ENG-1946 — Page 67

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handicapped by loss of equipment, lack of raw materials, high cost of raw materials and the excessive costs of labour. The number of factories registered at the end of the year was 366 and a further 537 had applied for registration. The number registered in 1941 was 1,200. Labour costs were very high throughout the period under review.

Effects of the War.

On the whole little direct war damage was done to factor- ies except to the shipbuilding and repair yards and to a sugar refinery which was totally incapacitated. Machinery was in many cases removed by the Japanese and could not be recovered. What remained was in most cases in a poor state of repair as a result of under-maintenance and neglect; but this factor was not a major obstacle to the recovery of indus- try, except in ship repairing, since in almost all cases the equipment which remained was adequate to cope with the limited raw materials available. There was a shortage of skilled labour since many skilled men were killed during the war and many returned to China and have not yet come back to Hong Kong. Even in normal times the greater proportion of the technicians required for development was imported and an additional reason for the post-war shortage of skilled labour was the closure during the war of local centres of technical education.

The lack of raw materials has already been mentioned and further reference will be made later when individual industries are dealt with. In addition to the shortage of raw materials for production, the shortage and high prices of building materials, and in particular of timber, put a severe brake on the re-building of damaged factory premises. Ship- ping difficulties were experienced not only in the shortage of shipping space to bring materials to the Colony, but also in the lack of local water transport and land transport upon which the movement of materials and stores within the port is dependent.

Textile Industry.

Before the war more persons were employed in the textile industry than in any other single industry. There were 150 factories engaged in cotton weaving and 450 in knitting, employing 25,000 and 15,000 workers respectively. At the end of 1946 there were 90 cotton weaving factories in operation, and practically no knitting factories. The weaving industry specialised in cheap shirtings and prints for export largely to Malaya, Ceylon and East and West Africa. One obstacle to the re-establishment of this industry was the depreciation of machinery amounting to as much as 50%, due to lack of maintenance. But the principal difficulty was the shortage of yarn throughout the world. Limited stocks were found in godowns on the liberation of the Colony and these were issued