New-York tribune., 1922-08-26
Coal Situation Is
Still Dominating
Autormotive Trade
Some Companies Success
fully Using Oil and Tar
as Fuel; Demand for
Cars Continues Unabated
Spoeia, Dispatch to The Tr4bun,


DETROIT, Aug. 26.-Coal continues
to be the dominating feature in the
activity Of the automotivc industry
There is every indication that If the
industry must depend upon coal as the
source Of its power, operations will be
greatly diminished at point not very
far in the future. Detroit Edison con-
tinues to furnish full quota of power
to all consumers, but lie able to do this
only as long as it can maintain inde-
pendent sources of coal supply. The
miute the priority regulations of the
Interstate Commerce Commission apply
to coal received by this company, the
industry will be cut off from this
power source.
In the situation now confronting the
automobile makers the use of oil for
fuel furnishes the one distinct ray Of
hope. One company now is successful
ly using oil and tar as fuel, and expects
to bring in sufficient supply Of this
fuel to tide over as long as the coal
situation makes it necessary. Expert
ments with oil and tar by other COM
panies have, also proven successful,
and 1t only remains for the wiping out
of their coal reserves to start them
on an oil fuel basis.
Depend On Outside Power
Operating their own power plants on
coal or oil or any fuel available, how
ever, will not enable the industry to
work on anything near capacity basis.
Unless the Detroit Edison Company is
the companies they will be able to
q rs on tyia opl,
rs to so per cent of normal, or the
capacity of their own power plants.
The most modern of the individual
power plants in the city is not capable
of furnishing more than so per cent
of the required power lead.
In the face of all this threatening
disaster the demand for cars continues
undated. Factories have been on n
capacity basis since early in the spring
and throughout the summer months.
Instead of a slackening in the fall most
factories are preparing to step up their
productions, in some cases ranging as
high as SO per cent. There is not a
factory in the district that has not a
liberal share of orders and in a mum
Der of cases they are from four to six
weeks behind on deliveries now.
Aside from delaying deliveries of
materials somewhat and making it
necessary to deliver more cars by the
drive away route. the railroad strike
has had no noteworthy effect upon the
industry and there is slight possibility
that it will have. Every effort is being
made by the railroads to serve ths
industry fully because Of the potential
business at stake, and the industry as
whole is content to cooperate with
the roads in working out the problems
now confronting them.
Reports of new reductions in prices
by leading companies persist and there
is some basis for them, in that it is
only by the price route that companies
with greater production capacity than
now in use can hope to get the busi-
ness that will give them production to
the full capacity of their plants If
these companies make the reductions
that it is reported they will make it
is certainty that the other leading
companies in this price class will fol,
how their example and bringethe price
basis as whole down to another low
level.
Will Affect Small Concerns
The only result that can be looked
for in the event of still lower prices
is that some of the smaller companies
"iit pe 1ildD1e To meet Cne feQuctl0nS
and will be compelled to sit by and
have some of their business drawn
from them by the bigger fellows. 1t is
questionable whether further reduc-
tions even by the largest, with their
accompanying increases in business,
will have a favorable bearing upon
the financial condition of the COM
panies. 1t is quite evident that more
reductions will cut into the earning
capacity severely and may put an end
to the payment of dividends for some
time to come.
The. situation as whole is not
favorable to price cuts as a good busi-
ness proposition at this time. Costs
OF coal and steel are mounting, and
if it is necessary to use oil as a fuel
the cost of power production will be
considerably higher. The cost of
making cars is bound to rise in a situa-
tion of this kind and the margin of
profit for the factory would be greatly
reduced without the added difficulty
of lowered prices.
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