The Key West citizen., 1952-10-30
Toduy's
Business
Mirror
BY SAM DAWSON

NEW YORK B-Pressure fol
higher prices is building up il
| some important sectorS-in spite
| of year-long price weakening fol
many commodities in world mar,
kets.
| Steel makers, for instance, say
their costs continue tc rise and
that the price of steel isn't as
high as it should be.
Several oil producers have com.
planned that production costs have
been rising while the price of
crude oil has been held down.
Many other industries have the
same complaint. But no matter
how much they'd like to hike pric.
eS now, they have the consumer
to reckon with. And waning con-
Sumer demand is a much more
effective brake on prices than any
government control.
In the earlier postwar years, a
general round of wage boosts was
accompanied by general rise in
prices. This year, however, wages
have gone up for many workers,
but many companies haven't been
able to boost prices-because they
have had plenty of trouble finding
customers at the old price level.
In some industries prices have
come down even though wages
went up. And the earnings state
mentS this year have reflected
that. The margin of profit in many
industries has been squeezed thin
ner.
What can happen when prices
drop because. consumers are Of
fered more of a commodity than
they want is shown in recent days
in the mining industry Zinc and
lead prices have dropped sharply.
For some mines with high operat-
ing costs the price of zinc and
lead fell below their, break-even
point. And some of these high-cost
mines have closed.
Steel is not in the same boat
yet. Demand for steel products is
still high and the pressure in that
industry is all toward higher pric-
eS.
The steel wage hike last sum-
mer was accompanied by price
boost. And customers accepted it.
Now the coal wage boost offers
steel companies another problem.
Benjamin F. .Fairless. chairman
of United States Steel, estimates
that the $1.90 a day wage boost
the, coal miners won from the OPP
erators-if the government finally
allows all Of it to be paid-will
add 81 a ton to the cost of pro-
ducing steel. That viii boost Big
Steels cost of doing business by
Is million dollars a year. he says.
At the same time Fairless re-
ports that earnings in the first
nine months of this year represent
return of as per cent on sales.
A year ago Big SteeI's margin was
So per cent. The higher cost Of
mining the coal that steel mills
must have presumably could tight
en- the margin stilh further.
Heads of other steel companies
have been complaining too about
mounting costs. They contend that
the price boost they were allowed
last summer didn't fully make up
for the higher costs growing out
Of the steel wage boost. And they
say that their costs are still rising
with the coal boost but the latest
in a long series.
One Of their complaints is that
earnings are falling al = time when
they are building expensive new
plants and otherwise expanding
capacity at a high cost.
The fast pace at which they have
been operating for many months
is also speeding the day when pres
ent facilities win be worn out and
win have to be replaced at great
expense.
They cite all Of these things as
reasons the price Of steel should
rise.
But waiting around some cor
ner, they know. is the day when
steel supplies win overtake steel
demand-and buyers Of such high
! er-priced steel might be hard to
find.