A PROMISING INDUSTRY

Rotorua Morning Post, Volume 2, Issue 535, 19 May 1933, Page 9

A PROMISING INDUSTRY

the world's paper markets OPEN TO NEW ZEALAND ^onderful possibilities ahead At the conference of bondholders in Timberlands Woodulp, Ltd., held in Rotorua between -February 28 and March 4, 1932, Mr. *lJ- Guere, consultant engineer, of Wisconsin, US.A , delivered an important and interesting address upon the 'ssibilities of manufacturing pulp and paper in this district. His advice to the bondholders has such an important bearing upon the future industrial progress of this part of the Dominion that wider publicity is fully justified. It is not possible to reproduce the whole of his addiress, but the opinions expressed by him regarding production and marketing cannot fail to awaken keen • interest,

w ^9 ITH the advent of sec- 1 TvT oxidary industries in yonr country," said lf jf Mr. De Guere, "you 3* are likely to witness a corresponding in- ! crease in consumption of paper products, and also the xnanufaeture of paper here should eventually result in cheapening the cost to the individual user, so there will 1)9 a likihood of more liberal use. It may he pointed out that there has been a gradual rise in the consumption of particular products, and then a decline, as for example, silk and timber, and others which might be mentioned, but there is no sueh ■ decline in the use of papjer products up to date, and there seems no possibility of such a condition coraingabout. "The rapidity with! which the timber is being cut in the two countries, ; yiz. Canada and the United States, is 1'auged by a knowledge of the fact i that the North American countries produced in 1929 nearly 11,000,000 tons of paper, and the United States alone over 700,000 tons more than the whole of Europe together, covering at least 19 countries. "The pulp wood required for paper used in the United States- in the year 1929, was roundly 15,000,000 cords of

^■1 128 cu ff n ■ canit„ ' ' n a kasis of equal per H N iet zPniSUn?ption of PaPer products H180'000 cord. J°Uld require aboU/t ^■traliai, , Per yeaU and if Ausrennii3 j°-.COns^ idered, there would ^B^ood T,p^e >000>900 cords of pulp WheflJwI' Mr: Cor]:,il1 can tel1 Muller With'i Gxisting forests, to^■Nablp , e now growing, will '1 it shnni ,SUpp y tWs demand or not B ould ever take place. "j Varfety 0f Uses ^Biieve so °pbimistic as to becapita PnJlgeest. tbat any such per Within ti, SUmP^on will take place Bt!lePossibii5ear/"ture' but tbere is tion t0 Cfm ^ 0 lnerease in popula- ■ Variet» nf , er' an^ w*th a greater H Play. jj. • Ses ^or paper coming into ■ lerca^ reasonable to expect the as tirae consumPtion will increase % a].f°ies10n> and some increase K crease h J* °obe(* for from an in MN®av\ ! on' tll0USh the latH; "I ai; " re|atively insignificant. MNa bepP e?y refeiTinS to Ausj^B^culd bp Se ^eel that country, ^HNse of i+an avaPab^e market, be"witlr S 5 tive nearne^s com■aa4teCauSP°ier !ources of supply, consenn + rational relationship ^B%osed tn f? ec^oni °f trade as strictW * Purcbasin& of paper H "Of cour70 countries. thn a ■n°tf- expect^Hjc%er can bo Us aban market or any qnalflaCqTed Unless ^oods of, ^Bue'canbtd2? at f corresP°nding there is red to their doors, - 8 cannot \n°i reas°n to feel that ^ be aone. K"ItiSnnfnCti°nProposals thh Pra?i0sed at this time to to produce every

known variety of paper now offered in th'e New Zealand and Australian markets, because this would he attemptin^ too much at the start, but as this plant pro'gresses better and higher grades will be developed, and in time it should he in a position to cover nearly all of the requirements. This will take time and additional and different equipment, but at the same time the basie equipment of the original pilant will remain intact. "There is, however, a wide margin to work on in varieties of paper entirely suitable to the proposed plant in the nearby markets, between its proposed production and the total consumption of paper in these markets. Prospective Markets "New Zealand is several thousand miles nearer Australia than any other source of supply, and the cost of delivering paper to Australia from here eertainly should not exceed, and should be less, than from more distant points. If then paper can be produced here at a low enough cost, which, together with the cost of transportation, is no greater than that from other localities, it would seem that the business must come here, quality being equal. Our figures show this can be, done? and at a Pr°~

fit to the producer. "You need not stop at Australia for a market because there are many 1 other countries using considerable paper, where you - can compete for i the business. They may seem to be ' a long distance away, but after all a | market is measured by the cost to ! reach it and not by miles. Pulp is transported from the- Pacific to the | Atlantic Coast, on the North Ameri- [ can Continent, for £1 4s a ton, and ! in instances- even less,. a distance of fully 7,000 miles, via Panama Canal. Transportation cost from European ports to the Atlantic Coast are around 16/- a ton. Need for Encouragement. "In order to place a mill of this type in New Zealand on a competitive l basis with other mills in world markets, this country should exert every reasonable effort to permit a minimum cost of production, because any conconeessions granted will be offset in return a thousand-fold by building up a business which may easily become one of the largest and onost suhstantial in the country to the benefit of all the people. "I am not referring to this company only, because with your abundant timber supply which can he grown as fast as required, there will be other mills established here in due course of time. The business- needs no protective tariff, but needs encouragement to permit it to igrow to th'e. limit of its possibilities. Lessons from Overseas. "The countries of Norway, Finland and Sweden have built up a large export pulp, and to some extent paper

business, hased entirely on the fact of their natural resources of timber and water power. These countries use relatively little paper -themselves, but because of their favourahle location with respect to markets and cheap raw materials, have been able to set the price on pulp delivered to other countries. These markets, however, are by no means nearby in. miles, and they are also shipping pulp to this country and Australia!. Is it too much to expect that this country might at some future time exercise a dominating influence in the markets of the world in these products? "The manufacture of pulp and paper should he as natural an outlet for your vast timber resources as the manufacture »of lumber, although the two industries cah with benefit to each other, go hand in hand. "You have, or will have in the fairly near future, all the pulp timber needed for a large enterprise of this character. You also have abundant power resources developed and undeveloped, an excellent climate, for carrying on the operation of such a plant and works operations, limitless supplies of clean fresh water, intelliigent workmen, all of which make for a suhstantial and successful industry of this nature. A Sound Industry. "From an intimate contact with the industry through having lived in its midst in one of the largest paperproducing States of th'e United States, and the development of same through the designing and building of mills, I am dn a position to say that I believe it can be established here with every assurance of a successful outcome. Its suecess here or elsewhere, however, depends upon the integrity, initiative, energy and wisdom of its management, because it will be in a sense a pioneering undertaking, and will naturally meet with many obstacles to its progress. "After a several weeks' stay in your country my observation leads me to believe th'e future of the country depends upon the development of secondary industries. By this I mean secondary industries only that are peculiarly adapted to the country by virtue of its natural resources, cap-

able of supplying products for home markets at a cost below the imported article, or on the other hand, by a local demand sufficiently large to make it feasible to produce a commodity at a cost at least no greater than is now being paid. Most commodities to-day are made on large scale op'erations, by what is commonly known >as mass production, and at a relatively low cost per unit of output, with the result th'at - it is not - generally possible for an operation on a small scale to compete in costs. There are exceptions to this state-men-t, ' but there is usually a certain limit of size or capacity below which it is not profitable to operate in any given enterprise assuming that general eonditions surrounding the industry are ahout the same. "However, businesses are being and have been built up that started on a very small . scale, but it is perhaps more difficult to do this to-day than ever hefore, because of the vast enterprises that have been set in motion in the last 12 years, due to the im mense prosperity of th'e world in general. Industrial Development. "The idea that this country is adapted to, and should depend, only on its primary industries, is one that sh'ould he discarded if held by the majority of the people, because you have natural resources capahle of development in an industrial way that are surpassed by no other country. Industries are feasible that need not depend upon the New- Zealand market alone, and no douht there are others that

would be profitable even if dependent on th'e local market only. ' "No other country has ever grown j b-ig and prosperous whose people gain their livelihood by living off each other as parasites, and unless you can go on and on in widening your markets for your primary products you will eventually reach this stage. j Then between the politicians living on the Government and th'e relatively few who are not, hut living on each other, you will have come to a pass not pleasimg to contemplate. The Canadian Example. "Canada's rapid and suhstantial growth was brought about mainly bythe development of its seconclary industries. This country, particularly the North Island, h'as a much better climate than Canada, and is much better adapted to the growing of forests suitable for pulpwood than Canada is. Another of Canada's great resources is its water power, hut you have abundant resources of this nature also. Eastern Canada has no coal where it can he easily reached, and consequently the cost of fuel to many of their industries is •comparatively high. Your coal costs here are high, hut i doubt if they are higher than the prices paid by many of the Canadian pulp and paper mills. "Most of the timber that reaches the pulp mills in Canada 'is either floated down rivers lewg distances, or hauledi similar distances by rail, and in some cases both means of transportation have got to he resorted to hefore the wood reaches the plant. It also causes the necessity for large storage piles of pulp wood in their yards, as some of this wood is a year or more on its way to the mill. You will have no such difficulfcies to contend with hers. In all of the Canadian mills, except those on the West Coast, an enormous amount of fuel is used each year for heating the plant, and you can well imagine this when the temperature gets down to 30 or 40 degrees below zero with 15 degrees or 20 ' degrees below common, and for long periods. Th'e operation of a plant. under such eonditions is difficult and expensive. _ "Processes and grades of paper wall change, mills will close down and go out of business here and there, due to natural eonditions, hut the march of progress in the consumption ofpaper products will not grow less, and we can just as confidently look forward to a larger volume of paper being used in 5 or 10 years from today as we can to the rising of the sun to-morrow.