of three children, McLennan would have had to do odd jobs around the factory and, as a country lad, undoubtedly developed the degree of neatness and independence he showed in later life. Both his younger brother and his younger sister died before reaching adulthood. In his more mature years he went to Shepparton High School followed by three years as a boarder at Scotch College, Melbourne, where he was equal Dux of the School in 1927 and his combination of academic ability and leadership foreshadowed his later career. He is remembered by the school as a wonderful benefactor whose generosity allowed them to establish the Sir Ian McLennan Chair of Design and Technology through which they could attract outstanding teachers in the field.
McLennan completed his education at Ormond College, University of Melbourne, graduating in Electrical Engineering in 1932 just as the country was beginning to emerge from the Depression. In the following year, he joined the Broken Hill Proprietary Co. Ltd as a cadet at their works at Whyalla, South Australia, and at the nearby Iron Knob iron-ore mine. He spent two years in this position, followed by six months at Hannan's North Gold Mine in Kalgoorlie, Western Australia. Then came six months as Superintendent of the company's Tasmanian limestone quarries, after which he was moved to the BHP Head Office in Melbourne as assistant to the Superintendent of Mines and Quarries.
On 3 August 1937 McLennan married Dora Haase Robertson from Ivanhoe in Melbourne, whom he met while she was working as a secretary at BHP. They subsequently had four children, Judith (b. 1941), Peter (b. 1942), John (b. 1947) and Louise (b. 1951). Soon after their marriage came their first move as McLennan spent two and a half years as a Special Cadet at BHP's Newcastle and Port Kembla steel works, with some time spent in the collieries and at other company centres. As a 'Special Cadet' he would also have come to the attention of, and his progress would have been followed by, Essington Lewis, then General Manager of BHP.
With this valuable experience behind him, McLennan was appointed Executive Officer at the Newcastle steel works in February 1940 and, in 1941, was advanced to become Production Superintendent there. He took an important part in the establishment of production facilities for the new steel products that BHP had been called on to produce for the war effort, many requiring novel methods of production where Australia lacked the usual components. Typical of these were high-grade electrical steels for motors and transformers and bullet-proof steel for Australian-built light tanks. Essential new materials to be made at the Newcastle works that could no longer be obtained from abroad included ferroalloys required to produce special steels, magnesium for aircraft production and tungsten carbide for high grade cutting tools.
During the first year of the war, an upset for BHP management had occurred when the General Manager, Essington Lewis, a strong, forceful leader, was appointed by the government of the day to be Director General of Munitions as a war time-measure, with far reaching powers over government and private manufacturing institutions. For the next few years Lewis had little to do with the operation of BHP, throwing greater responsibility down the chain of command in the Company. This had implications for McLennan, whose rapid rise in seniority is indicated by his being asked to support the toast at the farewell dinner that the Melbourne office gave Lewis prior to his departure for America in 1944, at Prime Minister Curtin's behest, on war-related business.
In 1943 McLennan spent several months in the USA and Canada studying production of special steels related to the war effort and, on returning, was appointed Assistant Manager of the Newcastle steel works. A year later he was seconded to Head Office for a short period in a managerial capacity. During this period in Melbourne he made the important recommendation to Essington Lewis, by then Chief General Manager of BHP, that the proposed Hot and Cold Strip plant should be installed at Port Kembla rather than at either Newcastle or Whyalla. He further maintained that BHP should '...commence the detailed planning for a hot and cold mill and tinplate plant at Port Kembla...whilst it seems very difficult to envisage a complete installation for a start, it can be taken in bites'. Lewis supported this recommendation with a paper to the Board of the company in August 1944 but it was not until November 1946 that the Board announced that a Flat Products Division would be developed at Port Kembla.
This was a difficult period in the steel industry, requiring high production rates while plagued by continuing labour shortage and unrest and with basic supply problems; BHP lost two ore-carrying ships by enemy action which caused severe production hold-ups. It was thus an ideal ground for developing initiative and leadership as well as for gaining a complete understanding of business operations. To round off this experience, McLennan was sent on a second overseas assignment in 1946, when he visited steel works and associated enterprises in Great Britain, Europe and the USA.
The year 1947 may have been one of the most important in the career of Ian McLennan, for in April of that year he was transferred to BHP's Head Office in Melbourne as Assistant General Manager, BHP. At Head Office he became far more involved not only with the development of the Newcastle plant but also with the great expansion of the Port Kembla works; and when Cecil Hoskins, Manager of the AIS works in Port Kembla, went overseas in early 1949, McLennan was appointed Acting General Manager of AIS. This brought him face to face, not only with the major expansion taking place at Port Kembla but with the post-war realities of a steel industry with production problems due to coal shortages – mainly caused by a lack of workers in the collieries – and with insufficient trained operators. At this time, Board approval had been obtained also for a future major development of the Port Kembla works of AIS, to be undertaken on a new green-field site embracing the projected hot strip mill and associated plant together with a nearby newly-dredged deep-water harbour and wharfing facilities. Management made an important decision with regard to the harbour, which required extensive dredging to be carried out by the New South Wales Department of Public Works to a planned depth of 9.7 m. However, AIS could see that, in the very near future, larger ships would be in use that would require greater depth, and eventually McLennan obtained Government agreement for an increase in depth to 11 m at low water, on condition that AIS paid for the extra work. The Government later agreed that the increase in depth was essential and paid half the cost. As it turned out, this was a very important decision because some years later an even greater depth became necessary for larger ore carriers.
McLennan had arrived in Port Kembla towards the tail-end of the planning of the development programme approved three years earlier, and he was recalled to Melbourne in 1950 when Lewis became Chairman of BHP. However, for the next few years he spent about half his time at Port Kembla and was instrumental in effectively bringing most of the strands together, on time and within budget. A continuing problem he had to contend with was a shortage of coal. In his words, 'Steel output has suffered due to a shortage of coking coal. The Company's plants could manufacture another half a million tons of steel if it could get the coal.'
Around this time it had become clear to both government and industry that a shortage of labour would be a continuing problem because demand for steel continued to increase at a fast rate while skilled and unskilled operators were hard to attract into the industry. Some action was required urgently. Shortly after McLennan arrived in Port Kembla, Prime Minister Chifley invited him, in 1949, to join the Immigration Planning Council, formed to help co-ordinate immigration activities and resolve some of the problems inseparable from the large-scale absorption of overseas people into the Australian way of life. McLennan played an important role through to 1967 and was Deputy Chairman of the Council. By the end of 1950 some 30% of workers at BHP were 'New Australians' and the Council assumed increasing importance in the following years.
In 1950, Essington Lewis became Chairman of both BHP and AIS with Mr Norman Jones as Managing Director of both companies. Shortly afterwards, McLennan was appointed General Manager of BHP and returned to Head Office, Melbourne All three men had been with the company since they began working and now had established a firm line of administration and control that would allow the expansion of the works to go ahead with fewer problems. On the other hand, from the outside there was always the feeling that most approvals for development had to be passed to the top for a decision, an impression reinforced when Lewis stepped down from the position of Chairman to a more executive role as Deputy Chairman
When a threatening international situation prompted the Commonwealth Government to set up a National Security Resources Board late in 1950, McLennan became a member, reflecting the steel industry's importance to the national welfare. This Board, chaired by Prime Minister Menzies, was to advise the Government on the best use of Australia's resources in the interests of national security. A year later McLennan was also made a member of the Materials Industry Advisory Committee. In the same year, 1951, he was elected President of the Australasian Institute of Mining and Metallurgy (AIMM), delivering the Annual Address in May in which he made the point that it was the fiftieth anniversary of Australian federation. After reviewing industry progress during that time he then looked forward:
while we at present are beset by many difficulties ...the next 50 years of our history will reveal even greater progress than the first of this century...to meet the needs of the country, the steel industry has many big developments in hand for the expansion of production...these are projects of great magnitude and will add half a million tons to the present capacity of 1¾ million...
On 12 January 1951 McLennan was appointed a Director and Assistant Managing Director of AIS. When he spoke at the opening of the new large No. 3 Blast Furnace at Port Kembla on 27 August 1952, he again raised supply problems and advised: 'Completion of this furnace is an important step in the Kembla Works development...but, this furnace could not operate without adequate supplies of raw materials and the proper means of their disposal'.
On 11 March 1953, McLennan outlined details of a steel mill to be established by BHP at Kwinana on Cockburn Sound in Western Australia. as part of new arrangements with the Western Australian Government. The mill was to have a production capacity of 50,000 tonnes a year and an associated steel fence-post plant. The project would require a long jetty to be constructed on Cockburn Sound to handle large ocean-going vessels and would take some years to complete.
In 1953 McLennan also became a Director of BHP. Two years later, in 1955, the hot strip mill was finally commissioned at Port Kembla, the occasion beng marked by a large public ceremony hosted in part by McLennan in his position as Assistant Managing Director, AIS. The Prime Minister, R. G. Menzies, officially opened the line and in his formal address observed:
This is a great historic event. We are here this morning taking part in a vast development of a great basic industry, an industry which is basic to almost every manufacturing process in Australia, an industry the success of which makes possible the success of hundreds of industries further down the line.
This development, with necessary additional plant, increased processing capacity by nearly one million tonnes per year, and must be considered as one of the most important developments not only for BHP but for the whole of Australian industry as it greatly increased the range and quality of available flat steel products. While it was being consolidated, consideration of a cold strip plant had been put on hold, mainly because the Australian steel sheet producer, John Lysaght (Aust.) Ltd (JLA), had already undertaken to install a cold strip plant at their Port Kembla works that also became operational in 1955. The AIS hot strip plant was essential to produce feed for the various steel qualities required by the JLA cold strip mills and ultimately by the roofing, automotive and white goods industries in Australia.
The installation of the hot strip mill required many major plant additions to match the capacity of the new mill, including the opening of a new colliery, the complete reorganization and full mechanization of three others, the erection of a battery of by-product coke ovens, and the building of another blast furnace. Major decisions were required of BHP management to ensure the right type and size of this new plant, that the necessary skilled operators were available at the right time and that financing would be available. McLennan's capacity for decisive action and firm control were strongly in evidence. In 1956 he was appointed Commander of the Order of the British Empire in recognition of his public service; he was raised to Knight Commander of the Order (KBE) in June 1963 for services to industry. During this period he held a number of important positions outside the steel industry. He was a member of the Ormond College Council at the University of Melbourne and also a member of the Council of the Australian National University in Canberra.
In 1955 McLennan, as General Manager of BHP and Assistant Managing Director of AIS, arranged and chaired the first steel-industry University-Industry Conference at Port Kembla. Ten university professors from a number of states were invited to attend over two days, visiting the plant and having round-table discussions with senior steel executives, many meetings being held on the verandah of 'Hillside', the company's staff house overlooking Port Kembla where the visitors stayed. In a later interview, Professor R. H. Myers, when asked the purpose of the conference, said:
These University Industry Conferences enable us collectively to view the developments and ramifications of the expanding steel industry as well as having fruitful interchange of ideas not only amongst ourselves but in open discussion with industrial leaders.
The meeting was very successful, well accepted by the university visitors. It became an annual affair organized by BHP, the meetings moving to different plants each year.
In June 1957, McLennan again delivered the Presidential Address to the AIMM Annual Conference, held that year in Newcastle. He recalled that he had also delivered the presidential address six years earlier and now said:
You may recall that we were then just beginning to emerge from the difficulties of post- war reconstruction...of fuel and power shortages and greatly inadequate manpower for the tasks facing us. ...How greatly has the scene changed, in 1951 Australia was able to produce only 1.4 million tonnes of steel because of labour and material shortages...we are now producing at a rate in excess of 2.8 million tonnes of steel. ...The fact that the Australian economy is now geared to a high rate of steel usage means that as we grow, the industries dependent on steel will play an ever-increasing part in our economic life. Australia, having established herself as a country well able to produce and consume relatively large quantities of steel, as a country endowed with a high level of technological skill and able to sustain a high standard of living, is destined therefore to become a great manufacturing nation in the future.
This was no idle statement but embodied McLennan's passionate belief that the general welfare of Australia was intimately tied to the successful development of the steel industry. While the earlier planned expansion of BHP was moving towards completion early in the 1950 s, the nation was suffering quite severe steel shortages and many manufacturers were forced to import steel, generally at much higher prices, and both industry and government were becoming critical of the steel industry. In part, the shortage of product was due to a growing lack of steel-making capacity, the company having under- estimated the comparatively high rate of economic recovery in the country. However, a further considerable portion of the steel shortage was due to labour problems within the steel works, in the coal mines and in transport. In the main, the unions were dissatisfied with the level of wages and with the company policy not to make over-award payments. In 1961 McLennan declared that 'The BHP Company is conducting its own recruiting campaign in Britain and Western Europe to overcome a serious shortage of skilled labour'. Shortly after, however, an unsympathetic government supported trade unions that were concerned with possible loss of jobs, and placed an embargo on overseas recruiting that lasted for nearly a decade.
McLennan was a strong supporter of proposals involving the installation of up-to- date technology and processing, and ensured that senior staff visited overseas steel and equipment companies at regular intervals. The essential place of scientific research and development was well recognized by Essington Lewis who in 1948 appointed a renowned British scientist, Dr Frank Adcock, MBE, DSc, as Chief Research Officer in the Newcastle works' research department. The work of Adcock's team soon outgrew the space available. With the continued growth of the works and the organization, new laboratories within the works were considered. However, McLennan strongly supported their being developed at a site outside the works precincts, and the new Central Research Laboratories were finally opened at Shortland in March 1957 on a green- field site 10 km from the works. Dr H. K.Worner, a highly regarded academic from the University of Melbourne, had been appointed Director of Research in 1956 and had input into the final design. In a very short time highly qualified staff were working in three main areas of research, namely raw materials, processing, and finished products.
With the increased scope of the company's interests, the resignation of Dr Worner, and good research results from Newcastle, McLennan thought it was time to extend the company's research facilities. He appointed another eminent overseas scientist, Dr R. G.Ward, to head the company's research effort as General Manager, Research at Head Office and to develop a further laboratory at Clayton, Victoria; soon total staff exceeded 300 scientists and technicians.
While the technical resources of the company were meeting many problems associated with the installation and operation of new plant, the company also needed new financing arrangements involving sums of money far greater than previously required. The hot strip mill installation alone required the investment of nearly $50 million at Port Kembla and the following year the No.4 blast furnace, then the largest in the world, was blown in which was another multi-million-dollar expense. Although these financial matters were handled mainly at Board level, line managers were becoming responsible for increasingly larger expenditure of capital. The greater importance of financial matters and the increasing number of company subsidiaries forced BHP to announce changes to the executive administration in June 1959. A major change was the creation of a Finance Committee with the Chairman of Directors, Mr C. Y. (later Sir Colin) Syme, as chairman and three other Board members, Messrs Jones, McLennan and Newman, as members. McLennan became Chief General Manager, and Newman became General Manager, Finance and Treasurer, while Jones continued as Managing Director, all within BHP. Ten other positions with the title General Manager were formed covering Operations, Development, Commercial, Sales, Administration, Shipping, Raw Materials and the Newcastle, Port Kembla and Whyalla steel works. These reflected the expanding scale of the organization and its subsidiaries and the challenges of the age. Such was the pace of expansion however that, within a few years, even further modification would become essential.
Expansion was not confined to Port Kembla. With McLennan's support, the Newcastle steelworks also carried through many major developments including the introduction of basic oxygen steel-making, then a new process that had only recently been developed overseas and that was as yet in use only to a very limited extent. The process would replace the open-hearth steel-making furnaces and, at the same time, should produce steel of greatly improved quality at a lower price. In a far- sighted move, McLennan obtained Board approval to invest in two large units for the Newcastle plant, each of 200 tonnes capacity, making them the largest in use anywhere at that time. In doing so, McLennan also demonstrated his faith in the recommendations provided by his technical staff. The first units went into service in 1962 and have been not only highly successful but absolutely essential, bringing BHP to the forefront of world production and attention.
When McLennan joined the Board of Directors of BHP in 1953 and became Senior General Manager in November 1955, his interests and responsibilities expanded to areas other than steel-making. He had already had some experience in mining and had followed the limited resources invested by BHP in the surveys for oil of the Sydney Basin so that when, by 1957, no definitive results had been obtained, he decided that firmer action had to be taken and a final survey made. He asked one of his senior executives to find the best, experienced oil geologist available to examine and report on the prospects of oil in the Sydney-Port Kembla area. On his advice, BHP hired Lewis Weeks, a highly respected oil-geology consultant recently retired from Esso, one of the biggest American oil companies. After a few months examining the geology and surveying the area, Weeks gave as his opinion that there was little prospect of oil in the area selected.
Before leaving Australia, Weeks went to Melbourne for a final visit to BHP and was invited to lunch by McLennan, who had become Chief General Manager, BHP in 1959 and who had been alerted earlier by his geologists to the fact that Weeks had identified another area where oil might be found but was reluctant to say more. Over lunch, McLennan asked in general conversation: 'Well, is there any worthwhile oil anywhere in Australia?' Weeks then explained that some years earlier, he was part of a survey team examining the Gippsland area and was convinced that it contained oil-bearing deposits. McLennan responded that they were steel men and had no experience of oil, and asked 'what should BHP do now and can we hire you for the next six months to advise us?'
Weeks stayed on in Australia, initially with a verbal contract including a commission on each barrel of oil recovered from Bass Strait. When McLennan asked of Weeks 'Will you rely on me to do a fair thing?' (as regards a contract) the latter agreed and they just shook hands.
This brief interchange seemed to sum up the high regard and mutual respect that had developed between the two men on a comparatively short acquaintance and that continued for many years. It was also typical of the high respect in which McLennan was held generally, both within the industry and in business circles more generally.
Preliminary costs for an initial magnetometric survey of around $350,000, with three times the amount for an additional seismic survey, were the initial figures that McLennan took to the BHP Board, on which he obtained their agreement for the project to go ahead. Even at this stage it was a bold adventure for both McLennan and the BHP Board for, even if drilling were successful, there were real doubts as to whether the technology for working in deep and stormy seas and harvesting oil had been proven sufficiently to justify the huge investment that would be needed for a successful outcome. The Board also agreed that, if the surveys looked promising, they would expect to go ahead if a company with the right experience and financial resources could be found that would be agreeable to entering into a partnership arrangement.
A major headache had been to find a suitable partner with extensive experience, not only in drilling for oil but doing so in deep ocean waters. It also proved difficult because McLennan insisted that BHP retain a 50% share in the final company. This last point took a great deal of skilful negotiating. However, in April 1964, BHP and an American company, Standard Oil Company, announced that they had entered into an arrangement to intensify the search for oil in the Gippsland Basin off the coast of southern Victoria. An associate BHP company, Hematite Explorations Pty Ltd, would work with ESSO Standard Oil (Aust.) Ltd to carry out the work. This finally led to a decision to extend exploration to include drilling off the southern coast.
The success of the joint company in striking gas in 1965 and then oil in 1967 is now well known. Even with the depth of experience behind ESSO Australia, drilling offshore in rough seas proved difficult and dangerous, as was the final tapping of gas and oil. At the later fields, Kingfisher and Halibut, the consortium drilled deeper than had been attempted elsewhere around the world; these together with the later Tuna and Mackerell fields gave Australia a degree of economic independence never before experienced. It is difficult to estimate just how great the benefits from oil and gas have been to the Australian economy, but the contribution by Sir Ian McLennan cannot be overstated.
There were a number of direct benefits that flowed to other parts of the company from the discovery of the oil fields. The BHP shipyard at Whyalla managed to obtain the contract for building an $8 million drilling vessel designed to drill either by sitting on the ocean floor or as semi-floating and partly submerged. The shipyards also were involved in the supply of tankers to transport oil and later gas overseas; work later extended to the supply of roll on-roll off vessels for transporting steel.
Even up to 1960 it was thought that Australia's reserves of iron ore in Australia were very limited and were mainly associated with the Whyalla deposits. As a consequence, the Commonwealth Government had placed an embargo on the export of iron ore, leavig little incentive for BHP to spend too much time or money on prospecting. When the export ban was lifted in 1960, general Australian exploration activity increased and drilling programmes were undertaken by American companies, joined later by Australian interests. In due course these companies invited BHP to join them in a consortium to develop and market iron ore from deposits in the Pilbara area in Western Australia. A new company, the Mt Newman Mining Co., was formed in which BHP held a 30% interest through its subsidiary company, Dampier Mining Co. The project became one of the largest open-cut mines in the world, and required the mined ore to be transported by rail over 400 km for subsequent loading into ore ships at Port Hedland on the north-west coast of Western Australia.
As part of this mining enterprise in the north-west, BHP needed to create a completely new township in an unpromising area with a very severe climate. Not only were new air-conditioned houses, flats, schools and hospitals to be built but amenities such as swimming pools, golf clubs and recreation halls, all set out in a tree-lined environment were to be developed. Most were completed by 1970 while McLennan was Managing Director.
Some years earlier, when the South Australian government began applying pressure to BHP to develop steel making in South Australia as compensation for its mining leases covering iron ore deposits, McLennan thought it was time to make a positive move, particularly as overseas steel makers were showing interest in investing in Australia. As a consequence, BHP decided in 1958 to erect a blast furnace as part of a future integrated steel works in Whyalla, where ship-building had already been established. The agreement with the South Australian Government involved the company spending $60,000 while some 1,500 houses were to be provided by the Government. As part of the agreement, the company would be given the right to take up additional iron ore leases. Similarly, as recounted earlier, Western Australia had been exerting pressure for the establishment of steel production in that state as recompense for leases to mine ore at Yampi Sound, and as early as 1952 an agreement was reached via the BHP Steel Industry Act for BHP to construct a steel rolling mill at Kwinana capable of producing 50,000 tonnes per annum. By November 1960 a further agreement to establish an integrated steel works was signed involving expenditure of some $160 million over eighteen years and covering leases at Koolyanobbing and later Mt Newman.
It was becoming apparent that there was a further need for BHP to protect its steel- making business from competition from overseas companies that might wish to expand to Australia. It was known that the British company Guest, Keen and Nettlefold (GKN), through its Australian subsidiary, JLA (uncoated and coated sheet steel producer) was interested in establishing more firmly its supply of raw products, whether as hot rolled strip coils, steel slab or raw steel.
To complicate matters, in 1965 the New South Wales Minister for Mines invited overseas companies, including some steel companies, to invest capital in Australia, leading to proposals from American companies interested in the possibility of steel- making in the Jervis Bay area of New South Wales. While these came to nothing in the end, BHP management could see that it was now imperative for BHP to have clear understandings with its major customer, JLA, whose business plan foreshadowed quite rapid increase in demand for sheet steel products that would involve significant capital expenditure by GKN/JLA. BHP also had plans for costly developments and joint discussions on these future plans were held. As an outcome, in a move largely organized by McLennan, a joint announcement was made on 4 March 1967 that the Boards of BHP, JLA and GKN were to put in hand a study of the feasibility of establishing an integrated iron and steel works jointly owned by BHP and JLA/GKN. The study, when under way would be looking primarily at a wide range of flat rolled products, studying possible plant locations and related market requirements and the types of processes that would be appropriate. From a JLA point of view, it was clear that, whatever road was taken, BHP would always play a major part in its supply line and that therefore some more formal relationship with BHP was desirable for future stability. In May 1969 it was announced that BHP would take a half share in JLA with the British company GKN, and under a Joint Venture Agreement it was proposed that JLA would establish a hot and cold steel strip production plant at a new facility to be established at Western Port Bay in Victoria, envisaging the eventual establishment by JLA of an integrated steel plant in the same area. JLA became jointly owned by a new company BHP/GKN Holdings Pty Ltd, with McLennan as Chairman. Some years later on 4 December 1979, BHP acquired the 50% GKN holding in JLA, making the latter company a wholly owned subsidiary of BHP. This was a major achievement for BHP under McLennan's leadership because it eliminated a possible major competitor with access to overseas capital support and, at the same time, BHP gained a well organized company with sales of over one million tonnes of steel annually, with important patents and with a number of overseas operations. It would ensure for many years that overseas steel companies would be unlikely to enter local production in competition with BHP.
For many years BHP's training policy had been directed from Head Office in Melbourne, where a head-office Staff Training Committee met periodically that consisted of most senior officers with the Senior General Manager as Chairman. In December 1944 the first Combined Staff Training Conference was held in Melbourne, organized and chaired by McLennan. This was a milestone in the development of the Staff Training Scheme, begun seventeen years earlier. Seventeen staff from all associated groups attended and discussed alignment of courses and future staff needs; it became an important annual conference.
In 1956 BHP and its subsidiary companies introduced their 'Steel Industry Scholarships' available to students at matriculation and undergraduate level to cover a university course on a full-time basis. They carried a very adequate living and book allowance and could be taken up at any university. The company had also developed a 'Steel Industry Trainee Scholarship' scheme for full-time technical training that operated for people who would initially attend colleges part-time. It had also successfully operated training courses at apprentice level so as to be assured of a continuing supply of well- trained tradesmen, as well as technicians and graduates. The subject was one in which McLennan took an active and continuing interest.
In some of the company's larger areas such as Port Kembla in the 1950s, the facilities for university and technical training were quite inadequate. In 1958 McLennan moved to obtain company financial assistance of £150,000, to go towards developing adequate technical and technological facilities and, in particular, Wollongong University College. There would be further input from government. In 1961 as Chief General Manager, BHP McLennan opened a new £500,000 apprentice training centre at the Newcastle steel works, modelled on the best practice in Holland and Germany. He observed then:
for all the skilled occupations involved in the industry, whether at the works, on the ships or in the mines, we have tried to develop training schemes to help the young men to fulfil their tasks...we realise that today's apprentice or trainee is tomorrow's skilled tradesman, engineer, draughtsman, designer, superintendent or manager.
He later observed:
the whole question of training in industry was one of tremendous importance to Australia. BHP was training 583 apprentices in the steel works and another 2000 in associated companies and the training of this number of young people must make a tremendous contribution to this country.
This was a theme McLennan expressed in public on every suitable occasion.
The conditions of employment of people in training changed over the years but always the student was paid adequate wages and allowed often generous time during the day to attend courses (although training also involved some attendance at classes in the trainee's own time). As regards other labour activities, BHP had difficult relations with the various unions over some years, particularly between 1950 and 1965, generally in connection with wage levels and over-award payments. When industrial awards were finally governed by the Arbitration Commission, the Company refused to make over-award pay rates. In later years McLennan is reputed to have claimed this to be essential, for otherwise it would put undue pressure on smaller companies to meet the higher rates when they were unable to afford them. In the late 1960s and '70s, with the much larger company spread over a number of divisions, attitudes to wage levels altered considerably, but BHP was never at this time a trend-setter on wages and salaries.
Throughout his service with the company, McLennan had followed Essington Lewis in being very concerned with all aspects of safety and tidiness around the works. He placed great emphasis on observance of rules for safe working. Training, he insisted, was the essential starting point:
Plant tidiness and cleanliness are always in the forefront of our thinking. So too is safe working practice. Since 1946 our overall safety performance has been improved by more than 50%.
In 1958 a further training course was introduced with the objective of establishing more effective control of the factors that lead to accidents. At the start of each course the general manager stressed that one of the company's most inflexible policies was that the safety of the individual took priority over all else. The course was generally of five days' duration.
Particularly over the two decades from 1950, BHP and its associated companies grew extensively requiring a number of organizational changes to meet the needs of the interests of different divisions and the increasingly expanding product market, both at home and abroad. Steel- making was no longer the main business. Oil and gas, iron-ore mining and export, and the business of associated companies were all requiring different approaches to administration and remuneration. Following recommendations by American consultants who examined the structure of the company in 1967, the BHP organization was divided into five groups or business profit centres, Steel Division, Oil and Gas Division, Minerals Division, Group Subsidiaries, and Rheem Australia. The staff heading these divisions were to have a considerable degree of independence and to be responsible for their divisions as profit centres. Each would have the appropriate staff functions so as to deliver the required service and would operate largely as separate entities. Collectively they reported to Sir Ian McLennan (appointed Managing Director in February 1967), as did a number of special groups such as Engineering, Research and Development, and Finance. In addition, at Board level, two new committees were established, the Finance Committee (reactivated from an earlier reorganization) chaired by the BHP Chairman, then Sir Colin Syme, and an Executive Committee of four members led by McLennan.
A problem that arose with the new organization was that it tended to highlight differences in annual profits between divisions, allowing outside shareholders to apply pressure to break the company down into separate business entities with the expectation of higher returns on investments. This was an aspect that had faced BHP for a number of years, particularly as the returns on assets employed from steel- making activities were always low when compared with those of other groups. McLennan and others in the company were reluctant to lift steel prices, although this was seen as the only way to improve returns. However, by 1973, inflation in Australia had reached very high levels and a new Labor government was in office with E. G. Whitlam as Prime Minister. A serious outcome for the Company occurred when the new government withdrew a number of industry concessions such as a 20% investment allowance on capital equipment and also introduced a Prices Justification Tribunal to monitor price increases. At this time, with McLennan now Chairman, BHP applied for a 7.1% steel price increase but was allowed only 3% by the Tribunal. As the Annual Report for 1973 showed, the return on funds invested in iron and steel had dropped to a critically low 2.1%, whereas shareholders might reasonably expect 10%. In spite of this low return, McLennan and his Board resisted the many cries to separate steel from oil and gas. The next year in his Chairman's Report, while dealing with expenditure on proposed major developments, McLennan stated:
this will involve extremely large expenditure investment which can only be justified if there are reasonable grounds for belief that the company will be able to earn a fair rate of return on the investment over its life.
Over his years with the company, McLennan maintained the firm conviction, restating it often, that 'from Australia's point of view, surely if the climate is right for a company like BHP to develop and prosper, the climate is right for the growth of other activities in Australia'.
In April 1971 McLennan was appointed Chairman and Director of Administration, BHP, positions he held until his retirement in 1977, when he reached the compulsory retiring age for BHP directors. Thus, in less than forty years he had moved through the company ranks to the most senior position, and had been the guiding force behind the extraordinary changes in BHP, particularly during the previous two decades. In the early 1960s, Helen Hughes observed that
The Broken Hill Propriety's monopoly has inevitably influenced its decision making, not in the direction of unduly high prices or profits...but rather in its failure to promote an adequate rate of growth, its failure to take risks and to show enterprise.
In fact, since the 1950s, shareholders' funds had been increasing by nearly 14% per year; by 1975 annual steel output had increased to over 7.5 million tonnes; the raw products used came from BHP mines and were transported in BHP ships; and it mined and exported ore and coal, oil and gas. It also had eighteen subsidiary companies and thirteen associated companies and in acquiring or associating with these, vision was needed and risks had been taken showing the great and expansive change that had occurred during the 'McLennan Era'
Between 1969 and 1975 Sir Ian McLennan was Chairman of the government's Defence (Industrial) Committee and in its first year led a successful Australian Government Defence Industries Mission to the USA. Within the BHP group, he was also Chairman, Australian Iron and Steel Pty Ltd; Chairman, Australian Wire Industries Pty Ltd, and Chairman, Hematite Petroleum Pty Ltd; and from 1970 to 30 June 1979 he was Chairman, BHP-GKN Holdings Ltd after which date BHP became the sole owner of the company, thus bringing together the major sheet manufacturing groups in Australia.
Apart from BHP companies, McLennan held directorships in a number of local and overseas companies including ICI Australia Ltd (1976-1979) and Henry Jones(IXL) Ltd (1980-1985). He was Chairman, Interscan Australia Ltd, 1978-1984; and with the ANZ Banking Group he became a Director in May 1976 and was Chairman, 1979 to 1982.
In 1979 he was made a Knight Commander of the Order of St Michael and St George for services to youth, community and industry.
McLennan's lifelong interest in science applied to industrial problems showed itself in a number of ways. For example, towards the end of its first decade, the Australian Academy of Science recognized that there was a need for greater interaction between the Academy, industry and commerce and organized a discussion group to promote the idea, inviting senior industrial leaders to meet with a number of Academy Fellows. In a farsighted move, they invited McLennan, then Senior General Manager of BHP, to chair a meeting in May 1964, at which some forty industry leaders and scientists discussed how best to increase and improve interactions between the various groups in order to best serve the nation. Sir Ian's final remarks in his summing-up included his understanding that future closer interaction would be supported by many in industry, and this served to ensure continuing action on the part of the Academy.
Over the ensuing 24 months the Council of the Academy organized further discussion groups, at one of which McLennan gave a paper entitled 'Scientists and Industry'. The final outcome from these discussions was a proposal to establish a National Science and Industry Forum, the first meeting of which was hosted by CSR Ltd in Sydney on 18 March 1967. Subsequent meetings covered a broad range of subjects and resulted in a number of reports, and were extraordinarily successful in improving mutual understanding and collaboration between scientific and industrial leaders in the nation. From 1967 until the fifty-seventh and last meeting on 7 November 1996, some 300 papers and discussions were delivered covering a great variety of subjects; McLennan delivered two papers, in September 1974 'An industrialist's view of China' and in 1976 'National priorities in the exploitation of inventions'.
In 1972 Sir Ian McLennan warmly supported a number of eminent scientists, technologists and industry leaders who were working towards establishing a new Australian Academy of Technological Sciences and was happy to accept the role of President of the Provisional Committee that was set up. He would have been particularly pleased because one of the committee members, Professor Howard Worner, had also been a member of the first steel industry University-Industry Conference that he had chaired at AIS in 1955. After the Australian Academy of Technological Sciences was finally incorporated on 6 November 1975, McLennan was elected its first President on 21 November 1975, when he inducted the first of the Academy's Honorary Fellows, Sir Mark Oliphant, then Governor of South Australia. Shortly after this, with the support of the Fellows, the words 'and Engineering' were added to the title of the Academy.
Many of the early activities of the Academy, which became increasingly important, were influenced and supported by the President, including the now well-established pattern of holding annual symposia on topics of importance to Australia. In 1982 the Academy signed a memorandum of understanding with China's State Science and Technology Commission and this was followed up by McLennan leading a delegation of Fellows to China. The delegation discussed with their Chinese hosts the direction that future liaison between the two organizations could take, and it must have been gratifying for McLennan to see, in later years, that further important exchange visits had taken place with benefits to both countries. Again, the Academy's aim of providing advice and assistance to both state and federal governments was helped materially by the presence of the President at many meetings. He was a driving force within the Academy until his retirement in 1983, and he maintained a close relationship with it in the following years At the Annual General Meeting in 1983 it was agreed that he be accorded the title 'Foundation President' which he was pleased to accept. Later, when the Academy purchased the Ida Scheps Wing of International House from the University of Melbourne in 1987, the new home of the Academy was called 'Ian McLennan House' as a fitting tribute to him.
In 1980, McLennan became a Fellow of the Australian Academy of Science by special election under the Academy's statute that allows for election to the Fellowship of a limited number of people who have 'rendered conspicuous service to the cause of science or whose election would be of signal benefit to the Academy or to the advancement of science'. The citation noted 'his leadership in expansion and modernisation in the Australian iron and steel industry' and referred to his establishment and subsequent support of BHP's research division, his influence on 'the modernisation of all process control measurements throughout the Company's works', his founding role in the Clunies Ross Memorial Foundation (on which see below), and his involvement in the Academy's Science and Industry Forum and support for various other Academy activities.
Sir Ian McLennan was President of the Australasian Institute of Mining and Metallurgy in 1951, 1957 and 1972 and was elected an Honorary Member in 1979. He was President of the Institute of Production Engineers, Australia in 1962. He was elected a Fellow of the International Academy of Management in 1978; a Foreign Associate of the (US) National Academy of Engineering in 1978; an Honorary Fellow of the Institution of Engineers, Australia in 1982; a Foreign Fellow of the Royal Swedish Academy of Engineering Sciences in 1982; and a Foreign Member of the Fellowship of Engineering (United Kingdom) in 1986. In 1986 he was a Director and member of the Executive Committee of the International Iron and Steel Institute (Great Britain). He was also a Member of the Australian Institute of Metals, the Institute of Directors and The Metals Society (Great Britain).
Between 1973 and 1979 he was a member of the International Council of the Morgan Guaranty Trust Company of New York and from 1978 to 1983 a member of the General Motors Advisory Council.
McLennan had many diverse interests in the community but particularly important were those dealing with education, engineering and technology. The Australian Mineral Development Laboratories (AMDL) in South Australia were initially established as the Research and Development Branch of the South Australian Mines Department and acquired a unique reputation in its fields of research. In an arrangement between the Commonwealth, the South Australian Government and the Australian Mineral Industries Research Association, the interest in the Laboratories was vested in the latter group so that they could operate on a national basis to offer a contract service for the investigation of problems relating to the development, processing and use of minerals in Australia. The Australian Mineral Industries Research Association is an association of various companies engaged in the mineral industry. In February 1960, at a ceremony performed by the Prime Minister, R.G. Menzies, to mark the transfer, control was passed from the South Australian Government and documents that signified the transfer of the laboratories were passed to McLennan, who then became the first Chairman of the Laboratories' Council. In accepting the documents, McLennan announced the appointment, after a world-wide canvass, of Dr L Coffer as the first Director of the AMDL. His final remarks were characteristic: 'We will get down to the job with vigour, and a determination to discharge the trust placed in us'.
On 17 June 1964, McLennan attended the official opening of Elrington Engineering Pty Ltd which occupied the surface facilities of a former Elrington Colliery near Singleton, New South Wales, that had been forced to close due to poor economic conditions for coal in 1962. The colliery had been jointly owned by Boral Ltd and BHP. McLennan had been actively associated with it and was well aware of the problems the closure would bring to the district. He conceived the idea of using the mine's surface buildings and facilities as an engineering enterprise, and this was supported by both Boral and the State Government as well as by BHP. Within two years a new company employing many of the miners was up and running successfully with 33 employees.
He was Governor and Chairman in 1966 of the Ian Clunies Ross Memorial Foundation and with three others, Sir Archie Glenn, Sir John Holland and Sir Bernard Callinan, founded the Melbourne University Engineering Foundation in 1983. He was the first Chairman of the latter Foundation which, among other things, was to assist the Council of the University in matters associated with the encouragement and promotion of excellence in education, study, teaching and research in the Faculty of Engineering. Further, it was to foster the development of close relationships between persons in industry, commerce and the Faculty – including both students and staff – and to assist in bringing to the University visiting lecturers who had made outstanding contributions in relevant fields.
In October 1985 McLennan became Honorary Chairman of the Joint Committees of the Australia-Japan Business Cooperation Committee and the Japan- Australia Business Cooperation Committee, and in 1986 he became Patron of the Australia-China Business Cooperation Committee. Also in 1986 he became Chairman of the Advisory Committee for the National Bicentenary Science Centre. He was a long-serving Councillor of the Board of the Royal Agricultural Society of Victoria, 1978-1992. For some years he was a Councillor of the Australian Mineral Industries Research Association, and a member of the Executive Committee of the Australian Mining Industry Council.
Over the years many high distinctions were conferred on McLennan including Honorary Doctorates of Engineering, University of Melbourne and University of Newcastle, both in 1968; Honorary Doctorate of Science, Deakin University 1988; and Honorary Doctorate of Laws, University of Melbourne, 1988. He was appointed a Knight Commander of the Order of St Michael and St George for services to youth, community and industry in 1979. Other awards included the James N. Kirby Medal of the Institute of Production Engineers, 1964; the Peter Nicol Russell Memorial Medal of the Institution of Engineers, Australia, 1968; and the Kernot Memorial Medal of the University of Melbourne, 1970. From overseas came the Charles F. Rand Memorial Gold Medal of the American Institute of Mining, Metallurgical and Petroleum Engineers and the prestigious Bessemer Gold Medal of The Metals Society (Great Britain) in 1981. In 1986 he received 'The First Class Order of the Sacred Treasure' from the Emperor of Japan.
It is all too easy to concentrate on Sir Ian's immensely successful technology and business accomplishments and to overlook his interest in various forms of sport in which he participated when possible.
At a tennis afternoon in February 1944, the opportunity was taken by Newcastle Works Tennis Club, of which he had been president, to farewell him because he was moving to Melbourne. The large number present, 44 plus four children, demonstrated the esteem in which the members held their president who not only took an active interest in the club but was also an excellent player.
More generally, he took great trouble to support the development of sporting clubs where the initiative had been taken by a group within one of the works. Thus, on 14 September 1957, and in his role as General Manager of BHP, McLennan officially opened the Illawarra Leagues Bowling and Recreation Club's new bowling greens and clubhouse. His doing so represented a new departure in that the honour for such an opening was usually given to the president of the Royal New South Wales Bowling Association. The change had been made in recognition of the assistance given by the Company to the Illawarra Leagues Club and the Illawarra Bowling Club. Following the opening, McLennan was given a civic reception where he observed:
only eight years ago in 1949 some people had been sceptical of the decision to develop further the steel industry at Port Kembla, but, today, with employment at the steel works over 11,000 and production running at 1,800,000 tons of steel a year, the faith of the industry, in the district, and in Australia has been justified.
McLennan was also Foundation Patron of The Grange Golf Club near Port Kembla, which began when employees at various BHP collieries that supplied coal to AIS formed the Southern Collieries Social Golf Club in 1960. The Club wrote to the Chief General Manager, BHP requesting a lease covering unused company land to develop into a golf course and McLennan replied in March 1963 that AIS would co-operate in the project. After much voluntary labour and company help, the first nine holes of the course were opened in March 1964 with the remainder completed by the official opening on 21 March 1965 when Sir Ian unveiled a plaque and presented the McLennan Cup to the club as a perpetual trophy for the Club Champion. He is remembered also by the nearby McLennan Park. There is a story told locally that, on the day when he performed the opening ceremony for the new golf course, he had the 'honour' on the first tee and well out-drove the club champion who followed.
In an interview he gave on retirement in 1977, McLennan remarked that he had played tennis and golf until 1966. At that time he purchased an 80-hectare property called 'Oatlands' at Narre Warren, Victoria, where a Victorian homestead was renovated and a Hereford stud established. This and an extensive garden, orchard and rose garden became his great interest and pride and what he claimed to be his refuge. Improving the breed of his Hereford cattle was a further interest until, in the 1980s, the area was re-zoned and the property subdivided for housing. His clubs were the Melbourne Club, the Athenaeum, the Australian, and the Royal Melbourne Golf Club.
Sir Ian McLennan was, above all, a most eminent Australian citizen, a strong leader with a clear vision of where he and the Company should go and with the will to see his vision succeed. Within the Company, he was demanding and exacting but always ready to support staff while expecting their loyalty. Instinctively, he was prepared to take chances, to support long- term development projects and more basic research where it converged finally on company interests. His great industrial and personal achievements in promoting the advancement of his industry to the forefront of world-best practice, leading to great economic benefits to the nation, are probably less well known to those outside the steel industry. If asked to identify his major business achievements, perhaps one would choose the early installation of the hot strip mill in Port Kembla, his major involvement in BHP's entering into gas and oil prospecting and its successful outcome, and finally the development of iron ore mining in Western Australia.
After relinquishing most of his business and technical interests Sir Ian moved closer to family, particularly his grandchildren and his gardens, interspersed with outings to his clubs. His thoughtful counsel is greatly missed by industry and community interests alike.
This memoir was originally published in Historical Records of Australian Science, vol.15, no.2, 2004. It was written by P.N. Richards, Newcastle.
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