MANUFACTURERS ASK PRICE CONTROL CLARIFICATION

Grey River Argus, 8 April 1948, Page 7

MANUFACTURERS ASK PRICE CONTROL CLARIFICATION

P.A. WELLINGTON. April 7. The New Zealand Manufacturers’ Federation has asked for a clear defipition of the policy to be adopted in regard to Section 25 of the Control of Prices Act, dealing with the withholding of goods from sale, according to a statement issued by the Secretary, Mr. D. I. MacDonald. “With the present complicated machinery for obtaining price approvals, it could often happen that goods which had borne increased prices could not be delivered until satisfactory price approval is given,” he said. The Federation required an assurance that it was not intended that goods of this nature should come under this provision if they were held up pending the Government’s consideration of an application for a justifiable increase in price. Another vital point was the necessity for the recovery of costs, where a falling overseas market created disparities in the selling prices. “The Price Control Division appeared to be adopting a policy of making the lowest landed cost the standard landed cost, irrespective of the actual outlay involved. “Such a policy,*’ the statement declared, “was not reasonable or sound. The statement also defined two of the main essentials in respect of Price Control as (1) give the customer fair and reasonable protection on a short-supplied market; and (2) at the same time, retain the enthusiasm of the producer by according him a margin sufficiently high to create a basis of incentive to secure his maximum productive effort. SOME CONTROL SUPPORTED “The general policy of the New Zealand Manufacturers’ Federation j regarding price control has been that i continuance of some measure of conI trol is necessary only until such time as the supply of the various types of goods equates the demand for those goods,” says the statement. “At that point healthy competition on the basis of cost and quality will automatically determine prices with- . out the need for any artificial forms of price control. In fact, the retention of such artificial control of prices beyond the commercially prudent point may easily delay the otherwise normal downward tendency of prices.” The statement said that one of the main points of the Federation’s disagreement with the Control of Prices Act was that it widened the scope of price control and made it permanent, with no provision at all for the removal of control when the stage was reached where this could be safely. D one. The Federation was . strongly of the opinion that the Government should now consider the lifting of price control from those industries or groups of industries where the supply of goods was more or less equal to the demand. COMPETITIVE TRADING The continuation of a strict and rigid system of conrtolling the price and profit margin on each and every individual item was entirely incompatible with normal conditions of competitive trading, the statement continued. Where price control was continued, it was necessary for much more flexibility to be introduced into the present methods. The statement declared that it was absurd under present conditions that ■ prices should be controlled down to the last fraction of a penny whe nso many of the component cost items, such as raw material prices and wages, were right outside the control of manufacturers. The Federation felt strongly that the operation of price control had discriminated most unfairly against the New Zealand manufacturers, who had had to submit masses of detailed information, including a close scrutiny of their accounts for a period of three to five years in support of their applications. They had to submit to openly admitted profit control, which should be distinct altogether from price control and which could not reflect a true conception of value or efficiency. This policy had done more to disrupt production than almost any other factor over which, internally, the Federation had any control. The statement contrasted the treatment afforded to imported consumer goods where the landed cost was plussed by a fixed percentage and the matter ended. The statement said application of profit control took away the incentive to efficiency or to improvement in the methods of manufacturing and thus retarded progress and initiative and endangered the future stability of the industry or company.