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Thursday, 14 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - The duties now proposed represent a considerable reduction of the British preferential rates, but no alteration has been made under the general tariff. Under the item British panels, not fabricated beyond trimming the edges, are dutiable at 6d. per lb. British panels, when fabricated beyond trimming, are dutiable at 9d. per lb. The panel-manufacturing industry in the Commonwealth is well established and is efficiently organized. There are, however, certain panels which it is uneconomical to manufacture locally by reason of their high cost of production and the small demand. The manufacture of pressed panels for any particular body necessitates a heavy initial expenditure in making the essential dies available. Each different type or design of body requires individual dies for the pressing of the panels, and, unless the number of bodies to be produced is reasonably large, the die cost per set of panels is unduly high. In cases where a limited number of bodies is required, the car distributor is compelled either to import the panels and have the body manufactured locally, or to procure hand-beaten panels. The former course, by reason of the high duties previously provided for imported panels, unduly increased the cost of the completed body, while hand-beaten panels also proved expensive. In addition, the use of hand-beaten panels is stated to result in an unsatisfactory finish, which is detrimental to car sales. Car distributors in such cases preferred, therefore, to import the finished body, and pay the high duty under the 1933 tariff. Thus a certain amount of work was diverted from Australia. This position obtains more particularly in the case of the British body, as the demand in Australia for certain makes and designs of British cars is limited, thus reducing motor body requirements for those types to a quantity which is too small for local manufacturers to produce on an economical basis. The object of the new duties is to alleviate the position in respect of British cars not greatly in demand in Australia, and where, in consequence, the cost of wholly manufacturing the bodies locally, on account of heavy die expenses, is out of all proportion to the cost of the complete car. 'The Tariff Board was divided in its opinion as to the rate which should be applied under the British preferential tariff, one member recommending the free admission of panels not fabricated beyond trimming the edges. The remaining members favoured a duty of 6d. per lb. on those panels. The Government has adopted the majority recommendation. In order to prevent additional stages of manufacture which can be undertaken economically in the Commonwealth from being performed in the United Kingdom prior to importation of the panels, increased duties are provided for panels further fabricated than the trimming of the edges. This should ensure that the maximum of manufacturing processes in the assembly and completion of the bodies is secured to the Australian industry. One person complained to me that he could not obtain bodies for a certain make of cars. Having perused the correspondence, I could see quite clearly that it would be impossible for him to get what was desired at a reasonable rate. He was anxious to secure a quotation for bodies for a 1936 model, but the dies could not be prepared until towards the end of this year. Although the order would have been probably for 1,000 cars no quotations were made by local body-builders. Moreover, the bodybuilders pointed out that it was uneconomic to provide a large number of bodies for this year's model, when new models would be introduced early in 1937. Before the new dies were completed a new model would be on the market, and the capital expenditure would have been wasted. In that instance I concluded that the request was unreasonable.

Senator Hardy - Does not the Minister think that that is an argument in favour of importing the panels and assembling the bodies in Australia?

Senator A J McLACHLAN (SOUTH AUSTRALIA) - I am discussing the subject from another angle. The information I have given is a sufficient answer to those who say that bodies are not being supplied. From time to time I have investigated the complaints, and have had assurances from manufacturers that they were willing to meet the convenience of their clients but that it was inadvisable to do so. While there may be some substance in the arguments adduced by Senator Foll, I do not think that his proposition is workable. Manufacturers will not decline business or concentrate upon any particular make of car. They are anxious to meet the convienience of all clients.

During the 1936 season local bodybuilders have at times experienced difficulty in giving deliveries on the dates anticipated. In most instances these delays have been of a minor nature, although in one instance investigated deliveries were considerably in arrears.

In considering this aspect of the question it must be remembered that the sale of motor cars in Australia has increased abnormally in recent years. In 1933-34, 32,924 chassis were imported, in 1934-35 the number increased to 53,975, and in the first eight months of 1935-36 to 50,664. During the periods mentioned, bodies were imported for not more than 4 per cent. of these chassis and the burden of producing almost the whole of the bodies required fell upon Australian bodybuilders. An abnormal increase in production in such a short period must throw a great strain upon the capacity of the body-building works, particularly during the first few months of production for the motor car selling season. Distributors of all makes of cars are anxious to receive initial deliveries of the new models, and press the body-builders to fix the earliest possible dates for delivery of the bodies. Fresh dies required for new types of bodies must also be developed within the first few months of the season. It is only reasonable to expect that in these circumstances the programme of the builders must occasionally be disturbed and unforeseen difficulties encountered which render it impossible for some orders to be completed according to contract.

Another factor tending to delay production this year was a shortage of the skilled labour necessary in certain sections of the works. The small demand for bodies during depression years no doubt interrupted the training of skilled labour, and by reason of the sudden increase in "demand body-builders have at times found it difficult to obtain all the skilled labour necessary. Other factors also interfered with early production. In some instances the necessary blue prints and working details were not made available to bodybuilders as early as could be desired. In other instances these details, when received, were not complete. Delays in delivery of bodies certainly inconvenience the distributors of motor cars, but during the current season these delays have not been particularly frequent, and the Customs Department is aware of only one instance in which orders have been seriously in arrears.

I feel that honorable senators will appreciate the difficult position in which the motor body-'building industry has been placed by reason of the sudden increase of the demand for bodies. On this account the capacity of the industry to cater for Commonwealth requirements generally should not be judged upon the results of an abnormal season, and the few instances of delayed deliveries which have occurred. In consequence of the complaints made the Minister for Trade and Customs caused a special investigation to be made, and I understand that assurances were given to him that any of the motor bodybuilding firms will undertake the work if it is a reasonable commercial proposition. Agents cannot expect builders to incur heavy expense in the provision of dies for the making of bodies for cars that will be shortly superseded by later models. The inviting of quotations in such circumstances almost makes one think that the object is really to obtain a. refusal. From correspondence which I have seen, the manufacturers, so far from refusing orders, have catered to the fullest extent for the trade and have done everything to facilitate business, but have pointed out at the same time the lack of wisdom of having dies made in this country for body designs which may be obsolete next season.

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