asked the Minister for Industry and Commerce if he will state whether, during the past six months, the profit margin allowable in respect of certain manufactured goods has been reduced by Order or other powers exercised by him; and if he will indicate the classes of commodities affected by such Orders and in each case the extent of the profit margin allowed (a) six months ago, and (b) at present.
Ceisteanna—Questions. Oral Answers. - Reduction of Profit Margin.
The profit margins on a considerable range of commodities have been reduced in the past six months. The commodities include cloth, clothing, footwear, leather, biscuits, cocoa, tyres and tubes, dry batteries, soap, tin boxes, agricultural machinery, pipe lead, electric lamps and asbestos slates.
The margins of profit of wholesalers and retailers of cloth, clothing and footwear are fixed by Order. For both wholesalers and retailers there are generally two margins, the higher being the normal margin while the lower margin is in respect of articles in the lower price ranges. The wholesale margin on home-manufactured clothing has been recently reduced from 19½ per cent. and 18½ per cent. on cost to a flat margin of 18 per cent. on cost. The wholesale margin on home-manufactured footwear has been revised from 18 per cent. and 16¼ per cent. to a flat rate of 16½ per cent. on cost. The wholesale margin on sole leather has been reduced from 25 per cent. on cost to 20 per cent. on cost.
Retail margins on home-manufactured cloth, clothing and footwear have been reduced from 40 per cent. and 30 per cent. on cost to 35 per cent. and 27½ per cent. on cost. The retail margins on imported cloth and clothing have been reduced from 50 per cent. and 33? per cent. on cost to 40 per cent. and 30 per cent. on cost respectively.
The profit margins allowed to manufacturers are not uniform but vary according to the particular circumstances of each industry or of each individual manufacturer. Continuous supervision is exercised on manufacturers' prices and profits and accounts of individual manufacturers are examined regularly. Any variation in manufacturers' profit margins are reflected in the ultimate price to the public. Reductions have been effected in the prices of the products of certain manufacturers during the past six months. It is not possible, however, to state the average margin allowed six months ago or at the present date.
In addition the prices of certain goods have been reduced by from 5 per cent. to 25 per cent. including biscuits, cocoa, tyres and tubes, dry batteries, soap, tin boxes, agricultural machinery, pipe lead, electric lamps and asbestos slates. These reductions in price involve the equivalent reductions in the margins taken by manufacturers and distributors.
In view of the fact that certain firms are able to sell commodities at less than what is described as the controlled price and apparently can do that without any serious impairment to their finances, will the Minister consider a further review of the profit margins with a view to ensuring that other firms are not allowed to charge higher prices than their competitors can apparently exist on by charging?
The margins which we have fixed are, in our opinion, reasonable. It is, of course, open to any firm to sell below the fixed price or on reduced margins. It is not an uncommon practice for business firms to cut the price of individual lines in order to attract custom or to convey the impression that their general prices are lower than those of other firms. Some firms have a policy of working on a small margin on a large turn-over, while other firms cannot do that. It is not possible to make regulations applying to the circumstances of each individual firm. The margins fixed relate to the trade as a whole and are the maximum margins which are considered reasonable to allow.
Is the Minister not aware that it is an age-old policy of large combines or large distributing units deliberately to try and eliminate the individual competitor by means of murdering the price until such time as the individual competitor is smashed and then the large combine or unit has a free field in which to charge what it pleases?