RAILWAY WORKSHOPS

Greymouth Evening Star, 9 February 1935, Page 14

RAILWAY WORKSHOPS

UNFAIR COMPETITION ALLEGED WELLINGTON, February 8. Expressing concern about the manner in which the railway workshops are entering into competition with private enterprise, a deputation from the New Zealand Manufacturers’ Federation to-day asked the Government to consider the whole question of policy involved. The deputation .pointed out that the railway workshops had already entered into serious competition in the manufacture of steel furniture, filing cabinets, and other office equipment; while they had also been permitted to tender for the supply of motor registration plates (despite the fact that this would have necessitated their purchasing new special plant for the purpose).

It was stated that in one recent case (steel office equipment for the Public Trust) it was originally stipulated that all tenders should be addressed, by outside manufacturers, actually to the chief storekeeper of the railway workshops, whose duty it would be to open and examine them. It was true that the Government, immediately on receiving the manufacturers’ protest, caused this astounding arrangement to be cancelled; but the fact it was attempted was surely indicative of the goal towards which the Railways Department itself was working.

“A fair comparison of tenders is extremely difficult, if not impossible." it was contended. “It is understood that the railway workshops are able to purchase the whole of their material (sheet metal, etc.) free of exchange, and also free of primage. Moreover they are exempt from payment of sales tax, which must be chargeable by an outside tenderer. Apart from this, the outside firm is subject to heavy rates and taxes, which obviously go into its costing, while the railway workshops are exempt. Even in smaller matters —for example the pay ment of fees for the inspection of machinery—the outside manufacturing firm is placed at a disadvantage, compared with the Railway Department, in its costing. There is, finally, a widespread belief that the railway workshops do not always charge to these competitive jobs their full and proper proportion of general overhead, and some evidence even that labour time is not always charged entirely to the particular job.

“Although we have received many general and rather vague assurances to the effect that, in comparing tenders, some allowance is made for exchange and sales tax, it has never been suggested that any account is taken of the fact that the outside firms’ costings must also include primage duty, taxation, local rates, and many other items down to even inspection-of-machinery fees.

“If the Government decides, as a matter of policy, that railway workshops shall be allowed to continue

tendering in open competition with independent firms, then we ask: — . “(a) That the Government will lay down and limit specifically the classes of goods which the railway workshops are permitted to produce for sale to outside bodies and departments. “(b) That the Government will cause an investigation to be made by a reliable and independent costs accountant, who shall report on the method of costing followed by the railway workshops in regard to goods produced by them in competition with outside manufacturing concerns, having special reference to the question of whether the full proportions of overhead and labour costs are in fact charged to these ‘competitive’ jobs, and also to the advantages enjoyed by the railway workshops in respect of exemption from exchange, primage, sales tax, local rates, general taxes, fees, and so forth. “In view of the widespread and apparently well-founded belief that this competition is ‘unfair.’ we feel that an independent inquiry is desirable to define the position."