THE OTAGO DAILY TIMES FRIDAY, November 19, 1937. THE PROBLEM OF COSTS

Otago Daily Times, Issue 23353, 19 November 1937, Page 8

THE OTAGO DAILY TIMES FRIDAY, November 19, 1937. THE PROBLEM OF COSTS

Speaking at the annual meeting of shareholders of the Bruce Woollen Manufacturing Company, the chairman of directors, Mr P. McSkimming, dealt very fairly indeed with the problem of high costs and its effect on secondary industry in the Dominion. Nothing, he said, had harmed the manufacturing industries so much as the introduction of the forty-hour week. With the return of prosperity and the flow of more money into the country, he added, industry could not object to wage restorations on the basis of the 1931 standards. Mr McSkimming did not hesitate to admit that industry, because of its increased turnover, could have coped with higher wages without difficulty. But he was insistent, as others had been before him, that when industry was further saddled with the shorter working week, which, by reducing production, had had the effect of materially increasing manufacturing costs, it found itself burdened with a serious handicap. Costs had been raised to such an extent, he claimed, that much of the business which would normally have been handled by New Zealand manufacturers had gone to overseas competitors. The import figures support that argument; but, although the facts as outlined by Mr McSkimming have been repeatedly placed before the Government,’ it has apparently been unable to devise any means of coping with a situation which is due entirely to its own lack of vision. Mr McSkimming was generous enough to suggest that the Government could not have anticipated the effects of higher wages, introduced coincidentally with a reduction in the number of working hours. Nevertheless, they must have been foreseen by all but those who were completely blind to the probabilities, and one would hesitate to place members of the Cabinet in that unimaginative class. The attitude of the Government, probably dictated by its inability to find a way out of the impasse, has been to accuse the manufacturers of exaggerating their difficulties. When he spoke on the subject at the International Labour Conference at Geneva in June last the Minister of Labour stated that employers in New Zealand had feared that the forty-hour week would ruin them, “but experience had proved the opposite.” From that peak of optimism Mr Armstrong has been singularly reluctant to withdraw; yet even he, by this time, must have enough evidence in his possession to convince him of the actual gravity of the costs problem from the manufacturer?’ viewpoint. It is doubtless true that some businesses have not been greatly affected by abnormal increases in "overhead,” but they are in the minority. Secondary industry, taken as a whole, is genuinely perturbed by the prospect that confronts it; and the sooner the Government realises the gravity of the position into which it has legislated an influential section of the business community, the better it will be for employers as well as employees, for many of the latter are faced with the threat of loss of employment. An interesting admission, bearing on the effect of increased costs on output, was made in the annual Mines Statement, recently presented to Parliament by the Minister of Mines. Referring to the quantity of coal imported into the Dominion during 1936, Mr Webb comments that it represents an increase of 14 per cent, over the figure for 1935. “I regret the disparity,” he adds, “between this increase and the increase of a little over one per cent, recorded in the same period from New Zealand mines.

. . . The increased costs of producing New Zealand coal, brought about by increased wages and better conditions introduced by the present Government, has no doubt been partly responsible for the situation.” It will occur to most people that Mr Webb, though speaking in a different relation, has supported the manufacturers’ case with admirable candour. It is high time that the Government, which is committed to a policy of industrial expansion, began to concern itself with this matter.