CONFIDENTIAL
1
8.
The evidence does not indicate that low-cost imports are at
the heart of Lancashire's problems. It is likelier that these
come from a combination of low demand, rising costs and continuing
low efficiency. Indeed, the industry once again presents a
picture of having as a whole failed to adjust early enough
even with the blue print of the PE Study before it and
waited until circumstances forced its hand times may have been
hard, but not, it seems, hard enough. A good many firms must
have hung on as weak sellers. There have been some recent clos-
ures of modern mills but the majority of closures have not been
in this category. Most of the present fuss is coming from the
smaller and weaker firms who tend to form the majority in the BTEA. The bigger groups on the whole continue to speak fairly
confidently about the future.
THE IMPORT PROSPECT
9. We always expected that the period of disturbance, during
the transition from quotas to tariffs would last until about the
middle of next year, while the trade adjusted to new market condi
itions and overseas suppliers held down under the present system,
notably Pakistan, Korea and Taiwan, sought to increase their
market share, very probably at the expense of less competitive
overseas suppliers like India and Canada. After that we thought
the market would settle down to better and more stable prices
thanks to the tariff. New factors are our having to accede to
the EEC's restrictive agreements in 1973, and the risk of diversion
of non-cotton textiles because of the new American restrictions.
5.
CONFIDENTIAL
/WHAT