WHAKATANE MILLS.

Auckland Star, Volume LXXI, Issue 43, 20 February 1940, Page 9

WHAKATANE MILLS.

PRICE OF CARDBOARD. APPLICATION FOR INCREASE. COMPANY'S CASE CONCLUDED. (By Telegraph.—Press Association.) WELLINGTON, Monday. The hearing by the Price Investigation Tribunal of the application by Wliakatane Paper Mills, Ltd.. to increase the prices of the cardboard it manufactures was continued to-day. Mr. Justice Hunter presided, and with him was Mr. H. L. Wi.«a. Mr. H. P. Richmond and Mr. W. G. Clavis. of Auckland. appeared for the company, Dr. N. A. Fodeu for the Crown, and Mr. W. Perry for users of Wliakatane cardboard. Under cross-examination. William Druniinond Barclay, registered accountant, of Auckland, who gave evidence on Friday afternoon on the company's costing system, said he did not check up on the relevancy or necessity of all items of expenditure in respect of plant or buildings. That was outside the ambit of his inquiries. Before asking anyone to accept the mill expenditure figure of £586,000 as conclusive, he would expect him to check up on the amounts from the beginning. Dr. Foden: I take it that speaking generally they are still adopting the policy of trial and error in many phases of the mill activities. Witness: Speaking generally, one might say they had now gained sufficient experience to net on a more satisfactory basis as regards costs. Mr. Perry: If the mill could have had continuous running costs production would be lower T Witness: It follow* that if it was possible to get the ideal of continuous running on one type of board costs must fall. "Margins for Contingencies." Mr. Perry: It is very difficult in practice to get it?— Very difficult. Therefore margins had to be made for contingencies of that nature. Mr. Perry: Therefore, front a practical point of view, it Is very difficult to get what you call continuous running!— Ye*, unless you had standardisation 011 a smaller number of boards. Mr. Ferry: Some kind of rationalisation ? —Rationalisation and as small a field a* possible. Mr. Perry: Do you know boxninkerliad made certain efforts to meet them? —Yes, I understand they had got down to an irreducible minimum. In answer to Mr. Wise, witness agreed that if there were any serious errors in the figures that had been given him his costing might be considerably aflfected, but he had indicated clearly the sources of his information. He agreed that the costing figures should be checked before they were accepted, and thought if accountants on both sides got together that matter could be cleared up. He felt that the total mill expenditure of £680,000 would be found substantially correct. His Honor questioned witness about changes in the company's 'prices In the last six months. "Can you tell me,' his Honor asked, "why it was necessary to vary these prices, four, five or six times in as many months ?" Witness said lie thought the simple fact was that prices in the earlier stages were not based on cost* at all, but on tbo selling prices of imported lines. Tho company realised that if it did not sell at the imported price it would get no business and it would be unable to get the mill going. His Honor: Do you say tliat, although the "life" which the company lias now got arises from the fact that there is a war and import control is now in force, nevertheless we should fix prices 011 that very large sum which they say was invested in the mill? "Can't Have It Both Ways." Witness suid lie thought so. If the matter was looked at from the other j>oint of view—high juices due to the war—the company would be entitled to tlio price at which the board could be imported. It was not asking for that. It was asking for prices based on costs. The public could not have it both ways. Clifton Frederick Langtoil, cost accountant for the company, said there was a diversity of opinion when the accounts of the company were reclassified. He had handed in his resignation, but it had not been accepted. In reply to his Honor, witness said that in costing theory did not matter in the least. Dr. Foden: Apparently the system of Mr. Horrocks in dealing with main items alone prevailed. Was that in keeping with sound accountancy t Witness: Yea. Tn a further reply to t)r. Foden, witness said it did not matter so much if the detail of costing was not exactly correct so long as the aggregate was correct. Dr. Foden: Can you explain the entry of £22,000 shown as unallotted expenditure? Witness: Yes. This might be called pioneering expenditure in establishing the new industry. It was made up mostly of engineering costs. Dr. Foden drew attention to the item of £5700 shown as expenses incurred by Mr. Horrocks and Mr. de Guyre on a nine months' trip to England to acquire plant for the company. His Honor: Princes or rajahs m*?ht have travelled on this sum. Witness said there may have been a pro]>ortion of salary included in the £5700. Dr. Foden: What staff of bookkeepers does the company have? Witness: We have three. Dr. Foden: You admit that with assets totalling over £1,000,000 some amount should be set aside for supervision?— Yes. I would 6ay about 8 per cent. The forests are growing and nature does not require much supervision. 111 reply to Mr. Rielimond, witness said the aggregate costs Were correct. Mr. Richmond: It has been said that Government officers had been unable to trace £39,000 of the cost of £586,000 in establishing the business. Has this amount been cleared up? Witness: Yes. It has been made clear now. His Honor: Your prices have been altered frequently in the past year. On what principle were your prices based 11 Witness: Until October of last year the cost was based on the prices of the imported article. Mr. Wise: Are you satisfied with the present price list? Witness: Yes. This closed the case for the company. Dr. Horace Hugh L'orbin, director and technical forestry adviser of the com- ; pany, called by Dr. Foden. said it was quite possible that pulp wood would be obtainable from Pukeiiui. Trees at Pukenul were fit for pulping now, but he had not gone into the cost of trails* port. The hearing was adjourned.