IMPORT CONTROL

Evening Star, Issue 23438, 1 December 1939, Page 13

IMPORT CONTROL

THEIR RELATION TO STERLING FUNDS DIFFICULTIES OF SECONDARY INDUSTRY ADDRESS BY MANUFACTURERS' PRESIDENT Some of the problems which faced manufacturers were referred to by Mr 0. V. Smith in his presidential address to the annual meeting of the Dunedin Manufacturers’ Association last night. It had been a busy and worrying year, both for the association and for the federation, he said. LICENSING OF INDUSTRIES. - Up to the end of 1938 it appeared that, although the Industrial Efficiency Act had been in operation since the end of 1930, it had been almost a dead letter as regai’ds general manufacturjuig industries, the president stated. The abnormal conditions that had developed out of the import control ' regulations. had had - the effect' or ■ stimulating rather more interest in the question of licensing. Up to Septemher 80, 1939, 30 industries of various hinds had been gazetted as, licensed industries. In addition a number of additional applications for licenses had been lodged, and were awaiting the completion of the necessary industrial plans. It was too soon yet to attempt to assess the practical advantage# or disadvantages actuallv resulting from licensing, but it would be interesting ■to study the future experiences and developments in those cases where the principle of operating under tho industrial plans with accompanying licensing was put into actual effect. Factory control regulations were introduced as a war measure, and were exceedingly comprehensive in their character.' To assist the controller in his work, an advisory committee had been set up, which included manufacturers’ representatives, and a local sub-committee had been formed, although so far it had not been officially recognised by the Government. Tho whole scheme was not sufficiently developed to allow any opinion to be ■formed as to its effectiveness and feasibility. IMPORT CONTROL. Twelve months ago, import control regulations were introduced, and they were now in a position to review the situation. Concern was felt by manufacturers throughout the Dominion over .the serious situation that appeared to be developing during 1937-38, as a result of heavy importations. Representations were made to the Government that steps should be taken through the tariff or otherwise, to deal with the position. . These representations seemed to ■ be of little avail, until the alarming position of sterling funds compelled the Government to take action, and the now ‘ all-too-familiar import control regulations were the result. “ It is easy to' be wise after the event, and various suggestions have been made as to better methods that could have been used io : remedy, the position,” he stated, “ but it must be remembered that a desperate illness often requires a desperate.cure. Such a change-over, however, in a country’s method of trading involved difficult _coroplicationg, .many of which. I think, '■“were' unforeseen?’’ In the first place the fact-that some-' form of import control was going to be introduced was well known for some time before the actual details were announced, with the result that many importing houses got in ahead with largo orders. In the ’ second place, owing possibly to a misinterpretation of the regulations, there was considerable duplication of ordering, manufacturers and importers receiving licenses for the same material. INCREASED BUSINESS. In the third place most New Zealand manufacturers had been experiencing an. increase in trade, considerably in excess of their 1938 figures, with tho result that their requirements of raw material were considerably greater. To cope with this, and also with the further increase expected as a result of import control, still greater supplies of raw material and machinery were required. “ The effect of these factors,” stated the president, “ can be seen in the 1 figures for the first six months of 1939, which showed that the imports exceeded the corresponding period of 1938 by ■ over £1,000,000. The fact that the imports for the period ended September, 1939, showed a decrease of one and a-half million pounds on the sanio period of 1938 indicates that the_ effect of the regulations was just beginning to be felt, but the outbreak of war, with its sudden increase in the price of raw material, and the depreciation of sterling in terms of foreign currencies, has created another complication. “ How has the manufacturer fared under these regulations? In the public mind I think the idea is fixed that the manufacturer is on the box seat, that he has no more worries, that he has tho words ‘ import control ’ written in gold on his desk, and that he bows before the words each morning before commencing work. I would he failing in my duty as president if I did not make file position quite clear. “ In the early stages of import control assurances were given that the Government’s definite policy was to develop our manufacturing industries, and use their increased production to replace imported manufacturers’ goods which were to he restricted. Manufac • turers were given assurances that they could go ahead with full confidence, and that their requirements as regards , necessary raw materials would be safeguarded. Stress was laid on the ex-

tent to which it was anticipated that this policy would ensure the absorption of unemployed labour into industry.” APPROACH TO POLICY. At tbe outset there were indications of a sound practical approach to the implementing of this policy, and a Government industries committee set up in Wellington, arranged through the association and federation, a programme of conferences with all main trade groups. _ Over a period of several months, in common with other centres, the executive and secretary of tho association were kept extremely busy arranging group meetings, collecting the essential information as to requirements of material ,and despatching delegates to Wellington, The heavy expenditure of energy, time, and money seemed justified by the hope that a new era was dawning for our manufacturing industries. As manufacturers they had no reason to doubt that the Government in general, and the Hon. D. G. Sullivan as Minister of Industries and Commerce in particular, were perfectly sincere in their repeated statements that it was their policy to develop the secondary industries to the fullest extent. Unfortunately, the best o' intentions could not create sterling funds, and manufacturers soon found that it was a great deal easier to get .Increased business than it was to secure the necessary raw. material. “To start with, licenses for 1939 were based on 1938 purchases. 1 do not think that any other basis could have been taken, but as most man ifacturcrs were showing fairly large increases over 1938, and naturally anticipated still greater increases, extra supplies and in many cases new machinery had to be applied for, and, naturally, evidence had to be produced to justify these applications. All manufacturers are familiar with the work involved in preparing these appeals. Further complications ensued when irationing of sterling allocation, inviting deferred payments, was introduced. FUTURE DIFFICULTIES. “ For many business executives it has meant constant pilgrimages to Wellington in an endeavour to untangle the ever-increasing difficulties and problems. There is, therefore, a certain amount of truth in what 1 said about the public. The words ‘ import control ’ are on our desks, but they are not written in gold. They are written on the top of official form.?, and we bow, not before them, but oyer them, before commencing work, during work, and long after everybody else has gone home from work. _ “ Although the difficulties in securing raw materials have not been exaggerated in any way, I would be ungrateful if I did not add that manufacturers have never been busier, and had we no worries about securing the necessary raw materials we would be' in a very happy position. Unfortunately, our worries in this respect are more likely to increase than diminish.

“ The third period licenses are again based on 1938 requirements, and when, in addition to what I have said about 1939 difficulties, it is realised that there have been big increases in the price of iraw materials, and that licenses are issued on value and not quantity, it does not need much imagination to picture what may happen next year. I am not going to prophesy that the factories are going to close down. I do suggest, however, .that there will have to be some limit on production, unless one or all of the following three things happen:— “Firstly, that there is an increase in our sterling' funds as a result of tho increased production of our primary products; or, secondly, that the Government impresses on the people the necessity of saving; or, thirdly, that the increase in prices which must take place in the course of the next few months may have the effect of reducing spending power. If increased cost of living is offset again by increased wages, then the vicious circle will start afresh, and our London funds will not be improved. One hears various theories advanced as to why our Loudon funds have been depleted. It does not seem to be generally realised, however, that the man in the street is playing a big part in creating this situation.

“ Times have been good,” said Mr Smith, “ and he has spent his money freely, but ho has not discriminated as to the articles he has bought. Let mo take a simple illustration as far as it affects my own firm. Toys have been placed on the restricted list. A saving in sterling results, but the parent wanting to buy something for the child, may decide to buy a tablet of chocolate, of which 80 per cent, to 90 per cent, of the raw materials have to be imported. The net saving, therefore, is not nearly as much as would appear at first sight. “ Before leaving the question of import control, I must express the very best thanks of the association to Mr Rocke O’Shea, secretary of the Manufacturers’ Federation, for the work he has done on behalf of our members, in steering applications for licenses through the maze of committees and departments, and untangling the hundred! and one difficulties that all manufacturers have been experiencing, I would also like to thank Mr L. J, Schmitt, of the Department of Industries and Commerce, and Mr E. I). Good. Controller of Customs, and their departmental officers, for their unfailing courtesy, patience, sympathy, and co-operation. They have been faced with a Herculean task, but they have never failed to make the time necessary to meet individual manufacturers and discuss their problems.