and deliver the tin can to your table, then you should keep the steel mills wholly integrated.

The CHAIRMAN. You have a successful closely held business, is that not correct?

Mr. MURPHY. That is correct.

The CHAIRMAN. If conditions do not change and these integrated companies, particularly Bethlehem and United States Steel, by virtue of their operations and the operations of their subsidiaries, continue in the manner you have described, how long will you be able to hold your successful closely held business?

Mr. MURPHY. It is a matter of prudence. If we were to stop operating tomorrow and not be able to obtain any more contracts to fabricate structural steel, we could stay in business-just living up to our overhead, we could, stay in business 7 or 8 years. But, frankly, if we did not get any business for 2 or 3 years, I think we would be prudent enough to get out of business.

The CHAIRMAN. Would you say that Bethlehem and United States Steel through their subsidiaries are getting more and more of the business on the west coast?

Mr. MURPHY. Yes.

The CHAIRMAN. And if they continue to get more and more, to that degree the independent fabricators, including yourself, will get less business?

Mr. MURPHY. That is correct.

The CHAIRMAN. And in course of time that business would grow so small and be so minimal that you would probably be forced out of business?

Mr. MURPHY. That is correct.

The CHAIRMAN. And would you attribute that condition mainly to the fact that the independent fabricators compete with their suppliers? Mr. MURPHY. Yes.

Mr. BRYSON. Your success has been very gratifying. I am sure it has not been an easy road. But as difficult as the road has been for you to travel, would not a young man similar to you and your associates have a more difficult time beginning now in reaching the success you attained than you yourself had?

Mr. MURPHY. Yes, he would have a much more difficult time.
Mr. BRYSON. He would have it much more difficult?

Mr. MURPHY. Yes, sir.

Mr. BRYSON. As the set-up is now as compared to that which existed during the preceding two decades?

Mr. MURPHY. That is correct.

Mr. MICHENER. Do you take into consideration in answering that question present economic conditions of the country?

Mr. MURPHY. No. The reason I made that statement is that when I started in the business I started first in the reinforcing end of the business and then I got into the structural end of the business, and at that time there was not the great number of-in other words, Bethlehem Pacific Coast Steel Co. was not as active with their subsidiary companies out there on reinforcing steel; Ryerson, which is a subsidiary of Inland Steel, was not on the Pacific Coast at that time. Then as I got into the structural end of it, Consolidated Western was not operating in the northern California market. Bethlehem Steel Co. was not as

aggressive. And it is the change in the type of operation that is going on out there in the area now rather than the change in economic conditions.

Mr. BRYSON. How about the competition then and now?
Mr. MURPHY. How about the competition then and now?
Mr. BRYSON. Then and now, yes.

Mr. WILLIS. We have more in the field, is that correct?

Mr. MURPHY. You have more in the field now than you had then. There are more mill fabricators in business now than when I first started.

Mr. MICHENER. I am talking about competition. There can be two people engaged in competition, or there may be a large number in competition, but competition means the same in either case. Now, is there more competition now than there was when you started? Mr. MURPHY. Yes.

Mr. MICHENER. That is all.

Mr. DENTON. It is a different kind of competition?

Mr. MURPHY. Yes, a different kind of competition.

Mr. DENTON. The difference in competition you have now is that the people that you buy the steel from are your competitors where they were not before?

Mr. MURPHY. They were not as active as now. That is kind of an open-end question. That could be developed. I am sure we do not want to get into the exploration of that. But it is possible if, for instance, Bethlehem Pacific Coast Steel Corp. and Consolidated Western, who are the main mill fabricators out on the Pacific coast area, put all the independents out of business, it would be reasonable to assume from then on in you would not have any competition.

Mr. MICHENER. And if the Government put the United States Steel and the Bethlehem Co. out of business, to manufacture but one thing, where would your competition be?

Mr. MURPHY. I do not understand the question.

Mr. MICHENER. Read the question.

(The pending question read by the reporter.) ·

Mr. MICHENER. In other words, if Bethlehem Steel Co. only manufactured a certain kind of steel, whatever you want to call it-I do not know the technical terms

The CHAIRMAN. Ingots.

Mr. MICHENER. Ingots.

Mr. MURPHY. I am not asking you to do that. As a matter of fact

Mr. MICHENER. I am sure you are not, but some of the questions that have been asked by counsel have indicated that that should be done. You have recommended against it, and I agree with you.

Mr. MURPHY. I recommended that Bethlehem Steel Co. and United States Steel Corp. as producing units should be kept intact.

Mr. WILLIS. Your objection is they are entering into the field and extending from day to day into the fabricating end of competition? Mr. MURPHY. Into the end-product end; yes, sir.

Mr. LEVI. Mr. Chairman.

The CHAIRMAN. Mr. Levi.

Mr. LEVI. I should like to say for the benefit of the record, since counsel is only temporarily with this committee and has a position

outside this committee, that he has never recommended, and so far as he knows never will recommend, nor will ask any questions to indicate that he is recommending that any steel company be limited to the manufacture of only one item.

Mr. MICHENER. Well, I am glad to hear that.

The CHAIRMAN. Any further questions.

I think you had a question, Mr. Wilson.

Mr. WILSON. I think the witness answered what I was going to ask him pretty well.

The CHAIRMAN. Thank you very much, Mr. Murphy. You have come a long ways and been very patient, and we are very grateful to you.

Mr. MURPHY. Thank you.

The CHAIRMAN. Our next witness is Kenneth Keegan, general manager of Independent Iron Works, of Oakland, Calif.; Mr. Keegan.

STATEMENT OF KENNETH M. KEEGAN, GENERAL MANAGER, INDEPENDENT IRON WORKS, OAKLAND, CALIF.

Mr. LEVI. Will you state your name and occupation.

Mr. KEEGAN. My name is Kenneth M. Keegan. I am general manager of the Independent Iron Works, Inc., in Oakland, Calif.

Mr. LEVI. Would you please state the total assets of that company. Mr. KEEGAN. Our assets are in excess of $2,000,000.

Mr. LEVI. And what does that company make?

Mr. KEEGAN. We fabricate structural steel for buildings, bridges, towers, storage tanks, platework, barges, railroad-car parts, and other similar items.

Mr. LEVI. How long have you been with that company, Mr. Keegan? Mr. KEEGAN. I have been with that company since 1929.

Mr. LEVI. And how many people are employed in that company? Mr. KEEGAN. We have employed in our company at the present time 265 people.

Mr. LEVI. And how many were employed in 1949?

Mr. KEEGAN. In 1949 we had 374 employees.

Mr. LEVI. And can you explain why there has been this drop in the number of people employed?

Mr. KEEGAN. The reason for the drop in the number of our employees is due to the drop in our work in progress. In other words, in June of 1948 we had a backlog of just short of $2,000,000. In June of 1949 it dropped down to below a million. At the present time it is down to three-quarters of a million dollars.

Mr. LEVI. Do you buy your plain material from Consolidated? Mr. KEEGAN. No; we do not.

Mr. LEVI. Do you buy from Bethlehem?

Mr. KEEGAN. We buy our plain material from the United States Steel Corp., Bethlehem Steel Co., and Kaiser.

Mr. LEVI. So that you do buy from United States Steel Corp. through which subsidiary?

Mr. KEEGAN. Through Columbia Steel.

Mr. LEVI. And you buy from Bethlehem through which division? Mr. KEEGAN. Bethlehem Pacific Coast Steel Corp.

Mr. LEVI. And do you also compete against them?

Mr. KEEGAN. We definitely compete against them; yes.

Mr. LEVI. And which subsidiary of the United States Steel Corp. competes against you?

Mr. KEEGAN. Consolidated Western Steel Corp.

Mr. LEVI. And which division of Bethlehem competes against you? Mr. KEEGAN. Bethlehem Pacific Coast Steel Corp.

Mr. LEVI. Would you say as a result of that competition by the people from whom you buy that you have lost any jobs?

Mr. KEEGAN. I would say it is a definite fact that we have lost a considerable amount of work to both of those companies.

Mr. LEVI. Do you know as a matter of fact that you have lost any specific jobs to them?

Mr. KEEGAN. Yes, I do.

Mr. LEVI. Could you state how many specific jobs you think you have lost to them recently?

Mr. KEEGAN. I have a partial list taken from our files in which the tonnages and prices are approximate due to our sources of information being incomplete, taken from March 1948 through January of 1950. In this list there are 33 jobs approximately 45,000 tons, approximating in dollar volume $10,000,000. Rather than go through those particular jobs individually, if it is all right, I would just as soon submit it for the record.1

Mr. WILSON. Are they all sealed-bid jobs?

Mr. KEEGAN. No. they were not all sealed-bid jobs. Most of our work is bid through a general contractor. The general contractor in turn submits his bid to the purchaser, the buyer, the owner as a sealed bid. They are then publicly opened.

Mr. WILSON. You are a subcontractor then?

Mr. KEEGAN. We are a subcontractor.

Mr. WILSON. And your principal has to get the job before you get the subcontract?

Mr. KEEGAN. In most cases. There are some cases where fabricated structural steel, for example, might be bid direct to the final source or purchaser. In most cases, our bids and all bids of firms like ours go through a general contractor.

Mr. WILSON. Do you subcontract to more than one firm?

Mr. KEEGAN. Well, I do not understand the question.

Mr. WILSON. I mean, is your principal always the same firm or corporation, or do you subcontract to a number of firms?

Mr. KEEGAN. No, if I understand you correctly, we bid on onesay, pick an individual job. There may be between 5 and 20 general contractors figuring this one job. So that for us to cover the field completely it is necessary that we bid to all of the general contractors figuring this particular work.

Mr. WILLIS. You say you lost that many jobs. To whom?

Mr. KEEGAN. I have on here one job lost to American Bridge Co., which is a subsidiary of United States Steel Corp. The balance of the jobs on this list have been lost to Bethlehem Pacific Coast Steel Corp. or Consolidated Western Steel Corp.

Mr. WILLIS. Do you know whether the other independents in your area are having the same experience?

Mr. KEEGAN. The other independent fabricators in our area have bid a lot of these jobs that I have listed. Now they might have been

1 The list appears as exhibit S-63 in Steel Exhibits, p. 92.

lower bidders than we were on a particular job. I have no way of knowing that.

Mr. DENTON. Why would they bid lower than you?

Mr. KEEGAN. That is a question I cannot answer.

Mr. BRYSON. Is the gentleman who preceded you a competitor of yours!

Mr. KEEGAN. Yes; he is.

Mr. BRYSON. And do you agree generally with his statements?

Mr. KEEGAN. I agree with all of Mr. Murphy's statement. I followed his statements closely.

Mr. BRYSON. Your experience is similar to his?

Mr. KEEGAN. Right.

Mr. BRYSON. You are slightly larger than he is?

Mr. KEEGAN. We are slightly smaller.

Mr. BRYSON. Slightly smaller?

Mr. KEEGAN. Yes.

Mr. BRYSON. I notice you say you buy from Republic and United States and Kaiser. Does the Kaiser Co. have subsidiary companies engaged in the work of processing this steel like the others?

Mr. KEEGAN. To my knowledge the Kaiser Co. as far as end products are concerned, that is, processing the raw material, only do one thing, and that is manufacture large-diameter pipe.

Mr. BRYSON. So strictly speaking they are not competing with you as are the other big companies?

Mr. KEEGAN. They are not a competitor.

Mr. BRYSON. They are still in the upper echelon, so to speak?

Mr. KEEGAN. Yes. I would like to change one word. You said "Republic." We buy very little from Republic.

Mr. BRYSON. Bethlehem, I mean.

Mr. KEEGAN. Yes.

Mr. BRYSON. In other words, your point of grievance is not directed to the Kaiser Co. as it is to the other two companies?

Mr. KEEGAN. That is correct.

Mr. WILSON. Isn't it the fact that you have lost a lot of this business due to the fact that these companies are now pressing for that business whereas before they were not?

Mr. KEEGAN. That is correct.

Mr. WILSON. In your area out there?

Mr. KEEGAN. Right.

Mr. WILSON. In other words, you get more competition out there now in this line of business than you eyer had?

Mr. KEEGAN. We have much more competition in our area, and I believe it is principally due to the mill competition.

The CHAIRMAN. There is more competition primarily because of the subsidiaries of Bethlehem and United States Steel?

Mr. KEEGAN. That is right. We have to compete with our source of supply.

The CHAIRMAN. Those are the people from whom you buy?

Mr. KEEGAN. Right.

Mr. BRYSON. Competition in every field is keener now than years ago. It is more difficult to get elected to Congress now.

Mr. WILSON. Let me ask you this question: Do you get your steel any cheaper from Kaiser, the man who is not engaged in your type of work, than you do from United States Steel or Bethlehem?