Inefficiency’ of car assembly challenged

Press, 23 October 1980, Page 8

Inefficiency’ of car assembly challenged

PA Wellington A departmental study of the car-assembly industry has been strongly criticised by Todd Motors’ managing director, Mr J. D. Todd. The report’s errors of “omission, context, and fact” were likely to go unchallenged, Mr Todd said. This was because its assertions gave sotne credibility to the cry for restructuring. "Comment so far has shown that there is little sympathy for a thorough examination of the study team’s case and this is unfortunate,” he said. The report, compiled by the Department of Trade and Industry’, Treasury, and Customs Department, warns there could be serious long-term economic consequences in retaining an assembly industry.

It argues that the New Zealand assembly industry is an inefficient user of foreign exchange and domestic resources. The report offers three options for the future of the assembly and component industries. These are : keeping the industry as it is, phasing it out and im-

porting built-up cars, or developing an industry plan aimed at achieving greater efficiency. A final report for the Government will be written by the departmental team after trade union and motor industry officials have made submissions on the interim document. “As it stands at the moment, my company cannot accept the officials’ analysis of what it terms inefficiency," Mr Todd said.

“In saying this I am not arguing from nostalgia or an attachment to my company’s own self-interest, but from the fact the report gives' no substance to its major conclusion of inefficiency.” Mr Todd said the supporting conclusions had been made “as assertions and their bias is obvious." “If a comparison between imported cost and locally produced cost were to be’the only criterion for the continuing existence of industry, then I would suggest that nearly every industry in New Zealand would have to close down.” Mr Todd said New Zealand could import pig meats much cheaper than

it could produce them locally. “Do we therefore tell pig fanners they must close down and restructure because they are inefficient? I suggest not." The report inferred that the cost of cars, relative to disposable income, was high in international terms, but it made no mention that New Zealand’s .vehicle taxing structure was one of the highest in the Western world. A Mitsubishi Sigma had lower wholesale and retail prices in New Zealand than Australia if the duty and sales tax content was taken out. “The difference is that the New Zealand Government slugs the car buyer to the extent of nearly $3500 whereas the Australian tax gatherer takes only a little over $BOO. Who is ripping off whom? Where are the inefficiencies?” Mr Todd said his company did not dispute the need for improving industrial potential. This could be achieved but it needed to be planned and it needd the full co-operation and a consensus approach of the Government, industry, and the people in the industry.