TYRE INDUSTRY

Evening Post, Volume CXL, Issue 129, 28 November 1945, Page 8

TYRE INDUSTRY

HEARING OF APPEALS

THE ECONOMIC ASPECT

The appeals against the granting of any licences for the manufacture of tyres and tubes in New Zealand was continued before Sir Francis Frazer yesterday afternoon. Tlie appellants were M. Michelin and Co. (Mr. D. R. Hoggard). A. S. Paterson and Co. and Avon India Rubber Co., Ltd. (Mr. W. J. Sim, K.C., and Mr. R. S. V. Simpson); and the objectors were the licensees, Reid (N.Z.) Rubber Co., Ltd., and E. W. Pidgeon. and Co. in association with Goodrich Rubber Co. (Mr. H. M. Rogerson). Dunlop Rubber Co. (N.Z.), Ltd. (Mr. J. Stanton), and Firestone Tire and Rubber Co. of N.Z., Ltd. (Mr. Lan Macarthur). Mr. Rogerson, in replying to the arguments of the appellants, said that the main purpose of the Industrial Efficiency Act was to promote the economic welfare of New Zealand by encouraging the establishment of new industries and the development of existing ones, provided they were economic. In the licensing of an industry some hardship was inevitable. There was no evidence of the comparative effect on dollar exchange of the establishment of a local industry or the buying, as in the past, of tyres made in America and Canada. In either case dollars would be used. In his comment on market prospects Mr. Hoggard had taken no account of the increase in population or the tendency for the number of cars to increase. The Reid Company had given evidence that it expected that, under normal conditions, prices of its products would be lower than the prices of comparable products imported from any country with a commensurate living standard. The fact that raw materials would be imported did not necessarily mean that costs would be increased. He understood that there would be a slight saving in New Zealand compared with other countries. There was no evidence that New Zealand wages per man-Jiour were higher than in England, and they were lower than in America; and the output per manhour should be just as high as that anywhere else. Mr. Rogerson denied that there were substantial royalties to be paid. The only annual payment was for technical service supplied, in the case of the Reid Company, at cost. For purposes of comparison he suggested that against the loss of import duty there should be offset the various forms of taxation paid by the manufacturing companies. On the question of coal supplies, he considered .it was not proper to take the present abnormal coal position and regard it as a determining factor. From the point of view of its population New Zealand was the largest country without a tyre factory, and as a car user it was, on a per capita basis, second only to the United States.

SUITABILITY OF INDUSTRY.

Mr. Rogerson said that the evidence as to the suitability of the industry for New Zealand had been so conclusive when presented to the bureau that there had been little dispute about it. Potential employment was 1200, not 800, as had been stated by Mr. Sim.

Statements by., appellants' counsel about the quality of the local product were challenged by Mr. Lan Macarthur for Firestone. The parent company would not risk its reputation by not producing tyres of the first quality, he said.

In a discussion on tariffs, his Honour asked whether assuming that local manufacturers were protected against outside competition and had the whole market to themselves, they could manufacture at prices not appreciably higher than those at which tyres could be imported.

Mr. Macarthur said they believed they could. He added that in regard to the suggestion made by Mr. Sim that decision should be postponed, he would point out that the companies concerned had already been waiting six and a half years to have the question determined.

Mr. Stanton, for Dunlop. said that all tlie companies concerned had indicated that even if the iudustry were dclicensed it would make no difference to their plans to manufacture.

His Honour remarked that the question of import control would then arise.

COST OF MANUFACTURE

Mr. Stanton said that the three firms, all of undoubted financial stability and long experience, .all said that they could manufacture economically at a price comparable with that of the imported product. In New Zealand they were in as good a position to manufacture at basic costs as other manufacturing countries. Overseas tyres suffered from the disadvantage that tlie raw material had first to be imported and the finished article then exported. References to Britain's export trade and appellants' comments thereon led his Honour to remark that he did not think New Zealand would be expected to refrain from developing economic secondary industries.

During Mr. Sim's reply this morning, his Honour said that he was concerned with facts, law, and economics. In so far as the bureau had reached its findings on pure facts, he should accept those findings unless fresh evidence were brought before him to cause him to take a different view. As far as law and economics were concerned he had a free hand.

Mr. Sim: On the formulation of the issue it is of the first importance.

ECONOMIC ISSUE

'■The issue is largely an economic one," said his Honour. "The question of the general economic welfare of New Zealand has to be approached Ivpm several viewpoints, one of which is tlie desirability of a balanced economy. I am not at the moment suggesting that the tyre industry is part of the balanced economy of New Zealand. My mind is quite open. I have to look at the whole question of the economics of the country. In my opinion, the fact that an industry itself is economic does not cover all tlie economic issues involved. It is a very important, first hurdle, however."

Mr. Sim claimed that the licensees had not shown that the industry would be economic, or, in the wider issues, that it would promote the economic welfare of New Zealand.

Mr. Hoggard said that Firestone had asked ' for a protection of 9.8 d a lb, which was equal, to 40 per cent, ad valorem. In addition, they would have the protection of freight, insurance, and landing charges, which before the war amounted in all to 10 per cent, on cost. In Australia they could not do without a tariff, which went up as high as 3s 9d a lb. It was now between 9d and 10d,, and anyone who wished to enter the' trade there would know that the tariff would be raised against him.

Mr. Rogerson said the successful applicants would, appreciate it if the decision could be. given as scon as possible, as they would soon have to involye themselves in a great deal of capital expenditure. His Honour said he hoped he might be able to get his decision out by th*-* end of the week.