We believe it is important to also point out that in 1951 and 1952, upon receiving the contracts covering the expanded facilities, this company immediately proceeded with the construction of the new facilities and our new plant was in initial production within approximately 10 months from the time the contract was entered into. The Government offered assistance to proposed newcomers for the production of primary aluminum presumably to increase the supply of primary aluminum for nonintegrated pig users. Although this assistance was first offered in 1952 none of these proposed aluminum nonintegrated newcomers has yet constructed a plant. Had these companies with whom the Government negotiated for expansion of aluminum capacity proceeded with the same dispatch as this company, the present shortage of metal would have been largely alleviated. As further evidence of our policy of continuing to serve the pig, ingot, and billet market, we have been and are always prepared to discuss and negotiate long-term contracts with responsible purchasers to assure them a dependable supply of aluminum pig, ingot, and billet. If you have any further questions with respect to this matter, we would be more than pleased to discuss them with you and answer them to the best of our ability. Very truly yours, DEAR MR. FLEMMING: I have a letter dated May 25 from Edmund F. Mansure, Administrator of General Services Administration, responding in part to my letter to you of April 1. Mr. Mansure's letter confirms my impression that loose administration of guaranteed marketing contracts between the Government and the three primary producers strengthens the dominant position of the primary producers over the nonintegrated users. I believe this is contradictory to the Government's original intention to protect and aid the nonintegrated users through the avenue of these contracts. Mr. Mansure's letter contains several statements inimical to the interests of the nonintegrated users and the Government's intentions in their behalf. In paragraph 3 Mr. Mansure states: "Provision was not made for firm distribution rights devoting one-third of the new production to nonintegrated users, one-third to the national stockpile, and one-third to the contractor's use or sale, since it was also contemplated, and the contracts so provide, that the Government would have a call on the entire production from the expanded facilities." This statement falls far short of answering my question as to why the nonintegrated users were not given in the contracts a firm guaranty that they would receive one-third of the output of the expanded facilities. The total call is an emergency provision to enable the Government to take all the metal from facilities covered by the contracts in the event of a national emergency. The primary producers received a firm guaranty for one-third of the metal from the new facilities even though the contracts contained a total call provision. Therefore, I see no reason why the nonintegrated users could not receive a firm guaranty for one-third of the metal from the expanded facilities even though the call provision is in the contracts. Mr. Mansure's letter makes it necessary for me now to ask, Why were not the nonintegrated users afforded the same treatment as the primary producers and given a guaranty for one-third of the output of the expanded facilities nothwithstanding the total call provision? Mr. Mansure also states in his letter: "These provisions concerning offers to nonintegrated users were designed to provide flexibility so that the Government can assure lower calls when the supply of metal is short and larger calls when the supply is more plentiful. 1 Harvey Machine, one of those offered assistance, sold its interest in the Montana project to Anaconda Copper. It has been reported this company was also subsequently granted aid for another primary aluminum project. We do not know the status of this second project. "In our opinion the two-thirds provision is more advantageous to the nonintegrated users because, by limiting its own purchases, the Government can see that such users get up to two-thirds of the new production." If the two-thirds provision is intended to be a flexible instrument operated by the Government in the best interests of the nonintegrated users, as Mr. Mansure indicates, why was the Government's stockpile call for the first half of 1955 greater than two-thirds of the output of the facilities under the contracts? Colloquy between Hon. Sidney Yates and officials of the General Services Administration, during the recent hearings on aluminum before the House Small Business Subcommittee No. 3, established that the stockpile call for the first half of 1955 was, in fact, greater than two-thirds of the output of the expanded facilities. In explanation of how the stockpile call figure was determined, the Director of the Aluminum and Magnesium Division of BDSA testified before the same House subcommittee on May 23 that his estimate of aluminum consumption for 1955, which he transmitted to you in March for your guidance in determining stockpile calls for the year, was predicated upon consultation with the primary producers. You, Mr. Flemming, made substantially the same statement to that subcommittee. During the same hearings the three primary producers told the subcommittee that demand for aluminum began to soar in the fourth quarter of 1954. In light of Mr. Mansure's theory of flexibility, I am led to three possible conclusions with regard to the stockpile overcall for the first half of 1955: Was the overcall made with the intent of depriving nonintegrated users aluminum from the new facilities? Was the overcall made in ignorance of the possible effect it would have upon supplies of aluminum available to the nonintegrated users? Or, was the overcall made in reliance upon statistics from the Almag Division of BDSA, the Director of which is an executive of one of the primary producers, that were either calculated to produce, or accidently produced, inequitable distribution of aluminum under the guaranteed marketing contracts? The stockpile overcall, whatever the basis of it, left no metal available for independent users under terms of the guaranteed marketing contracts. It resulted in lessening competition for the primary producers from the nonintegrated users. At the same time, the primary producers were able to take care of increased consumer demand from their own fabricating facilities. In addi tion, since the primary producers raised the price of aluminum pig 1 cent per pound in January, they reaped a benefit of something over $5 million in their sales to the national stockpile. Mr. Mansure indicated in his letter to me that the primary producers' excess metal purchased last year by the Government for the national stockpile was "available for sale to nonintegrated user but had not been purchased." However, the facts indicate that in the latter part of 1953 and for 9 months of 1954 the primary producers, unable to consume adequate amounts of metal in their own fabricating facilities, exercised their put privilege and dumped their excess metal on the Government. I note that Mr. Mansure offered no discussion of the put rights of the primary producers under the guaranteed marketing contracts. This is a serious omission since this right established an ever-ready, ever-normal market for the primary producers. Statistics gathered by BDSA, shown in the following tabulation, clearly indicate that in the period I am discussing the nonintegrated users' requirements for metal increased while the primary producers' requirements for metal decreased in this same period. The primary producers, therefore, were really disposing of metal excess to their requirements through their put rights: Total shipments of aluminum to military and civilian consumers: 1953, 3,211 million pounds; in 1954, 3,010 million pounds. Shipments by nonintegrated fabricators: 1953, 409,508, 000 pounds; in 1954, 456,538,000 pounds. In 1954 primary luminum production was up approximately 17 percent over 1953. In 1954 shipments by nonintegrated fabricators were up 11% percent. In 1954 shipments by Alcoa, Reynolds, and Kaiser decreased about 10 percent. With regard to the current situation, Mr. Mansure confirms the fact that only Alcoa has agreed to distribute to nonintegrated users its share of stockpile forgiveness for the first half of 1955. Reynolds and Kaiser remain adamant in their determination to use this metal in their own fabricating facilities. Mr. Mansure further states that to abide by the terms of the contracts and his letter of April 7 he is negotiating with them. The Government has been overlenient and cooperative with these two companies. This is not a time for negotiation with them, but a time for Government direction. There is no question whatsoever concerning the obligation of these companies and I expressed this in my letter of June 14, 1955, to Mr. Calhoun of Kaiser Aluminum & Chemical Corp., and the reply thereto dated July 1, 1955, copies of which I enclose herewith. I reiterate any metal returned to the stockpile as a result of the failure of Reynolds and Kaiser to comply with the Government's letter of April 7 belongs to the nonintegrated users under your order of March 24 and the Government is obligated to distribute such metal to them. You are charged with the responsibility of immediately directing into the hands of nonintegrated users all of the aluminum by which stockpile calls for 1955 are reduced or will be reduced, in addition to deliveries and commitments entered into by the primary producers prior to the date of such reductions. In keeping with my previous correspondence with you on this matter, and particularly with regard to my letter to you of May 24, I urge that you make definite recommendations to the Attorney General in accordance with section 708, paragraph (e) of the Defense Production Act which reads: "The Attorney General is directed to make, or request the Federal Trade Commission to make for him, surveys for the purpose of determining any factors which may tend to eliminate competition, create or strengthen monopolies, injure small business, or otherwise promote undue concentration of economic power in the course of the administration of this Act. The Attorney General shall submit to the Congress and the President within ninety days after the aproval of this Act, and at such times thereafter as he deems desirable, reports setting forth the results of such surveys and including such recommendations as he may deem desirable." Please favor me with a copy of your communication to the Attorney General. Sincerely yours, Representative SIDNEY R. YATES, Chairman Small Business Committee, JAMES E. MURRAY, TEXAS ALUMINUM CO., INC., Washington, D. C.: To eliminate the possibility of a misunderstanding that could arise from my testimony yesterday regarding the aluminum supply situation, I would like to add to my testimony the following: Alcoa is currently supplying us raw materials considerably in excess of the small historical purchasing pattern we have established with them. R. W. PICKENS, President. Mr. GEORGE ARNOLD, CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D. C., November 29, 1955. Counsel, House Select Committee on Small Business, Washington 25, D. C. DEAR MR. ARNOLD: As requested by my secretary on September 30, the record on the aluminum hearings was to be kept open until I had compiled the material which I desired to be included in it. I am sending you herewith the letters which I had received from Miami firms on the subject, together with a letter our Florida delegation directed to the Director of the Office of Defense Mobilization, and request that you make this a part of the record of the hearings. Thank you for your courtesy. Sincerely yours, DANTE B. FASCELL, WARE LABORATORIES, INC., Hon. DANTA B. FASCELL, House of Representatives, Washington, D. C. DEAR CONGRESSMAN FASCELL: We are manufacturers of aluminum windows with all our manufacturing taking place at Miami, Fla. This is our sole business at this time. Last year we installed an extrusion press which changed our need for aluminum to billets from our former requirements for extruded shapes. Because of the fact that our buying pattern was changed from a type of aluminum, we experienced a severe shortage earlier this year, which necessitated reducing our production materially. This condition was relieved temporarily by the reduction in stockpiling by the Government of 150 million pounds for the second quarter of this year. Although we are not receiving sufficinet material to operate at capacity or at a rate sufficient to take care of the demands of our customers. This same condition is adversely affecting others in the south Florida area in similar types of business. The Aluminum Extruders Council has appealed to Defense Mobilizer Fleming to divert another 150 million pounds of aluminum from the stockpile for the second half of 1955, of which 75 million pounds would be earmarked for extruders, such as ourselves. It is the purpose of this letter to earnestly solicit your assistance in obtaining a release from the stockpile of 150 million pounds for the second half of 1955 with 75 million pounds to be earmarked for extruders. We understand that a decision will be made later this month. We understand that in making this request, that it will not jeopardize this country's military position as we believe the stockpile is adequate at this time and understand that a substantial amount of metal was stockpiled last year in excess of last year's stockpiling schedule. We understand that this was in the neighborhood of 200 million pounds of aluminum but this figure is unconfirmed. This matter is of great urgency to our company and its employees as the amount of employment we are able to provide is directly related to the amount of metal that we will receive this year, and we are advised that the same condition exists with other companies in the area who are also dependent upon billets for their basic raw material. Thanking you in advance for any assistance that you are able to give us. Hon. DANTE B. FASCELL, WILLARD M. WARE, President. LUDMAN CORP., OFFICE OF THE PRESIDENT, North Miami, Fla., May 13, 1955. House of Representatives, Washington, D. C. DEAR SIR: Today, we sent you a telegram, as follows: "Aluminum Extruders Council has appealed to Defense Mobilizer Flemming to divert 150 million pounds of aluminum from stockpile for second half of 1955, with 75 million pounds earmarked for extruders. Decision is expected latter part of May. "Diversion of this metal from the stockpile and earmarking a portion for the extruders will serve the best interests of this country. More than 500 employees of this company are affected. Nationally, this involves thousands of employees engaged in the independent aluminum extrusion industry. Please look into this matter and lend your support to this proposal. Thank you." This aluminum is not to be taken from aluminum already in the stockpile, but is only a part of the aluminum which the producers will supply to the stockpile the second half of 1955. In order to facilitate the aluminum expansion programs, the Government committed itself to purchase large quantities of aluminum over a period of years. This made the expansion program more desirable to the producers. In the meantime, the stockpile is growing, and it would be a distinct help to the aluminum industry, if some of the metal, which is to go into the stockpile, is diverted to alleviate the present shortage. The amount of aluminum that has been stockpiled is undoubtedly far greater than could be absorbed in any short period, should an emergency occur. There are many products which are made with aluminum in Florida. If aluminum is not available in this south Florida area, it could have a serious effect on our economy. There is no aluminum produced in Florida, and none of the aluminum producers have extrusion facilities here. Therefore, all people engaged in aluminum extruding here, and those other industries dependent on them, are seriously affected during such a shortage. I would strongly urge that you look into this matter, and lend your support to any program which will benefit the aluminum extruders. Yours very truly, MAX HOFFMAN, President. JONES SHUTTER PRODUCTS, Re your letter of May 23, in reference to aluminum shortage. Member of Congress, House Office Building, Washington, D. C. DEAR MR. FASCELL: As you may know, we are considered a small user of aluminum, with a possibility of around 200,000 pounds per year, and during the past few years, because of war conditions and material shortages, we have been hard pressed and practically put out of business. We have recently looked at the future with some degree of optimism; however, during the last 60 days, contracts that we have for our prefabricated product in which we use extrusions formed from our dies by a local extrusion company have been cut off because of their inability to obtain ingot. It has been necessary for us to use Alcoa sections at nearly three times the cost of our extrusions, which of course shows a considerable loss, which we cannot afford. We are sure that if our dies had been in the hands of Alcoa, Reynolds, or Kaiser, and had been willing to wait 2 or 3 months for delivery, they would have no shortage of ingot; therefore, we believe some method should be devised whereby small users of aluminum should have their share of supply obtainable. We wish you luck in your endeavor and appreciate your efforts in representing the people in the Fourth District of Florida. Very truly yours, Hon. DANTE B. FASCELL, Member of Congress, HERBERT S. JONES. DENISON CORP., Miami, Fla., May 25, 1955. House Office Building, Washington 25, D. C. DEAR SIR: We have at hand your memorandum of May 23, 1955 and certainly do appreciate your interest in the present problem of aluminum shortage, especially for the smaller users of this material. In the past, under the controlled materials plan, we had many difficulties in obtaining aluminum, which greatly hindered the progress of our expansion and, therefore, definitely affects the general overall expansion of industry in the State of Florida. Whereas 5 years ago only 10 percent of the construction work in the country were using aluminum windows, today this figure is closer to 30 percent and is growing rapidly every day. We believe you will find that all Government specifications on new building consider only the use of aluminum windows. Although our deliveries have been lengthened recenlty, especially on new sections and new models, we are getting as much extruded material as we require. However, we are setting up an extrusion press for our own requirements and have recently released the press for production. Originally the press was scheduled for May or June delivery, but due to the extreme billet shortage, and since we could get no commitments from the prime producers, we were forced to delay acceptance of this press. At the present time the press is scheduled for installation in August and we do have a prime commitment for approximately one-fourth of our requirements. We have checked with three other major suppliers and thus far they have not been able to give us any assurance of material. Inasmuch as the cost of the building and equipment will be in the neighborhood of $300,000, we are placed in a precarious position due to the so-called shortage of aluminum billet. |