Dearie:Russell Family History

THE MALAY MAIL, WEDNESDAY, MARCH 30, 1938

1937 EXCELLENT YEAR FOR DEMAND BUT DIFFICULT IN MATTER OF COSTS

Malayan Collieries Suffer From Shortage Of Skilled Labour

BUT PROFIT IS $60,573 MORE THAN PREVIOUS YEAR

Labour Problem Only To Be Solved By A Resident Reserve.

“The year was an excellent one in terms of a demand for coal, but a most difficult, and, in a measure, a disappointing one in the matter of costs” declared Mr. H. H. Robbins, presiding at the annual general meeting of Malayan Collieries, Ltd., in Kuala Lumpur this morning. Mr. Robbins said that the principal cause of the high costs was the shortage of skilled underground labour, and the general cause the sharp upward trend of labour costs as a result of the flash prosperity caused by the unsustained demand for both tin and rubber earlier in the year.

The accounts revealed that the company last year made a profit of $656, 943.75, which was $60,573 more than was made the previous year. As had been predicted, capital expenditure had been considerable both on buildings and on general colliery plant.

Mr. Robbins suggested that the problem of Chinese labour could only be solved by the building up of a resident and settled reserve, with, as the foundation of the family, squatting and padi planting. He welcomed the present influx of Chinese women, as representing the potential mothers of a locally born resident labour force.

The following is the full text of Mr. Robbin’s address:-

“It is with pleasure that I have to record a year of further improvement in your Company’s affairs.

“The report and accounts have been in your hands for the prescribed period and with your permission I shall take them as read.

“If we take the liabilities side first, it will be seen that the issued capital was increased by $246,730 to $3,433,400 by the issue of 24,673 new shares at par, the 61,162 surrendered shares being sold also at par, the total of 85, 835 shares being offered to shareholders in ratio of one to every three shares held. Actually, 800 shares were not applied for by those entitled to them and these were sold at an average price of approximately $27, the excess of $12,000 being credited to the profits for the year. With the removal of the surrendered shares our issued and circulated capital are brought into line.

“Dividends unclaimed at $11,963.02 are a little up, but this is not of any significance. Sundry creditors and credit balance at $369,002.94 are up by $130,000 due to increased purchases of stores and equipment.

“The general reserve remains unaltered. It will be seen that the description ‘mine amortisation’ has been altered to ‘amortisation fund,’ which, in view of our periodical writing down of leasehold property, should be regarded as capital amortisations, and the allocation to this continues as in previous years. As you are aware, once the major capital expenditure is disposed of, it is our intention to build up investments outside your company’s business to balance this fund.

“On the assets side, it will be seen that ‘leasehold property’ at $1. 200,000 has been written down by the $100.000 provided at the last annual general meeting.

CAPITAL EXPENDITURE

“As predicted last year, the capital expenditure has been considerable both on buildings and on general colliery plant and as in previous years new buildings were of permanent construction. The reconstruction of the village business premises, comprising some 56 shops and a market, was completed, and fifteen of the permanent buildings of the old village are being converted to quarters for artisans. While the plant installed was of a general nature, the bulk of the expenditure was on such as is calculated to make us less dependent upon a large unskilled work force. Orders for boiler plant and other not immediately essential heavy equipment were held over in the hope that better prices and deliveries may later on be obtainable from manufacturers, and meantime, our present equipment of this nature as augmented during the year will suffice for our requirements.

“The allocation of $264,914.75 for depreciation in respect of the year’s working was a matter of $5,000 higher than that for the previous year and this together with the capital adjustment of $611.620 as a result of the sale of the 61,162 surrendered shares, makes possible the writing down of buildings and plant by a sum of $12,500 in excess of the expenditure thereon for the year.

PROFIT

“Operating stores and spares and trading stocks at $1,058,617.51 is abnormal, principally owing to the receipt into stores towards the end of the year of a large amount of equipment which could not be installed and allocated to capital accounts before the balancing of the books. As previously explained, with mechanisation, the amount of capital tied up in stores inevitably increases, and the difficulty of the times in securing deliveries, necessitates the carrying of larger stocks than would otherwise be the case. The figure of $1,058,617.51 is made up as to $308,108 of general colliery stores, $256,331 in spare ?, $266,818 of plant and equipment awaiting installation and allocation to capital accounts, $38.807 of explosives, $109,649 of coal, brick, plywood, sawmill and wood distillation stocks, all on a suitably conservative basis, and $59, 912 of goods in transit.

“ ‘Sundry debtors and debit balances’—less reserve—at $338,037 is up by $47,000 and while the reserve is not specifically disclosed, it remains the same as last year, an amount considerably in excess of possible, as distinct from probable, requirements.

“ ‘Investments’ at a cost figure of $157,829.86 remain unchanged, the market value at the close of accounts being a little down on the year at $172.812. ‘Cash at bankers and in hand’ at $714,790.45 is up by $179.000

“The matter of supreme interest is the profit disclosed by the ‘trading and profit and loss account’ and this, at $656,948.75 is $60,573 higher than that for the previous year.

HIGH COSTS

“The year was an excellent one in terms of demand for coal, but a most difficult, and, in a measure, a disappointing one in the matter of costs, due, principally to a shortage of skilled underground labour, and generally to the sharp upward trend of labour costs as a result of the flash prosperity caused by the unsustained demand for both tin and rubber earlier in the year. After opening with work for all labour in the country, and with the flow of labour into the country restricted by quota, the year closed with insufficient work and an artificial restriction on the ebb of labour back to China, and so, in the short period of twelve months, this country experienced yet another of those violent fluctuations which render the conduct of industry so difficult. The net percentage gain, in terms of releases under The Tin Restriction Enactment, which may be regarded as a fair barometer of the demand for coal, was 16 per cent. the average release during the year being 77 ¾ per cent. against 67 per cent. for the previous year. A matter for much regret is that, as a result of policy laid down over twelve months ago, we are due to reduce our surface labour force, much in excess of that necessitated by the falling off in demand for our coal, just when industry generally eases and is unable to absorb our supplies.

“All this notwithstanding, the year was one of considerable progress, both underground and on the surface. As all underground development and stripping are charged against revenue, the increased costs are not all strictly applicable to the year, with the result that the advanced development and large volume of stripping will benefit the current year, and so help to counteract the effect of the falling of in demand which it is now apparent confronts us. In other words, we hope this year for a somewhat reduced ratio of expense and an increasing ratio of profit on a smaller volume of sales.

STRIPPED COAL RESERVE

“A satisfactory aspect is that we are well on the way to the restoration of our stripped coal reserve position, and all that that portends in added security to our consumers in the matter of continuity of supplies, and to you, when the next real slump occurs to reduce once again our demand to a figure which normally would little more than enable us to keep our organisation together. Half a million tons of coal stripped, and ready for extraction by efficient means, is worth more to you than three times that figure in gilt-edged securities, though it is our hope that you may in due course have both. In the meantime, it will continue to be our policy in times of normal demand to draw upon our surface-got coal as little as possible, in fact to reserve it to take peaks, which no underground organisation could deal with economically, and as ‘standby in cases of emergency.’

“As a result of the conditions in the Far East, and with the co-operation of the F. M. S. Railways, we were once again able successfully to compete for the current year’s requirements of the St James Power Station in Singapore, and this extra demand will go some way towards counteracting contractions of demand here in the F. M. S.

SUMMARIES

“With regard to your subsidiary undertakings, we are pleased to report quite satisfactory sales of brick and plywood, the Malaply chest sold representing almost twenty per cent. of the total plywood chests used in Malaya. The sales of the products of the wood distillation plants were less satisfactory, and during the current year a very special effort is to be made in an endeavour to bring demand closer to production.

“As manufacturers of Malacol bricks we are very proud of a building which was officially opened by H. E. the High Commissioner during the year, that of the Rubber Research Institute here in Kuala Lumpur. To shareholders interested in architecture in brick, I commend this as a delightful example and to those responsible I offer congratulations, to the architect on his artistry and to the Institute on its judgment and helpfulness in selecting a building medium of local manufacture.

“The new railway line to connect Batu Arang with the company’s timber area north of the Selangor River, was extended to the tenth mile, while the earthwork was completed considerably in advance of this. During the current year this line will be commissioned for the transportation of the whole of the company’s requirements of timber and the economy as a result should be considerable.

CEMENT PLAN

“Though I have not much to report in the way of progress, the year was more active in the matter of the proposed cement manufacturing plant, and there still seems a possibility that something may develop along the lines previously indicated. The attitude of Government, whilst now one of greater interest, is still not clear, though its policy would seem to be to refrain from fostering secondary industries here which may in any way harm industries of countries to which Malaya may owe loyalty or consideration. While it is realised that, as producers of primary products, this country cannot have it both ways, and that it is a good policy, within reason, to buy from those who buy from us, it seems possible that there is much that might be done to promote secondary industries, and I should like to see a complete analysis of the two-way trade of Malaya, with in mind a decision upon the industries which might without detriment to other countries deserving of consideration, economically be developed, perhaps with some direct loss of revenue to Government, but with a very substantial net gain to the people and primary industries of this country and through them to Government.

MINERS FROM CHINA

“Last year we referred to our repeated requests to Government over a period of some 16 months for permits to make possible our bringing in from China selected underground miners. This permit was eventually issued, but not until June, and though our representative had travelled to China and selected the men, final application for clearance could not be made to Nanking before the precipitation of the Sino-Japanese trouble, by which time the Central Government had decided that all able-bodied men were required in China, and instead of all our selected 200 being allowed to emigrate to Malaya, they were, for the most part, enlisted for military service. Had our application to immigration authorities in this country had readier endorsement, our position during the year would have been happier, and the result much better: but the decision to mechanise still further our underground operations and to introduce and train labour, unskilled and otherwise, unattracted by underground conditions, was accelerated and as a result it may be possible, and it will certainly be our endeavour to draw upon our reserves of surface labour for our future underground requirements.

CO-OPERATION NEEDED

“A year has passed since I last addressed you, but I have no reason to revise the views then expressed on the trend of labour in this country and upon the desirability of some co-operation between the Chinese and the Malayan Governments in the matter of emigration or, failing co-operation with the Government of China, some arrangement in Hongkong embodying some of the principles governing emigration from South India. I have recently seen something of the excellent organisation of the latter, and to me it is astonishing that, in respect of one class of labour such an organisation should have been built up, while, in respect of the other, the only control should be by quota, with the emigrant left exposed to exploitation in its most flagrant form. The fact that one class of labour is from within the Empire, and the other from without, would appear not to explain the anomaly, but to intensify it. Though for a given output of tin, and subject to new planting of rubber, the labour required in the future is perhaps not likely to reach that of the past, in view of the political conditions in both India and China it is hoped that some effective means can be devised to retain in the country that which might be regarded as the likely requirements of the next few years.

SETTLED RESERVE

“Though it has so often been suggested that Government as collectors of royalties and duties on the products of the country, should be responsible for the care of labour as it is thrown on to the market with each successive slump it would, I feel, be fairer for industry to regard Government as being equally interested rather than solely responsible. Employers of Indian labour pay willingly for the control exercised by Government and I, personally, feel that employers of Chinese labour would be prepared to do anything within reason, not in the way of contributing to the cost of passage money, from or to China, which is clearly not necessary, or in meeting any part of the coast of proper control of immigration, which is essentially a function of Government from funds already at its command; but in aiding a determined effort to build up a resident and settled reserve of labour, with, as the foundation of the family squatting and padi-planting.

“To me, one of the more encouraging features of the present Chinese labour position is the unprecedented influx of female labour, if such can be regarded as mothers of a locally born resident labour force of the future. With wife and family here, the incentive to a work man, not only to return to China, but to remit savings to China, is largely removed, and if we are in fact entering a new era, it is this married class of labour of family producing age that should be given first consideration, the aim being the development of a self-reliant people, born to the land and with, as a base and background to its education, a proper sense of the dignity of labour.

With rice imported to the value of some 30 to 40 millions of dollars annually and with much to be done in the way of popularising other forms of foodstuffs, for the cultivation of which land not suitable for padi can be utilised, there would not appear to be much risk of overproduction or of overstocking the local market.

CONDITIONS REVISED

“I have not forgotten that this is the annual general meeting of your company, and not one to consider the local labour problem, but labour being such an important factor in the welfare and prosperity of this country, and therefore, of this company, and, this being one of the periodical crises in the affairs of labour, I feel that you will not expect any apology for what otherwise would be a digression. Before proceeding, however, I should like to say that the revision of conditions of employment at Batu Arang, and the individual payment of workmen thrice monthly have been accepted with favour. We have only one contractor of any consequence remaining, and here, as in respect of all labour employed, we know exactly what each workman earns, what the deductions are, and the net amount to be received by each. A member of the staff has been made responsible for all labour matters and the Colliery cashier’s office is equipped to pay 1,000 individuals per hour on pay-days, which are on the 10th, 20th and 30th or 31st of each month.

“In October his Excellency the High Commissioner, and with him the Hon’ble the British Resident Selangor honoured Batu Arang with a visit, and we hope another visit may be possible in the not distant future.

SUB-DIVISION OF SHARES

“At the last meeting, a shareholder was good enough to revive the idea of sub-dividing the $10 shares of the company into shares of a smaller denomination. This matter was referred to shareholders in 1929 and as the support was not considered sufficient to justify action, it was allowed to stand over. Conditions in the interim have changed, and it may be that now there is more to be said in favour of the proposal. In any case it is your board’s intention during the year to arrange for the meetings necessary to ascertain the wishes of the present body of shareholders. Meantime, if shareholders with views in the matter would aid the board by expressing them, and indicating their preference in the extent to which sub-division should take place, such would be greatly appreciated and carefully considered. The idea of, at the same time, converting the shares into unit of stock has been considered, and views on this also would be welcome. The board’s present views are that if sub-division is considered advisable, denominations of a nominal value of $2 would seem a happy medium and that these should be in the form of shares and not units of stock.

“Your wish to have some indication of the likely outcome of the conduct of your business during the current year is probably as strong as my reluctance to venture into the realm of uncertain things. Unfortunately, we are here so almost entirely dependent on outside influence, that anyone short of an authority on world affairs would seem presumptuous in making any prediction. Instead of improving, the international position has worsened, and notwithstanding the tremendous impetus given to employment and trade by the vast rearmament programmes, the depressing influences continue to dominate the outlook. We can only continue to hope for an abatement of the general uncertainty, and for some relief from the many restrictions on the flow of international trade.

THREAD OF OPTIMISM

“Meantime the fortunes of Malaya would appear once again to be on the wane, temporarily we hope: but, reinforced by the waxing of the past two or three years, the strength and stamina of the country should uphold it through vicissitudes ahead, and with it, us and all soundly conceived and reasonably consolidated undertakings. If throughout my address you have detected a thread of optimism, I admit to intention in weaving of that thread. Given a reasonably sustained demand for our main and subsidiary products, with the benefits to be derived from the year of development just passed, I feel reasonably confident of our ability not to disappoint you when next we foregather in the ordinary course.

“In conclusion, I would like once again to record the high opinion I and my colleagues have of the ability and hard work displayed by the staff in general, and of the inherent interest and loyalty of the vast majority making up our labour force, in achieving the results disclosed.”

On the proposition of the chairman a final dividend of 7 ½ per cent. was declared in respect of the profits for the year payable to-day.

The sum of $20,000 was voted as directors’ fees.

Under the provisions of the Articles of Association Mr. W. H. Martin and Mr. F. Cunningham retired from the Board, and were re-elected.

The chairman said that Mr. A. W. Delamore and Mr. J. Drysdale on the retirement of Mr. A. J. Kelman and Mr. R. C. Russell were invited to join the Board. Before asking the meeting to confirm the appointments, he wished both Mr. Kelman and Mr. Russell long and happy retirements.

Mr. Delamore and Mr. Russell were duly appointed directors of the company.

Messrs. Evatt and Co., auditors, were re-elected.

Mr. Martin addressed the meeting as follows: “It gives me great pleasure again to propose that the appreciation and thanks of shareholders be given to the general managers, secretaries and the staff at the mine for the manner in which they have carried out their duties during the past year.

“While the reports before us and the admirable speech by the chairman clearly show us that we have had a good year, good as it is it cannot be dissociated from the personal element. We are exceedingly fortunate in our staff and I will ask the chairman to convey to them our best thanks.”

The chairman said he would have much pleasure in conveying those sentiments.