CASE FOR CROWN.

Auckland Star, Volume LXXI, Issue 44, 21 February 1940, Page 9

CASE FOR CROWN.

PAPER MILLS INQUIRY. HIGH TRANSPORT COSTS. ENGINEER'S SALARY. (By Telegraph.—Press Association.) WELLINGTON, Tuesday. The hearing by the Price Investigation Tribunal of the application by Whakatane Paper Mills, Limited, to increase the prices of the cardboard it manufactures was continued to-day. Mr. Justice Hunter presided aud with him was Mr. H. L. Wise. Mr. H. P. Richmond and Mr. W. G. Clavis, of Auckland, appeared for the company, Dr. X. A. Foden for the Crown, and Mr. W. Perry for users of Whakatane cardboard. « Professor Corbin. technical forestry adviser to the company, said it would be more costly to bring timber from the Pukahunui block to the mill than from Matakana Island. In any case the timber at Pukahunui was being reserved not for the production of cardboard but ultimately for newsprint.

Dr. Foden outlined the nature of evidence for the Crown, whose answer to the company's application, he said, would be that a case had not yet been satisfactorily established for the new prices sought. The history of the mill seemed to be what might be called a serial story of erroneous estimates. The picture had changed with kaleidoscopic rapidity during the few years of the mill's existence. The Crown would endeavour to satisfy the tribunal that this factory, which, it was submitted, had proved uneconomic, should not be turned into an economic concern at the public expense. Criticism of Books. John Bernard Prendergast. an officer of the Industries and Commerce Department, who carried out an investigation at the factory, said he was of the opinion that the'books did not go a* far as they should have done in stating the company's exact position. Witness discussed items in the balancesheet and said that from his inquiries he gathered that the company's financial position was not too good. The company was working upon low stocks of raw materials, which would be likely to embarrass continuity in the event'of a hold-up in supplies owing to the war or other factors. He understood the directors wished to increase their stock of raw materials, but that the financial position of the company made this impossible. .Lack of co-ordination and organisation had made it difficult for the Department's officers to secure accurate details of the cost of production at the mill. Witness said the company should have had departmentalized costing from the start. This would have given it greater experience to work on in the present year. He did not see the plant inventory at the mill. This would have clarified the position. He felt the tribunal would be faced with the question whether a number of items referred to plant or to buildings.

Witness said 20 per cent of the cost of Whakatane products was represented by transport costs. This was abnormally high. If the company got the prices it wanted the public would be paying these costs. Transport costs were high because of llie site. Every pennyworth of raw material, including coal, had to be transported. In addition the product had to be transported out. Judge's Suggestion. His Honor suggested that after an adjournment accountants of both sides should confer and see what could be agreed on in. regard to mill expenditure and the capital account of £580,000. The case could not be decided without something definite about this. William Crabb Ward, technical officer to the Government timber price commission and production and marketing officer of the State Forest Service, said regarding a statement that for pulping purposes pinus insignis would not keep, he could best point to 400 cords being kept for use as posts by the State Forest Service.

From his examination of the costing ledger at the mill, this was not one, in witness' opinion, on which a costing system could be based. The labour cost per cord was given at £1 2/6. He was prepared to concede to the company that the labour obtainable on Matakana Island could hardly be termed fully efficient in the sense of timber cutting and loading, but at the outside the cost per cord should not be more than 17/. With increasing efficiency this could be improved. At the present figure each man was. producing a cord a day. There were any amount of instances in Xew Zealand' at . present where men were producing two cords of timber a day cut into 4ft lengths.

Witness said the salary paid the company's chief engineer was considerably in excess of that.paid by his Department for a similar position. For instance, a chief mechanical engineer, with at least equal qualifications, to control a £100,000 plant and a number of other plants, was recently appointed by his Department at £470 a year. Mr. H. A. HOrrocks, managing director of the company: Then he does not get as much as some of our carpenters.

The hearing was adjourned,