YEAR OF ACHIEVEMENT

Press, Volume LXXXVIII, Issue 26903, 2 December 1952, Page 6

YEAR OF ACHIEVEMENT

N.Z. Forest Products SOLID PROGRESS IN UTILISATION OF EXPANSIVE PINE FORESTS Evidence that the company had pioneered the use of New Zealand’s exotic forests to a considerably greater extent than had been attempted or sp far contemplated for any other area of forests was provided by the chairman and managing director, Mr David Henry, at the sixteenth annual general meeting of N.Z. Forest Products, Ltd., at the head office, Penrose, Auckland, on November 28 last. In the most striking and comprehensive address to shareholders yet given, Mr Henry stated:—

| "We welcome your attendance at j this annual meeting today to discuss, i and we hope approve, the annual ‘ accounts and directors’ report for the ! year ended March 31 last. A copy l has been posted to all of the company's 55,0CX) shareholders, where i postal facilities exist, and this meeting now provides the opportunity to discuss vital aspects of your affairs and also hear a report on the progress of new projects since the annual accounts and report were printed. Shareholders have always taken a keen interest in the affairs of this company and many thousands who cannot attend personally send in their proxies, frequently with comments and criticisms. Those are most helpful to your directors and remind us also that we are virtually trustees for a very large international group of people who almost completely rely on us to prudently, and yet in an enterprising way, manage the affairs of this company. We think it is well to stress the very wide international shareholding in this undertaking, as it not only presents unusual problems in management, but even more impor-

tralia favouring the importation from New' Zealand of timber, pulp and newsprint. Those materials are now or can be readily made available and we express the hope that, following the conference of Prime Ministers being held in London, we will see immediate practical steps taken by both Governments whereby exports of timber, pulp and paper to Australia are very substantially increased. We know of no simpler or better way to remove the existing disparity of trading, or one which will help Britain and the Commonwealth more. We look forward, therefore, to this

particular problem being promptly settled between both Governments so that New Zealand’s exports to Australia will be quickly resumed and substantially increased. “The last special problem we wish to comment on today relates to' the overcutting of New Zealand’s native trees, which will soon become exhausted if persisted in. The practical solution is «to reduce the cut of native timber and meet the demand by using exotic timber to the maximum. Only in this way can the country’s forest resources be harvested

tantly we consider it warrants a special degree of sympathetic understanding from the Government at all times towards the many thousands of people, non-resident in New Zealand, who have invested money in those forests. They did well for New Zealand in doing so and we hope New Zealand will always fully reciprocate. E “The profit for the year, including forest revepue, is a record one of £275,038, after making provision for income tax. The substantial upward trend over the previous year is due wholly to the relatively greater volume of production and sales. By any New Zealand standard, the profit earned is a good one, but, as the company has a paid-up capital exceeding £6,000,000, it is quite clear that we have some headway to make yet before we can say the full task of forest utilisation on a profitable basis is completed. Nevertheless, we are grateful for the marked progress that has been made and, with the near completion of all new projects, including the kraft pulp and paper mills, we believe further upward progress is reasonably indicated. During the 10 years of the company’s manufacturing history, reserves have been accumulated in excess of £1,000,000, while in the .same period, plant has been written down by nearly £700,000. At the same time, the forests have been well cared for and the volume of timber resources has increased very considerably. Altogether shareholders are in a very much stronger position than ever before and, despite passing difficulties, your directors have every confidence that' the company’s future activities will prove of the utmost benefit both to shareholders and the national economy. In the international field, frees and their products are wanted more than ever .before and, whether in peace or war, they are of growing importance to mankind. Reserves having now been built up to over £1,000,000, your directors recommend that a first dividend of 3i per cent, should be paid on preference shares. The amount required to meet this payment of approximately £35,000 is less than one half of the forest revenue recovered for the year, apart from manufacturing profits. It is a very modest payment in view of the profits earned, but we remind shareholders that substantial payments have yet to be made for plant, etc., before all new mills are completed and a policy of caution regarding dividends seems clearly indicated. “We take this opportunity to pay tribute to our numerous employees for their excellent work. It has been a trying and abnormal year in many ways—supply difficulties and unusually wet weather have hampered progress of new works—and we acknowledge our indebtedness to them and also to our executives for their special efforts in overcoming numerous problems with tenacity and cheerfulness. Apart from the subject of forestry income tax assessment, which is receiving special consideration from the Taxation Department, several new matters of importance are calling for attention. The difficulty of developing new and expanding industries, such as pulp and paper manufacturing, which come under the restrictions of the Industrial Efficiency Act, has been exercising the minds of your directors recently. Licensing of industry was introduced by the Labour Government in 1936 with the intention that it would protect and foster growing industries. The view of the present Government is that industry would benefit by the progressive removal of this restrictive

to secure the most economic result and serve the best interests of the people. In general, we support the measures advocated by the Minister of Forests to conserve native timbers and to make up the leeway by a corresponding increase in the use of pine. Some 8000 men are at present employed in sawmills and any displaced by the reduction of native sawmilling could be transferred to pine sawmills. The pine milling industry, in response to Government appeals for increased production in the post-war years, responded magnificently, output having been nearly trebled, and no time must be lost in diverting more orders to pine sawmillers, thereby reducing the ’ drain on the dwindling native forest reserves and by exploring all means for achieving a high volume of exports. During 1952, excellent progress has been made in the establishment of both the pulp and paper mills. All other new projects are now completed and we expect the pulp mill to begin production early next July and the paper mill in September. Electricity supplies should then be fully available for all the company’s requirements. We are at present engaged in appointing the balance of key workers required for those mills. They will come from various overseas countries and during the next few months several hundred newcomers should arrive at Kinleith to help to operate those industries and we expect them to become good New Zealanders. Arrangements are now under way for large regular shipments of pulp to Australia and those should begin next August. We believe this will herald the beginning of a substantial new export trade which should steadily grow in the future and prove of considerable benefit to both New Zealand and Australia. “Before concluding this report, I would refer to the many questions which reach us from time to time regarding the company’s various mills from manufacturing units—annual output, number' of employees, future policy, finance, etc., etc. —and, so that all shareholders may have a clear picture of their undertaking, I would advise that:

“The wallboard mill operating' a' Auckland can produce in excess oi 60,000,000 square feet of Finex building board per annum, or approximately 20,000 tons. “The multi-wall bag plant operating at Auckland can produce up tt 25,000,000 bags per annum. The company has the exclusive New Zealanc licence for the internationally famouf Bates patents. “The corrugated and solid containei plant at Auckland can produce 10,001 tons of corrugated and solid containers per annum. It will begir production in January, 1953. “The casemill at Auckland manufactures approximately 1,000,00( wooden cases per annum, usins 6,000,000 feet of timber. “The various sawmills operated bj the company can produce 60.000.001 super feet of timber per annum. “The shook mill at Kinleith wil convert 5,000,000 super feet of timbei into 800,000 cases in shook form pei annum. (Shooks are wooden cases cul to size but not nailed.) This planl will operate in January, 1953. “The veneer plant near •Kinleith can produce 8,000,000 square feet o 1 veneers, when new plant now' in store is installed early in 1953. Present output is slightly over 4,000,00( square feet per annum. “The kraft pulp mill at Kinleith can produce 45,000 tons of unbleached sulphate pulp per annum. Production should commence in July, 1953,

system, and many industries nave since been delicensed, but those do not include the production of pulp and paper. We have instead been recently advised by the Bureau of Industry that it has prepared a suggested ‘new’ charter for the control of those industries and, while we agree that it would make for greater clarity and simplicity, we consider the new proposal is still too restrictive and your directors are firmly of the opinion that pulp and paper production should no longer be licensed. If, however, the Government does not wish to take the full step suggested, we believe there should be a very substantial freeing up of pulp and paper licences, so that your company can produce a wider range of products and make the fullest use of our various modern plants. “We trust this meeting of shareholders will concur with the view that the company should now be freed from - all unnatural restraints and be permitted in future to carry on its operations with the same freedom as applies to practically all other manufacturing industries. Indeed, we know of no other way whereby the full utilisation of the forests can be substantially advanced. Some past decisions of the Bureau of Industry have unduly restrained progress in both research and manufacturing developments, and we cannot see how forest industries can properly expand and play the important part they should play in our national economy and in the full development of Empire resources unless pulp and paper manufacturers have the fullest control over their own development. We acknowledge most readily the helpful, interest and co-operation of the I present Government in various ways and, in the belief that members de- I sire to assist the maximum use of our forests, we urge that a substantial and preferably a complete free-ing-up of the licensing system is given effect to without delay.

1 “The paper mill at Kinleith can £ produce 25,000 tons of paper per anj num. Production should commence } in September, 1953. ' “The pressure preservation plant at ’ Pinedale can pressure treat 8,000,000 ' superficial feet of timber per annum, ? and is now operating. J (The company has exclusive ’ licences for the long-established ’ British “Celcure” process and also uses creosote as required.’' ’ “The combination of the above i mills makes up a set of completely ; integrated plants so that all timber is used to the best advantage and : waste will be almost wholly eliminated. The volume of logs required to sustain the above industries in full production is considerably greater ! than is required by any existing or . contemplated projects in New Zealand. The estimated total cost of all j mills and plant, w'ater schemes, trans- * port, offices, etc., as a going concern | is unlikely to be greater than ] £6,250,000, and costs have already < been written down by £700.000. The estimated annual. value of sales is 1 £5,600,000. The estimated total num- ’ ber of employees is 2500. j “With regard to future manufacturing expansion, the directors hold ! the firm view that it is essential ’ before any further expansion work • of any size is undertaken by the t company, that all manufacturing j plants and general activities now c operating and being established J should be thoroughly consolidated 1 before any further new projects are I considered. In this respect we pre- c fer to make haste slowly and build f up the company’s resources as I I soundly as possible. There is no x foundation for the frequently c

expressed view that insignis forests rapidly mature and rapidly decay. Your directors fully understand the necessity for utilising the forests expeditiously. but only for the reason that it is timely to convert standing trees to much-needed marketable goods and not’for the* reason that old age or disease makes forest utilisation imperative. We believe in fact that insignis trees, which are the fastest growing exotic trees forested in New’ Zealand, will be quite healthy in another fiftv years at least, if properly cared for. but their suitability for some pulping uses may then be somewhat more restricted than if used twenty or thirty years earlier. “From the foregoing summary of operations, it will be readily appreciated that your company has pioneered the use of exotic forest utilisation to a considerably greater extent than has been attempted or so far contemplated for any other area of forests. To implement the original overall plans has required a period of ten years during which time a sum of £1,000,000 profit

“Reciprocity in trade has also been brought sharply home to New Zealand sawmillers in recent months by the reduction of our timber trade with Australia. Compared with NewZealand's total exports, the money value of the trade is not perhaps significant, but the loss, we hope temporary only, of those exports is unfortunate and coincided with the completion of a number of new sawmills which had been established in New Zealand to meet domestic and overseas demands. We understand Australia sells to New Zealand about £35.000,000 of goods annually and buys only £5,000,000 worth in return. There is ample need, therefore, for the rebalancing of trade between the two countries and we w’ould expect

it to come by way of New Zealand sending substantially increased goods to Australia rather than through reducing imports from that country. It can be done very readily by Aus-

has been earned after tax assessments of approximately £1,000.000 de P rGC iating plant, etc., bv £700.000. During the same period enormous goodwill has also been created for the products being produced. Long-term markets have been found for substantial quantities of pulp, paper and timber, etc., a considerable volume of research and investigation into timber, pulp and paper problems peculiar to insignis trees and of great value in manufacturing has been successfully accomplished so that your company has now passed its most difficult pioneering problems and can follow a wellcharted route through the consoli- I dation period which lies in the immediate future.

“I trust the foregoing information will clearly provide all the information which shareholders desire and fully satisfy them of the size, quality, value, and scope of the company's activities.”

.Report published by arrangement.)