CAB129-52 — Page 95

4

Selling Problems

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17. Our export trade is, as the Chancellor of the Exchequer has rightly emphasised in Paragraph 15 of C. (52) 166, in the hands of private industry and commerce. There are thousands of firms handling tens of thousands of export transactions year by year with some dozens of markets abroad. The circumstances and experience of individual industries or firms are bound to vary greatly and it is unwise to generalise about their selling prospects. Nevertheless, for virtually the whole range of our consumer goods industries the export problem is essentially one of markets and selling.

18. The main facts are:

(a) Recession of consumer demand in many countries where anti-inflationary

policies have been implemented;

(b) growing competition with the strong revival of German and Japanese industry, together with continuing competition from a number of other countries, including the United States;

(c) rapid and large-scale development of manufacturing industry in many primary producing countries together with severe import restrictions and high tariffs.

19. These developments have severely hit our textile industries. But they have also hit a wide range of other consumer goods industries including some manufactured foods, leather goods, rubber manufactures, drugs and medicines and paints. There are better prospects for some of our consumer metal goods, including motor cars and bicycles, but competition is vigorous and these metal-using industries are short of steel. We had developed an important export trade in household appliances such as refrigerators and washing machines, but the bulk of this trade has been with the overseas sterling area and it is proving extremely difficult to obtain alternative markets for these expensive items which are in demand only in highly-developed communities.

20. Order books in the consumer goods industries are shortening. A further fall in consumer goods exports seems inevitable in the coming year. This, coupled with production problems holding back the expansion of exports of raw materials, semi-manufactures, capital and allied engineering goods, means that we are unlikely to achieve a level of export earnings sufficient to bring us into an overall balance of payments with the non-sterling world.

!

21. My conclusion is that the outlook for the rest of 1952 is certainly as grave and possibly graver than that envisaged by the Chancellor of the Exchequer. Far from increasing, the volume of our exports will fall. Our competitive power is declining under the restrictions on investment which have had to be imposed. Those firms which could export lack the steel to make the goods. It is against this back- ground that we must decide not only what steps can be taken to give help in the short term, but what are the prospects of achieving the longer objective of a 20 per cent. increase in total exports over the next few years.

SECTION II

Short-Term Measures to Assist Exporters

22. The first task must be to ensure that engineering firms with reasonable prospects of increasing their sales abroad are allowed to concentrate on production for export and are given the raw materials they need. Many people in industry still feel that the Government is in two minds about the export drive. I recognise the great difficulties involved, but we must put exports first, and we must convince

convinced

we are doing anything of the kind.

industry by our actions that we are doing so. So far they are notating with ut

hey are not convinced that Pas solution for our export problems in using physical

23. There is no long-term solution for our controls or near controls to force out exports. As the Chancellor of the Exchequer has emphasised, there will be no need to try to force people to export if the economic climate at home can be put right and kept right. If the pressure of demand at home, including the demands of Government itself, remain out of hand, we shall certainly fail to solve our export problems.

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