THE WOOLLEN TRADE

New Zealand Times, Volume XLIX, Issue 11296, 23 August 1922, Page 3

THE WOOLLEN TRADE

A DIFFICULT YEAR ANNUAL MEETING OF WELLING TON COMPANY. CHAIRMAN'S REVIEW. The thirty-ninth annual meeting of the Wellington Woollen Manufacturer Uompany, Ltd., was held yesterday. Mr WH. P. Barber presided. The annual report and the balancesheet (already published) were adopted, i Addressing the meeting the chairman said:—“ln company reports and addresses at shareholders' meetings nowadays a familiar phrase is that ‘the year been difficult., and one of great anxiety.' I, too, have to use the same expression, but despite anxieties and many difficulties, the result of the financial period now before you, whilst showing a decline in net earnings, from that of the last few balance-sheets, is, I am pleased to be able to add, not unsatisfactory. On this occasion twelve months ago, I mentioned that it was in the second half of our 1920-2 L financial year that we began to feel the effect of the 6lump, which had descended so suddenly, and during the succeeding year—now under review—the depression gained, if anything, in severity, trading conditions becoming increasingly difficult. Large quantities of depreciated goods from overseas were on the market, and although in certain classes of our. own manufacture, there was a continual shortage, for others, notably clothing, competition was very keen, causing 6ales to' bo affected, often at prices not adequate to cover the cost to make and sell. This competition, that had to be > met, cannot be described as economically healthy, as it was not due to cost of production being lowered in a normal way; but was the outcome of either financial strain, jor (timid, imiiagivingfi, causing immense quantities of goods to be thrown on the market at heavy loss to both producers and importers. Our experience was that untrammelled buyers, not worried over financial considerations, then became over careful, being afraid to venture, and all the elements of a severe trade depression existed. MEETING NEW CONDITIONS. “English financial papers coming to hand contained numerous instances of textile firms finding it impossible to meet the new conditions which caught them unprepared, and lessee of great magnitude were reported. In one case the deficit for the year was 1± million pounds, in another ,£400,000, and so on, in amounts of six figures, the cause being invariably stated as 'attributable entirely to the unprecedented fall in textile values.' “The concern of your directors was„ that scores of British textile firms so affected, were engaged largely in the export trade, so that these written down stocks were finding their way into this Dominion Whilst that was quite satisfactory to the ultimate consumer, it made it hard for us to compete in price for certain goods, ours being of pure wool, and made under high cost conditions. Another element, almost sufficient in itself to disturb industries very seriously, was the liquidation of war stocks by the Imperial Government. In the last two years no lees than 700 million pounds sterling of surplus war etores of all kinds I were sold; an amount in close approximation to the total exports of Great Britain in some pre-war years. “The New Zealand Defence Department also retailed cheaply, large quantities of hlankets, overcoats, underwear, etc., but such were judiciously placed on sale in quantities, and at periods, to cause little further disturbance in an already glutted market. More hopeful signs. “Whilst the term 'replacement value*, is used generally to express writtendown prices, it is doubtful if goods can , ever again be manufactured at such low figures. It can only be done if the overseas textile mills revert to pre-war scale of wages, and it can only be hoped such will not be the case. There cannot now be much to be done by firms and companies in the way of writing off stocks, eo that with the depreciated goods used lip, trading in the .current year should yiqld a normal rate of profit. More .hopeful signs are reported from abroad that a gradual return to prosperity has begun. In the face of conditions such as I have mentioned* and which, of course, are generally known to the business community, the statement appearing in the directors' report that a second shift is in operation at the mills, Petone, may seem inconsistent, or lead to wrong conclusions. As stated, it was commenced to meet the company's clients; with certain classes of our products, in 6hort supply. It is not profitable to work at night, hut there are times when the preservation of goodwill is more important than direct gain, and it appeared to the directors that this was one of the occasions when profit should be subordinated to the maintaining of good relations between the company and its supporters; always a feature of the board's policy. The directors are now considering methods to provide for more output of seasonable goods in a less expensive way than obtains with a night-shift. THE FINANCE! SIDE. “Textile plant, although reduced in the last two years, is still very high in price, and large development whilst it remains so would not he prudent, as successful competition could not be sustained even against other Dominion mills equipped with plant at pre-war prices. Reference to the balance-sheet will show some important changes. “ The nominal capital is fully called, and the wish of the shareholders to that effect expressed two years ago is now fulfilled. The indebtedness \b less by J>74,486. Depreciation of plant and buildings 'has been continued at .£SOOO, and a much larger bum than is usual, •was expended in maintenance, especially of the power plant. The total writing off since manufacturing commenced now totals .£103,344. The ■ amount of New Zealand Government Incribed Stock, as it stood in the 1921 balance-sheet, is reduced by JBSOOO, by the sale of per cent. Soldiers' Settlement Loan. The balance of that asset is now shown, less discount to cover market fluctuations, and mortgages thereon, for money raised at a lower rate than the bank at present charges for advances. The currency of the mortgages is three years. In connection with the sale of this Government security, it will bo remembered that appeals were made to citizens at a time of stress that Government War Loans should bo assisted to the fullest \ ossible extent. In response the board took up *257,500 of Inscribed Stock at par. When the whip of circumstances caused subscribers to sell, the price fell as much as Iff per cent., and such losses are not allowed as a deduction from income by the Tax Department. Under normal conditions, if a firm or company speculated in consols, any losses made would not be properly deductible, but the conditions were not normal, and those business houses which found the money at such a crisis should not now incur heavy tax on loss made through purely patriotic action. WELL ORGANISED TO MEET DIFFICULTY. “It is anticipated by clothing manufacturers that Australia has a decided advantage over New Zealand, for many ronsons w©u known to local producers, and that she wiU be able to create surpluses for which proximity makes the Dominion a convenient market at cut rates. A fairer adjustment would have been the adoption of the tariff Australia asks jof Great Britain; any other is unquestionably a disadvantage to New Zealand. It may seem to you that my remarks to-day are mildly pessimistic, but what I have said refers in the main to difficulties overcome, or nearly so, and I am of the opinion that the disturbances in the economic field have passed the worst phase, and that business in the I

current year should bo on sounder lines. Of course we shall always havo competition, but quality for quality, we have no fear about holding our own, under fair trading conditions. A large part of our stock is made up of raw materials, stores, etc., and the values set against it should prove to bo safe. We are well booked up with forward orders, and so far an can be judged we should have a good year. Our mills are up-to-date, and favourably compare in size and equipment with anything in the Southern Hemisphere; our goods popular in the trade, and our staff is thoroughly capable. li£ we are faced with as difficult, or even a more difficult year than we have just come through, we are well organised to meet it. On behalf of the board, I have to thank the heads of departments and staff of tho company for their assiduous efforts to further the company's welfare." The retiring directors. Messrs W. H. P. Barber ana W. G. Foster, were reelected. Messrs Henry Kember and Son and 33. W. Hunt wore re-elected auditors.