ALUMINIUM INDUSTRY

Forest and Bird, Issue 139, 1 February 1961, Page 14

ALUMINIUM INDUSTRY

Sir, —While not wishing to question the wisdom of the decision to establish the aluminium industry, its value should not be over-emphasised. There are four important reasons why the industry’s establishment is unlikely to have a large expansionary effect on industrial development in New Zealand: 1. The capital employed will be largely owned outside New Zealand and hence dividends will be remitted overseas; 2. The employment of labour, once the construction phase is completed, is small, particularly small relative to the capital investment involved; 3. The use of local materials (and hence the resultant growth in supplying industries) is very small once construction is completed; 4. Fabrication of refined aluminium is an industry in which there are large economies of scale and fabricated products are more expensive to transport than the refined metal. As a result the growth of fabrication in New Zealand is unlikely to be substantial. The conclusion to be reached is reinforced by the results of a careful assessment of effect of the development of a similar industry in the north-west of the U.S.A, in the 19405. It was found that the influence on regional economic growth was very small. The above is not a criticism of the decision to establish the industry but rather to suggest that the over-all influence on the economy, once construction is completed, will not be very great. (Signed) G. M. NEUTZE, Department of Economics, Australian National University, Canberra.