MANUFACTURING: Victims of Defense

Last week, as the May Federal Reserve production index hit a new all-time high (see chart), a young OPMite named Peter R. Nehemkis Jr.* predicted that one-third of U.S. industry might be soon shut down for lack of business. Because of defense priorities, he said, ten industries are already facing eclipse. Chief victims, moreover, would be little businessmen. “It is one of the profound ironies of our defense effort that its total effect may well be to obliterate smaller enterprises. . . .”

Nehemkis did not name his ten doomed industries. But the manufacturers of die castings and their customers were probably among them. Last week the die-casting industry was a mirror of the inequities and ironies of a defense boom.

Over 95% of die castings (formed by forcing molten metal under pressure into steel) are made out of aluminum and zinc, both of which are under priority control. Without aluminum and zinc, the die-casting industry must fold up. Die castings are essential to countless defense products. Yet defense orders (which carry priorities) amount to less than 15% of the industry’s business today.

It is estimated that by July 1942 there will be an aluminum shortage of at least 200,000 tons. The die casters need about 15,000 tons of aluminum a year to stay in business. The steel industry, using ¾ Ib. of aluminum (as a cleanser) to make a ton of steel, is now using about 30,000 tons. When steel uses aluminum, it uses it up completely, and around a quarter of its products require virgin metal. But die castings need only scrap, and represent a scrap reservoir. Yet all steel has an A-10 or better priority rating on aluminum, while die castings limp along in the Bs, getting only 10 to 40% of their 1940 consumption.

To conserve zinc, automakers have been urged to cut down on castings. They have not been asked to cut use of galvanized iron and steel, which in normal times consumes three times as much zinc as die casting. As substitutes for castings, they have turned to brass (which annually takes twice as much zinc as die castings or steel**).

The die-casting industry employs less than 25,000 workers and represents only 125 independent companies, most of them very small. But quite apart from the crucial 15% of its production that goes to defense, its demise would leave a colossal gap in the U.S. economy—through its 5,000-odd normal customers. Die castings are a sine qua non of hundreds of consumer goods from zippers to outboard motors, from clocks to vacuum cleaners, from fire extinguishers to drug dispensers, from an essential small piston rod for automobiles to a whole radiator grille.

Big customers like Singer (sewing machines, irons, etc.), could probably survive the loss of die castings, since they can fill their factories with defense business eventually, in many cases already have enough to live on. But Singer has some 20,000 salesmen, who are not trained for defense work, and who would then have nothing to sell. As for small users of die castings without defense work, many are in the soup already. Some victims:

> Irish-American James Gerity Jr., 37, learned the plating business from his father in Toledo, branched out for himself in 1937 when he formed the Gerity-Adrian Mfg. Corp. (Adrian, Mich.). From 17 employes to begin with, he reached a peak of 960 early this year, plating door handles and radiator trimmings for automobiles, household hardware, etc. His basic manufacturing process reads like a roster of scarce materials: he uses nickel anodes for chrome-plating zinc die castings, which can’t be made without aluminum. His best customer: General Motors, whose A. C. Spark Plug Co. can make die castings for G.M. from the scrap aluminum that other G.M. plants produce in the course of manufacturing, and from the zinc of which huge G.M. can get much more than tiny Gerity-Adrian. Today Gerity’s sales are down 40% and his payroll 45%. He is frantically (and fruitlessly) looking for defense business to keep alive.

> Stewart Die Casting, a division of Stewart-Warner, is facing a 50% production curtailment, has laid off 15-20% of its normal payroll of 600 men. Its general manager, George Meyer, President of the American Die Casting Institute, has been busy of late trying to persuade the Army and Navy that they can use many more die castings. Fortnight ago he wired the President to ask for more business (and better priorities) for his industry. But he has little hope of keeping it all busy.

> In Kellogg, Iowa, the Midwest Metal Stamping Co. makes One Minute Washers. Said one of its officers last week: “Today you lose the agitator, tomorrow the drain spout, the next day the wringer heads.” His washing-machine production this year will be 6,000, half of last year’s; next year he expects it will probably be nothing. Of the rest of his business—stampings for light sockets, etc.—½ of 1% is now for defense. He thinks that could be increased. Meanwhile, he has laid off 100 of his 300 employes.

> Arthur H. du Grenier Co. of Haverhill, Mass, (vending machines for candy, gum, cigarets) has had to cut production 30-50%, employment one-third, not only because of the die-casting shortage but for lack of steel and of cobalt nickel for the magnet that rejects phony coins. Du Grenier has no defense business. Says Treasurer Bouchard: “We are very much worried about the future.”

> Grand Rapids Brass Co. makes refrigerator and furniture hardware, has cut down from three shifts to one, faces complete shutdown as zinc rationing tightens. Its general manager, Samuel Strasser, has been to Washington for defense business, has written to hundreds of prime contractors. Only result: an invitation from Detroit’s Defense Contract Service office to bid on two British fuses. Yet the company has 200 machine tools (only eight of them usable for the fuses), a trained engineering staff, 16 tool & die makers, plenty of plant space for defense work.

The No. 1 manufacturer, Doehler Die Casting now employs 2,000 v. a norm of 4,000. Most other large manufacturers and users of die castings do not yet admit to curtailment of production. But practically all either see real trouble ahead or are thinking wishfully about substitutes.

There is only one solution for this problem: defense business. (Die casters are convinced that all their capacity will be needed for defense in time.) In England, for more than a year after the war, unemployment and defense production increased side by side. Production was concentrated in some factories, while others closed. Unless it can decentralize the work by intelligent subcontracting, the U.S. seems fated for the same wasteful, wrenching, scar-leaving course.

* Last heard from by businessmen as the would-be Pecora of TNEC’s investment banking investigations.

**One more minor horror: in April and May, the Army placed orders for 100,000 syrup pitchers, 50,000 water pitchers, 50,000 pots, 5,000 coffee drippers—all of aluminum. This became known about the time OPM was collecting housewives’ pots & pans to alleviate the shortage. The Army said the Quartermaster Corps was unaware of the shortage until OPM officials testified to it in Congress in mid-May.