NEWSPRINT MANUFACTURE IN NEW ZEALAND

Evening Star, Issue 21571, 17 November 1933, Page 14

NEWSPRINT MANUFACTURE IN NEW ZEALAND

AN UNSOUND PROPOSITION [By Newsprint.] The manufacture of paper from natural forest timber was enormously expanded in the decade following the war, and few industries have suffered more severely during the subsequent period of depression. The; demand for newsprint especially has rapidly declined, and paper mills have been forced to curtail production to far below economical capacity to supply a shrinking market at falling prices. . . , Although the history of the industry has offered little encouragement for new ventures, several paper-making projects have been advanced in Australia, these being based upon natural forest areas in Tasmania, and similar plans in New Zealand have been evolved as a means of utilising the timber produce of afforestation schemes. Experiments have certainly proved th© possibility of manufacturing paper from selected AusItalian and New Zealand timbers, but these investigations have not yet demonstrated that production on a commercial scale would be profitable or even practicable. Canadian and English paper makers have established very high standards in the important factor of quality, and in that respect alone newsprint manufactured in Australia or New Zealand would begin under a heavy handicap. One Australian company has recently announced that it regarded further experiments at a cost of £50,000 essential to tbe preparation of its actual enterprise, and another has assured its shareholders that “ vigorous investigation in the light of present world conditions ” would precede any largo commitment. Other concerns arc apparently inclined to regard snob prudence as unnecessary..

The question of markets is. in fact, decisive. According to Canadian authorities, the smallest economical unit for newsprint, manufacture has a productive- capacity of 300 short tons a day, or 90.000 tons a year, and such a mill could earn profits only if it were able to operate close to full capacity and sell its whole production regularly. The establishment ot a mill equipped with three paper-making machines, under averagely .favourable conditions in Canada, involves a capital investment equivalent to £2,soo,ooo—the amount would be higher in New Zealand owing to the greater cost of equipment and installation. This estimate includes provision of power plant and working capital, hut is exclusive of the capital value of timber resources. Reduction in the scale of manufacture below 300 tons a day would be economically impracticable, for the reduced output would be overladen with overhead costs. Incidentally, a paper mill in New Zealand would at the outset have to import the necessarily large staff of experts for supervision and operation of the 'manufacturing processes, and. not having access to any reserve of skilled men. would have to create and maintain its own reserves, with consequent inflation of its costs. That is a relatively minor consideration in view of the fact that such a mill would produce 90.000 tons of newsprint for a market which consmAcs only 22,500 tons. Even if every newspaper in the dominion was compelled to use only newsprint from the local mill, the promoters of the. enterprise would be faced with the problem of selling overseas three out of every four tons produced. The problem is insoluble. Efforts are being made to promote a pulp and paper industry in Australia. >vhere the consumption of 112.000 short tons is just sufficient to absorb the output of one mill, if all competitive paper were excluded." Hence the Australian market would he closed against newsprint from New Zealand unless it could be produced at a lower cost than any competitive product. Thai condition certainly could not. be satisfied, so that it- may be positively said that there would not he a market cither in Australia or in other parts of the world which command abundant supplies from North America and Scandinavia.

In view of the decisive disproportion between the utmost possible demand in New Zealand and the minimum economical production, it is scarcely necessary to examine such other aspects as the suitability of New' Zealand timbers for the manufacture of newsprint, nor to speculate upon the remote possibility that a real demand for .New Zealand pulp wood might be created by the exhaustion of the vast resources of soft, woods in the Northern Hemisphere There is no foundation whatever for the predictions of a world shortage of paper-making; materials. Unable to ignore the situation in the newsprint field, some enthusiasts have expounded schemes for manufacturing finer quality papers. They are again confronted with the problem of marketing, aggravated by the fact that no single mill could undertake the manufacture of the great variety of writing papers used in smaP quantities in Now Zealand. It rmW be as reasonable to establish a singh .factory to produce the multitude of eoods stocked by a modern dojiartmcnt store.

Briefly, it may be said that any attemmt to manufacture pulp and paper products from New Zealand soft woods, in competition with the world’s established' industries, would he doomed to failure, even if the raw materials were suitable and the supply of them was adequate—two points upon which the evidence is far from conclusive.