THE WOOLLEN INDUSTRY.

Press, Volume LVI, Issue 16961, 9 October 1920, Page 9

THE WOOLLEN INDUSTRY.

. —♦- boar£> of trade s report. (rRISS ASSOCIATION TELEGRAV.) "WELLINGTON, Octobcr 8. An interesting report dealing with, the woollen industry was presented to ,jj C }fou»e of Representatives to-day by the Minister of Industries and Commerce, the Hon. E. P. Lee. The report contains the result of the Board of Trade's investigation of the allegations nindo that the woollen mills in Sea* Zealand have been making unreasonable profits since 1914. the year of the commencement of the war with Germany. The Hoard's investigation] into all the operations of the woollen industry from the raw wool to the point of sale" to the consumer wns started soino tirno ago, and has not yet been completed, and the report tabled was the first section of the investigation, tho process of manufacture of woollen goods and the disposal of these goods by the milling companies. Tho Minister states, in his summary of the rej>ort, that every care was taken by tho Board's officers to obtain accurate information of the costs of manufacture, and other charges which iigure in tho total cost of production, and expresses the opinion that, upon the cvidcnco disclosed, it cannot be said that the woollen milling companies of New Zealand have taken excessive profits during recent yearsi Tho profits have certainly been increased during the war period, and on the gross capital outlay the average net profit in 1919 amounted to approximately 13 per cent A reduction of prices of less than 8 per cent, would place the companies in such a position that no profit whatever would' be earned by tho average company, while at least two of the largest companies would be conducting business at a loss. "It must bo allowed,'' says a passage of tho report, ""that in sympathy with< tho general inflation of values, tho decline in tho exchange value of money and 'tho general increase in interest, rates, investors in woollen manufacturing companies are entitled to some increases in tho net profits earned by capital so invested." There are ten woollen mills at work in New Zealand to-day, comprising four operated by private companies, and six by public companies. Tho tables given in tho report refer to nine of tho companies. The recent chango of ownership of the tenth mill has delayed the submission of its detailed accounts to the accountants of tho Board of Trade. In tho preliminary part of the report it is explained that tho enquiry has been complicated by the fact that several of the"companies are also importers and makers of clothing. "The allocation of capital expenses and profits as between the various departments of theso companies," the states, "is a matter whicji can be carried out only on the basis of intelligent esermajtcs. Tho records of the various companies do not provide for the ascertaining of profits otherwise than for the businesses as a whole, but there is no evidence to- show that the gross _ | arising out of imported goods is less than the gross profit taken on locally manufactured goods. For this reason the particulars given in the major portions of this report cover the operations which are allied to, but which are not necessarily, part, of, tho busi-. per,s of woollen manufacturing." "It is well re.cognised," the report states," that prior to the war period the pressure of oversea competition was such that woollen milling in New Zealand was 1 a by no means lucrative business. Several of tho companies carrving on this business were rapidly reaching a position of financial instability. and only ono or two of tho companies were earning profits which could bo regarded as reasonably sufficient in the manufacturing industry. The higher profits earned in recent years have to some extent at least been secured a result of tho installation of hew and up-to-date machinery and tho; adoption of. improved methods of organisation."' ■ Manufacturers state that tho absence of competition from,overseas permitted them to undertake measures of specialisation, a concentration on materials that could be quickly produced ; thus, with up-to-da-to machinery a large output was maintained, in epito of the shortago of" labour, and the cost of manufacture was ikept bfelow the point to which it would have otherwise risen with a corresponding increase .of prices. ' The following points are made: — "Though the number of employees lias rison from 1415 in tho year 1893, to 1878 in 1919, the mills have equipment for a much larger number, and manv machinos are idle to-day as a result of tho shortage of suitable labour." ' ' , . "In consideration of the fact that tho costs of production for different samples of goods have increased since 1914 by different amounts, it is not ' possible to give a concise statement as to the general increase in the cost of manufacture. . , . The increase, however, jnay be se* down as approximating 70 per cen«,. It is claimed by tho woollen companies that the prices of greasy wool have increased sinoo 1914 approximately as follows • Merino. IOJd to 2Md per lb (95 per cent.), hr.lfbrecl *> 2M (88 per cent.), crossbred to 13 4-5 d <88 per cent.). . • After an analysis of tho wool position the report says: "There is conclusive evidence to show that wool pricc havo advanced in recent years, no - Withstanding the nominal fixation prices under the Imperial Governmen requisition', and the extent of tins aavnnce, so fat as 1919-20 prices are concerned, cannot be accurately deter--mined, but may bo accepted, quality for quality, at apnroxiniatoly to per cent. "Wages figures £how increased of" about 65 per cent, for men and for women. Largely as a result of tne scarcity of labour, the wages of junior femMe workers have been increased to a much greater extent." "Although it is impossible," tne Board comments, "to determine accurately, over the mills aa a whole, the increase in labour costs in relation tc output, the evidence available shows that this increase has been not less than 60 per cent." With regard to the rise m the cost of the various materials used bv tn< mills, tho Board states: "It is quite impossible to give any concise or accurate statement of these increases, bul evidence produced in respect of on< mill shows increases ranging from ovei 100 per cent, for coal to several hundred per cent, for relatively unimport ant commodities." The total sales of locally-mado anc imported goods by nine of Uhe ten com panics were £1.569,490 in 1914, ani . £3.028,746 in 1919 (an increase o £1,459,256). The gross profit wa £305,630 (19.47 per cent.) in 1914, am £729,061 (24.07 per cent.) in 1919. Th net profit in relation to sales wa £85,854 (5.5 per cent.) in 1914, an< £242,721 (7.9 per cent.) in 1919. Further investigation will be mad regarding the operations of one or-tw< of the more successful companies, an the Board's recommendations in thi connexion- will then be submitted t the Government later. Mr Wilford asked if the Governmen had any intention of entering into th woollen industry. The Hon. E. P. Leo- snid lie couli not say what the Government would do but as the question had been asked, h •would discuss the matter with th Prime Minister.