Even during the business boom of 1920 only three-quarters of Britain's massively war-extended steel capacity was utilised; 1921 output was less than 41 per cent of that of 1920; from 1921 to 1926 the rate averaged about 50 per cent. Gradually some leaders of the large steel, armament, heavy engineering and shipbuilding groups, recognising the intractability of the problems facing them, began to consider collaborative ways of escape. As a result the continued existence of vertically integrated operations, which had seemed logical in pre-war days of rapidly expanding business, came under scrutiny.

As early as winter 1921–22 Webster Jenkinson, an accountant with experience of the industry at the Ministry of Munitions, wrote to the Vickers board: ‘Experience has shown that combinations or trusts can only be successful if confined to one trade or class of trade, that is to say to one type of production or its subsidiaries’. If he was right, rambling conglomerates such as Vickers, Armstrong–Whitworth or Cammell Laird were vulnerable: commercial experience was already endorsing this point of view. Gradually Hichens realised the answer might be to replace the vertical structures with horizontal integration and follow up with a relentless pruning of the dead wood throughout the new amalgamations. Sometimes the process was presented as benign, as when Sir Herbert Lawrence, chairman of Vickers from 1926, defined it as ‘the amalgamation of like with like as a process calculated to increase the competitive power of the firms concerned in the world's markets’. In fact, a great deal of disturbance, loss and hardship was to be the price for improved efficiency.