RATIONALISING AN INDUSTRY

Press, Volume LXXI, Issue 21384, 29 January 1935, Page 10

RATIONALISING AN INDUSTRY

O TIMBER TRADE COMPLETE SCHEME ADOPTED MILLERS SHARE IN OUTPUT AND TRICES [From Our Own Reporter.] HOKITIKA, January 28. Practically all the timber millers on the West Coast, the home of the red pine trade, have co-operated in a plan for the complete rationalisation of their industry. This plan will ensure them all a fair share of the trade which is now showing such encouraging signs of a great revival. Details of the plan were completed at the conference of millers and merchants held last week on the West Coast. There the delegates showed general agreement with the claim that rationalisation was the surest method of keeping control over the internal administration of the industry and of preventing any of those checks to development which had occurred in the past under haphazard production and marketing.

This rationalisation scheme is thought to be unique in the Dominion. On broad lines it has been in force for a short period, and already, it is claimed, has shown itself successful, and an important factor in maintaining the present favourable trade conditions with red pine for the Australian market. It is stated that there are now only a few mills on the West Coast which arc not concerned in the scheme and that their owners are not likely for long to remain in the position of securing all the benefits derived from the rationalisation scheme without themselves contributing anything towards i' urciers Distributed All the mills in the organisation have been placed on something of a quota basis, all orders being distributed equitably from a central controlling office between mills according to their producing ability. Since it is most important to the industry that the export output of red pine be maintained at a high level, steps have been taken, as part of this scheme, to see that mills cut timber for export. This is done by a system of subsidies. Mills which are less favourably situated than others for the export trade—those working at a great distance from the exporting centre, Greymouth—are subsidised to assist them to meet the heavier railage involved.

Another important feature of the scheme for the rationalisation of this industry is the equalisation of returns to the millers. Naturally prices vary as between the North Island, the East Coast and the Australian markets, and there are certain mills which are particularly suited to supply some particular market. So a scheme has been evolved whereby the return to each mill is the same, no matter what market is being supplied by that mill. This is achieved by the creation of a fund to subsidise mills which supply timber to the low priced markets. This ensures that they are not penalised for concentrating their production on the less profitable market. Here again the arrangement is of very great importance in the development of the market with Australia. An instance can be given to illustrate the working of the scheme in equalising both railage costs and returns. A mill, more than 20 miles from Greymouth and supplying to the Australian market, receives assistance to the extent of 3d a hundred superficial feet on railage, and Is a hundred superficial feet to equalise the price and bring it to the level which would have been received had the timber been sent to a more profitable market. It can thus be seen that the scheme is fairly comDlete in detail. Spreading Production The scheme has apparent advantages which will probably be appreciated in other industries where there is no such control. By a system of the pooling of orders it is assured that the smaller miller gets his share of the work offering. 'Die bigger mill transfers surplus orders to the smaller man, and so an even flow of production spread over the entire industry is maintained. Output is easily assessed and easily handled; marketing is 'infinitely simplified, cut-throat competition disappears and for those in the organisation, particularly the small man, there are few of the uncertainti6s which made sawmilling formerly such a haphazard and risky business. The timber merchants co-op-erate in the scheme by handing a certain proportion of their orders to the central office, so enabling the rationing of orders to certain mills.

Under the rationalisation scheme there is no interference with the actual internal administration of each mill. Millers handled the details associated with cutting and production themselves, and there is no interference with individual enterprise or extension of activities. E /en where, under the scheme, a large mill becomes the foster-parent to one of the smaller concerns and hands on its surplus orders, the small man conducts his own milling work without any dictation from the big man. The result seems to have been rather an increase of individual initiative in the industry, and already there are signs of expansion and development among thp smaller mills which would have been unbelievable a few years when the timber trade was in the doldrums Continuous Employment The scheme has been practically perfected and is now assuring the West Coast sawmillers, it is claimed, a stabilised price, a fair share of output and, so long as markets hold, continuity of employment for every mill in the organisation. To a great extent price-cutting has actually been done away with. Those closely associated with the administration of the scheme say that it is only this co-operation within the industry which has made possible such a marked revival in the internal trade and in the export trade with Australia. The favourable marketing arrangements made with the Australian importers could never have been arrived at but for the goodwill shown by the millers and merchants in organising themselves along such lines. Nor, they say, would it have been possible without

this co-operation for the industry to say, as it did at the recent conference, that the red pine trade ha." been so organised that this year i* will be quite possible for the Wesf Coast to meet the heavy demand expected for rimu from the Common' wealth. The industry has adopted "Australia" as its watchword and is displaying an optimism which is reflected £.ll over the Coast.