The Daily News FRIDAY, JUNE 20, 1930. REORGANISING INDUSTRY.

Taranaki Daily News, 20 June 1930, Page 8

The Daily News FRIDAY, JUNE 20, 1930. REORGANISING INDUSTRY.

Never has the problem of industrial reconstruction in the Mother Country been more pressing than in the present period of Britain’s history. Inasmuch as to a much lesser degree the problem, with its corollary of unemployment, affects the Dominions, it is only reasonable to expect that it will engage the attention of the people in New Zealand. The new way that has been invoked for the purpose of curing some of the evils in the affairs of industry is generally known as rationalisation, which has been aptly termed “an ugly word of doubtful origin imported from Germany, much talked of lately in the Press, a glorified name for some very old industrial devices, such as amalgamation of price rings.” The basic idea of which rationalisation is the expression is said to be very simple—merely the elimination of waste by the systematic reduction of cost, by conscious and deliberate planning of each industry or group of industries as a whole. It is generally agreed that pre-war conditions favoured the expansion of British industries up to the end of the last century. Then came the time when the plant and machinery which the British manufacturers supplied began to be used to oust them from their former markets. Large and flourishing industries sprang up all over Europe and America, with the result that British-made goods had to compete with those of Germany and the United States. Later came the Great War, with its cataclysmic disturbance of all the normal channels of world trade. Partly out of necessity owing to the lack of transport, partly for strategic reasons, the belligerent nations began deliberately to organise- their industrial economy

on nationalist lines, developing industries that before the war would have proved unprofitable, while expanding others, such as the coal, iron and steel industries, to an abnormal degree under the treacherous influence of worldwide currency inflation. After the collapse of the short-lived boom which followed the Armistice Britain awoke gradually to a changed world, faced with keen competition by countries where real wages were kept far below the British level and markets contracted by ever increasing tariff walls. No one will underrate the gigantic difficulties—not ®f their own making—with which the exporting industries of the Old Country have been forced to struggle, nor can anyone fail to recognise the need for a radical change in the economic organisation of that country. The failure of the key industries to adapt themselves to post-war conditions, largely through lack of organisation and co-operation; the multiplicity of independent producers all working for their own ends, naturally proved disastrous in a contraction. Instead of being concentrated upon a few large and efficient plants working at their full capacity, production was dispersed over the whole field of units, many of them more or less obsolete, all of which .alike were kept working short time with greatly increased overhead charges. The waste was necessarily enormous and the consequences increasingly vicious. It is for these reasons that rationalisation, which means simply the technique of reducing costs, has come into favour in order to eliminate wasteful competition by the formation of cartels to regulate production and to equate supply with demand. Among the more, obvious of economies resulting from this process are the suppression of redundant staffs and middlemen through centralised buying and selling, the reduction of unnecessary specifications through more adequate standardisation, the closing down of obsolete plant, and the concentration of production on the best equipped units, which can be kept working continuously on a single type of product, thus avoiding duplication. It is contended that the credit resources of big combines render possible large-' and frequent renewals of fixed capital, and consequently enable the most modern labour-saving devices to be adopted on a scale that would be impracticable for smaller units. The London bankers took this view when deciding to assist with funds the reconstruction of industry. Without doubt the road to be travelled will be long and difficult, but once the real purpose of rationalisation has been fully grasped, not merely by financiers, but by industry itself, progress should become evident, for the new way in industry appears to be the only road to reach prosperity. The general principle involved is one that demands serious consideration throughout the Empire. >