Evening star., 1941-08-24
Drive TO Spread
Defense Work
Intensified
Outcome to Determine
Business Trends in
Next Few Months
BY FRANK MACMILLEN,
Associated Press Business Writer.

NEW 1OfLh, Aug. Zo.-1ne lTenQ
of business for the next several
months, a number of industrial an
alysts agree, will depend in con-
siderable measure upon the success
obtained in spreading defense work.
With enormous sectors of heavy
industry, such as steel, already
working at capacity, and other large
sectors, such as automobiles and
consumers durable goods. generally
threatened with shortages of ma
terials, further gains in aggregate
production and employment, these
experts say. require a wider distri-
button of defense contracts.
1t appears, therefore, that the
work of o. P. MS defense con-
tract service, fortified with new pro-
cedure recently worked out with the
Army and Navy, will be vitally i'm
portant in successfully keeping the
wheels of industry whirling.
Plans Close Cooperation.
AS this procedure is expected to
develop, the contract service will
work closely with the Army and
Navy and will know of all important
contracts in the negotiation stage,
instead of after they have been
awarded. Also, the service will be
empowered to recommend a whole
series of steps designed to facili-
tate spreading the work, such as
elimination of clauses from con-
tracts which would be onerous TO
small manufacturers and reimburse
ment of big contractors for higher
costs incurred in ub-contracting.
In the early phases of the defense
effort, with concentration on quick
results and known performance, the
Army and the Navy supply work
went primarily to big concerns that
had facilities and experience. A
survey of all defense supply con-
tracts let up to May 81 showed.
three-quarters had gone TO only Sc
concerns. Now not only are big con-
Germs swamped with more business
than they can handle but many
areas are threatened with shutdowns
and layoffs because materials will
not be available for production of
usual peacetime goods.
Earlier in the defense effort it was
expected that subcontracting would
take place more or less automatical-
ly, perhaps with a little prodding
here and there, once the big con-
Germs became completely showed
under with business. But it did not
happen as anticipated for variety
of reasons.
Strong Pressure to Be Used.
The very pressure for speed mill
tated against it. The big concerns
were evidently reluctant to sub-con-
tract business with small concerns
of whose performance they we're un-
certain. At the same time, the
small concerns were reluctant to
take sub-contract jobs and incur
the expense of adapting their plants
to them without assurance that
there would be substantial repeat
orders.
Under the new procedure Of the
defense contract service, it may
actually bring sharp pressure upon
big concerns henceforth to bring
about ub-contracting. 1t may
recommend withholding of priority
orders permitting the big concerns
to get machinery and equipment
unless these concerns can establish
the fact they cannot get along by
dividing up their work with other
plants not too far distant.
Spreading the work seems likely,
of course, to increase the cost to the
Government and the taxpayer but
it also should, from now on, speed
up the defense effort and avoid a
big intangible social cost to the
country by preventing unemploy-
ment in areas where normal activity
will be curtailed
1t appears now, say number of
business men. that in the beginning
few of the country's l85,000 manu-
facturerS had any idea of how to
get defense contracts and Washing
ton did not have much idea of how
to get the business to them. Little
dtAOIl was SlNcll W 1dCJ
that many of these concerns might
be closed down if they did not get
defense business and much work
went into getting big. well-known
concerns to build new plants, to
build and tool up a brand-new de-
fense industry.
Defense Clinics Tried.
You can get a host of stories
among small business men of their
unsatisfactory experiences .in trying
to get defense business. Some say
they travelled thousands of miles
and got ''run-around." Others
employed agents and go-betweens
who either produced nothing or
demanded large commissions.
Now things are really moving in
bringing big and little manufac-
turers together. Defense clinics
have been tried in some cities. The
recent one in New York brought to-
gether SIS prime contractors and
more than 1000 Representatives of
concerns seeking contracts.
These efforts, together with the
hand which the defense contract
service now will take in sitting In
with the Army and Navy, may
change the picture in coming
months.
Meanwhile, the trend of industrial
production, as measured by most
statistical indicators, has leveled
of, with steel. copper, silk, aluminium
and other vital materials being re-
stricted for non-defense use At the
same time consumer goods lines
which have not been curtailed by
defense continue to squirt.