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IMPORTS AND EXPORTS.

30th September 1919
Page 25
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Page 25, 30th September 1919 — IMPORTS AND EXPORTS.
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Which of the following most accurately describes the problem?

A Review of the Present and Future Situation.

By Henry Sturmey.

NOTE The Commercial Motor, in common with other journals, is urging the Government to put a duty on the importation of commercial ears; but, if the manifesto of the Government which was recently published, setting forth its trade policy, means anything, it means that the decision which has been arrived at is an irrevocable one, and I fancy, quite apart from the answer of Sir Auckland Geddes to the deputation from the manufacturers of commercial vehicles and motor tractors, that this will turn out to be the case.

If the Government had considered the restriction of the supplies of commercial vehicles in the interests of the country, it would have imposed a duty at the same time that it was imposed on touring-car equipment. I have been told by one who is well placed to know that, apart from the needs of the commercial community during the period of reconstruction, it was recognized that commercial motor vehicle builders have not been so heavily hit by the war as the car makers, by reason of the fact that they were not, for the most part, put on to, other occupations during the war as the others were,' So were less disorganized when the Armistice was signed.

Moreover, it has to be remembered that the policy of the Government ttiroughout both war and reconstruction has been the restriction, both of manufacture and use, of luxuries as compared with necessaries, and the motorcar is still looked -upon as more or less of a luxury, which appellation could, in no manner of. sense, be applied to the commercial vehicle.

The Handicap to the American Exporter.

In any case, however, the American exporter is heavily handicapped by the freightage and exchange, which latter, it may be pointed out, is applicable to the freightage as well as the invoice price, by reason of the fact that the freights are payable in dollars on the other side. Just how this affects landed cost wilL be seen by the following figures:— Take the case of one of the 2,000 lb.-3,000 lb. say, 25 cwt.—vehicles selling in the States at $2,000 for the chassis. At normal pre-war exchange, say, $4.87 to the pound sterling, this would be equivalent to 2410 13s. English money. This chassis, when boxing and inland freightage to port, together with handling and warehousing charges have been paid, would probablycost the importer about $1,750 f.a, s. New York. Boxed measurement would be in the neighbourhood of 10 cubic tons or 400 cubic feet. Freightage. before the war was about 17s. 6d. per ton or, say, .28 16s., but to-day it is running at 75 cents per foot or $300 for 400 ft., making in round figures—I have ignored insurance now there are no mines and submarines—$2,050 landed.

Present rate of exchange is less than $4.18, so that the c.i.f. price equals at least £466 10s. in English money. This is equivalent to the " all-in " cost of the British manufacturer without profit, and when we consider -that the importer's selling and overhead charges, with a very small profit to hipiself, could not be covered by less than 10 per cent. and that the retailer can hardly work at less than a 121 per cent. margin, we arrive at a conservative retail chassis price, without any "profiteering," of approximately 2586, below which it cannot possibly be sold here with any profit at all to the importers and agents, a figure which, for a 25 cwt. vehicle, brings it well up to British prices, and then the question of relative quality and national preference comes in.

' The Uncertainty of Costs and Charges.

It must further be remembered that both freightage and exchange are becoming increasingly adverse, so that the importer could hardly catalogue his machine even at this price with any degree of safety, and, as these factors affect the higher-priced U.S. lorry chassis to an even greater degree, it follows that it is only the cheapest American models which have any chance of finding a market here at all.

As to whether British commercial motor manufacturers are yet in a position to deliver in any quantity I cannot say, but it is possible that, as home buyers are finding it difficult to obtain deliveries, some may be taking a, leaf from the Yankee book and are taking steps to supply the first demands from the foreign markets and letting the home buyer wait. This, in my opinion, is sound policy from the national point of view and a policy which has usually been ignored by the British producer generally, who, in times of excess of world demand, has been more inclined to let his foreign trade go rip, in order to fill the call of the home market at the bigger prices that rule here.

Concerning our export trade, however, it is here, I fear, that our manufacturers will be most heavily hit by their Yankee competitors, and every effort should be made to amend the present conditions ruling. When all is said and done, price (all other things being approximately equal) rules the market in most things, and in all things as regards quantity business.

British Quality Against Cheap Price.

As I have frequently said before, with the highest class cars and commercial motors, where quality is required first and price is a secondary consideration, the British manufaaturer has hitherto been supreme, not only in the home but the foreign markets. But it must be remembered that the saying is true that "everyman has his price," and in this case it means that there comes a point at which even -the stickler for quality and patriotism has to let it pass and take & cheaper article, and that point is the limit of his purse. So I do feel that in this matter of British high prices the country's foreign trade is very seriously menaced, and unless our manufacturers can reduce their cost and selling figures very considerably they will inevitably be driven out of the foreign markets. Most certainly the prices of the mass-production cars—of, which so much has been heard but so little seen as yet—will have to be vastly different from the prices ruling generally today in the home market, as it will be impossible to dispose of the vehicles in sufficient quantity to justify mass production,. In this matter I believe labour is mainly al the bottom of the trouble. When hostilities ceased the labour people all over the country set about getting more money for themselves, regardless of the effect on anyone else or on industry. It was each for himself with the unions and devil take the hindmost. So we have had nothing but a succession of strikes for higher wages all along the line, with threats of more to follow and the plain admission by the leaders that they are out for what they can get. Combined with this has come a distaste for work, the clamour for shorter hours on impossible and visionary Socialist theories, and a general slackening of effort, and the result is not far to seek.

Take the motorcar, for instance. The manufaeturers have not only to contend with slack work and increased wages in their own factories, but the effect of the same thing in other factories is reflected in the price of material and purchased supplies. The cost of the raw material, in the first place, is heavily increased by the increase in the cost of coal, caused by the higher wages and lower output in the mines, and the cost Of smelting and refining the ore is again enhanced by the increased cost of labour in its direct production, and so on through every stage of its manufacture to the finished product. When all these increases are concentrated in the motor wagon the cost is so enhanced that even the well-known reputation for quality of British goods will not secure trade in the foreign markets against Our competitors.

It is all very well to advance wages to obtain an illusory condition of things for the workers here, but when our goods get into the foreign markets the principal thing which will count in securing business will be price, for it must 'be remembered that the lorry chassis built in other countries have proved themselves to be at least practical and useful vehicles under the strenuous stress of war, and with the foreign and even the Colonial buyer sentiment counts little and will count less when there is. a substantial difference in price.

The Dominating Influence of Price.

Undoubtedly the soundest policy for this country to pursue would be a novel and drastic one. Price in 2 s. d, and its equivalents of our goods in the foreign markets is the thing to think about. High wages, coupled with high home prices, are illusory and fallacious ; but, so long as they pertain, we cannot bring our prices down, as we must do, to secure and hold the overseas markets. Strikes should be forbidden for a year and an investigation into the effect of labour cost on the common necessaries of life made, and on the assumption that lower labour cost would mean lower production cost and, hence, less cost to the consumer. Both the p–rices of commodities and the price of labour should be simultaneously reduced, the State carrying the loss on already produced or partly-produced goods. After this production cost would naturally decline, lower prices for everything would rule, and the real value of the wages received would be greater, although the nominal figure would be less.

Such a policy would be a drastic one, but it would have the effect of reducing the cost of living to all those suffering thousands who, not being workers, manufacturers or shopkeepers, are unable to ",pass it along" to others, and it would have the still more valuable effect of reduoing the cost of our exported goods and enabling us to hold and increase our trade.

The Need for Enlightening Labour.

The task of the Government to bring about such a change would be a big one, because it would be a difficult matter to get the British workman to see that, if his wages were reduced 30 per cent. and his cost of living at the same time reduced 35 per cent.. or 40 per cent., he would be really better off, although he would not handle so many " Bradburys " weekly.

Labour is not yet educated up to understand economics—they ought to be taught in our secondary schools. No doubt his misleaders would tell him it was all a ruse on the part of the capitalists to get the better of him, and it would be difficult to persuade a man that he might be better off with £3 a week than with 24 10s.

But if such a policy could be brought about, and the workman persuaded at the same time to give a fair day's work for a fair day's pay and induced to see the value of production, it would do wonders to' pull our country out of the mire. As we are going to-day, it is difficult to see how we are to hold or increase our foreign trade, and without our foreign trade we are done.

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