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Survey of manufacturing activity in consumer goods industries



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DO NOT BROADCAST OR PUBLISH BEFORE 1 P.M. ON WEDNESDAY, DECEMBER 14» I960._________

SURVEY OF MANUFACTURING ACTIVITY IN CONSUMER GOODS INDUSTRIES ‘ ~ ..... " "

; (Statement "by the Deputy Prime Minister and i ' Minister for Trade, Mr· J. McEwen) s

The Minister for Trade (Mr. J. McEwen), said today that

industries manufacturing consumer goods had enjoyed very high levels of

activity during 1960. They were working much closer to capacity than in

previous years and had made significant progress in holding their costs. .

It waa noteworthy that this had been achieved in a period of rising imports.

' Mr. McEwen was commenting on a survey of manufacturing activity

in fifteen consumer goods industries which was released today by the

Industries Divisidn of the Department of Trade. The survey was carried out

in late September and early October. .

This was the second part of the Division's annual survey of

Manufacturing Activity in Australia, Mr. McEwen said. The first, which

surveyed industries engaged in the manufacture of basic materials and of

plant, equipment and machinery, was released some months ago. The present

one v/as restricted .to consumer goods only. Mr. McEwen said these surveys

were now in their ninth year of publication and had become valuable

additions to our knowledge of the operations of the Australian economy.

Apart from dealing with current levels of activity, they also contained notes

on the structure and background of the industries covered. They were widely

distributed in Australia and overseas. ■ >

In-commenting on the results of the survey, Mr. McEwen referred

particularly to the fact that firms in the consumer industries were now

working much closer to capacity than in the past couple of years. This had

vindicated the judgements of those firms which had considerably expanded

their' capacity in recent years and embarked on programmes of modernization.

Whereas the industries surveyed were, on average, working at about 60 per

cent and 70 per cent respectively of their capacities in 1958 and 1959» they

were, now working at close to 80 per cent. This still left room for increased

production, particularly as additions to capacity were continuing, and it was

noteworthy that even yet only twenty per cent of'the firms interviewed had

i~7T

reached the level of production from their existing plant that they would

u 7 " att3ln· Ιω3 ~ 3 Ϊ - » «-u, for example, in either the

u.K. or the U.S.A.

This increase in capacity in use had helped manufacturers to keep

' " th6ir M S t B · T t e 35 c o a c h e d installed capacity a more

efficient use of labour was possible. Cenerallv foe , . y> for example, it seemed that,

under present Australian conditions +ν,Ω ί v ‘ ' ·

onditions, the labour content of additional units'

o output was only about one-half to two-thirds of that r o a r e d when

working at a lower percentage of capacity though, of course, there were

coneiderahle variations between different f i r m and i ^ ustriea.

Despite s i ^ f i o a n t increases in wages and in the cost of some

materials, notably stool, unit costs in the fifteen'industries surveyed had

- o n only slightly d u r i ^ the ye,r ended September/,960, and prices bad

- a i n e d virtually unchanged. In fact, twenty per cent of the fim s

interviewed had reported decreases in prices, and mere than fifty per cent

no change in the prices of products manufactured by them. This was a

commendable performance on the part of m - p * well for th ♦. - u f a c t u r e r s and he hoped it au^ired

for the continuing struggle to improve the competitive position of

secondary industry, .proved designs and machinery and hotter

methods had helped l e c t u r e r s to restrain their costs, hut the mayor

Sing = factor appeared to he the sharp increase in output that had taken

place during i960,

McKwen said that in recent months, imports of finished

consumer goods had been at a level mof* +v ' 1 Γβ than one~third higher than the

average for 1958/59. Such imports totalled £ 160 m n V · y

with ruo . 1Ί 160 milllon ln 1959/60 compared

in 4 m i n i °n in 1958/5S· * « - = ~ r quarter of ,96o, they had

reused further to an annual rate of more than £190 million. Many of these

^ however, were not directly competitive with goods of local manufacture.

ther cases it appeared that the increase -in + · . - ln domestic demand during I960

been sufficient to take care of both the · greater · * increased local production and

greater imports. Nevertheless - p · f ’ 1IBa exPe°ted increased competition

from imports in future. . He re^rtiAd - , · +

that th 30 enC0Ur^ in^ sign, however,

that there were reports that some manufacturers were w , · a t t e n d ™ beginning to turn their

attention, sometimes under +

nnder licence to an overseas manufacturer, to making consumer ffoodn „·? „ 4 . ’ “ajcing

goods of a type not previously seen . . ,

' ' ’ 7 ln Australian stores, but which

were now being imported following the relaxation of import licensing.

Generally speaking, most Australian consumer goods industries

were not as yet significant exporters, though a number of manufacturers '

had euooooded in obtaining export aaloo and ho had no doubt that this

field v/as capable of further development. Two of the industries surveyed,

however, were quite notable exporters. The processed foodstuffs industry

for example - a traditional exporter - earned about £52 million of exports

in 1959/60, though this represented a decline from the figure of £57

million achieved in 1958/59· These figures excluded exports of butter,

cheese, sugar and flour. Another industry which v/as achieving export

success was the motor vehicle industry. Exports of this industry amounted

to several million pounds annually and were expected to rise considerably

during the present year. There were a number of industries, however,

in which exports, though at present small, were significant in that they

indicated that export markets could be secured by Australian manufacturers

of consumer goods. Thus there was some export of radio receivers to a

number of countries, including the United Kingdom, several manufacturers of

television sets were examining the prospects of exporting to countries which

use the same line system as Australia, and cosmetics and toilet preparations

were exported to the United States, New Zealand and the Middle East.

Mr. McEv/en said that, on tie v/hole, stocks of finished products

in the hands of manufacturers in the industries surveyed had not varied

significantly over the year. Some merchants had stated that any increase in

their stocks which had occurred had be.en mainly in imported goods.

Stocks of materials and components in the hands of manufacturers

had, however, shown an increase. This was to be expected following the

increase in the levels of production. Generally, however, the rise in stock

holdings was not as great as the increase in output.

Overall, there had been little change in the proportion of

imported materials and components used by the firms interviewed, though total

imports had risen following the rise in production. Nor, by and large, did

manufacturers expect any change in the future proportion of imported

materials and components used by them. Occasionally, however, manufacturers V

had expected that there would be some increases in the six months following

August, i960. Thus, because local steel continued to be short, some

4 • ♦

increase in the use'of imported steel had been forecast.

« w e n said that the increased activity in the c e n s o r

goods industries, which had become very noticeable during the past year,

was mainly due to the increase in money in the hands of the Public

: particularly f o l l o w ^ the increases in wa.es ani salaries which ad

occurred. Nevertheless, total retail sales wh,ch are the main dote—

of activity in the consumer seeds industries had not increased by as mu

as the growth in wages and salaries paid, some of which appeared to ^

flowed into increased savins as evidenced by the rise in savingsbanh ^

other hank deposits. On the other hand, in the view of the Gov ,

been a disproportionate increase in the demand for certain consumer go ^

particularly those for whose manufacture, steel, which wae currently in short

supply in Australia, was required.'

Though manufacturers' expectations at the time of survey, w c

_ serried out mainly in late September and early October, were high,

had not expected activity to continue to show the same rate of rncrease

the early months of 1 * 1 as during the past year. This was because t ey

considered it unlikely that the factors which had led to increased desmnd i

the twelve months ending September, such as the increase in wages, won =

repeated to the same extent in the following six months. Mr. « w e n added

that, since the Survey had gone to the printer a M before the complete

analysis of its results was available, tbe Gover»ent had, in addition, found

. it necessary to introduce measures of economic restraint, which it was

expected would also temporarily limit activity in some of the industries

making durable consumer goods. Nevertheless, these restraints should s i

permit continuance of industrial activity at high levels.

So far as the future was concerned, he looked forward to an

improvement in local steel supplies, f o l l o w ^ the coming into production

cf the new 350,000 ton open-hearth furnance at Tort Kembla last month. ·

He also thought that a restriction of hire purchase activity would not only

restrain inflationary pressures arising from some forms of non-manufacturing

co-orcial activity, hut would prevent demand on some manufacturing

\ . ... f_r ahead of growth in those basic industries

industries from running too far ahead oi gr ^

J i · +hpiT supplies. The Government was anxious

on which they were dependent for their PP

to prevent any repetition of the events which had led to the ^o-called

"milk-bar" economy'of a decade ago.

Once the economy was back on a more even keel, he looked forward

to a continuance of rapid and balanced activity in all sectors of the

economy. He was confident that the recent measures taken by the Commonwealth

Government could, if fully implemented, lead to ihe restoration of such a .

situation. Nevertheless, there were, in his view, two indispensable

conditions for any long-term continuance of the rapid development of the

Australian economy. The first was that more materials and aids to manufacture

be supplied from local sources. The second was that exports of manufactures

must be increased. ■ '

Mr. McEwen said he would like to express his thanks to the many

firms which had co-operated in the Survey. In this particular half of the

Survey, which had covered consumer goods, information had been supplied by

over 300 manufacturers in all States as well as by a number of retailers and

wholesalers, including some of the leading merchant houses in Australia.

Periodic assessments of this kind were almost indispensable for any

valid judgements of the Australian economic scene. Because of the increasing

complexity and importance of Australian manufacturing industries, with their

vast range of many thousands of products, there was an increasing need for

information on their structure, operations and economics. In the primary

industry field much good work in this regard was done by bodies such as the

Bureau of Agricultural Economics and the C.S.I.R.O. The work of the Industries

Division v/as an important beginning to providing such a service in respect

" . \

of manufacturing.

81/6OT

CANBERRA. A.C.T.

December 14> I960