THE MANUFACTURERS' REPLY

AFTER the preliminary report of the Research and Planning Division was released, the Automobile Manufacturers Association addressed a letter to S. Clay Williams, then chairman of NIRB, protesting "the making and dissemination of a document of this character by a government board." This open-shop association holds that "the bulk of the testimony on which the report relies for criticizing the industry is testimony of organizers of the American Federation of Labor and of witnesses marshalled by the AF of L who "sought to make the investigation a means of promoting their organization campaign." The manufacturers specifically challenge four of the report's conclusions:

1. No more serious indictment could be brought against an industry, particularly in times of general unemployment, than that the managers of the industry have adopted the deliberate policy of discarding, because of age, employes who have worked for them for a long time. In many places in the report references are made to this policy as if there were evidence that the policy was in force in the industry. In one place, for instance, they state that the "automobile industry has set a new 'low' age for displacement of workers. Men near 40 find great difficulty in securing jobs with the industry, or being rehired after lay-offs".... The data employed to support this point are open to such serious criticism and modification that one wonders how men of professional standing and competency could have used them in the loose way in which they were used.

The report, for instance, states with reference to a table included in it, that a much higher percentage of persons in receipt of relief in Detroit are in higher age groups than is true in New York, Chicago and Los Angeles.... In the report's own table, however, the percentage of those in receipt of relief who are over 44 years of age is 48 percent in Detroit and 46 percent in Chicago. Furthermore, in the age group of 55 years and over, the Detroit percentage is lower than in any of the other cities, being 15 percent, whereas it is 17 percent in New York, 21 percent in Chicago and 19 percent in Los Angeles.

. . . There is certainly nothing in the available data which would support the contention of the report that workers are discarded in the automobile industry 10 to 20 years before they are discarded in other industries. The records of one of the three largest automobile companies show that in the year ending September 1, 1934, it had 129,564 factory hourly rated employes on its payroll, of whom 31,093, or 24 percent, were over 40 years of age.

2. The whole question of the age distribution of automobile workers is closely connected with the application of seniority rules in the hiring and laying off of employes in this industry. Whatever may have been the state of affairs in the industry prior to the spring of 1934, since that time automobile workers have been hired and laid off in accordance with their seniority standing. We submit that this is true of few industries in this country.

In its discussion of the seniority rules which prevail in the industry, the report states that "under the present seniority rules, a worker's seniority status applies only at the company which employed him last." This statement is not in accordance with the facts and any slight investigation of the rules and of their application would have revealed the true facts. Following this inaccurate statement the report goes on to say that "if a worker, with seniority, loses his job for any reason, his possibilities at present for employment with other companies are limited to peak periods when all workers with seniority status have been rehired."

The conclusion which the report evidently desires to be drawn from this statement, but which it does not undertake itself to draw, is that the seniority rules in the industry should apply to industry service and not plant service as at present. Anyone familiar with conditions prevailing in the industry would well know that industry service seniority rules would wholly destroy seniority, and it is a fact of common observation to those who have been close to the automobile labor situation, that industry service seniority rules would be summarily rejected by the overwhelming majority of automobile workers.

3. The report attempts to convey the impression that a substantial proportion of workers in the automobile industry are currently being displaced by changes in the methods of manufacture, by speed-up and by the introduction of machinery. In one of its striking illustrations of the assumed reduction in labor cost, the report states that "the estimated labor saving is 50 hours for the manufacturing and assembling of certain parts which are entirely eliminated by the one-piece stamping of the underbody," when the fact is that the total man-hours per car produced by the members of the Automobile Manufacturers Association in 1934 were greater than the total man-hours per car produced in 1929, in spite of the fact that the trend of the industry since 1929 has been towards the low-price car.

Technological improvements of course have been great in the automobile industry, but they have not reduced employment. Such improvements are absolutely essential for the maintenance of employment and wages in this industry. Without such improvements the industry could not have sold so many cars and therefore would have provided less employment....

4. The whole question of the relation between wages and annual earnings is one of the most complicated in the whole American business situation. In order to observe the letter and the spirit of the policy of the National Recovery Administration, the automobile industry throughout 1934, spread the available volume of work among as large a number of employes as possible. The fact that it did so is proved by comparing the total volume of output of this industry with the number of persons employed in producing that output in 1929 and in 1934....

It is clear, from the experience of this industry, as well as from others, that reduction in the length of the maximum work-week cannot have the effect of increasing the earnings of labor but must necessarily result in their reduction, first, because a larger number of persons will be employed than are required, and, second, because the reduction of the length of the work-week is bound to reflect itself in a rise in costs and selling prices and, therefore, finally in a reduction in the total volume of business done by automobile companies. The report disregards this fact in recommending a shorter work-week, which clearly would prevent higher annual earnings and thus would defeat the purpose of regularization.

For the benefit of the many people who, by this time, will have read the report . . . it should be worth pointing out that the figures regularly compiled by the National Industrial Conference Board show that the average hourly earnings in the automobile industry at the close of 1934 were 76 cents whereas for all manufacturing industries they were 59 cents.