Evening star., 1920-10-18
POLITICS SET BACK
AS DETROIT STUDIES
FUTURE OF MOTORS
Harding Victory Universally
Expected, But Auto Is
Vital Issue.
BY DAVID LAWRENCE.

DETROIT, Mich, October 1s.-Poli-
tlcs takes a back seat hereabouts for
economies. There is far more interest
in the way the automobile industry is
cutting down the price of labor and
wedding out inefficient workers than
IN the presidential election. Perhaps
IT'S because Michigan is republican
and a victory for Harding is univer-
sally expected. but the readjustment
IN business is the most vital thing in
Detroit today.
Naturally in an industry like auto
mobile making which has always ex-
uded full share of optimism, the
feeling is that the presidential cleo
tion Will be turning point for the
petters The manufacturers are gong
ahead on the theory that 1921 viii be
a better year than 1920 for them. But
1T all depends upon finance and credit
Makers of automobiles do not 90
around shouting it from the house
tops, but they are passing thr1agh the
Severest test the industry mas ever
had.
Trouble In Traced.
The whole trouble may be traced to
the action of the Federal Reserve
Board in restricting credit on mon
essential products and leaving it to
the bankers everywhere to determine
what were "non-eSsentials" or 'luxu-
ries.' The manufacturers and dealers
have contended that an automobile is
no longer luxury, but a necessity.
but when the federal reserve districts
OF Kansas City and Dallas refused to
handle commercial paper based on au-
tomobile transactions. the business
began to suffer in those sections and
elsewhere, and the restriction was
even practiced by banks in this vi
n io1
most liberal in their loans.
Credit Restriction Hurts.
AS a matter of fact, the restriction
mobile business more than most other
lines. because of the peculiar way in
which it is financed. The dealer must
pay deposit when he orders his cars
and must pay the rest of the bill when
he takes each machine from the
freight cars. Yet he has not always
sold the machines for cash. and must
take his payment in installments from
the purchaser. When he went to the
bank, therefore, and said the pur-
chaSers were sound financially, and
that it was sure payment. the bankers
on the other hand. agreed with him as
to the soundness of the transaction
but pointed out that the purchaser of
the car would soon come along to bor-
row the money Wherewith to pav the
dealer. So borrowing money for auto
mobiles was reduced to a minimum.
and as a consequence the manufac-
tureIs found the dealers reluctant to
buy. Similarly. used cars have been
some cases have been better bar
gain than new cars, which also has
retarded purchases of new machines.
Reduce Labor "Overhead."
Meanwhile. the automobile con-
Germs have taken advantage of their
situations to reduce their labor over
head. They have laid off thousands
of men. The figures are not avail
able. But often men are gievn two
back are told they cannot have the
same jobs, but others that pay less.
One concern had been EMPLOYING
twenty-one men to perform a certain
operation that was finished daily at
pm. 1t reduced the number of men
to sixteen, and is getting the work
done by 1:30 pm. Economics of this
sort are being practiced both in the
factories and on the clerical side. The
automobile companies have been in
the habit of hiring practically any-
body they could get. AS result they
have acquired inefficient or unskilled
help. One conspicuous factory cut
down the number of it's workers by
10 per cent, and the Production
promptly jumped from 80 to 120
cars per day.
Not Much Pessimism.
1t isn't being generally admitted.
but the manufacturers of automobiles
are actually reducing their labor cost
either by eliminating inefficiency or
hiring a smaller number of men. Not
much pessimism is heard. The manu-
facturers say they are assured of the
money to finance their winters MANN
featuring program
In only one case is there any rumor
of a receivership. and the banks are
said to be ready to prevent that com
pany from going under. The solution
seems to be found in reducing the
cost of labor or getting more pro
duction out of the same number of
workers. One concern found that
$4,000 men were not turning out as
many cars as 10000 men did before
the war. 1t wasn't entirely due to
laxity or idleness, but to the creeping
in of unskilled workers who retard
the car making process. One man can
slow up fifty.
Copyright. 1921