Word: steelmen
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Those who kept their eyes on heavy durable goods, especially steel and autos, found the picture still depressing. Operating at only 48.2% of capacity, steelmen revised their production figures for the year, now think 85 million tons, off 30 million tons, will be about the size of it for 1958, though they expect the worst to be over by Labor Day. Auto production last week was 33.1% less than last year, and General Motors announced wholesale shutdowns of its Fisher-body and Chevrolet assembly plants to help dealers trim their unsold stocks...
Pickup in Autos? Many steelmen believe that steel's inventory cutbacks may also be nearing an end. Production is down about 40%, twice the drop in consumption. Estimates are that total steel inventories are already down below 20 million tons, off 5,000,000 tons from the peak, and below the 21 million-ton inventory considered normal. While inventories got as low as 14 million tons during the 1954 recession, steelmen reckon that in 1958's bigger economy a bare-minimum inventory is 17 million tons. What could turn steel around-and give the entire economy a healthy...
...recession, have held up surprisingly. Though many retail prices and some wholesale items dropped, the level of the nation's basic commodities is unchanged. The reason, say businessmen, is the organized labor philosophy that good business or bad, wages-and thus prices-must go up every year. Therefore, steelmen refuse to cut prices, not only because they say it would not improve business, but also because they face an automatic 7% wage increase next July 1; Detroit refuses to lower auto prices largely because it must renegotiate auto contracts this summer, expects that it will have to grant...
...knows when the inventory slide will hit bottom. Yet the cuts have been so drastic that few businessmen think they can continue much longer. Steelmen, operating at less than 60% of capacity, are making so little steel that first-quarter production may actually fall some 5,000,000 tons short of consumption, even with the big drop in steel use in Detroit. January auto sales were the most disappointing since 1954 with only 381,000 new cars delivered-down 22.6% from December. Ford Motor Co., after record 1957 sales of $5.8 billion (with profits of $282 million...
Despite President Shanks's clear optimism, it was still hard for most businessmen to see signs of an early upturn. Steelmen themselves, whose plants operated at less than 60% of capacity throughout much of January, expect no improvement in February. Detroit's worried auto men reported that January production of 489,357 units was down 8.5% from December and 23.7% lower than January 1957. As business cut back buying, the Federal Reserve announced that commercial and industrial loans in 94 major cities tumbled another $218 million for the week, making a total $1.8 billion reduction since...