Wool Board ‘must be textile industry catalyst’

Press, 21 June 1985, Page 24

Wool Board ‘must be textile industry catalyst’

PA _ Wellington Wool Board investment must concentrate on establishing fresh products, new technology and marketing, the board’s chairman, Mr J. D. Mcllraith, has said.

He announced the board’s policy on investment in the textile industry, saying the board must be a catalyst in helping development of the textile industries among nations that use New Zealand wools.

Mr Mcllraith said the board’s initiatives were aimed at the margin. This is the area where the cost of positioning wool within the international marketplace could not be sustained from initial commercial profit margins alone. “Investment by the board must concentrate on new ventures where risk is primarily associated with the establishment of a new product, a new technology or an innovative marketing move,” he said. Mr Mcllraith warned that a balance needed to be maintained between the need to pursue product exports and the need to improve the service to nations who receive most of New Zealand’s wool.

“The reality that must be faced is the sheer volume of our production and the extent to which it dominates international trading. We are the second largest coarse wool producer, responsible for about 70 per cent of the total volume of all international traded coarse wools,” he said.

“Ninety seven per cent of our wool is exported, 90 per cent in a greasy or scoured raw form. Obviously there is room for improving wool’s export returns for

New Zealand by adding value in product forms. In the process we create employment opportunities. “We need to keep in perspective the impact that diverting major board funds into textile expansion would have on our export returns, and what it would represent in terms of the percentage of production it would process.”

Mr Mcllraith noted that the largest domestic processor of New Zealand wools consumed only about 2 per cent of present wool production.

He rejected calls for the diversion of the board’s funding of the International Wool Secretariat into local textile development, warning that most New Zealand wool would still be exported in a raw state.

“With no expenditure internationally to stimulate world demand, price returns for woolgrowers, and hence total export returns would be insufficient to compensate for this effect.

“In its raw form, wool as an industrial raw material is able to be traded internationally largely free of the protectionism tht bedevils the international textile trade and indeed New Zealand’s other traditional agricultural products.” New Zealand is a large wool producer dependent on international markets, Mr Mclraith said. Therefore it was appropriate for the board to consider international investment proposals as well as those from local industry.

“Equally if we weren’t such a dominant wool producer, the potential conflicts of interest with our customers wouldn’t be as great,” he said.

“Any board investment in processing must be structured in such a way as to minimise the risk of alienating other wool customers in the same or related business fields.”

The board, he said, had recently faced international customer criticism simply over its involvement in bringing together the three partners to initiate the new U.E.B. wool carding export plant.

“We have been involved for a number of years in assisting the development of the textile industry in New Zealand in a wide variety of ways. “Often we have to keep a low profile on these matters because of the potential conflict of interest with our other customers and because of the requirements for commercial confidence by the companies we are involved with.”

But, we have also helped New Zealand manufacturers with extended credit for their wool purchases, and provided domestic marketing programmes targeted to facilitate industry objectives, Mr Mcllraith said. “Over-all, the board spends more on research and development and promotional dollars per kilogram of wool processed in New Zealand than in any other country,” Mr Mcllraith said.

The board also spends $1.7 million promoting New Zealand woollen carpet , exports to their main Australian market.

Efforts by the board to assist New Zealand carpet manufacturers in exporting to the United States have failed, Mr Mcllraith said, because exporters were unable to resolve their dif-

ferent objectives or priorities.

Mr Mcllraith said the board supported the continued expansion of the textile industry, provided investment was market led and based on soundly structured market research and clearly identified market opportunities. “We will not support investment where New Zealand manufacturers seek to compete internationally on price alone,” he said.