MANUFACTURE OF TYRES

Press, Volume LXXXI, Issue 24600, 23 June 1945, Page 8

MANUFACTURE OF TYRES

PROPOSALS OF N.Z. GOVERNMENT

BRITISH FIRMS PROTEST (N.Z. Press Association—Copyright) LONDON, June 21. The belief that the New Zealand Government will issue a licence to one firm to manufacture motor tyres in the Dominion is causing grave concern among tyre manufacturing companies in Great Britain. They foresee that this will eventually mean the end of their trade with New Zealand and the granting of a virtual monopoly. A meeting has been held in London to discuss the position at which were present executives of the John Bull Rubber Company, Limited, the MicheIkr Tyre Company, Limited, Henley’s Tyre and Rubber Company, Limited, the North British Rubber Company, Limited, and the Avon India Rubber Company, Limited. In a memorandum which they drew up in protest against the proposals of the New Zealand Government, they referred to the dissatisfaction expressed in New Zealand at the quality of the milking machine rubbers which have been produced in the Dominion under a monopoly for the last five years. They also recalled the assurance given by the Hon. W. Nash in the White Paper of July, 1939, in which it was stated that it was not the intention of the New Zealand Government to employ the import licensing policy in order to give protection to local industry against imports of United Kingdom goods on a scale which prevented full opportunity of reasonable competition. It is stated that since the signing of this agreement a number of industries are believed to have been established in New Zealand, not merely under the protection of high tariffs but under the protection of complete prohibition of imports. “Another Monopoly Inevitable” The opinion is expressed that the proposed manufacture of tyres in New Zealand will inevitably add another monopoly, preventing a “full opportunity of reasonable competition." The memorandum emphasises that the United Kingdom was the market for 82 per cent, of New Zealand products in the last 1 26 years. It also states that in the three years immediately preceding the war New Zealand imported annually 420,729 tyre covers and 325,829 tubes, including tyres on imported vehicles, the local manufacture of which would occupy a small factory and on the basis of using natural rubber only, 400 employees would be needed, in addition to a small number of engineering and maintenance staff. It is believed that the amount of new employment provided would be appreciably reduced by the displacement of personnel normally engaged by the tyre importers. Regarding costs of production, less than 10 per cent, would represent wages, while imported materials would be more than 70 per cent, and the remainder, about 18 per cent., would represent overheads. Local labour involved therefore would be small. Saving of Overseas Funds It is also pointed out that there would be little saving of oversea funds as a result of orders not being placed in Britain, that the users of tyres would have no freedom of choice, while it is certain that production costs in New Zealand would be higher than in any other country. Both factors would be seriously detrimental to all classes of users , and there would be the added burden of New Zealand’s future ability to cornpcte in hfcr export markets, is suggested that there is insufficient justification for the considerable capital investment which would be involved in the whole undertaking. _ Members of the tyre trade in Britain emphasise that their objection is not so much against local manufacture as to the prospect of a monopoly and the loss of full opportunity of reaBonable competition. If the New Zealand Government .persists in its intention, they urge a demand for a public assurance that the market will not be closed to facilities for trading. This, they declare, is the only safeguard that Users have against exploitation.

STATEMENT BY MR NASH .

“NOT NECESSARILY CONFINED TO ONE COMPANY” (P.A.) WELLINGTON, June 22. Commenting to-day on the London cablegram which referred to the manufacture of tyres in New Zealand, the Acting-Prime Minister, the Hon. W. Nash, said arrangements so far approved provided for the hearing by the Bureau of Industries of applications to engage in tyre manufacture. A considerable number of applications for licences to manufacture had been received, and the bureau in its discretion would take into account the needs of the country and the economic production of motor tyres. _ That did not in any way mean that if licences ■were granted manufacture, would be confined to one compajjy or organisaThe question of price would be properly cared for in the licence or in a subsequent agreement in connexion with manufacture associated with the licence. COMMENT BY MR SULLIVAN (P.A.) AUCKLAND, June 22. “The people who held the meeting in London apparently know, a great deal more about the business of the New Zealand Government than we do,’’ said the Minister of Supply (the Hon. D. G. Sullivan) in comment on the report from London. "The Government policy regarding the tyre industry has not been brought to finality," he added. Mr Sullivan said that, as far as the industry in general was concerned, it would be developed. That was definite. Out of production in the Dominion came the people’s living and their standard of living. The greater production the greater the national income and the more there was to distribute among the people. Expansion of industry was necessary if returning servicemen and others were to get a mil opportunity of being able to earn a living.