COSTS AND PRICES

Rotorua Morning Post, Volume 2, Issue 319, 5 September 1932, Page 6

COSTS AND PRICES

FACTS ANALYSED MANUFACTURER CANNOT VARY IMPORTANT FACTORS. POSITION IN NEW ZEALAND. Prices of articles cannot be judged offhand merely by the cost to the consumer. Only by analysis of production costs can the fairness of the price be estimated, stabes the "N.Z. National Review," in asking the question: Can prices for goods manufactured in the Dominion be cut? | Costs, states the article, are made up of ten items — raw materials, labour, power and light, rent and interest, depreciation, freight and cartage, rates and taxes, selling expenses, management, and return on capital. In only two of these items has the manufacturer any actual control of or influence on costs. | j Wherie He Lacks Influence. It is elear that the manufacturer can have no influence over the cost of his raw materials. Whether im- ; ported or local, they must be chargsd j •up at the cost landed in the faetory. ' Many of our manufacturers here have to import materials, and, if, as seems probable, further preference is now given to Empire products, the cost of these is more likely to rise than drop. Interest is a big item in industrial production, and money is scarcer and dearer now than before the depression. Power and light are the monopoly of State production and local control, and the costly experiences of these ventures of the Government have not yielded that cheap industrial power which was anticipated, and which is so essential. Rates and taxes are also fixed by the State and. local bodies; ooth have about reached the limit that industry can stand if production is to remain possible against competition with manufacturers in more favoured countries. j.' r Jights, cartage, etc., are charges which are fixed outside the faetory, vvhile depreciation in machinery, plant, etc., is a heavy item which must be xaced in modern industry where everohangmg methods and processes must be followed if efficient and economic production is to be maintained. Big Item of Salaries. Then there remains the big item of vvages and salaries, and here again i uhese have been fixed by outside agen- j eies in the form of industrial agree- j ments or arbitration awards in which mdividual manufacturers have had little say. Added to them may be mentioned numerous Acts, regulations and restrictions, many of which have been a brake on the wheels of industrial production.

Sellmg expenses include advertising, travellers, and the general cost of reaching the final customer. In most cases it is impossible for the manufacturer to deal direct with the consumer, and the complaint is often made that between faetory cost and what ihe ultimate purchaser pays the margin is excessive, but the keen competition of to-day is rapidly reducing this gap; the wholesaler is playing a diminishing part between our manufacturers and the retailers. In the bulk of saies now there is but one profit between the local faetory and the final consumer, and that profit is cut to the bone by strenuous modern competition. Keeniuess of Competition. The costs of faetory management are the other items over which the manufacturer ex'ercises control, and the low revenue tariff which exists here has made competition with imported products so keen that sheer necessity has sharpened management to its utmost in order to keep our indusnies alive. Finally there is the item pf profit, or return on capital invested in the industry, and this can best be juuged by a study of the balanoesheets of our industrial concerns which are incorperated as public companies; because what applies to these will also be found in those smaller industrial concerns operated by individuals and private companies. The record of our local industries is now one of passing Jividends and drawing on hard-earned reserves in order to carry on with courage and confidence in our couniry's future.