N.Z. Cycle Manufacturing Held Uneconomic

Press, Volume CIV, Issue 30769, 5 June 1965, Page 22

N.Z. Cycle Manufacturing Held Uneconomic

A New Zealand cycle - manufacturing industry would be one established on uneconomic grounds, and would cut bicycle wholesalers and their staffs out of a living, said Mr R. B. Kay, chairman of the cycle section of the Canterbury branch of the Automotive and Cycle Wholesalers Association, in Christchurch yesterday. Few bicycle wholesalers could survive an import licence “cut” of 80 per cent —which would be the effect of the recent statement by the Minister of of Industries and Commerce (Mr Marshall) placing bicycles in the “C” category of import licensing. Mr Kay said. The whole industry, he said, would be handed over “on a plate” to Morrista’s Industris—a New Zealand manufacturer with no experience of the industry—whereas the wholesale marketing of imported cycles have been carried out for 60 years by about 13 wholesalers in healthy competition.

“This rankles,” Mr Kay said. “Wholesalers believe it is another case of the Department of Industries and Commerce entering into secret negotiations with an industrialist and issuing a licence to import plant and materials, without prior consultation with the established industry, which could have pointed out many of the pitfalls." Outlining the position of the bicycle industry in- New Zealand, Mr Kay said that wholesalers had been criticised for not grouping together and manufacturing a cycle themselves, but this was hardly fair. At least three wholesalers manufactured cycles during World War 11, and carried the industry

through during a period of short supply. In Christchurch. Cycleworths (N.Z.) Ltd., had reached a production of 900 cycles a month, with a New Zealand content approaching that of the Morrison machine. After the war, when imported bicycles became more freely available, this industry has been allowed to collapse as being uneconomic, in spite of appeals for protection. “The Tariff and Development Board, after sifting many hundreds of pages of evidence, has suggested to the Government a 25 per cent tariff protection for the industry," said Mr Kay. “Wholesalers would welcome this move, provided their licenses were not to be cut as well. The effect of this would be that the imported A-grade cycle would retail at £27 compared with the Morrison bicycle at £24—and the public would have a choice of machines. “The New Zealand industry would then have to grow in a spirit of competition and would be the healthier for that,” Mr Kay said. “After all, the only protection of the New Zealand industry would not lie in the tariff. It already has a built-in protection from the English manufacturer of another 20 per cent represented by the cost of freight. Backing, and landing from England. How much more protection does the industry want? If it cannot survive under these conditions, is the valuable labour that the New Zealand factory absorbs not better employed in tourism, pulp and paper, and other worth-while overseas funds earners?" The wholesale trade had been an integral part of the bicycle field, employing more than 150 people, some with a lifetime experience as “bike men.” and to be cut out of their living by an industry established on uneconomic grounds and now supported by a Minister of the Crown, who in an earlier press statement said that the industry would not he offered protection, had naturally antagonised the whole cycle trade, retail and wholesale, Mr Kay said. “Wholesalers contend that one factory, with complete monopoly and a production of 30,000 cycles a year, cannot make any contribution to New Zealand’s industrial wellbeing when it is considered that overseas competitors in England and Japan have productions 10 times this size," said Mr Kay. “Raleigh in England produce 2m. having cut I

] production from 3m just after ]the war in the face of world competition. Is it not better for our industry to concentrate on the things that we are so obviously good at—-pre-packaging meat, for instance?” he said. Commenting on Morrison Industries, Mr Kay said it had been trying to get a bicycle industry under way for four years. The firm’s first approach to wholesalers and retailers to handle its product had been rejected on the ground that Morrison’s sought to pare profit margins of wholesale and retail to an uneconomic level to keep the price of its bicycle down. “Morrison’s then sought other outlets, mainly the departmental stores, carrying out the wholesale function themselves,” Mr Kay said. “This move has obviously failed, the public preferring to continue to deal with the well known local ‘bike shop’ with an equipped workshop behind the counter. This forced Morrison’s then to apply to the Tariff Board for protection, a protection that has been recommended at 25 per cent. "Why then does not the Minister apply the protection, and at least give the established trade a chance to fight back?” said Mr Kay. “Does he bend to pressure from the unsafe Hawke’s Bay seat where the industry is established? Does the pressure come from the very large Wright Stephenson organisation which took over Momson Industries some two years ago? Or does he prefer the dictatorial tool of import licensing?”