Mr. CAREY. Yes, I was. Mr. HOLIFIELD. You were a colonel? Mr. CAREY. I was chief of staff of the Fiftieth Air Force that maintained and supplied the Fiftieth Air Force in Italy. Mr. HOLIFIELD. You are now with private industry? Mr. HOLIFIELD. So you have had a varied experience of being with the service in supply, then with the War Assets in disposal of surplus supplies, and now you are in a position of private enterpriser who is supplying the regular orderly manner of trade, these component parts and aircraft supplies? Mr. CAREY. That is right, sir. Mr. HOLIFIELD. You would subscribe to the theory, then, that the Government should never again build such a big bureau as the War Assets to do a job like this? Mr. CAREY. I certainly hope not. Mr. HOLIFIELD. You believe it can be done more efficiently by private enterprise? Mr. CAREY. Yes, sir; I do. Mr. HOLIFIELD. And that the Government's responsibility would be to perfect and supervise a plan and see that proper interest of the Government, the taxpayer, the owner of this material, is protected in the disposal of these excesses and surpluses? Mr. CAREY. That is right, sir. Mr. HOLIFIELD. Are there any questions, Mr. McVey? Mr. HOLIFIELD. Thank you, Mr. Carey, for your testimony. Mr. CAREY. Thank you. Mr. HOLIFIELD. Is Colonel Peterka of Lamson & Sessions Co. of Cleveland in the room? Would you like to testify today? It is getting rather late. We would prefer having your testimony, if you desire to testify, tomorrow morning. Mr. PETERKA. Mr. Chairman, I plan to be here tomorrow and the next day. Mr. HOLIFIELD. In the meantime if you have not apprised yourself of the recent plan of the Air Force which is, I understand, taking the place of the original APRA plan, I hope you will be able to do so. Mr. PETERKA. I think I am aware of that, because I helped write it as a consultant to the Air Force. Mr. HOLIFIELD. My admonition is unnecessary, then; we will be glad to have you, Colonel Peterka, present your views tomorrow. Is Mr. Dyess present? Mr. PETERKA. He asked me to tell you that he will be here tomorrow. He was unable to get here today. Mr. HOLIFIELD. Some have asked to testify on Wednesday. It may be that we can put them on tomorrow. Is Mr. Tansey present? Mr. TANSEY. Yes. Mr. HOLIFIELD. You represent the Clary Multiplier Corp. in Los Angeles. You are engaged in the business of air parts? Would you like to testify? Mr. TANEY. I should like to do so tomorrow, if I can. Mr. HOLIFIELD. There is an Admiral Ramsey representing the Aircraft Industries Association of America. Is he present? I have his letter asking to testify on Wednesday, but it may be that we can put him on tomorrow, or Mr. Smith of the same group. Is Mr. Levins present? Mr. TANSEY. He asked me to convey this message, that it would be impossible for him to be here, but he will have a written statement to submit. Mr. HOLIFIELD. The subcommittee will accept any prepared state ments. We want to set a deadline tomorrow or the next day on those statements. If they are in by the end of the week, we can accept them for the printed record. The meeting will stand adjourned until 10 o'clock tomorrow morning in this room. (At 4: 45 p. m., the subcommittee adjourned, to reconvene at 10 a. m., Tuesday, June 24, 1952.) UTILIZATION AND REDISTRIBUTION OF CRITICAL MATERIALS AND AIRCRAFT PARTS TUESDAY, JUNE 24, 1952 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON EXECUTIVE AND LEGISLATIVE REORGANIZATION OF THE COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS,1 Washington, D. C. The subcommittee met, pursuant to adjournment, at 10:20 a. m., in room 1501, New House Office Building, Hon. Chet Holifield (chairman of the subcommittee), presiding. Present: Representatives Holifield and Burnside. Also present: Herbert Roback, staff director; and Dorothy Morrison, clerk. Mr. HOLIFIELD. The subcommittee will be in order. Under agreement with the minority member of the subcommittee, we will immediately start hearing witnesses, notwithstanding the absence of part of our subcommittee at this time. Colonel Peterka, will you please take the witness chair. Will you please identify yourself for the record, Colonel Peterka ? STATEMENT OF A. E. R. PETERKA, LAMSON & SESSIONS CO., CLEVELAND, OHIO Mr. PETERKA. My name is A. E. R. Peterka, of Cleveland, Ohio. I am employed by the Lamson & Sessions Co., of Cleveland, who are manufacturers of bolts, nuts, and screws. Of their production in 1951 approximately 5 or 6 percent was aircraft. I have been with that company since 1932. I think at this point I should point out that neither the Lamson & Sessions Co., nor I, to the best of my knowledge, have anything to gain by this program which is being discussed, financially. Mr. HOLIFIELD. Will you give us some of your background, Colonel Peterka? I know that you have an extensive background. I would like the record at this point to show the importance of the Lamson & Sessions Co., relatively speaking, in this field. I would also like to have it show the fact that you have an extensive background in this subject. I know you have been before this committee in years gone by. Mr. PETERKA. That is right, sir. I have been educated as an engineer. I hold a professional engineer's license in the State of Ohio. 1 Name changed to Committee on Government Operations, July 4, 1952. 81 I have been in production, engineering, development, research, and currently I am an executive for my company in distribution and sales. In 1942 I went into military service as an officer with the Army Air Corps at that time, and was Chief of what was known as the Matériel Branch in the Industrial Resources Section under General Rawlings. Later on I administered the redistribution program of the Aircraft Scheduling Unit which was made up of Navy and Army people. In 1945 I was loaned to the Reconstruction Finance Corporation to assist in setting up their program for the disposal of surplus aircraft parts and components. After a little over 6 months in that capacity I returned to the Lamson & Sessions Co. In compliance with your request, I may state that the Lamson & Sessions Co. is one of the world's largest producers of bolts, nuts, and screws, referred collectively to as fasteners. Mr. HOLIFIELD. Are you at the present time on a consultant basis with the Air Force? Mr. PETERKA. I have been on a consultant basis for the Air Force, on an arrangement where I would be called when, as, and if needed. I believe that about a year or so ago I was called down to Wright Field by General Rawlings to work on setting up the reestablishment of the program which was in effect during 1942, 1943, and 1944, when the Aircraft Scheduling Unit and the Metals Reserve Company handled that particular redistribution program. Mr. HOLIFIELD. Was that during the Murray Cook contract? Mr. HOLIFIELD. At that time? Mr. PETERKA. That is correct, sir. During and prior to. Mr. HOLIFIELD. Have you participated in the conferences in regard to drawing up this particular plan that General Metzger presented to us yesterday? Mr. PETERKA. Yes, sir; I did. And I understand and I learned last night that the plan which I am familiar with is just a little bit different, or there has been a little change made in that program since I was involved in it. Mr. HOLIFIELD. That change, I believe, is in the substitution of the General Services Administration for corporation X, the principal change. Mr. PETERKA. I believe that is correct, sir, although it was in the plan in which I was involved, that is, the General Services Administration did take a major part. Mr. HOLIFIELD. Would you give us the benefit of your experience and advice on the feasibility of this plan, the desirability of it, and the extent to which excess property is accumulating at the present time? And we would like to know if you have any opinions as to whether that accumulation of excess of surplus property will increase in the years that lie immediately ahead. Mr. PETERKA. In any program such as that which our country is engaged in, in the building of aircraft, idle and excess inventories are bound to accumulate. History has proved that to us. Those idle and excess inventories accumulate as the result of engineering changes, program changes, design changes, cut-backs, contract cancellations, and just ordinary human errors in the procurement and specifying of such materials. The Air Force did a thorough job of investigating the existence of such idle and excess inventories. They arranged to have a man by the name of H. W. Draughon, of St. Louis, a very reputable, retired businessman, formerly in the aircraft parts distribution business, to make the survey with the Air Force. And they found that idle and excess inventories do exist. I personally did some checking on that myself and found that idle and excess inventories do exist. Mr. BURNSIDE. You mean those red tag articles? Mr. PETERKA. I am referring to what the aircraft industry refers to as purchased parts, bearings, fittings, bolts, nuts, screws, instruments those things which they buy in production quantities for assembly into aircraft. The disposal of that material is something of a problem. Some of it is Government-owned. Some of it is contractor-owned. But it is, in general, pretty much the same type of material. The disposition of such material in aircraft is much more difficult than nonaircraft material, because it is high priced and highly specialized. The use of aircraft parts, even the simplest aircraft parts and components is not readily assimilated into, let us say, the railroad, the agricultural, the automobile industry. We tried that. In developing this proposed program we find that we did not learn much from history or experience in World War I or II. We find that the things that seemed logical, but impractical during World War II are again being contemplated as a means of redistribution of this material in order to avoid having it become an unmanageable surplus later on. Mr. HOLIFIELD. Do you think that the rate of production which we are rapidly entering into will generate a great deal of surplus through obsolescence of articles already produced and in storage? Mr. PETERKA. I cannot answer that question just "Yes" or "No," because the amount is important. It is difficult to say how much of it will accumulate, but we do know that it is accumulating and will continue to accumulate. The accumulation will be accelerated with any cut-backs in the program or any changes that may take place in the type of aircraft or aircraft engines to be produced. I would like to point out that in 1942 it seemed so logical to assume that if, let us say, there were 100,000 idle and excess bolts in the inventory of airframe manufacturer X to say, "Well, let us find out if aircraft manufacturer B needs them," and then by a simple transfer move the 100,000 bolts from company X to company B. Actually, that does not work at all. We find in practice that if company A has 100,000 bolts that company B does not want 100,000 bolts. We find that company B wants 5,000 and that company C wants 1,350 and that company D wants. 7,011 and not all at the same time. The airframe manufacturer is in no position, by virtue of experience and personnel, to divide this material, pack it and ship it and bill it to these other airframe manufacturers. |