COMMERCIAL “Insufficient finance available to manufacturers”

Press, Volume CXIV, Issue 33693, 16 November 1974, Page 20

COMMERCIAL “Insufficient finance available to manufacturers”

(New Zealand Press Association)

DUNEDIN. The amount of money available to the manufacturing sector in New Zealand was totally inadequate to maintain stability let alone provide for growth, the chairman of Williamson Jeffery, Ltd (Mr L. C. Nisbet) said yesterday.

“In the present liquidity crisis, and it is a crisis, the growth which the Government considers desirable and necessary for the manufacturing sector is virtually impossible to achieve,” he told the annual meeting of the Dunedin-based manufacturing stationery company.

The Government properly stressed the importance of manufacturing exports as a buffer to price variations for traditional exports, but more than lip service was required for this emphasis on the importance of New Zealand’s manufacturing industry. Mr Nisbet quoted the deteriorating proportion of bank advances now available to the manufacturing sector. “In 1963, trading bank advances to manufacturers represented 22.6 per cent of total bank advances. In May, 1974, while the total of trading bank advances to manufacturers had increased, the percentage of total bank advances had dropped to 19.3 per cent. “This situation is aggravated when it is recognised that the manufacturing sector is growing at a rate much faster than the rest of the economy. “Gross national product since 1963 has grown by 142 per cent, but manufacturing production has grown by 208 per cent. “On this basis, trading bank advances to the manufacturing sector should have

increased as a percentage, and not have reduced. “If the percentage had remained constant and corrected for growth rate, this would have resulted in an injection of some S2OO million of additional bank advances into the manufacturing sector.” Mr Nisbet said that although Williamson Jeffery retained 52 per cent of profit, it was insufficient to provide the working capital necessary to support the increases in stocks and book debts. “As a result of this situation, we are faced with the alternatives of raising additional moneys from some source, or the postponement of some capital expenditure and planned expansion. “For this reason, your directors are studying various alternative means of raising additional finance, but the problem is that traditional sources of borrowing are themselves short of money and unable to provide the necessary finance.” Reporting on sales for the first four months of the current financial year, Mr Nisbet said they were 29.3 per cent ahead on the comparable period last year, and were)

8.1 per cent ahead on budget. “This is a good start to the current financial year, but your directors would be less than realistic if they did not foresee some downturn in sales activity. Already it is evident that our customers are buying in smaller quantities. “Fortunately, demand remains reasonably sustained, but much will depend on whether or not there is any easing on the current tight money situation. “If in the current year’s trading, a similar profit result can be produced, this will in my view, be an eminently satisfactory achievement,’’ the chairman said.