The CHAIRMAN. But should Congress do anything? Mr. BROWN. I would say "Yes." Mr. LANE. How many employees, Mr. Brown, are there in the industry or plants that you represent? Mr. BROWN. Well, I am only representing one plant. In fact, I do not know Mr. LANE. How many employees have you? Mr. BROWN. We have about 75 engaged in the manufacture of mechanical springs. The majority of the mechanical-spring plants are small. I would say, oh, four to five hundred people is a large plant. Of course I am not too sure that I represent anybody but Mr. Brown. I am going to be in this business for a few years, I hope, and whether it is with Kokomo Spring Co. or with some other company, I am still looking after my own interests. Mr. MICHENER. I have one question there. You have to pay the price fixed by United States Steel for the wire, or whatever it is that you purchase? Mr. BROWN. That is right. Mr. MICHENER. Do you have to absorb the freight from the factory where the product that you purchase is made to your plant? Mr. BROWN. That is right. Mr. MICHENER. And one who lived farther away from the source of production would have to pay more for his material then, unless freight absorption was permitted, would he not? Mr. BROWN. That is correct. Mr. MICHENER. In other words, if I want to start a small factory in northern Michigan to manufacture this same material, and bought the same raw material that you buy, I would have to pay more for my freight. My product would cost me more because it would be mill price, plus freight from the mill. Mr. BROWN. That is correct. We have had to discontinue the purchase of wire from some of the eastern mills for that very reason. Mr. DENTON. How uniform is the price of your finished product? Do other manufacturers charge approximately the same price? Mr. BROWN. It is a competitive business. There are no established prices, because each item varies in sizes and shape, in the amount of material in relation to the labor, and so forth, so there are no established prices that can be applied. Mr. DENTON. Now, do you not have an advantage over American Wire & Steel in that you sell to people in your immediate vicinity while they have to sell it some distance away? Mr. BROWN. No. We sell the biggest part of our product not in our community. In fact, I would say that the majority of our customers are an average of 150 miles from our plant. Mr. DENTON. Now, you say there is competition in the price in the finished products of springs. Is American Wire & Steel competing with you in that price? Mr. BROWN. Oh, certainly. Mr. DENTON. Is there any tendency to follow the lead of American Steel & Wire on that price? Mr. BROWN. No. We make every effort to get our prices down to their level, but we are not too successful in most cases. Mr. WILLIS. That means that they do set the pattern of price? 96347-50-ser. 14, pt. 4a-23 Mr. BROWN. They certainly influence the price, but after all we cannot just arbitrarily sell at their price and lose money on the product. Mr. WILSON. In other words, you cannot always follow the leader? Mr. BROWN. That is right. Mr. WILSON. And stay in business. Mr. BROWN. No, sir. The CHAIRMAN. Are there any further questions, gentlemen? Well, thank you very much, Mr. Brown, and we are very grateful for your coming here. Mr. BROWN. Thank you, Mr. Chairman. The CHAIRMAN. Our next witness is Mr. J. Philip Murphy. STATEMENT OF J. PHILIP MURPHY, PRESIDENT, JUDSON-PACIFICMURPHY CORP., EMERYVILLE, CALIF. Mr. LEVI. Would you please state your name and position for the record? Mr. MURPHY. My name is J. Philip Murphy. I am the president of the Judson-Pacific-Murphy Corp. of Emeryville, Calif., which is on the shores of San Francisco Bay. Mr. LEVI. What does your company make, Mr. Murphy? Mr. MURPHY. We have two divisions. We fabricate structural steel, which is used in bridges, tiered buildings, such as office buildings, apartment houses, and warehouse-type structures, that is, mill buildings, or steel-frame buildings that are used for the manufacture of products and a reinforcing steel division. Mr. LEVI. Would you tell us how large your company is? What is its capital structure? Mr. MURPHY. It has a paid-in capital of a million and a quarter. We have an earned surplus of approximately a million dollars. It is a closely held corporation, and my partners and myself have another million dollars which we have used at times to augment our working capital. Mr. LEVI. How many shop men do you employ? Mr. MURPHY. At the present time, today, we have 280 employees; 87 of them in our shops. In our peak period, in May of 1949, we had 655 employees; 300 of them were in our shops; and a year ago today we had a total of 530 employees, 267 of them being in our shops. Mr. LEVI. What is your total payroll? Mr. MURPHY. Our total payroll in 1948 was $2,000,000. In 1949 it was in excess of $2,000,000, and this year we anticipate it will be under a million dollars. Mr. LEVI. How long have you been in the steel business, Mr. Murphy? Mr. MURPHY. I have been in the steel business-I graduated from college in 1929, and 3 months after that I went to work for a small steel company in Oakland. In 1934 I went into the steel business for myself, operating as an individual. In 1938 I incorporated the activities of my individual business, and in 1945, in company with two other people, we bought the plant facilities, the fixed assets, and the work in progress of the Judson Pacific Co. Now, their antecedent companies go back to 1868 and 1872. Mr. LEVI. Now, in the manufacture of structural steel, what steel materials do you buy? Mr. MURPHY. I would rather use the phrase "fabricating of structural steel." We do not manufacture structural steel. We fabricate structural steel, and we purchase the various shapes which are rolled by the steel mills in this country. They could be described as flats, rounds, angles, I-beams, channels, H-sections, and wide-flange beams. Mr. LEVI. Would you say that the bulk of your purchases are wide ffanges? Mr. MURPHY. In the structural steel fabricating end, I would say that from 70 to 80 percent of our purchases are of the wide-flange beams. Mr. LEVI. Who makes wide-flange beams? Mr. MURPHY. Two companies in the United States, the CarnegieIllinois Steel Co., which is a subsidiary of United States Steel Corp., and Bethlehem Steel Co. Mr. LEVI. And only those two companies? Mr. MURPHY. Only those two. Mr. LEVI. From whom do you buy these wide-flange materials? Mr. MURPHY. We buy the wide-flange material from Columbia Steel Co. out on the Pacific coast, which is a subsidiary of the United States Steel Corp., and who are the sales agents of Carnegie-Illinois Steel Corp. in the Pacific coast area, and from Bethlehem Pacific Coast Steel Corp., which is a wholly owned subsidiary of Bethlehem Steel Co. Mr. LEVI. In terms of material that you buy from Columbia, do they make what you buy? Mr. MURPHY. Columbia does not make the wide-flange materials which we buy. Columbia does, however, make I-beams, channels, flats, rounds, angles, which we popularly describe as coast sizes; Columbia Steel Corp., has two rolling mills. One mill is on the Pacific coast, one at Pittsburg, Calif., which is approximately 30 miles from our plant, and one at Torrange, Calif., which is in the Los Angeles area, approximately 500 miles from our plant. Mr. LEVI. When you buy the wide-flange beams from Columbia, where do they get them from? Mr. MURPHY. They are rolled in the East; generally, in the Chicago area, and they are shipped out to us all-rail freight. Mr. LEVI. Who does the rolling in the East? Mr. MURPHY. Carnegie-Illinois Steel Corp. The CHAIRMAN. Which is a subsidiary of United States Steel. Mr. MURPHY. Wholly owned subsidiary of United States Steel. Mr. LEVI. Could you buy these directly from Carnegie? Mr. MURPHY. NO. Mr. LEVI. Do you buy also from Bethlehem Steel Co. ? Mr. MURPHY. We buy from Bethlehem-Pacific Coast Steel Co. Mr. MURPHY. They sell us wide flanges; yes, sir. Mr. LEVI. Do they make them on the west coast? Mr. MURPHY. No, sir. Mr. LEVI. Where do they have them made? Mr. MURPHY. They are generally made at Sparrows Point, Md. They are made in the eastern areas of the United States, and shipped out to us. Mr. LEVI. Then, on the wide-flange beams, you get all that you get from Bethlehem and from Columbia; is that right? Mr. MURPHY. Yes. I would like to qualify that statement a little bit. Sometimes in picking up what we describe as our shorts, we have to go to warehouse stocks in the bay area, but 99 percent of our purchases are from the producing mills. Mr. LEVI. Who are your main competitors? Mr. MURPHY. In the fabricated structural steel industry? Mr. LEVI. Yes. Mr. MURPHY. Well, alphabetically, there is Bethlehem-Pacific Coast Steel Corp., Consolidated Western Steel Corp. The CHAIRMAN. Consolidated is a subsidiary of the United States Steel? Mr. MURPHY. Bethlehem-Pacific Coast is a subsidiary of Bethlehem; Consolidated Western Steel Corp. is a wholly owned subsidiary of United Statee Steel Corp.; the Independent Iron Works, which is a local independently owned company, not of the same size as our company; the Herrick Iron Works, which is in the same category; the Moore Drydock Co., which is, oh, about 80 percent of the size of our company, and they also have shipbuilding and ship-repairing facilities. Mr. LEVI. Does it frequently happen when you bid for a job that you find that also bidding is the Bethlehem-Pacific Coast? Mr. MURPHY. Ninety-nine times out of a hundred. Mr. LEVI. And is the same thing true of Consolidated Western! Mr. MURPHY. Now, yes. Mr. LEVI. And if you should be the successful bidder, would you then have to go to these companies to get your materials? Mr. MURPHY. That is correct, we would have to. Mr. LEVI. In other words, you would have to get the materials from the people who were competing against you? Mr. MURPHY. That is correct. Mr. LEVI. Was there a recent price rise on the plain material which you used? Mr. MURPHY. Yes. There was a recent price rise approximately 3 to 4 months ago. Mr. LEVI. How much was that price rise? Mr. MURPHY. Well, it was more or less of a technical price rise. They raised the base price, and then they raised certain extras, but a general statement would be that the price of the plain material itself had an increase of from $5 to $6 per ton. Mr. LEVI. When you say it was more or less of a technical price rise, do you mean that the price did not actually go up? Mr. MURPHY. No; I mean it was a price rise described in technical terms. In other words, the price of steel went up $2 a ton base on certain sizes, $3 a ton base on other sizes, and the extra book was changed. In other words, certain extras, certain beams, went up $5; others went up $9, but integrating it back to our operation, it meant an increase of approximately $5 to $6 a ton on our over-all product. Mr. LEVI. Was this price rise of about $5 reflected in the price charged on finished products by Consolidated, or fabricated products by Consolidated and by Bethlehem competing against you? Mr. MURPHY. Not noticeably. Mr. LEVI. Was it reflected in yours? Mr. MURPHY. Naturally. Mr. LEVI. Why do you say "naturally"? Mr. MURPHY. Well, we had to acquire the material at a higher price, so we had to add the additional acquisition costs of the material to our finished products. Mr. LEVI. But so far as you know that amount was not added to the finished product by Consolidated or by Bethlehem? Mr. MURPHY. It did not appear to be. Now, fabricated structural steel is not sold like a grocery store item. In other words, you cannot go in and say that a bridge structure cost you X dollars per ton, and since the price rise, the price is now X plus $5 per ton. In other words, each bridge or structure, building, an estimate is made of the cost, and there was no apparent increase in the price structure or the prices as quoted, that would have a direct bearing on the increase of the $5 a ton in material. Mr. LEVI. But it was reflected in your price? Mr. MURPHY. In all of our estimates we added for the material, an addition of $5 a ton. Mr. LEVI. Who gets the majority of the structural steel fabricating contracts in your area? Mr. MURPHY. At the present time, Bethlehem and Consolidated Western. Mr. LEVI. And they are the companies from whom you purchase your plain material? Mr. MURPHY. They are the companies from whose parent associations or parent companies we purchase the same material; yes. Mr. LEVI. Is it a matter of concern for the independent fabricators in your area that most of these contracts are going to Consolidated and Bethlehem? Mr. MURPHY. It is a matter of concern; yes. Mr. LEVI. Is that concern limited to your area? Mr. MURPHY. No; it is not. Mr. LEVI. It is true of fabricators throughout the country? Mr. MURPHY. Generally, yes. Mr. LEVI. How do you know that? Mr. MURPHY. Well, because of certain associations I have, I discuss mutual problems with them, or I meet with them, with many of the fabricators in the United States, an average of every 2 to 3 months, and we are always discussing general conditions. Mr. LEVI. Do you have any formal association? Mr. MURPHY. Yes. All the fabricators of the United States have a formal association, which is known as the American Institute of Steel Construction, whose offices are on Park Avenue in New York. Mr. LEVI. Are you an officer of that? Mr. MURPHY. Yes, sir. Mr. LEVI. What is your position? |