I move:—
That Seanad Éireann hereby approves of the Control of Imports (Quota No. 48) (Woollen and Worsted Yarns) Order, 1952.
Control of Imports (Quota No. 48) (Woollen and Worsted Yarns) Order, 1952—Approval Motion.
The position in regard to woollen and worsted yarns is, I think, well known to the House. Because of the textile slump and the stock of woollen and woven fabrics in the country, the worsted spinning industry was badly hit. No orders were being received by the worsted spinners and the spinning mills went on to short-time working. We tried to remedy that situation by imposing a customs duty on imported yarn. There was no customs duty in force, because normally the prices of worsted yarns used here are fully competitive with those of imported yarns. The customs duty was not, however, effective enough. Again, because of the textile slump in Great Britain and elsewhere, there was an accumulation of yarns already made there and occasional lots were being offered at prices so low that they could be imported here duty paid at less than the economic price of manufacture here. It was not so much that the volume of yarn so coming in was considerable, but the expectation amongst the people concerned here, that the slump might continue and that in a month or two months' time they might be able to purchase yarns at still lower prices, stopped them from placing orders for those yarns with their own spinners. The purpose of this Order was to make it known to them that there was no advantage to be gained in not placing orders with our own spinners, that the import of yarn from abroad was going to be regulated in any case.
There was another reason why it was necessary, in any event, to control the import of worsted yarns and to keep that control in force for some time. My predecessor, towards the end of 1950, in the light of the international situation at that time, had an approach made through the Industrial Development Authority to the principal firm of worsted spinners in the country and that firm was asked to carry a stock of wool tops substantially in excess of the maximum stock the firm would normally carry for trading purposes. The firm undertook to comply with that request and purchased a very substantial quantity of wool tops over and above their normal needs. Unfortunately, the wool market broke shortly afterwards and the firm found themselves in quite considerable difficulties because of the stock of high-priced wool tops that they were holding.
They approached me in regard to it and an arrangement was made under which I undertook to facilitate them in liquidating this stock of high-priced tops over a period of time—two, three or four years. That involved the inevitability of worsted yarns being somewhat higher in price here during that period than they would have been if the wool tops had been purchased at the bottom of the market instead of at the top. The situation is not completely satisfactory, but I cannot see any other way out of it.
In order to prevent it having any adverse effect upon the development of an export trade in worsted fabrics or hosiery goods, an arrangement was made by which yarns would be supplied to firms doing an export business, to the extent that they were doing such business, at the world price. The situation has not passed yet. It is true that the volume of orders for worsted yarns is such that the manufacturers delivery date is getting further and further behind. We have had to consider increasing the quota under this Order. The recovery of trade has been quite definite and real. The full effect of the losses taken on these emergency stocks has not yet been worked off however so that for some time there will be for worsted yarns used for the home market a higher price than would operate if the tops for the making of these yarns were purchased now. That is rather complicated but I have tried to make it clear.
The future of wool prices is so uncertain that nobody could attempt to forecast it. Any recovery in raw wool such as appears to have taken place lessens this problem of ours and brings nearer the date at which the yarns produced by our spinners will once again be at the world price. That time will come in any event. But the situation is one which prevents us getting the full effect of the fall in wool prices in our worsted yarn prices for the time being.
I wonder if the Minister is aware of the fact that many hosiery manufacturers just cannot get yarns due to the fact that the firm which is supposed to have had an excessive quantity of tops has no tops?
I did not say it had excess tops. The firm had this emergency stock. That is gone but the losses are still there. I am not saying that the actual tops are still in use. They were taken into use at a lower cost than would have had to be charged if the original cost was recovered. It is to the liquidation of the loss involved I was referring not to the actual physical stock.
Would the Minister give friendly thought to an application from hosiery manufacturers who are not at the moment in a position to get their supplies from the spinners of tops?
We have done that. We have made a new quota to cover the period up to the end of the year.
I doubt whether the quota is sufficient to cover their requirements. There is another point I should like to raise. The prohibition of the importation of yarn had a most extraordinary repercussion upon certain hosiery firms here who had tried to find an export market. The Minister was quite right in what he said up to a certain point, that if a firm had an export market they were to get supplies from their Irish suppliers at the existing external price. That did not happen.
In confidence, I can give information in respect of a very reputable firm which lost an export order as a result of this quota. They had bought wool at 13/6 as against 20/6 a lb. for the same yarn from their Irish suppliers. I know it is not the Minister's policy to stop the development of the export market. I think it would be worth while investigating and finding out why there should be such a big difference between the price of the yarn of the top spinners here and the price of the yarn on the external market.
In another connection, retailers are experiencing difficulty. There are certain types of yarn and wool which our machines are not capable of spinning. It seems to be an infliction on the public that they should be prevented from having that kind of wool if we are not manufacturing it here or providing a suitable substitute.
There ought to be exceptions made to the Order in connection with these types of wool which are not available on the home market. Very often we shout about the high prices by manufacturers, but the difference between hosiery prices and what they could be is due to a great extent to the fact that most of our hosiery manufacturers had to buy their yarns from the top spinners at their own prices. They had no alternative. I fully appreciate that spinners are essential to our country and I think they need every help and protection. Whilst we are doing that, I think the Minister might make it clear to the country that if hosiery prices are comparatively dearer than they should be it is due to the fact that we had to pay a higher price for our raw materials.
This matter of wool is very important to us. Both types of manufacturers are members of the Federation of Irish Manufacturers, but in this instance I am only putting up the case as it affects the hosiery manufacturer.
As far as labour content goes, the hosiery people give a far greater labour content than the top spinners. Any action taken against the top spinners should not be allowed to react on the hosiery manufacturer.
I was very glad to hear Senator O'Donnell quoting cases. I was going to speak about what I thought was a fault in the quota system. Senator O'Donnell has given the actual cases. He is a member of the Federation of Irish Manufacturers. I have been very closely associated with distribution. We are all very suspect in this matter but that should not be.
I feel that the quota system is of its nature very rigid. Once a quota is instituted the Department seems to have to deal with it in a purely rigid way. That is to say, everybody has to be lined up in the same box whereas business is not just like that. Some man might have a case for a very big quota while another man might not have a case for a quota at all.
There are cases where makers-up are not able to get the quality of wool they require for their machines. Even when a special case is made, the quota is given in a very parsimonious way. The feeling seems to be that if a case is made for 3,000 or 4,000 lb. of wool, 1,500 is given. I feel there should be a proper assessment made of the requirements of a particular firm and if they really want 4,000 lb. of wool they should get it provided the case is properly made and gone into. In my experience, nobody is ever given the quota they ask for whether he has a genuine case or not. That has been my experience ever since quotas were instituted. Business is so full of trouble nowadays that what I would like to see is freer examination of these things and some more freedom in the giving of quotas, where there is a genuine case.
It is in the interests of Irish manufacturers themselves, because one of the faults of the quota is that very often it closes the market completely. The Minister mentioned that exceptions were made in cases where they were needed for other industries, but I notice that, whether designedly or not, he left out the distributor. The distributor very often finds, if he is confined completely to goods produced here, that he loses in the matter of variety. In a small country like Ireland, every distributor has more or less the same people coming into his shop day after day. If they see the same Irish goods, no matter how good they are, on show, without anything to change the pattern or the picture, they cease coming in and trade drops off. We had that clearly shown in regard to woollen piece goods. Everybody knows that at the moment, although there is a heavy quota and practically none are allowed in, sales are at the very lowest ebb and show no sign, or very little sign, of improving. I feel with regard to woollen piece goods that if more goods were allowed to come in, of a carefully chosen variety—and that proviso with regard to variety could be enforced— the trade in woollen piece goods would improve considerably, which would be to the benefit of our own manufacturers. I feel that quotas can be overdone because they can close a market and stifle the market inside as well.
Mr. P. O'Reilly
Possibly the warning about fools rushing in where angels fear to tread might apply to me in rising to speak on this matter, but it strikes me that Senator O'Donnell speaks from the point of view of the manufacturers and Senator McGuire from the point of view of the retailers. What I should like to hear from the Minister is an indication as to when this country's requirements in woollen and worsted yarns can be met without importation and when there will be more competition in the trade so as to ensure that there will be no fictitious pricing of these yarns. The Minister indicated that a particular firm had a very big stock of wool tops which might be regarded as stockpiling and apparently that position was brought about by his predecessor's arrangement to accumulate a quantity of this raw material.
However, when the bottom fell out of the wool market and when rock-bottom, so far as prices were concerned, was reached, around June of 1951, the price of woollen goods did not come down. When wool prices began to soar on the Australian market, even though the goods being manufactured in this country were not being manufactured from yarns made from the wool which was going up in price, the manufacturers here increased their prices in sympathy with the rise in price of the raw wool on the world market. That possibly could be regarded as an effort to cushion themselves against the impact of the higher price of the wool which they will buy in the future and an insurance against loss should prices tumble, but the fact was that, when woollen goods were increased as the price of wool increased, the increase was in almost a direct proportion, but when the bottom fell out of the market, the manufacturers here did not reduce their prices in the same proportion.
That suggests that there is not enough competition in the industry and I am sure a couple of firms in this country could more or less arrange a fixation of prices in that regard. There is the safeguard that restriction and a certain amount of importation would balance it out, but the real solution and the best solution is to have more competition in the trade. I suppose that that is mere wishful thinking, but it would obviate the difficulties to which Senator O'Donnell referred and ensure that the consumer would be able to buy at somewhat lower prices. I should like to hear from the Minister if he can give any indication as to when something in that line may be expected.
Nothing has given me more difficulty during this past year than the problem of worsted yarn production. I found that this stock of wool tops had been purchased on a specific request from the Government and with an assurance that if any difficulty was occasioned to the firm concerned by reason of their compliance with the Government's request, they would be helped out. I felt that the obligation was on me to redeem that undertaking and to help the firm out. The position was not made any easier, as the House will appreciate, by the fact that the request to carry this emergency stock of wool tops was directed to one firm, whereas there are other firms in the country manufacturing worsted yarns which were not embarrassed in that way. There was no easy solution and there is not a solution yet, nor will there be a completely happy situation until the losses resulting from the importation of that emergency stock have been liquidated and then I am confident that our worsted manufacturers will be again producing yarn, as they were before, as good and as cheap as any that can be imported.
It is true that for the time being our hosiery manufacturers selling in the internal market have to pay more for their yarn than the price at which they could now import it—not a great deal more but enough to make some difference in the price level here. The effect of that situation has been offset to some extent by the rise in wool prices internationally since. A quota Order would not have been thought necessary at all in normal circumstances. There was manufacturing capacity for worsted yarn in this country adequate to our requirements and thoroughly efficient. There was no need for protection of this kind and there would not have been but for the abnormal situation which arose.
The Order had necessarily to apply to all yarns of wool or hair as there was no means by which the Revenue Commissioners could distinguish between one type of yarn and another but it was recognised that there are certain types of yarn not manufactured here which are required for certain purposes and a quota was fixed to permit of the importation of quantities of these types of yarn.
My main problem was not to impede our export trade. We had developed a fairly considerable export trade in worsted cloth and hosiery goods and there looked to me to be considerable possibilities in that field. An arrangement was made with the yarn manufacturers that they would supply cloth against evidence of export at the price quoted in British trade journals as the ruling price for worsted yarns. It was appreciated that quantities of yarn would be on offer in Britain at less than the standard market price but there seemed no way in which that could be countered. Any firm here could easily get a quotation for yarn at less than the standard quoted price in Great Britain if that were all the evidence needed to get an import licence and, therefore, the only safe basis on which to work was that of the quoted prices in the British trade journals. Where there were special circumstances justifying the importation of yarn for an export business the necessary licences were given.
The special circumstances I have in mind were those of a firm which sent patterns of its products abroad, patterns made out of imported yarn, and had secured orders on the basis of those patterns and wished to supply goods conforming in every way with the patterns. These firms were facilitated in importing the necessary quantities of yarns used in the production of the patterns. It would have been bad business to put them in a position where they were forced to supply against those orders goods different in any way from the patterns on the basis of which the orders had been received.
There have been frequent discussions between all the interests concerned, the worsted manufacturers, hosiery manufacturers, yarn producers and certain commercial export firms that are not themselves manufacturers, and an endeavour has been made to get an arrangement in this matter by agreement. We have got, I think, 99 per cent. agreement for the measures we have taken and where there was any divergence of view it was because of some individual whose case was so special that you just could not make a regulation of general application to cover it and even in these cases some special steps have been taken where possible to ease the problem created for them.
I do not want, however, any misunderstanding to arise regarding prices, the matter to which Senator O'Reilly referred. I do not think it is true that our worsted and hosiery manufacturers increased their prices here in sympathy with the world prices of wool when it was going up to its peak. All the evidence is to the contrary. If they did not reduce their prices when the world wool market slumped it is because most of them were closed down at the time. The goods then being sold in the shops of this country were goods which had been either manufactured or imported a considerable time before that when prices were higher, but there has been, I think, as anybody familiar with the trade will agree, a quite noticeable fall in the price of most woollen products during the course of the year. I do not want to forecast that that fall will continue. The probable indications appear to be to the contrary. I do not think that any of our worsted or hosiery manufacturers are going to be open to the accusation in this year of having made too much profit.
I would like to ask the Minister one question arising out of this speech. Could he give any indication as to the period during which it would be necessary to keep this Order in being so that the losses will be recouped. When might we hope to come back to normal?
That is a most difficult question to answer. If I could be assured that wool prices were going to remain stable during the next four or five years I would naturally be disposed to spread the recovery of the loss over the longest possible period so as to get the least impact upon current prices, but if, as seems to be likely, there is a recovery in wool prices the period will be much shorter because the nearer the prices of wool get now to what they were when these tops were purchased the less the loss will be.
The Minister is aware of the fact that many shops, some of them primarily living on their sales of wool, are dependent on a total quota of 10 lbs. for six months. In cases of extraordinary hardship of this nature a case, say, where a woman and her daughter have a wool shop and are dependent on 10 lbs. of wool as a result of this Order, would he reinvestigate the matter.
When this Order was made it was realised that there was a question of classes of yarn that are not made here at all, so straight away every manufacturer got a licence of 100 lbs. and every retailer a licence of 10 lbs. of these lines. They were intended to be used solely for classes of yarns which are not made here and if any importer used it to import a type of yarn which is so manufactured he has no grievance if he finds himself without the special varieties.
Would the Minister do something with the officials of his Department in order to deal with these cases of hardship and expedite the granting of licences?
Certainly. I was not aware of that.
Question put and agreed to.