Wairarapa Times-Age THURSDAY, MARCH 28, 1940. BUILDING UP INDUSTRIES.

Wairarapa Times-Age, 28 March 1940, Page 4

Wairarapa Times-Age THURSDAY, MARCH 28, 1940. BUILDING UP INDUSTRIES.

IN an address to a recent conference of engineers m V ellmgton, Mr 4 C Mitchell not only criticised the proposed establishment of iron and steel Works at Onekaka, observing that it was exceedingly difficult to escape the conviction that, the undertaking could not. be just’died on economic, grounds, but expressed some Very decided opinions also on the question ol the extension of the scope of industry in this country. He said, as he is reported: —

In an endeavour to create what has been described as “a more balanced economy,” import restrictions, designed to encourage! loca manufacture as an alternative to importation have been imposed, and the immediate effect has been to stimulate the locally of many lines not previously produced in the countiy. Thei are however, many economic considerations which impose v y definite limits. . . Overseas mass production methods m centies of large population with a correspondingly large home market tend to lower production costs to a figure which could not poss.b y be equally locally, and the absence of essential raw matenals in this country imposes further insuperable restrictions on our capacity foi local production at competitive prices with the world. . . . tne impartial critic must admit that in many lines of manufacture New Zealand cannot possibly hope to establisn an export market and the local- market would not justify those mass production methods essential to success.

It is not to be denied that in many lines of inanulactnre New Zealand cannot hope to achieve quickly the efficiency ol mass production methods attained in countries of larger population and more advanced industrial development. It follows, too, that with some possible exceptions, this country has poor immediate prospects of developing an export trade in manufactured goods.

Nir. Mitchell, however, as he is reported, has gone far bevond the statement of these facts and the limitations they imply. Expressing views that have been stated freely by many people and have obtained a wider credence than they aie obviously entitled to, he suggests virtually that, it is impossible to justify the establishment in this country of industries incapable of rivalling the standards of productive efficiency attained by mass production methods abroad.

If that sweeping contention is examined dispassionately,_it will be seen that it embodies an obvious fallacy and tails completely to take into account, some of the leading aspects even of the present economic position of the Dominion. L nothing else had to be considered than Ihe relative costs of internally manufactured goods and imported goods, the ease lor restricting severely the development, of manufacturing industries in. the Dominion no doubt would ho rounded and complete. Many kinds of manufactured goods admittedly can be imported more cheaply than they can be manufactured in this country.

If is bv no means true, however, that we have, therefore, an open freedom of choice as between importing or manufacturing goods. Save within quite definite limits, out actual choiceis between manufacturing goods or going without. In the end, we can buv imports only'to the extent, of our net export surplus —i.e., the'amount that is left, of our export returns after debl and other external charges have been met. Of late, it is true, we have ignored this limitation of our purchasing power, but We have done, it at. the cost of depleting our London funds and disorganising seriously our national finances. A ictuin to stable financial and economic conditions can be made only by reducing our purchases ol imports to the point at which adequate funds will be left to meet our external obligations.

Save within the limits here stated, the suggestion that it is open to us to import manufactured goods economically instead of manufacturing them nneconomieally in the Dominion is entirely erroneous and inaccurate. 'The war lias introduced altogether exceptional conditions, notably in creating a virtually unlimited demand for primary produce, but al a long view Ihe position to be faced in this country is that when we ha\e produced all the primary exports we can sell, we are left will) a considerable body of labour unemployed, or not employed effectively in. productive industry, and also with surplus oi unused power, material and other resources. We have incurred and are meeting national overhead charges on account of the eons!ruction of harbours, railways ami roads and in other wavs which need not be added Io appreciably if the scale and range of oui' productive industries were extended very considerably.

Caro and forethought are needed in selecting-, in light of the best technical advice available, Ihe indusl ries which may most advantageousk' be developed in this country, but siivces lions that we must abstain. I com promoting an\ iiitliisljy incapable of competing with efficient mass-production units abroad amount to defeatism ol the most extreme order and should be denounced uncompromisingly. There is splendid scope for economic advancement in this eonntrv bv a more effective employment of labour and use of resources.