MILL INQUIRY

Waikato Times, Volume 126, Issue 21043, 20 February 1940, Page 6

MILL INQUIRY

COST OF CARDBOARD EARLY BASIS OF PRICES EXPENSES ON ENGLISH TRIP (By Telegrapb.—rress Association) WELLINGTON, Monday The hearing by the Price Investigation Tribunal of the application by Wiiakatane Paper Mills, Limited, to increase the prices of the cardboard it manufactures was continued today. Mr Justice Hunter presided and with him was Mr H. L. Wise. Mr H. P. Richmond and Mr W. G. Clavis, of Auckland, appeared for the company, Dr. N. A. Foden for the Crown, and Mr W. Perry for users of Whakatane cardboard. Under cross-examination William Drummond Barclay, registered accountant, of Auckland, who gave evidence on Friday afternoon on the company’s costing system, said that before asking anyone to accept the mill expenditure figure of £586,000 as conclusive he would expect him to check up on the amounts from the beginning. Dr. Foden: I take it that speaking generally they are still adopting the policy of trial and error in many phases of the mill activities. Witness: Speaking generally, one might say they had now gained sufficient experience to get on a more satisfactory basis as regards costs. Continuous Running Mr Perry: If the mill could have had continuous running production costs would be lower? Witness: It follows that if it were possible to get the ideal of continuous running on one type of board costs must fall. Mr Perry: It is very difficult in practice to get it?—Very difficult. Therefore margins had to be made for contingencies of that nature. Mr Perry: Therefore, from a practical point of view, it is very difficult to get what you call continuous running?—Yes, unless you had standardisation on a smaller number of boards. Mr Perry: Some kind of rationalisation?—Rationalisation and as small a field as possible. Mr Perry: Do you know boxmakers had made certain efforts to meet them?—Yes, I understand they had got down to an irreducible minimum. Early Price Basis His Honour questioned witness about changes in the company’s prices in the last six months. “Can you tell me,” His Honour asked, “why it was necessary to vary these prices four, five or six times in as many months?” Witness said he thought the simple fact was that prices in the earlier stages were not based on costs at all, but on the selling prices of imported lines. The company realised that if it did not sell at the imported price it would get no business and it would be unable to get the mill going. His Honour: Do you say that, although the “life” which the company has now got arises from the fact that there is a war and import control is now in force, nevertheless we should fix prices on that very large sum which they say was invested in the mill?

Witnes said he thought so. v If the matter were looked at from the other point of view—high prices due to the war—the company would be entitled to the price at which the board could be imported. It was not asking for that. It was asking for prices based on costs. The public could not have it both ways. Clifton Frederick Langton, cost accountant for the company, said there was a diversity of opinion when tht accounts of the company were reclassified. He had handed in his resignation, but it had not been accepted. In reply to His Honour, witness said that in costing theory did not matter in the least. Dr. Foden: Apparently the system of Mr Horrocks in dealing with main items alone pervailed. Was that in keeping with sound accountancy? Witness: Yes.

Expenses of Trip Dr. Foden drew attention to the item of £5700 shown as expenses incurred by Mr Horrocks and Mr de Guyre on a nine months’ trip to England to acquire plant for the company. His Honour: Prmces or rajahs might have travelled on this sum. Mr Richmond: Before we talk of princes or rajahs— His Honour: I repeat that two princes or rajahs might well have travelled according to their state on £5700 for nine months. Witness said there might have been a proportion of salary included in the £5700. Mr Richmond: It has been said that Government officers had been unable to trace £39,000 of the cost of £536,000 in establishing the business. Has this amount been cleared up? Witness: Yes. It has been made clear now. His Honour: Your prices have been altered frequently in the past year. On what principle were your prices based? Witness: Until October of last year the cost was based on the prices of the imported article. Mr Wise: Are you satisfied with the present price list? Witness: Yes. This closed the case for the company. Dr. Horace Hugh Corbin, director and technical forestry adviser of the company, called by Dr. Foden, said i’ was quite possible that pulp wood would be obtainable from Pukenui. Trees at Pukenui were fit for pulping now, but he had not gone into the cost of transport. The hearing will be continued tomorrow.