CEMENT INDUSTRY

Otago Daily Times, Issue 21993, 30 June 1933, Page 9

CEMENT INDUSTRY

EVIDENCE BEFORE COMMISSION RETENTION OF DUTY URGED (Peb United Press Association.) WELLINGTON, June 29. A joint case for the retention of the present duty of £1 per ton on cement was presented to the Tariff Commission to-day by the three companies operating in New Zealand. Mr A. E. Mander, secretary of the New Zealand Manufacturers’ Federation, said the companies represented were Wilsons (N.Z.) Portland Cement Company, Ltd., the Golden Bay Cement Company, Ltd., and the Milburn Lime and Cement Company, Ltd. They were asking for the retention of the present duty of £1 per ton. The first witness, Mr S. Reid, manager of Wilsortb (N.Z.) Cement Company, Ltd., said that all the materials came from the Dominion, and the industry gave employment to a large number of coal miners. General labour and rail and steamship transport also benefited. The Government and the local bodies took their share of taxation from the industry, which might be called a primary industry rather than a secondary. From 1923 to 1928 the building trade was active, but since then it had declined heavily, and the trade in cement had fallen to that of oyer 10 years ago. l The descent had not yet been arrested. The companies had spent large sums in improving their plant and the quality of their product, and although of necessity a large portion of i the plant was idle to-day the money spent on increasing the output capacity and quality had been fully justified, for otherwise the industry in New Zealand would have been unable to cope with the demand. Wilsons had already guaranteed to maintain, along with other large contracts, a supply for the Arapuni dam. The existing companies were organised to provide for all demands, but during the last two years they had been threatened with heavy over-produc-tion through unsuccessful attempts to float further large companies. Professor Murphy said that according to the last balance sheet the company had paid a dividend of 10 per cent. Mr Reid; Yes, but there was a dip into the reserves.

Professor Murphy pointed out that in 1932 the dividend bad been 10 per cent., in 1931 and 1930 12J per cent., and in the four previous years 10 per cent. Over the 10 years ended 1932 (since the imposition of the duty) the company had paid dn average dividend of 9 per cent, to the shareholders.

Mr Reid: You are probably right. Professor Murphy: I have checked these figures over. During the same period your visible reserves were increased by £200,000? Mr Reid: Yes.

Professor Murphy: And at the same time £284,714 was written off on plant and machinery. Thus, during the period you returned in dividends the equivalent of the share capital and built up nearly £500,000 outside that. I put it to you that the business has been very remunerative and that the duty has been excessive? Mr Reid: The business could be remunerative without the duty being excessive.

Professor Murphy: I put it to you that the splendid results of the company show that you have been over-protected and that you could have done pretty well without the whole of the duty? Mr Reid: Possibly. Mr Mandcr asked the witness to tell the commission about the position in Britain in regard to the existence of cement trusts.

Mr Reid said that if they were to ,do what was done in England a Royal Commission would be set up to investigate the industry in New Zealand. Professor Murphy said he _ was satisfied there was no interlocking in New Zealand.

Mr Reid said that not only was there " trustification ” in England, but there were also cartels on the Continent. In Germany, they were more powerfully interlocked than in Britain. Mr Hander: If the protection were reduced and imports came into New Zealand freely would not the effect be to deliver New Zealand into the bands of the British or international cement trusts? Mr Reid said he thought that if cement was coming from overseas there would be a tendency for the price to rise. Mr J. B. Gow: There would be a big opportunity. Mr Reid: That is another way of putting it. , In reply to Professor Murphy, he said he had not taken the exchange rate into account as it was beyond their contrql. Professor Murphy: You regard it as a temporary phenomenon? Mr Reid: Yes. Professor Murphy: So do I. In reply to Mr Mander, the witness said the big international companies were often prepared to sacrifice a few million tons in order to bold a market. The New Zealand industry had spent a large sum of money within the Dominion, and his company was the means of keeping the Whangarei section of the railways going. In 10 years they had paid £70,000 to the Whangarei Harbour Board, and the service was not worth anything more than £IO,OOO. It would be a better business proposition for them to take over the running of the harbour. Further evidence from Mr Reid and the representatives of the other companies was taken in camera.