wHAKATANE MILLS

New Zealand Herald, Volume LXXVII, Issue 23620, 2 April 1940, Page 9

wHAKATANE MILLS

TRIBUNAL'S DECISION RISE ON DECEMBER RATES HEM'S REQUEST NOT MET [by TELEGRAPH —OWN COlUlESrONdent] • ' '•»> \VELLINGTON, Monday Prices representing an average increase of from £1 10s to £2 a ton over the December prices approved by the tribunal have been awarded "Whakatane Paper Mills, Limited, by the Prico Investigation Tribunal, whose final decision in the company's application to be allowed to increase the prices of its cardboard products was released this afternoon. The prices are for the MarchApril cycle, and are those worked out by accountants on the basis of the interim decisions given by the tribunal early in March. The tribunal refused to approve of an additional £1 a ton general increase and special additions for certain boards itsked for by the company over and above the prices worked out on the tribunal's interim findings and which, after the interim decisions, were submitted as the minimum prices at which the company felt it would be ablo to carry on business. V-aluef of Investment The decision points out that, in the event of the fair , or true value of the investment in the mill and its adjuncts being fixed at more than the £450,000 taken by agreement as the basis of .costing by accountants, the prices the tribunal has awarded will be proportionately increased. As the company claims that the true value is £586,000, the addition might be fairly substantial. An investigation into this matter, the tribunal considers, should bo proceeded with immediately. The tribunal stated that it was unable to approve of an additional £1 a ton being added to the prices, as now asked for by the company, because, in addition to other reasons, it felt that to approve of these would in effect amount to a direct subsidy being granted tD the company. The tribunal was unable to approve increases of £2 and £3 a ton now applied for in respect of vat-lined and coloured boards respectively, as these represented additions to the prices which wero the subject of the application, and no evidence had been - heard in support of such conditions. The tribunal was of the opinion that these should be the subject of further application and investigation. Further, the tribunal was unable to 1 ' approve of an additional amount of £2 3;> a ton asked for .in respect of M.G. victory board on the game ground. ( The Economic Position The tribunal could not ' approve of anv company raising its prices to a greater extent than was justified merely to enable it to attract capital to itself. -Had the war not commenced there was no doubt that, faced ith competition from overseas, the company would not have been able to increase its prices to anything approaching the extent applied for. "The question of whether the company is economic or uneconomic," states the decision, "must be judged largely by its ability to compete under normal conditions of competition, and ' an. important factor in this connection i is the relationship between eapitalisa- J . tion on the one hand and tonnage ont■~put and sales on. the other. If the company's output' in relation to its capital is uneconomic, then either the company must, by greater efficiency in management or by increased output, or by a combination of both factors, lower its , costs of production to a point where it can sell its products at the ruling market price in open competition, or it must reconstruct and thereby render more economic the relationship between capital and output." The Tribunal's Duty

The tribunal considered the correct view to take of the application was that it should siot be influenced in arriving at its decision by the position that ■would arise in the event of prices fixed in. accordance with principles laid down hv the tribunal beina: in the company s opinion insufficient to enable it to continue production. The tribunal considered its duty to be to fix such prices as in its opinion were, fair and reasonable to all interests affected, and that, it would be failing in its duty to the public if it were to confer an undue advantage upon the company and its shareholders at the expense ol the Diiblic in general and boxmakers in particular merely because of the present abnormal circumstances. Accordingly, while the tribunal ha necessarily had to take cognisance of the position that might arise 111 the event of the tribunals findings not being acceptable to the company, no u'theless it fel.t that thereßponslHht.y for whatever action might be taken in the future, either by: the company.-1 he Government or any others, did not with the tribunal. Important Question The decision concluded: "The tribunal deeply regrets having to como to a decision which may have the effect that the company, as at present constituted, cannot obtain the nectssarv financial assistance to enable it to continue in production, and ventures to express, the hope that some waj may be found, either by reorganisation ot -the company cr otherwise, whereby it will continue to produce oardhonid, especially for the duration of thewar. The fact that prices ol certain impoital cardboards are higher than those applied for by the company makes this a question of practicable importance.