MANUFACTURERS WARNED

Otago Daily Times, Issue 27505, 27 September 1950, Page 6

MANUFACTURERS WARNED

Importance Of Maintaining Highest Quality PROTECTION ISSUE INVOLVED PA WELLINGTON, Sept. 26. A warning to New Zealand manufacturer's who are not paying sufficient attention to the price and quality of their output is contained in the annual report of the Department of Industries and Commerce tabled in the House of Representatives today. “Although the actual effect ha? been clouded by the impact of'war and inflation, it is undoubted that some industries have been established behind the protection provided, intentionally or otherwise, by import licensing,” says the report. “ Many of these firms might not survive if protected solely by the present tariff, which has not been revised for many years, particularly since the New Zealand £ is now at parity with sterling. It is to be realised, however, that comparison with overseas products is often difficult because of variations in the type or quality of the commodity, and, moreover, an industry which today could not face unrestricted overseas competition may well do so in a few years. Currency adjustments—such, for instance, as the recent bringing of New Zealand currency to parity with sterling—may entirely alter conditions overnight.

“While this appreciation of our currency has tended to act as an influence against rising costs, it has substantially impaired the ability of many firms to produce quality goods at a price at which these could be imported. It has also reacted unfavourably on several export lines, including timber and crockery. “ With a lack of fully effective competition, some manufacturers are not paying sufficient attention to the price or quality of their output. It has, in fact, been necessary to take the issue up with certain firms, pointing out that protection under import licensing necessarily carries with it a responsibility to the consumer. It would unquestionably be wise for those firms to consolidate their position now and prepare themselves more effectively to meet overseas competition when it is possible to remove import licensing. “A most necessary prerequisite to the removal of import control would, however, be a careful examination of possible consequences to industry and what tariff adjustments might be necessary to protect adequately the worth-while units and prevent any tooviolent disruption in the present pattern of our economic life. Much heart-searching will be required if we have to decide whether units, whose protection on the grounds of a saving in the expenditure in overseas funds is justified, merit protection on different grounds. “As proved by so many firms, New Zealand industry can produce a quality article at a competitive price, and there is still a large field for the economic development of the manufacturing in-

dustry. For instance, there is a prospect of a worth-while expansion In the direction of processing our own primary products and the utilisation of indigenous raw materials such as wool, clay and timber. As the population of the country increases, the manufacturing industry must become a progressively important avenue of employment unless there occurs a considerable change in the pattern and type of our primary production.” The report says that New Zealanders should prove as successful in manufacturing as in primary production, but this cannot be achieved overnight, and the aim should be to build a sound industrial basis for the future with an appropriate selection of new industrial development. It had been suggested that the time for some reassessment of policy had come. With labour, hydro-electricity, and building resources in such scarce supply, it might well be thought in the national interest to adopt a stricter test of the desirability on new projects. It was questionable whether industrial expansion should proceed at its present pace, thus adding to the existing unsatisfied labour demand. “In fact, if, as has been suggested, a review of the manufacturing industry should be carried out to determine as far as possible those industries which are worth while and those whose continuance is not in the best interests of the nation, any such review is fraught with great difficulties of choice, especially in the face of established interests both of capital and labour,” says the department.