Senator Hawkins raised a question as to the effect of one of these duties on leather wear. I take it the Senator had in mind the position which was recently revealed arising out of discussions in the Dáil, and outside, and which centred on the position of the Portlaw tannery I do not know that a discussion in public of the position of the Portlaw tannery would be good from the point of view of that industry, and so I would prefer not to be tempted into a battle of words with the Senator or anybody else, because I still think it is possible to help the industry, once it gets over the present difficulties.
But, as the matter has been raised, may I say, in the most remote way possible, what the precise difficulties are? There was a time when that particular industry had a substantial export market for its leather. It no longer has that export market for its leather because of the fact that the countries to which it exported leather have now found that the same change in public taste is taking place. Not only do they not need imported leather but they have found it unnecessary to use the quantity of leather which they could use from their own sources of supply. That situation has been brought about by the use of synthetic soling. There has been in almost every country in the world an increase in the use of synthetic soling material. There has been an enormous change in public taste in that respect in England. It is stated that now approximately 37 per cent. of the footwear which is used there to-day is soled with synthetic material, and it is believed that the figure here in respect of synthetic soled footwear is not far short of that percentage of the total footwear used by our people.
It has been stated that, in the United States, over 70 per cent. of the footwear is soled with synthetic soling material, and, unfortunately for the leather manufacturers, it has been stated by the footwear manufacturers that the synthetic soling material gives a longer life than the natural leather. The result is that not only have you a change in public taste, so far as synthetic soling is concerned, but, if what is stated is true, you have a footwear which is going to last longer if soled with this synthetic material.
That is the situation which any alert firm should notice. I do not think it has been noticed with the same alacrity and alertness here as one would expect. If these indications, which have been on the horizon for quite a while, had been noticed in time, it might have been possible for that particular industry to have avoided the worst aspects of this impact of change in the public taste.
In other countries, where it was recognised that this change in public taste was taking place, the leather manufacturers and tanners generally set out to find new uses for leather, set out to make a leather not of the heavy bend type which is not now as popular as it originally was, but set out to split hides and set out to put leather to other and diversified uses. In fact, in Great Britain the leather manufacturers were so alert as to the dangers which threatened them, that they ran leather exhibitions and sent out mobile exhibitions into the cities and towns, in order to popularise the use of leather and to show the uses to which leather could be put.
The difficulty about the Portlaw tannery—or the main difficulty, for there are others—is that it has got in stock a 12 months' supply of heavy bend leather and, until it can liquidate those stocks, it is going to have a pretty rough time. But when the stocks are liquidated and when they survey the market in the light of the change in public taste and when they begin to think of the alternative uses to which leather can be put, I feel sure they can rehabilitate themselves and perhaps rehabilitate themselves on a steadier market than that which has been available to them in the recent past.
What you have to remember in this matter is that it is true that synthetic soling is coming in, that substitute soling is coming in. First, some of it is coming in by arrangement with the boot and shoe manufacturers free of duty. In so far as they want to import synthetic soling material over and above the quota which they get in duty free, they have to pay duty on it. It may be argued that we should not give any duty-free licences at all. Supposing I take that stand and say: "You will get no duty-free licences at all", that will not help Portlaw or any other tannery here. What will happen is that the boot and shoe manufacturers will pay the duty and having paid the duty they will then proceed to show that the raw material of the boot or shoe is now costing more and they will increase the price of the boot or shoe. If I say to them that they cannot import this substitute material free of duty, all I am asking them to do is to pay an Exchequer tax, as the duty will go into the Exchequer. If anyone gets satisfaction out of that, they are welcome to it—but because the duty goes into the Exchequer the person who buys boots and shoes will have to pay more for them. I see no reason why, in a case like this, I should compel them to pay a rate of duty on all their imports, when the only effect of doing that is not to provide additional employment but to put money into the Exchequer and once they have to pay that money into the Exchequer they will increase the price of boots and shoes.
I think it is desirable that I should take steps to prevent the price of boots and shoes rising, but that cannot be done by requiring the importers of synthetic soling material to pay duties on these commodities. In this country, we supply not merely 99 per cent. of our own boot and shoe requirements but we have an export trade which is worth approximately £500,000 a year. A considerable amount of that export trade is profitable only because the footwear which is imported is soled with this synthetic material and if you keep out this synthetic material then you will lose that export trade valued at £500,000. Or, if you let in the synthetic soling material by requiring the boot and shoe manufacturers here to pay a duty on it, then you will send up the price of boots and shoes for export and you will cut the Irish boot and shoe factories off from their external markets, as you will price them out of those markets where they have to try to hold on by being extremely competitive in price.
This is a matter which has to be very delicately balanced. I am trying to handle it without any doctrinaire approach to the problem. It is a problem which has to be balanced by weighing the demands of one particular type of industry as against the demands of another and the consumer has to be protected as the overall consideration.
I do not want to discuss the affairs of Portlaw here. They have been in difficulty but their difficulties are not insurmountable. As far as I am concerned, I would be glad to give them every possible assistance to overcome the difficulties which have recently engulfed them, but which I hope have only temporarily engulfed them.
Senator Sheehy Skeffington raised a point relating to the review of tariffs and certain other related matters. Last year I took the view that we now had tariffs in operation for a sufficiently long period to justify a review of the operation of those tariffs. I approached the problem, not from the standpoint of desiring to abolish the tariffs but in order to see whether the manufacturer was using those tariffs for the extension of his industry, whether he was aiming at supplying the home market, whether he was endeavouring to build up an export business, whether he was providing the optimum employment, whether he was relying on the tariff to justify the use of outmoded methods of production and out of date machinery. I asked the Industrial Development Authority to examine the operation of tariffs in approximately 20 industries. They are doing that at the moment; some reports have reached me and other reports are on the way and the Industrial Development Authority is continuing that review.
I have asked them to make that review a searching review, but at the same time to make it in an understanding context, so that the aim will be rather to step up production, to supply a wider market, to try to get markets abroad, to modernise the industry as much as possible, to get in new machinery and generally to take the view that the firm should be told that it should approach this whole problem with a view to regarding tariffs not as a permanent crutch on which they must rest for the rest of their lives, but as something to aid the industry for a reasonable period, in the hope that it will so organise itself that it will not have to depend on adventitious aids of this kind and that the overall consideration will be maximum production, the widest possible measure of employment and a reasonable service to the community, at prices within the ability of the consumers to pay. The Industrial Development Authority is engaged on that task at the moment and its reports reach me from time to time.
I would like to mention, however, to Senator Sheehy Skeffington—and perhaps other Senators would be interested in the matter as well—that, while it is true that we impose tariffs of 50 or 75 per cent., that does not mean at all that the Irish manufacturer finds it necessary to charge these percentages over the imported article. Manufacturers of articles which are made here find it necessary to charge perhaps 2, 3, 5 or 7½ per cent. over the imported article and that imported article may come from a highly mechanised industry which has a long tradition of that particular class of goods. The fact that these tariffs of 50 and 75 per cent. are imposed is not to give the Irish manufacturer the right to charge these percentages on top of the British landed cost here. In the main, it is for the purpose of giving the Irish manufacturer the market, as many of the exporters to this country could not compete here against these high tariffs because the import price plus the tariff could not possibly compete with the cost of production of the Irish manufacturer.
In many cases it is necessary to impose a very high tariff to give the Irish manufacturer the market. That is particularly so in the case of files, which are manufactured by Sandersons at Droichead Nua. Various efforts were made over a number of years to assist that firm against what might be described as the insidious attempts by substantial interests outside to undermine the firm's position here.
It is the only industry in this country which makes files and nobody would attempt to deny that we ought to have one file factory in Ireland. This firm was assisted in the first instance by a tariff. The tariff was put on files so many inches long, but the moment you put on a tariff like that, an outside industry can come along and make a file shorter by about 1/16th of an inch and get the file in free of duty, as the firm is able to produce a file of 1/16th of an inch shorter in order to get over the tariff. The cross-Channel interests also proceeded to allow substantial discounts to importers here, which they did not allow to their customers on their own market. That was done for the purpose of appealing to the understandable cupidity of traders who said: "Here is an Irish file on which the profit will be 15 per cent. I have got an English file which will provide a profit of 25 per cent. The Irish firm will require cash in one month and the cross-Channel firm will say: ‘You can have three months." It is hard to blame a trader while he gets 25 per cent. profit instead of 15 per cent. and three months' credit instead of one month.
Of course, you could not possibly sell Irish produced files against competition of this kind. In getting over that difficulty it was found necessary to impose these substantial duties on particular files. I agree that in relation to the low-priced Irish file this represented a very substantial tariff, but it had the effect of giving Sandersons of Newbridge virtually the entire market. In fact, I think they have the entire market at the moment. Although they got these tariffs, we got from them, as we endeavour to do in other cases, an assurance that they would not increase the price of the Irish files if the tariff was increased. We have always made it clear to these firms, particularly when we impose a tariff, that we expect them, when they get the market, not only not to increase their prices, but to bring their prices down in consideration of the fact that by getting the market, they have accordingly reduced their overhead expenses.
In reply to Senator Sheehy Skeffington, the granting of duty-free licences occurs where the industries, assisted by tariffs, cannot produce the commodities which are required or where they are not yet in production to produce the commodities which it was originally intended to protect by the imposition of tariffs. So far as my Department is concerned, I have personally seen cases in my experience where it is clear that the Irish firm is not making a commodity which the customer requires and that no satisfactory substitute is available, and duty-free licences to import the commodities have been freely given. That is the only sensible way in which you can approach a problem of that kind. It has got to be dealt with on its merits but there is no inflexibility so far as my Department is concerned. I think that I have now answered all the points which Senators raised in the course of the discussion.
