DIFFICULT YEAR

Nelson Evening Mail, Volume LXIV, 9 January 1931, Page 2

DIFFICULT YEAR

IRON INDUSTRY AT ONAKAKA

ITS IMPORTANCE TO NEW ZEALAND

WAGE BILL £50,000; PRODUCTION £BO,OOO, COAL USED 21,000 TONS

REVIEW BY CHAIRMAN OF DIRECTORS

It is the custom of Mr J. R. Leggo, chairman of Directors of the Onakaka Iron and Steel Cpmpany, Ltd., to supply to shareholders a review of the year’s operations. As the endeavour of the Company to establish the iron industry in New Zealand is of national importance and therefore of general interest, we publish Mr Leggo’s last review which is as follows: In submitting the following review of the past year’s operations of the above Company, I do so with a great deal of doubt as to whether I can explain adequately the true position so as to enable you to visualise the very many difficulties your management have been faced with during the period—difficulties which only time, patience and experience have disclosed to us.

Pipemaking.—You will remember it was decided we enter into cast iron water-pipe manufacture, believing that to be the soundest and most profitable means of using up our surplus iron; and accordingly we commenced manufacturing pipes'upon resumption of work in the New Year (1930). Difficulties. —To see a long, lean cylinder of cast iron pipe lying on the ground, one would not think that a great deal of skill was necessary to produce it; hut we soon discovered that pipe-making is a most exacting and intricate undertaking, inasmuch as there are no less than six operations connected therewith, and each operation has to be 100 per cent, efficient, or the pipe is defective and a consequent loss. In order to get the best possible start in this pipe-making business, we sought the advice of an English Engineer, recently in charge of one of the oldest pipe-making plants in Great Britain, and on his recommendation imported three practical pipemakers to give our men a lead. But pipe-making in an old-established works in Great Britain is evidently a very different matter from making pipes in a new country where the materials are of a different nature.

Imported Pipemakers. —These imported men, although skilled, honest and good workers in their respective branches of the business, were very much at ! sea when it came to the manipulation of • I local materials, such as sand, clay and ! other things essential to the completion, of a first-grade pipe. Therefore a pro-! longed series of trials and experimental became the daily experience oKour-man-ager, Mr Heskett. and his''technical., staff; and much time and money was lost during this stage of uncertainty. A . detailed record of the multitudinous troubles at this period would serve no purpose: enough to say they are/now practically all overcome and our pipemaking staff is now au fait with all the difficulties, etc., peculiar to pipe-making, together with their cause and prevention. ... Helpful Ideas.—Before leaving this subject of pipe manufacture and the problems connected therewith, I wish to say that, in my opinion, I doubt if there is one man who can truthfully claim to know all about the finer points connected with pipe-making. For instance, the Englishmen brought with them some excellent ideas which are now adopted at our works. We have also an Australian and his brother, both of whom have spent practically the whole of their working lives in the employ of Hosking’s Pipe Works, Sydney, one as foreman for years, and the other as a specialist. These men came along with their outstanding improvements which have also been adopted at our works—while our own staff, through bitter experience, have also contributed to this list of improvements. So that, at the present moment, both our staff and plant may be considered as fast approaching the desired economic position we have been aiming for. Output.—Two months ago our output was barely 12 tons per day, and our rejects were quite 15 per cent. To-day our output is 18 tons per day, with a , diminishing percentage of rejects. Contracts. —We have contracted for and supplied to various City Councils, County Councils and other public bodies 1325 tons of pipes; whilst a total tonnage oi 1747 have- been produced, and it is very gratifying to know that in every instance these have given entire satisfaction: further, when repeat orders have been necessary to their

work, we have received such orders. Future prospects. —At our works we are now, as speedily as possible, installing a full range of casting-boxes to supply pipes ranging in size from 3in. to 24in. inside diameter. When this range is completed we shall then be in the position to make at least 25 tons of pipes per day. This will enable us to meet the requirements of any contract received as to size,i quantity and time of delivery. At the present moment we have contracts to complete amounting in tonnage to 1000 tons. In addition to this, we have every reason to believe we shall 1 secure further contracts within the next few weeks that will keep us busy for a considerable portion of the year, when other work is sure to follow. Tardiness in Reaching Present Stage of Production. —The principal contributory causes of this slowness ill reaching a satisfactory output from the pipeplant have been : Want of a master pipemaker from the commencement. Lack of experience and all-round knowledge, which meant a lengthy period or experimenting. Delay in the delivery of plant. Faulty castings, unworkable when delivered. Delay in the completion of the hydro power. . Also lack of plant for continuous and

quick working. But all this, if not quite overcome, is fast approaching that stage; and I have every confidence that we shall give a satisfactory account of ourselves in the coming year. I should mention that your Directors have approached the. Government for a protective duty on both pipes and pigiron. It is somewhat remarkable that, no sooner do we commence producing our article at our works, than down comes the price of that particular article. Take pig-iron, for instance: when we started it was £l2 per ton. Of course no one calculated on it remaining at such a price; but, on the other hand,

the best authorities felt it would not come below £8 per ton. To-day we are selling it at £5 10s F. 0.8. Then take pipes: twelve months ago they were being sold for £l3 per ton; to-day we are selling them at £lO 10s delivered. The same applies to oxide of iron. All of which goes to prove that there are competitors keenly determined to put us out of the market. We, therefore, contend that we are not asking an unfair thing of the’ Government to assist us by imposing a reasonable duty. Your Company to-day is paying out in wages alone at the rate of £50,000 a year. It is producing approximately £BO,OOO worth of materials. It is using 21,000 tons of coal a year, plus other materials necessary to the running of the Works. Taking all this into consideration, and the fact that £25,000 has been subscribed by shareholders and de-benture-holders, surely Onakaka is of some benefit to the Country, if I regret to say. to shareholders, and worthy of the Government’s protection to a reasonable extent, which is all we ask. . Furnace.—The furnace has gone wall during the whole year and has produced 8,075 tons of iron, 4,921 tons of which have been sold to the Foundries in New Zealand, the balance being used in the pipe foundry, or in stock on hand. Oxide.—The oxide plant has produced 338 tons of crushed oxide, the whole of which has been sold to the Gas Companies of New Zealand, and we hope to increase these sales by at least 50 per cent, during the coming year. Tar.—Our semi by-product coke ovens have produced, over and above our own requirements, many gallons of tar of excellent quality, the whole of which has been sold to the Nelson Gas Works. Coal. —Your Company has now taken over the Mt. Burnett Coal Mine from Messrs. Chambers, on terms quite satisfactory to your Directors. From this mine we hope to derive considerable benefit in connection with our own fuel supplies, and in the sale of coal to Gasworks, the coal ranking among the highest for gas production. The mine equipment—an aerial ropehaulage, is at present nearing completion and should be quite ready to start with the New Year (1931).In conclusion, I would like to point out to Shareholders that, although we have been operating so many years, there has never been a time, until the present, when it could be claimed that as regards equipment we were on a footing that allowed us to produce the lines jva are mow producing commercially ; and, although the manufacture of pipes during the past years has shown very heavy losses, still, I am confident that from now on, we shall begin to make satisfactory headway, and that pipemaking which has sorely tried us in I every conceivable way, will yet be the salvation of our Company. In closing this letter, I must, oh behalf of my Co-Directors, thank the shareholders , for the patience They’ are extending ’ to us in what must’ begin to aprueal to them as an unending struggle against tremendous odds.:. But I.can, assure our friends I .do believe that fronj how on we shall 'make a better much showing. I know that I held out to you similar hopes last year, and to be frank, am very disappointed at the past year’s results not being better; but knowing what we have been faced with in pipe-making, we can do nothing but accept. the position.