Whakatane Paper Mills Price Probe

Northern Advocate, 21 February 1940, Page 2

Whakatane Paper Mills Price Probe

[Per Press Association. Copyright.] ; WELLINGTON, This Day. _ j The hearing by the Price Investi- j gation Tribunal of the application by , Whakatane Paper Mills, Ltd., to in- | crease the prices of the cardboard [ it manufactures, was continued yes- j terday. Professor Corbin, technical forestry ! adviser to the company, said it would j be more costly to bring timber from the Pukahunui Block to the mill than from Matakana Island. Dr. Foden, for the Crown, outlined the nature of evidence from the Crown, whose answer to the company’s j application, he said, would be that a j case had not yet been satisfactorily | established for the new prices sought. Erroneous Estimates . The history of the mill seemed to be what might be called a serial story of erroneous estimates. The picture had changed with kaleidoscopic rapidity during the few years of the mill’s existence. 'lhe Crown would endeavour to satisfy the tribunal that this factory, which, it was submitted, had proved uneconomic, should not he turned into an economic concern at the public expense. John Bernard Prendergast, an officer of the Industries and Commerce Department, who carried out an investigation at the factory, said he was of the opinion that the books did not go as far as they should have done in stating the company’s exact position. Witness discussed items In -the balance sheet and said that from his inquiries he gathered that the company's financial position was not too good. The company was working upon low stocks of raw materials, which would be likely to embarrass continuity in the event of a hold-up in supplies owing to the w.ar or other factors. Raw Materials. He understood the directors wished to increase their stock of raw materials, but that the financial position of the company made this impossible. Lack of co-ordination and organisation had made it difficult for the department’s officers to secure accurate details of the cost of production at the mill. Witness said the company should have had departmentalised costing from the start. This would have given it greater experience to work on in the present year. He did not see the plant inventory at the mill. This would have clarified the position. Witness felt the tribunal would be faced with the question whether a number of items referred to plant or to buildings. High Transport Costs. He said that 20 per cent, of the cost of Whakatane 'products was represented by high transport costs. This was abnormally high. If the company got the prices it wanted the public would be paying these costs. Transport costs were high because of the site. Every pennyworth of raw material, including coal, had to be transported. In addition, the product had to be transported out. Mr H. P. Richmond (for the company): Can you tell of anywhere where the product would not have to be transported out? Witness said that at. such a place as Auckland there would be less outward freight. The. plant would be closer to the immediate market, .and te. the port for delivery of imported materials. If a locality' was chosen, where there was coal only the pulp would have to be transported in. Mr Richmond: Would you suggest to a fisherman that he should keep a week's supply of fish? Life of Timber. Witness: I have not heard before that timber would keep only as long as fish. Mr Richmond: That is where you make a mistake. The analogy is clcser than you think. A matter of three weeks. Mr Justice Hunter suggested that after an adjournment, accountants of both sides should confer and see what could be agreed on in regard to mill expenditure and the capital .account of £586,000. The case could not be decided without something definite about this. William Crabb Ward, technical officer to the Government Timber Price Commission, and production and marketing officer of the State Forest Service, said regarding a statement that for pulping purposes pinus insignis would not keep, he could best point to 400 cords being kept for use as posts by the State Forest Service. From his examination of the costing ledger at the mill, this was not one. in witness’s opinion, on which a costing system could be based. The labour cost per cord was given j at £l/2/6. | Labour Costs. ; He was prepared to concede to the j company that the labour obtainable on j Matakana Island could hardly be | termed fully efficient in the sense of timber cutting and loading, but at the 1 outside the cost per cord should not j be more than 17/-. I With increasing efficiency, this j could be improved. At the present j figure each man was producing a cord a day. There were any amount of in- j stances in New Zealand at present | where men were producing two cords j of timber a day cut into four-foot lengths. Witness said the salary paid the company’s chief engineer was considerably in excess of that paid by his department for a similar position, j For instance, a chief mechanical engi- i neer, with at least equal qualifications, | to control a £IOO,OOO plant and a num- j ber of other plant, was recently ap- \ pointed by his department at £470 a j year. j Mr H. A. Horrocks, managing director of the company: Then he does j not get as much as some of our car- ■ penters. ’ , I The hearing is being continued j today. ‘ !