COMMERCIAL More Emphasis Placed On Export Promotion

Press, Volume CVII, Issue 31519, 6 November 1967, Page 17

COMMERCIAL More Emphasis Placed On Export Promotion

A heartening feature of the present economic crisis in New Zealand is the impetus it is giving to the promotion of exports of manufactured goods. Although only a recovery in primary produce prices will provide a substantial and quick way out of our economic plight, it can be lessened if substantial export orders are won.

This is recognised by the Trade Promotion Council which, through the Department of Industries and Commerce, has produced a register of export houses which will assist manufacturers to find a channel overseas for their goods.

Not only would greater exports in manufactured goods help the critical balance-of-payments position, but it would also provide a partial answer to the problems facing manufacturers with the decrease in domestic demand.

tion schedules, resulting in fewer sales and fewer units contributing towards overhead or fixed costs. If production levels can be maintained or increased, then variable costs will increase but the contribution margin towards overheads a unit will rise also. Falling production, dismissal of staff, and lower incentives through a freezing of wage rates, promotes pessimism among staff. On the other hand, export orders, as well as giving confidence to staff, would provide a stimulus to the firm. Held Prices Another aspect is that shares of New Zealand companies actually in the export business have held their prices in the last year better than the average. To some extent this is because of the devaluation scare of last month. Shares of companies such as N.Z. Insurance and South British are near their peak for the year. Both have substantial overseas interests which would act as a buffer to any devaluation move by New Zealand. Skellerup Exports Skellerup, which expects to treble its exports in the year to March 31, will find its export orders a counter to the downturn in its New Zealand business. Mr V. R. Skellerup, the chairman comments in his annual review that the slight decrease in the sales of a subsidiary, Marathon RubFootwear, should help the export drive to Australia. In the past this was hindered by the growing local demand. Although the profit which covered the 15 per cent dividend 4.7 times in the latest year could fall a lot this year without worrying shareholders unduly, the export business of Skellerup plays some part in the high market value on the shares. At the latest price of 510 e, they are more than five times the par value of 100 c. Other Companies Other exporting companies holding their prices include J

As well, any firm actually r selling on the Australian mar-j ket is likely to provide a better investment for sharehold- i ers than other firms, especially those relying on sales to the farming community. Because it is the manufac-/ turer who has to take the'l risks and make the effort, itli

I is he who must be convinced that it is worth his while to try to market his goods overseas. Advantages If sales can be won, the adI vantages are obvious. The falling local demand must irnean a cut-back in produc-

Wattie and Tasman. These, because of the high premium on their shares, have a ready access to their shareholders if thev need further capital. The change in emphasis from the New Zealand to the Australian market, which is the nearest largest, and most prosperous country to New Zealand, is not easy. But apart from the urgency decreed by the present situation, there are several factors that assist manufacturers. The new register of export houses can be read easily by manufacturers. The idea behind this publication is that manufacturers, with a good product to sell, but not able to give attention to its marketing, can pick up a com-| pany from the register thaL should be able to carry out! the marketing work. The register contains the names of 60 firms willing to do this marketing work. Firm Described The firm is described and the nature of the export services offered listed The basis

of these services are shown, and also the present and potential export lines. Where its markets are situated are also listed, and its overseas connections. At the foot of each firm is a list of the special services offered, and whether these are on an advisory or executive basis. Trade Agreement The Free Trade Agreement between Australia and New Zealand has also smoothed the path of manufacturers to Australia. Contrary to what many critics from tins country say —and many of them appear to be parochial in their judgments—the agreement is advantageous to New Zealand. There is scope within it for change and it is to Australia’s advantage that the agreement meets satisfaction in New Zealand. Perhaps more incentives—and not just special tax allowances—could be given to New Zealand manufacturers moving into the export fields.

One area in need of improvement is plant and machinery. Many New Zealand manufacturers cannot get machinery giving better production performance because of the import controls. Whatever happens, it is

likely that this time next year, New Zealand manufacturers will be more export conscious than they are now.