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he is given that permission, he should not be interrupted by some other member of the committee.

Senator FULBRIGHT. You then disagree with the limitation on the initial round?

Senator FREAR. No, sir; I do not. I did not mean to indicate that.

On the initial round, whatever time you specify for it, I think he should be permitted that time, and without any interrupting by someone else.

Senator FULBRIGHT. After we have completed then, we can return for further questions, if you want.

I believe that is the way it would work out satisfactorily.
Does that suit you, Senator Bricker?

Senator BRICFER. Yes, that would suit me. I do not intend to take up much time.

Senator FULBRIGHT. You may proceed either to read it all, or point out what you particularly want to emphasize, because I think most of us have read the rest of it.

Mr. MOREELL. I would choose to do the latter, Mr. Chairman, because I think the Senators have read the statement, but I want to emphasize the table on page 2202, at the bottom of page, which shows the actual earnings for our company for the first quarter of the current year and then the budgeted earnings for the second, third, and fourth quarters, and for the first quarter of next year.

You will note that I have not totaled those up there, but the total earnings estimated for 1952 is 21.3 million, and the earnings for the first quarter of 1953 is estimated at $6,097,000.

Now, if you turn the page, turn to the next page, in the table on page 2203, you will see that we have estimated the cost of the Wage Stabilization Board package. That cost in the first quarter is $2.714,000; in the second quarter, $5,681,000; in the third quarter $8,583,000; and in the fourth quarter, $10,093,000.

In the first quarter of 1953 we estimate that that Wage Stabilization Board package will cost us $12,133,000.

In the very last line, Mr. Chairman, you will see the net income account showing the cost of the Wage Stabilization Board package and you will note particularly that in the first quarter of 1953, where, before we had estimated earnings of $6,097,000, we now show estimated earnings of $384,000.

The requirements for our dividend payment, common and preferred stock, are approximately a little over $3 million per quarter so that we will not even come close to making our dividend requirements in the third and fourth quarters of the present year and in the first quarter of next year our earnings practically disappear.

Now, if you will turn to page 2203, there is a table there which indicates what the effect of price increases would be on that earnings picture. We assume that price increases might be effective as of May 1. You will see that the effect of the Wage Stabilization Board package there, in the third line, is repeated. Then we assume, resulting from price increases per ton of shipments of $1, $3, $6, $9, and $12 we calculate the effect on our earnings picture.

In the second quarter of 1952 it would require $6 of price increase to almost offset the effect of the Wage Stabilization Board package in that quarter.

In the third quarter of 1952, it would be somewhere between $6 and $9, probably about $7. In the fourth quarter of 1952, it would be between $6 and $9, probably about $7.50, and in the first quarter of 1953 it would require about $11 to offset the cost of the Wage Stabilization Board package in order to stay within our budgeted receipts at the present time.

Now, I call attention to the fact that the net earnings of our company in 1951 were approximately $31 million and our budgeted net earnings for this year are approximately $21 million, a decrease of approximately 33 percent.

That leads me up, Mr. Chairman, to the concluding statement which I made in my prepared statement, which I would like to read because I would like to emphasize it.

If I were called upon to summarize the foregoing, I would say that the steel industry, as exemplified by Jones & Laughlin, faces a very serious problem. It must work out its destiny in the light of extremely heavy financial burdens which it has assumed at the request of the United States Government.

In order to do this, it is essential that it have freedom of action. If its wages, prices, and the distribution of its products are controlled by Federal agencies, there will result at best a very difficult period and, at worst, a serious threat to the survival of the industry under private enterprise.

I believe that with all the force of my being there is a serious threat to the survival of the steel industry under private enterprise unless it has freedom of action to adjust its costs and its selling prices as it sees fit.

Senator FULBRIGHT. Admiral, to initiate our system I will start with 5 minutes.

Admiral, did you participate in the collective-bargaining procedures with the unions?

Mr. MOREELL. Mr. Elliott, our vice president in charge of personnel relations, who is sitting here on my right, did participate, Senator.

Senator FULBRIGHT. I would like to direct à few questions then to him, if that is proper.

You are familiar with the offers and counteroffers that were made, Mr. Elliott ?

Mr. ELLIOTT. Yes.

Senator FULBRIGHT. What did the union originally demand of you in November, or at the start?

Mr. ELLIOTT. In the early meeting on November 29, the union presented 22 demands couched in very, very general language. They took several succeeding meetings to explain what that language meant. Along about the 10th or 12th of December they brought in, in writing, contract language which had been prepared in connection with the United States Steel Co.'s contract, and which in all instances did not fit the Jones & Laughlin situation. Sometime between the 16th and 18th of December our company was officially notified for the first time what was the amount of the general wage increase demanded and what was the amount of the shift differential demanded.

By the 20th of December we were called to Washington before the Federal Mediation and Conciliation Service and by the 22d of December we were certified to the Wage Stabilization Board.

Senator FULBRIGHT. Would you tell us what was the amount of the request or demand that they made upon you? Could you reduce it to cents per hour?

Mr. ELLIOTT. The total package we estimated would cost us in direct employment costs 54 cents an hour. For all employees. For the steelworkers it was higher.

Senator FULBRIGHT. Could you reduce that to a table for the information of the committee, showing just what that demand was?

Mr. ELLIOTT. As to what the individual demands were?

Senator FULBRIGHT. How you arrived at the 54 cents. Do you have that in the way of a table?

Mr. ELLIOTT. I can get that provided to you.

Senator FULBRIGHT. I think the committee would like that in here. I would like it, at least, in the record, for this reason: There has been a great difference of opinion as to what was asked and what went on in these negotiations, what they demanded and what you offered.

If you have that calculated I would like to see that put in the record.

Mr. ELLIOTT. We have here a table of the demands in the cost per hour worked. The general wage increase request was 15 cents which is an employment cost of 1634, and an increase of a half cent in the jobclass increment which is an employment cost of 3.83. The elimination of any geographical wage-rate differentials we did not estimate because its impact on us is very slight.

In shift differentials they requested 10 cents for the second shift and 15 cents for the third shift. That was a cost to us of 4.23 cents per hour. Premium pay for work on Saturday and Sunday as such, time and a half on Saturday, and double time on Sunday would have cost us 27.85 cents per hour.

Senator FULBRIGHT. Do you have the data to support that cost that you arrived at that you could put in the record?

Mr. ELLIOTT. Yes; we have supporting data we can file.

Senator FULBRIGHT. There has been a great difference of opinion on these very facts. The union representatives requested the records of your estimates of what it would cost you. Therefore, I think it would be very helpful if you could put that in the record, if you have it.

Mr. ELLIOTT. We can file a complete statement on the method of computation.

Senator FULBRIGHT. Will you do that, then?
Mr. ELLIOTT. Yes, sir.

Senator FULBRIGHT. It is a little involved to go into that at the moment but I want it for the record so the staff and committee.can study it, if you will do that. Mr. ELLIOTT. We will. (The information requested follows:)

In answer to this question we are submitting three exhibits, with explanatory notes: (1) Basic data, (2) cost per hour of original union demands, and (3) cost per hour of Wage Stabilization Board wage package.

EXHIBIT 1

Jones & Laughlin Steel Corp.-Basic data used to determine hourly cost of USA

CIO demands and W. S. B. package shown on exhibits 2 and 3

(Data based on 12 months ending September 30, 1951) 1. Number of wage earners in steel plants.

25, 550 2. Average number of wage earners in steel plants who worked on the 6 holidays now provided in a year.-

14, 534 3. Total hours worked by wage earners in steel plants-

52, 148, 445 Used.--

52, 100, 000 4. Hours worked by wage earners in steel plants on all Saturdays in the year--

6, 623, 652 5. Hours worked by wage earners in steel plants on all Sundays in the year-

4, 725, 621 6. Straight time average hourly earnings (includes incentive earnings and shift differential)---

$1. 765 7. Average straight-time pay for a day (8 hours by $1.765)

$14. 12 8. Average time and one-half pay for a day (12 hours by $1.765)

$21. 18

EXHIBIT 2

Jones & Laughlin Steel Corp.-Original economic demands and average cost per

hour worked

(The cost of union demands Nos. 2, 3, 5, 8, 10, and 11 was not estimated]

[graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed]

4.5

The cost per hour worked for the proposed increase in vacations is...

3. 8

Total cost of those demands on which cost has been estimated

65.0

54.1

* Including additional cost of existing overtime premiums, pensions, social security, and vacation provisions.

96315—52—pt. 4-17

NOTES TO EXHIBIT 2

NOTE A-Cost of PREMIUM PAY FOR SATURDAY AND SUNDAY Work The 27.9 cents for employees represented by USA-CIO was determined by increasing the existing payroll for Saturday and Sunday work as follows:

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(1) Dividing $12,010,000 by 52.1 million hours per year gives 23.05 cents rer hour. (2) Increasing 23.05 cents by 12.6 percent for the effect of increased wage rates by demads 1 and 4 gives

25.95 cents. (3) The incidental cost effect of social security, pensions, and vacations increases the 25.95 cents by 7,33 percent giving 27.85 cents: Call 27.9 cents.

NOTE B-Cost or Paid HOLIDAYS
Total Cost of 8 paid holidays per year:
Not worked, 25,550 employees by 8 days by $14.12

$2. Mi, 128 Add for those who work holidays, 14,534 employees by 8 days by $21.18.

2. 162, 611 Total annual cost

5, 348 769 Present cost of 6 holidays per year: 14,534 employees by 6 days by $21.18.

1,816, N1 Additional cost per year (or the difference).

3, 501,718 (1) Dividing $3,501,788 by 52.1 million hours per year gives 6.72 cents per hour. (2) Increasing 6.72 cents by 12.6 percent for the effect of increased wages by demands 1 and 4 gives 7.57 cents. (3) The incidential cost of social security and pensions increases the 7.57 cents by 3.5 percent, giving 7.83

cents: Call 7.8 cents.

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