Govt. fiscal policy helps Deanes

Press, 5 December 1981, Page 20

Govt. fiscal policy helps Deanes

Deanes Industries Ltd, the Christchurch clothing manufacturer, has a more favourable level of forward orders at present because of the Government’s expansionary fiscal policy, according to the chairman Mr T. I. Perry, in a half-yearly report to shareholders.

There had been a significant improvement in economic activity since the JuneJuly period he said. “An expansionary Government fiscal policy, funded by the running of a substantial deficit on the Government’s internal account has been responsible for creating the present more favourable, market, which in turn has resulted in a more favourable level of forward demand for our production.”

Orders for the 1982 winter season showed a considerable improvement on 1981, reflecting better retailer confidence associated with the

present economic upswing, Mr Perry said.

Because of the adverse affects of current expansion on the balance of payments and inflation the Government must reduce its internal deficit and curtail credit availability.

“Without continuing an expansionary Government stance there does not appear to be sufficent buoyancy in the natural economic forces either internally or by ex-port-led recovery, to usstain the mild economic recovery,” he said.

Adjusting production levels to meet short-term variations in demand for Deanes’ products had been difficult. It was not intended to increase staff levels to meet increased demands for short periods because of the possible need to cut back on staff at a later date with the attendant onerous redundancy payments and the

major threat of a contingent liability. “By way of a paradox, however, it is extremely difficult to secure skilled labour and maintain a stable skilled work-force.”

As reported the group net profit after extraordinary items, fell 13.2 per cent to $212,574 in the six months to August 31. The group net trading profit dropped 7.1 per cent to $332,031, and extraordinary losses totalled $119,457 ($112,000 previously) arising from group restructuring introducing a computer system, and rationalising the activites of Fabiola Fashions Ltd. Fabiola Fashions incurred a small trading loss in the six months. The property occupied by Fabiola Fashions was being sold and the staff either moved to other sections of Deanes or to a building suited to the reduced size of the operation Mr Perry said.