TNAG-0172-FCO40-208-United-Kingdom-Productivity-and-Efficiency-Study-effect-on-H-1969 — Page 230

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THE FINANCIAL TIMES

(Established 1888)

Incorporating THE FINANCIAL NEWS

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Commissioner St. 838-5636 Central 50-59 681 314

TUESDAY APRIL 1 1969

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A major report on textiles

THE TEXTILE Council's pro- ductivity and efficiency study covers much familiar ground. That the Lancashire industry's productivity is poor compared with other Western countries, that re-equipment has been taking place on too small a scale and that the rising flow of low- cost duty-free imports from Commonwealth countries has been one of the prime causes of this situation is well enough known; while the proposal to in- stitute a tariff structure and dis- mantle the quota system in due course has been a much dis- cussed subject.

Massive effort

But the report is nevertheless of major importance. It reflects a tremendous effort by the in- dustry itself to diagnose its problems and it weaknesses and to propose solutions towards a prosperous and internationally competitive industry. These in- clude a further massive contrac- tion in employment and in the number of units and firms over the next six years. It is a big achievement for this very tradi- tional industry to try and look at the present situation as it is and not as what it was, to forget its aspirations and to start again.

It is also a particularly honest report that clearly exposes the in- dustry's competitive weaknesses in relation to other developed countries. Many people in the

past have believed that imports could be contained by further quota restrictions. But the clear message from the Textile Council is that quotas have had their run, they have not worked and that the industry should be prepared to develop within the more com- petitive environment that a tariff without quotas will demand.

Although this report is only the first step towards the forma- tion of a new Government policy for the textile industry after 1970, it has at least suc- ceeded initially in putting the ball firmly in the Board of Trade's court. It makes no bones about its feelings on past Government performances, drawing attention at the outset to its conclusion that successive Governments have failed to get to grips with the industry's problems and play their part in developing sensible long-term policies. Instead they have stumbled from one expe-

dient to another, spending large amounts of public money with little to show for it in the way of results."

Any further Government financial redundancy schemes have been firmly rejected in the proposals. Such contraction as will be necessary will have to take place under normal market forces. What the report demands is that the Government should establish the normal market conditions under which this difficult transformation can take place. Mr. Crosland has made it clear in the past that if the industry plays its part on achiev- ing more productive efficiency the Government will fulfil its role of providing a more stable policy on imports, which in its turn will be the key to establish- ing the sort of environment under which the suggested re- organisation can take place.

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Mr. Crosland also has to clear the air on other outstand- ing issues. What the industry feels it can do will also depend on the role the fibre producers will be allowed to play and on whether he allows Courtaulds to go ahead with further acquisi- £ tions. The bid for English Calico has only been withdrawn tem- porarily. The formation of new groupings in Lancashire could be affected if it was thought that they were only fattening up tastier (and more expensive) morsels for the big fish to eat. Mood for change

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What is clear is that the mood for change in the industry is now better than it has ever t been. Whether the report will receive a unanimous backing has yet to be seen. There will E undoubtedly be some squealing | a from the traditional cotton men t at the proposals for the ultimate n elimination of quota protection with the replacement by what on most criteria is a relatively modest tariff. But most of the large groups and many of the small companies have been associated with the report's proposals.

Mr. Crosland can at least take some comfort from the vast change in the circumstances of the industry, which has now demonstrated that it will be receptive to a complete change of direction in its role. That is far from the mood that existed 10 years ago.