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War Economy

Production Achievements

Production Achievements

In the seven years from 1938–39 to 1945–46 the volume of manufacturing production increased 31 per cent, equivalent to a growth rate of nearly 4 per cent a year. Though production volume increased each year, the period includes two spells of comparatively slow growth. In 1940–41, with supply problems becoming more difficult, the increase dropped to 2 per cent. The rate then stepped up, but later, when munitions work declined, there was a second deceleration. Victory in Europe, in May 1945, curtailed orders for munitions page 178 and other war stores. With victory over Japan, in August, they fell right away. The switch back to civilian work involved some delays and readjustments. Production increased only 2 per cent in 1945–46.

These wartime increases occurred in a manufacturing sector which was well protected by quantitative import restrictions, but was hampered by wartime supply and labour difficulties and, in some cases, by shortages of power. There is no need to go fully into these difficulties here: supply problems are discussed in Chapter 6, labour shortages in Chapters 5 and 18, and power restrictions and coal shortages in Chapter 16. Sufficient now to recall that stocks of manufacturers' materials tended to be inadequate from the outbreak of war,1 but for many commodities improved from 1943; that labour shortage became acute in 19412 and remained difficult for the rest of the war; that power supplies for new factories were threatening to become restrictive after 19433 and were putting a brake on some new developments early in 1945.

The wartime growth in volume of manufacturing production of 4 per cent a year on average was roughly in line with the long-term trend. The years 1933–34 to 1937–38 had seen a faster rate of growth, but this was in large measure a post-depression recovery.

In 1938–39, with difficult overseas trading conditions having some effect, the increase had been only 3 per cent. But wartime demands gave a new boost, which was initiated with a production increase of 10 per cent in the first year.

Chart 40 shows changes in volume of manufacturing production.

Considering the quite rapid increase in labour available to manufacturing industries, the rate of increase in production is not very fast. It should, however, be remembered that much of the new labour came into the industry under manpower direction. Often training or retraining was necessary before the extra workers could be used efficiently.

Uncertainties in supply affected equipment as well as materials. Many of New Zealand's suppliers of productive equipment found their efforts diverted to war production for their own governments and could not meet New Zealand orders. However, it is interesting to note that motive power available to manufacturing industries in New Zealand increased from 848,000 horsepower in 1938–39 to 1,167,000 horsepower in 1945–46, an increase of 37 per cent. There

1 See also p. 116.

2 See also p. 96.

3 See also p. 433.

page 179 was no lack of available motive power, although shortages of coal and electricity did prove restrictive for some industries on occasions.
chart of manufacturing statistics

Chart 40
INDEX NUMBERS: BASE 1938–39 (= 100)

The prevailing weakness of New Zealand manufacturing, its tendency to small-scale operation in a multiplicity of types of establishment, remained throughout the war period and no doubt contributed to the slow rate of improvement in output per labour unit. The average size of establishment was 17 persons in 1938–39 and 18 in 1945–46.

The setback to increases in productivity, that is, in production per unit of labour,1 shown on Chart 40, in 1940–41 and 1941–42 was probably associated with the growing supply difficulties in those years. The second setback, in 1945–46, was affected by the falling away of war production. In each case substantial retraining of staff was also occurring, first of new staff to replace armed forces recruitments and second of service personnel returning to industry.

1 Strictly, productivity is a measure of changes in output from industry per unit of labour and other resources used, but useful information is obtained by comparing output to labour only.

page 180 The growth in output per labour unit averaged 1½ per cent a year during the build-up from 1938–39 to peak munitions production in 1943–44. It averaged less than 1 per cent a year for the whole of the war period. Post-war production and productivity changes were to make these growth rates look slow, but they were quite reasonable, considering the difficulties under which they were achieved.