Sheltered Industries Of Dominion Still Receive Double Pre-War Prices.

Star (Christchurch), Issue 18056, 17 January 1927, Page 9

Sheltered Industries Of Dominion Still Receive Double Pre-War Prices.

ECONOMIC EXPERTS POINT OUT CAUSES k FOR PRESENT TRADE DIFFICULTIES.

“ The sheltered industries of New Zealand still receive high prices for their output, many of these prices being in the neighbourhood of double the pre-war level, - ’ says a bulletin preby the Economics Committee of Canterbury College. 1 he unsheltered industries have the prices for their produce determined b> overseas competition, and these competitive prices cluster round 50 per cent above the pre-war level. The price receiv ed by the sheltered industries, as well as those of the \ arious commercial and transport industries, and, in many cases, these basic industries cannot make costs and prices meet.”

Bulletin No. 24. prepared by the Economics Committee of the Canterbur)' Chamber of Commerce, continues the discussion on the economic organisation of New Zealand, dealing with the relations of primary and secondary industries.

I.—PRODUCTION AND OCCUPATIONS. A preliminary survey of production and occupations was undertaken in Bulletin No. 22 of this series. It showed in brief that, according to the official figures, the total value of net production in New Zealand approximated £lO6 millions 1923-24, the latest year for which figures are available. The shares of total production contributed by the primary and secondary industries respectively have varied little since the beginning of the present century, the primary industries contributing from 71 to 73 per cent, and the secondary industries from 27 to 29 per cent of the total. Within the primary industries group the proportion contributed by agriculture, mines, forests and fisheries has fallen considerably during the past twenty-five years, that of the pastoral industry has fallen slightly, while the share contributed by dairying has increased greatly. Under the official classification used for estimating the value of production in-which the output of meat works, dairy factories, etc., is included under primary products, the net factory production was £l9 millions. But under the different official classification of secondary industries, the gross product of these industries for 1923-24 was valued at £77 millions, which is the figure most commonly quoted; the net product, or added at current

prices in the manufacturing processes undertaken, was £3O millions. Analysis of the secondary industries however, shows that the largest and most important of the secondary industries are engaged in preparing primary products for market—animal foods ac count for £33 millions of the total gross product—and there is a further important group engaged in supplying essential local services, such as heat, light and power. But the initial production, or the creation of economic goods, although fundamental and of first importance, is not the whole of economic life. Production and exchange must both be financed, and the goods produced have to be collected and distributed throughout the community and the world. Hence a considerable part of our rer sources, both human and material, are devoted to transport and communication, fommerce and finance, administrative, professional and other services, all of which are more or less directly inter-connected with production. The distribution of population amongst various occupations varies from country to country, and depends mainly upon marked differences in resources of production. A significant comparison of these variations is presented in the 1921 Census Report, where the New Zealand occupations have been so classified as to make them directly comparable with those of South Africa and of. England and Wales.

INDUSTRIAL. DISTRIBUTION OP POPULATION. (Percentages.)

In each of these countries about half the employed population is engaged in directly productive occupations, the percentages being 49.6 in the case of New Zealand, 52.4 for South Africa and 54.0 for England and Wales. But .South Africa has nearly two-thirds of her producers engaged in primary production, England and Wales has littie more than one-fourth, and New Zealand about four-sevenths; the remainder in each ease are employed in industrial production. Those engaged in services which areyiot directly productive. the commercial, transport and administrative services, etc., number slightly more than half the total in

New Zealand, and a little less than ha|f m the other two countries. 11. DISTRIBUTION OF OCCUPATIONS. 1 he root causes of the differences in industrial organisation here revealed lie very deep. They are to be found in geographical differences, in the widely different types of physical resources which are the basis of all production. South Africa’s mineral wealth, her , sparse population and her wide expanses of veldt make her mainly a country of extractive industries. Britain’s endowment of coal and iron, her unique geographical position at the centre of the world's trading peoples and her dense population make her mainly a manufacturing and commercial country: New Zealand's wealth of soil and climate, combined with her position remote from centres of world production and trade and her sparse popuJation make it inevitable that her tmef products should come directly from the soil and be exported in the most concentrated form, such as animal foodstuffs and wool. The usual broad division of our ininto the primary and secondary industrial groups, though useful ana necessary for statistical dassifica- . -* I,’ 1 ,’ ls , .t’oduly simple and is therefore A much truer picture is P esented m the following classification of persons employed in the Dominion “ fi the 1921 Census Report .. Detnnn 1 u l. es are B,ven on >y wljere over 0000 and then to the nearest thousand. distribution of occupations.

£ Primary production (dairy- A ins’, oS.000; sheepfa.rm- • mg-, 32,000; agriculture,' ; - farming’ Ji,UOO: forestry, 10,000mining-, 8000.) 152 000 ”7 S 1 production (building, 25,000: food. aoVuKv. and tobacco, engineering, -Jo,000; road and rail’R’a-' construction, 8000: books and print- , 110.000 21. S Commercial (property and finance, 13,000; textile trades, etc., 14,000; mixed businesses, 10,000) 70,000 14.5 J ransport and Communication (railways, 15,000; Post. and telegraph, .10,000; shipping, 8000; carrying-, 6000; on wharves, 5000) 55,000 10.1 Professional Clocal and general government, .*000; law and order, 5000; health, 11,000; education, 15,000) 52,000 0.5 Domestic and other groups e s t j « service, __,000; hotels and boarding-houses, 14,000; independent, 32,000; not -r„ s , I^ d ’ y- 00 °) SS.OOO 16.1 Total breadwinners 546 000 Dependants 673,’000 1 opulation (excluding Maoris) 1.210,000

i This classification shows that more than a quarter of our occupied population is engaged in primary production. a little over a fifth in industrial production, and just over half in other pursuits which are not directly productive. The primary industries are a homogeneous group easily recognised, and consisting mainly of farming of all kinds, timber and mining. But the industrial group is decidedly heterogeneous and includes all the minor industries of the Dominion, road and railway maintenance workers, refuse j collectors; undertakers, and all the miscellaneous repair industries, such as the village blacksmiths, plumbers, carpenters, painters, etc. 111. THE CLASSIFICATION OF INDUSTRIES. The Census classification of occupations is the best available' for a composite presentation of the distribution of our population throughout the various types of employment, but for an analysis of the nature of our industrial production it is better to refer to the official classification of factory production. A factory is here defined as an “establishment engaged in manufacture, repair, or preparation of articles for trade or export which employs at least two hands or uses motive power.” Hence repair shops as well as factories are included, as long as two employees arc engaged or motive power is used, and a large number of very small businesses supplying purely local needs come within the classificaThe following is the official classification of these industries:—

The fortunes of these industries are greatly influenced by the conditions governing the marketing of their output. But the market conditions under .\hK'b they sell their products differ grea ly, and the differences, which are n . t>t in the above official classification, arc of great practical importance at the present time. It is well therefore to regroup these industries in a way that will reveal these significant differences in market conditions. This re-arrangement has been

attempted in the table given below. Group I contains industries manufacturing primary produce mainly for export, but partly for the local market. Group II includes industries producing mainly, and as a rule wholly, for the local market, but subject in very small degree to the competition of imports. Group 111 comprises industries producing usually for the local market onl}”, but subject in considerable degree to the competition of imports. SECONDARY INDUSTRIAL GROUPS

The products included in Group I. have to be sold, as a rule, in competitive overseas markets, after meeting transport costs to those markets. They are entirely unsheltered against the competition of rival producing countries. The products of Group 11. enioy an almost completely sheltered local market, for though a fraction of the products classed as glass, publications, vehicles, etc., may meet some competition from imports, the bulk of the products included in this group has the local market to itself, either because the product must be locally produced to meet particular local needs, as in the case of repair industries, newspaper publications, and heat, light and power, or because, as in the case of bulky goods such as stone and clay goods or furniture, transport costs from overseas are prohibitive. Group ITT. contains almost all the products which are subject in. appreciable degree to the competition of imports. But some part of each class in the group is not subject to such competition. Vegetable food is mainly Hour; wood products include the output of sawmills and sash and door factories, non-precious metals include all the engineering repair industries and a considerable part of saddlery, apparel, and the other classes is either repair work or has for other reasons a secure and sheltered local market.

The net output of this group is valued at £12.9 millions. If allowance be made for repair work and the proportion of new output in each class which! enjoys a secure local market, then the remainder of the output of this group is perhaps worth, at a generous estimate, about £8 millions. This residue is sheltered in that competing imports have to pay transport costs to the local market, and in most cases pass a Customs barrier as well, but it does not enjoy a secure local market as do most of the products of Group. 11.

Analysis of secondary industries grouped along these lines is essential to any effective consideration of the relations and relative importance of our various industrial interests. The net

total product of New Zealand is valued at £lO6 millions, that of the industries which really have to meet foreign competition in the local market is in the neighbourhood of £8 millions, or less than 8 per cent of the whole. The product of the big export industries (pastoral and dairying), which meet world competition in our export markets, is £SB millions, or about 55 per cent of the total. The remaining 37 per cent of our production, both primary and secondary, is sold in a naturally sheltered local market.

The chief economic difficulties of the Dominion in the post-war period are traceable to the disparity between prices and costs throughout these groups of industries. The sheltered industries still receive hjgh prices for their output, many of these prices being in the neighbourhood of double the pre-war level. The unsheltered industries have the prices for their produce determined by overseas competition, and these competitive prices cluster round about 50 per cent above the prewar level. The price received by the sheltered industries, as well as those of the various commercial and transport industries, determine costs in the unsheltered industries, and, in many cases, these basic industries cannot make costs and prices meet.

__ 5 z 5 g CS » \ 3 3 'A It* 18.4 Transport, commer-«-iaI, professional. , n ± 4- fi 46.0 Total 100.0 100.0 100.0

Total ill* Pi > | Class <>f Product * > 8 5: :! " biis:s sek 2 2 2“ mGross Value -S SSJSfr. c c g -1 Or. -1 -1 '» W -1 "> 1.7 1.1 .5 4.3 2.2 1.5 » Value of Not C«Product (added Value.) (1 millions i E 2 ESS : £ E i. u£ co Value of i WnSL,. ? i S SssSs SSs i S K s Ss ciNo. of Establishments.

ii ill !Bi ® 1 1 :1 s ’ .Product “ s: Slssxsi: : s Els B Gross Value of Product (£ millions llsk^i,: ss d-.-iss s s d- s Value of Net . Product (added Value) (C millions) IIIISssS a Si llssssi s 5 sis S No. of Establishments.