Evening star., 1941-10-05
Larger Profits
Seen for Busy
.Shipbui|ders
Gains Likely Despite
Big Taxes; Shipping
Earnings Climb
Special Dispatch TO The Star.

are placed in operation, both deliv-
cries and gross revenues will expand
further. While taxes will be heavy,
a good gain in earnings is expected.
Shipping operators generally will
benefit from increased traffic and
good cargo rates. and this will be
reflected in improved earnings.
Those concerns which have char
tered part of their vessels at profit
able rates will make the best
showing.
Spurred by the expanding tempo
of national defense needs. naval and
merchant shipbuilding is being rap
idly accelerated. with new produc-
I ton records continually being set.
! Not only are all yards, both Gov
! eminent and private, actively en-
gagged IN work on the huge orders
for the two-ocean Navy, but the IA
cilltles OF private yards also are be-
Ing taxed to the utmost to speed
work on the large scale commercial
building program under way.
Production to Soar.
As new shipbuilding facilities be-
ing constructed are placed in opera
ton, further gains in production will
be witnessed. Under the Maritime
Commission schedule for merchant
ship construction. it is expected that
| the number of vessels completed in
the final half of 194l will be at
lease 100 per cent above the total
/ Tor the first six months of the year.
A sharp increase in naval vessel
construction also will be shown.
In all. the Maritime Commissions
/ program so far calls for the future
| construction of about 1900 vessels.
of which 730 vessels are of the
emergency cargo type known as the
! EC-2. Output is expected to expand
substantially in 1912. with deliveries
| increasing successfully in each quar-
ser OF the year. The naval construc-
/ ton program will take some wears
to complete, but it is expected that
1t will reach its peak by mid-l942.
With the huge backlog of orders
on hand, shipbuilding companies are
! assured OF an exceptionally high
rate OF operations for a long Pc
/ ROD ahead. Despite this. some un-
/ certainty regarding the outlook for
/ private operators has arisen as a
result of the government action in
taking over the Kearny yard of the
Federal Shipbuilding e. Dry Dock
/ Co, because of the dispute between
/ t1at company and the c. l. o. union
regarding the maintenance of
membership provision sought by
the latter.
! Outcome Still Uncertain.
1t il reported that the Govern
ment is currently adhering to this
membership clause in its operation
of the yard. although the final
decision as to the manner in which
the yard will be operated is still to
be determined.
If the C. l. O. wins out, it doubt
less would attempt TO obtain similar
recognition at other shipyards.
What the result would be is in
determinable at this time 1t is
significant. however, that the Ma
tional Defense Mediation Board.
which ruled in favor of the men,
] berShip maintenance clause in the
Kearny yard, subsequently refused
| to recommend this in the case of
/ another shipyard Apparently, fu-
/ ture decisions will be based on the
individual companys position. and
this represents a favorable factor
In the outlook Moreover. some
shipyards have contracts with inde-
/ pendent unions. and they may not
be affected by c. I. o. activities.
Assuming maintenance of the
present operating status. a period
of exceptionally good earnings is
! In store for the shipbuilding indus
try. Although costs have increased.
Government naval contracts allow
! for compensating adjustments. while
economies from capacity production
also are protecting profit margins.
On the merchant marine business,
profit margins will probably run
close to the 10 per cent allowed by
law. Despite the limiting effect
OF heavy taxes net earnings for
| 1e41 should show a good gain over
/ the returns for 1910.
Coastal Lines Busy.
Coastal traffic should continue at
good levels under the stimulus Of i'm
proved industrial activity. Inter
coastal traffic will also benefit from
the increased caroges necessitated
| by the transfer of materials needed
! for defense construction in off shore
! areas.
| Those concerns which have char
tered part of their feet for various
/ purposes are in the best position to
realize on the present war-stimu-
lated activity. as the income received
from chartering is greater than from
direct company operation. It is
probable that war bonuses being de-
manded by seamen, If granted. will
be compensated for by an adjust
ment in rates. thereby protecting
margins. All told. satisfactory in
crease in earnings is expected for
the better situated operators.
Overseas Traffic Increasing.
The recent Interpretation of the
Neutrality Act, under which Amer
lcan vessels can be used to carrv
cargoes to various Far East. Red
Sea and African ports, will ma
terially widen the areas served bv
shippers engaged in overseas service.
Outright repeal would further ex-
tend service areas. With the scar
city of available vessels, overseas op-
orators are assured of full cargoes
as long as present war conditions
last. At current cargo and charter
rates, high level of income will be
realized, and after all changes, final
earnings should be the best in recent
| years.
Shipments of iron ore on the