Protection of N.Z Industries

Hawke's Bay Herald-Tribune, Volume 81, Issue 13, 8 October 1937, Page 3

Protection of N.Z Industries

Onr Own Correspondent.)

HOW CAN ITBE DONE? More Ways Than Raising Tariffs GOVERNMENT'S PROBLEM

(From

WELLINGTON, This Pay. The announcement by the Prime Minister that the Government^ intends to move to protect local industfy against "excessive importations', _ has j come just in timo to prevent a political I crisis of some magnitude, but may easily lead to difficulties within the Labour Party. The plain facts are that in. the last three months ' New Zealand industry has been steadily on the downgrade. Men have been laid off, many more are working short time. It is generally admitted by the manufacturers that up to June last they enjoyed a good year. At the same time it was felt then that the outlook .was disturbing, and to-day the fears of June have come to be a reality. Practically ah industries have the ' same tale to tell — a story of slacking : orders, of greater pressure from com- ! petitors, of rationed work, of men dis- ; charged because there is no longer anyj thing for them to do. Figures in the I possession of your correspondent show 1 that some factories have laid off almost oiie-third of their staff. The tale is a dreary one, especially in tho case of one industry which is certainly not renowned for its efficiency, but wMch conducts an important and large-scale business. In this fieldi there are factories of 50 and 60 workers which have put off 15 or 20 men and placed the rest on extremely short time. In some instances the men are working only two full days a week,'while in certain instances tlie workers laid off are known to have gone on to sustenance. There are few ordcrs coming in and the outlook is far from bvighb. In one particular field there is now only one factory in New Zealand workj ing full time. It is a business which j was iounded since the war and has had ! a successful career, being someTvhat j proud of the fact that even in the l uepths bf the depression it has3 never | iiad to put off men or reduce hours. It now states that it cannot keep this record much longer and sliould, as a matter of. business expediency, begin retrenchment almost at once. M'nlstcr's Earlier Attitude. It was the knowledge tliat this state of affairs * was steadily spreading tlrroughout the country which led to the differences b etween the Minister of Industries and Commerce and the New Zealand Manufacturers' Association in July. The manufacturers had brought the case before the Government withi a plea that it should investigate the position for itself and, if it was convinced, act upon its elec-

tion pledges that n0 one should . suffer from harm as a result of the Government's policy. It is generally held by manufacturers that the shorter working week has resulted'in a drop of about 10 per cent. in the output of most factories, and this alone made it necessary for industry to be able to recoup itself apart from higher wages, restrictions on overtime, higher-priced materials and costlier transport. .What happened after that was what happened in the case of tlie defence plan, which was asked for urgently and drafted at high speed — an apparently unending Cabinet delay. The manufacturers were able to get nothing done ; they finally lost patience and put their views into prinf. The error they made was in not having prepareft their case properly, and in releasing such material as they had covering small businessek as well as large ones. But the dig had its effect. A Cabinet committee met at once and a rebl investigation of fhe situation by the Bureau bf 'Industry^began. What that situation will reveal must be obvious to anyone who is aware that imporfs have increased by. £9,000,000, for the flrst eight months of this year and reflects fhat, even if much of tliat has gone into motor-cars and petrol, there is still ample credit for purchase of goods which may be available in New Zealand, but not at low enough prices. The change in the attitude of the Government has been absolutely revolutionary. Not long ago the

Minister appeared. firmly opposed to any action whjch might embarrass him in his plans for greater overseas trade. To-day he has been won round. Not long ago there was some disposition on ; the part of Mr. Sullivan to ask critical questions. To-day he is 100 per cent. for tha local manufacturer. And wifh the change on the part of Mr. Nash the way was opened for action to be taken to meet the situation which has been created by Australian imports as much as by British imports, it is believed hero. Rationed Exchange. What form can that action take? New Zealand is bound by the Ottawa agreements to put the British manufacturer on the same basis as the local manufacturer. She is thus not able to alter the tariffs on British goods. But there are other ways of getting round , i— position, ways which may not be in "the spirit of Ottawa," but which do not specifically run counter to anything m the treaty. One of these would be a system of exchange control, a rationed exchangt which would have the effect of putting overseas countries on the same basjs as firms which are able to £11 a definite quota of goods and no more, This line, it is true, is raising alarm in the ranks of the Labour Party. The rural members, fearful of the result of any move against British trade by the New Zealand Government, have been exerting pressure to leave things as they are so that they\ may work themselves out. These representative# of country seats are afraid that Britain's answer to any move tu restrict her trade would be to clap a levy on New Zealand dairy produce or meat. A levy On our produce sent to Britain", in the opinion of these members, Would mean the loss of their seats at the next election. Thus they have been. behind the Minister of Finance in. his hitherto stand-pat attitude. They do not realise, as one high official put it cynically, that Britain will impose such a levy if and when it suits her, which. may be when she has worked out a satisfactory plan for her own dairy industry, So it is expected that the step which Mr. Savage will shortly take will be in the direction of reducing the quantity of 'imports from overseas by some means other than outright raising of the tariff. The method to be employed is now being worked out and should be revealed within two weeks, for tlie Government has at last come to regard the matter as urgent and to realise that it must act promptiy to atone for its earlier dalliance. Nevertheless it will be some time before the local industries manage to piek up. again and . get back on to a basis such as they were lucky enough to enjoy last year. Great quantities of goods have come into the country, other shipinents are on the way. A Government which is» not laraid of drastic action will not be deterred by that fact and will bring down its widespread and intricate plan as if it were the simple'st thing in the world. Tho murmurs within the party, already very audible, will certainly be redoubled . unless jfc is seen that the move provokes no action by Britain. Possibly Australia will feel the weight of the blow. In that case she may respond in kind, but New Zealand Governments are used to that. i