COMPANY ASKS FOR INCREASE

Southland Times, Issue 24056, 21 February 1940, Page 8

COMPANY ASKS FOR INCREASE

Whakatane Mills Application COSTING SYSTEM DETAILS (United Press Association) WELLINGTON, February 20. At the Whakatane Paper Mills inquiry today Professor H. H. Corbin, technical forestry adviser to the company, said that it would be more costly to bring timber from the Pukahanui block to the mill than from Matakana Island. In any case, the timber at Pukahanui was being reserved, not for the production of cardboard, but ultimately for newsprint. At the completion of the evidence, Dr Foden outlined the nature of the evidence from the Crown, whose answer to the company’s application he said would be that the case had not yet been satisfactorily established for the new prices sought. The history of the mill seemed to be what might be called a serial story of erroneous estimates. The picture had changed with kaleidoscopic rapidity during the few years of the mill’s existence. The Crown would endeavour to satisfy the Tribunal that this factory which it was submitted had proved uneconomic, should not be turned into an economic concern at the public expense. . John Bernard Prendergast, an officer of the Department of Industries and Commerce, who carried out the investigation at the factory, said the information he desired went further than the books of the company provided. He was of the opinion that the books did not go as far as they should have done in stating the company’s exact position. He made it clear, however, that the officers of the company did their best to satisfy him on the points raised, and he was not compelled to produce special authority from the Minister demanding further information, which the Minister was empowered to issue under the existing legis--lation. , . i The witness discussed the items in trie balance-sheet and said that from his inquiries he gathered that tne company’s financial position was not too good. The company was working upon low stocks of raw materials, which would be likely to embarrass continuity in the event of a hold-up in supplies because of the war or other factors. He had formed the opinion that the transport costs, which amounted to more than 20 per cent., were extraordinarily high in production of articles like cardboard. He understood the directors wished to increase their stock of raw materials, but that the financial position of the company made this impossible. A lack of co-ordina-tion and organization had made it difficult for the department’s officers to secure accurate details of the cost of production at the mill. There was no suggestion that the Government’s officers had gone to Whakatane to discuss the prices the company was to receive for the products, and the subject was not mentioned while he was at Whakatane. COSTING SYSTEM Prendergast said the company should have departmentalized the costing from the start. This would have given it greater experience to work on in the present year. He did not see the plant inventory at the mill. This would have clarified the position. He felt that the Tribunal would be faced with a question of whether a number of items referred to the plant or to the buildings. The witness said that 20 per cent, of the cost of the Whakatane products was represented by transport costs. These were abnormally high. If the company got the prices it wanted the public would be paying these costs. Transport costs were high because of the site. Every pennyworth of raw material, including coal, had to be transported; in addition, the product had to be transported out. Mr Richmond: Can you tell anywhere the product would not have to be transported out? The witness said that at such a place as Auckland there would be less outward freight. The plant would be closer to the immediate market and to a port for the delivery of imported materials. If a locality was chosen where there was coal, only pulp would have to be transported in. Mr Richmond: The mill uses 3,000,000 gallons of water a day. That would not be got for nothing at Auckland. He asked the witness if he would suggest anything to the mill superintendent.

The witness replied that there was only that he should keep a larger supply of timber on hand. Mr Richmond: Would you suggest to a fisherman that he should keep a week’s supply of fish? Witness: I have not heard before that timber would keep only as long as fish. Mr Richmond: That is where you make a mistake. The analogy is closer than you think —a matter of three weeks. Mr Wise asked what information the witness could give on the subject of the considerable export trade to Australia. The witness said he understood that such a possibility applied only to two classes of boards, not a whole range of products. His Honour suggested that after the adjournment the accountants of both sides should confer to see what could be agreed on in regard to the mill expenditure from the capital account of £586,000. The case could not be decided without something definite about this. STORING OF INSIGNUS PINE William Crabb Ward, technical officer to the Government Timber Price Commission and production and marketing officer to the State Forest Service, said his experience of insignus pine extended from planting till its utilization for all purposes. Regarding the statement that for pulping purposes the pinus insignus would not keep, he could best point to 400 cords being kept for use as posts by the State Forest Service. Storing insignus pine should not present any other difficulties than were met with, and provided against, in the storage of great quantities of Scandinavian timbers in any overseas mill he had ever heard of. From his examination of the costing ledger at the mill, this was not one in his opinion on which the costing system could be based on labour. The cost a cord was given at £l/2/6. He was prepared to concede to the company that the labour obtainable on Matakana Island could hardly be termed fully efficient in the sense of timber cutting and loading, but at the outside, the cost a cord should not be more than 17/-. With increasing efficiency, this could be improved. At the present figure, each man was producing a cord a day. There were any amount of instances in New Zealand at present where men were producing two cords of timber a day, cut into fourfeet lengths. The witness said the salary paid to the company’s chief engineer was considerably in excess of

that paid by his department for a similar position. For instance, a chief mechanical engineer with at least equal qualifications to control a £lOO,OOO plant and a number of other plants, was recently appointed by his department at £470 a year. • Mr H. A. Horrocks, New Zealand attorney for the company: Then he does not get as much as some of our carpenters. The case continues tomorrow.