RAW MATERIALS

Evening Star, Issue 23351, 22 August 1939, Page 10

RAW MATERIALS

MANUFACTURERS GANT GET REQUIREMENTS FUNDS ALLOCATED WELL BELOW LICENSES PROSPECTS FOR THE FUTURE POSSIBLE CURTAILMENT OF STAFFS Collectively, New Zealand’s chickens are coming home to roost! Following a period of reckless spending, when London sterling funds were dissipated, Mr Nash,'Finance Minister, made arrangements to borrow a few million to tide us over for a short period, but by all the signs and portents those paltry £4,000,000 were earmarked before they were secured. Funds are now seriously short and rationing by the Reserve Bank has had to bo resorted to. The result is that quite a number of businesses now find themselves unable to get sufficient raw material to meet average factory requirements. . . , With raw materials in short supply and with prospects for the future anything but bright, the next six months may bring a period of'retrenchment, a regrettable expedient. The manager of one big factory in the city told a ‘ Star ’ reporter this morning that, while he was granted licenses to cover the import of material to keep his factory in full operation, under the rationing scheme funds for only 25 per cent, of the licenses have been made available. Thus, as no arrangements have been made with overseas shippers for deferred payments, his supplies in some lines cannot last more than a few weeks. Payment has been spread oyer the remainder of this year and until June. 1940, at the rate of 25 per cent, for the next three months, 25 per pent, for the first quarter of 1940, and 50 per cent, for the second quarter. By this restriction the firm is expected to carry on for 12 months’ manufacturing on a •ix months’ supply of material. RESTRICTED OUTPUTPresent indications were that for four months of the year his company would be doing nothing, the manager said, which on present indications and unless some further consideration was given to their case would mean dismissal of staffs. _ In one department there was approximately six weeks’ work left. The firm concerned depended almost entirely on raw materials imported from various overseas countries, and unless adequate supplies were granted it, he said, there was no other alternative but ■restricted output and a consequent curtailment of staffs. The general impression in business and commercial in the city is, that the financial position of the country is more serious than was realised even by those in Wellington. “ for if this is not so,” said one importer, “ why did . the Government allow licenses to be granted far in excess, of sterling funds available. It must have been aware of what the monetary position was at Home.” At the moment quite a number of firms have not yet received _ word of what their allocation of sterling funds will be, but those who have state it is not more than from 25 per cent, to onethird of the licenses granted. FUNDS NOT AVAILABLE, The position has been aggravated by the fact that goods to the value of the licenses have oeen ordered, but now that funds are not available what will be the reaction in Britain when the position is fully known f ' Will the goods be shipped “ on tick ’’.and in the hope they will be paid for within the next 12 months? If payment for goods ordered for this second licensing period is spread over until June, 1940, merchants and,others are asking themselves how will it be possible to pay for goods purchased during the first half of next year. During this latter period, owing to the restricted ordering now, there will be need for bigger licenses if local manufacturers are to continue at full capacity. SMALL FACTORIES. It is not only the factory which imfiorts direct that is going to be affected iidging from inquiries made this morning. Several ; small manufacturers are reßant upon big importing houses for articles to use in their finished product. Among these are upholsterers and furniture manufacturers, to name but a few. These concerns use innumerable small finished or partly finished articles in their completed product. ' Hardware merchants, who supply these goods, are faced with the same difficulties as the big factory importer. Sterling. funds made available do not cover more than a small percentage of licenses already granted, while applications for licenses for urgent goods for these small factories are held up. Some have been so delayed for over a month. His company would be very fortunate if the licenses were granted, the manager of one concern said this morning. That might be any time between now and next Christmas. And then the question of the availabilty of funds had to be settled. What the Customs Department thought or did in the matter of the issuance of permits was one thing, but what the Reserve Bank granted in the matter of sterling funds was another. ■ All this delay meant a serious _ halt in local manufacture, it was pointed out, .fqr if the partly finished or completed small goods which were required aid not arrive according to schedule, there must follow retrenchment , of staffs. Firms could not afford to keep open factories and maintain idle staffs. DEPLETED STOCKS. The inability to import goods for use in secondary" industries was not the only hurdle to be faced, another director said! In his business they could not get all their normal requirements for stock, and when there. were not the goods to sell the dismissal of staff was a possibility in the immediate future. The curtailment of one business meant restriction somewhere else. What the future held in store time alone would tell, was the expressed opinion. A few good seasons for our primary products might alleviate the position, hut he could not see any permanent relief inside five years.