Strike Earnings

To 360,000 General Motors stockholders last week went the corporation's report for the first six months of 1937. It covered the most exciting six months in GM history. During the March quarter the No. U. S. motormaker was tied up in knots by the youthful United Automobile Workers of America. During the June quarter GM was harassed by almost daily wildcat strikes unauthorized by the union. Both GM and the union are freshmen in the art of collective bargaining, and for both the second quarter proved an expensive education--for GM in profits, for the union in prestige.

In the three months through June GM's sales were $500,000,000, some $34,000,000 more than in the same period last year. Yet earnings were down from $88.000.000 to $65,000,000. For the six months GM sales were also up but profits again were down, from $140,000,000 in the first half of 1936 to $110,000.000 in the first half of 1937. Higher material costs accounted for part of GM's unfavorable showing but Labor was blamed for the rest. The GM report, in the words of Financial Editor Carlton A. Shively of the New York Sun, was "an appeal to the public on labor problems."

Scrupulous was Chairman Sloan to confine his soundoff on Labor's '"irrespons-bility" to the United Automobile Workers, not ringing in John L. Lewis, who has as little control over the U. A. W. as the U. A. W. has over its enthusiastic members. Careful was Mr. Sloan to qualify discussion of the Right to Work with a pertinent phrase about when "work is available." But in the thunderous vein he likes so well to employ, Chairman Sloan warned:

"It is perfectly evident that what has happened was occasioned through inability on the part of the union leadership involved to control their own followers.

Whatever the cause may be, the facts demonstrate beyond any reasonable doubt the worthlessness of an agreement if the procedure created to stop strikes is ignored and wildcat or unauthorized strikes result. It cannot be said that so far the United Automobile Workers of America have proven themselves to be a responsible body, with ability to live up to their contractual obligations. Manifestly, neither industry in general, nor General Motors in particular, can be expected to long tolerate such a complete disregard of its own rights."

Mr. Sloan went on to say that higher automobile prices seemed inevitable, though GM's profit margin is not yet distressingly slim (13% for the June quarter).* Gloomed Mr. Sloan: "Much might be said as to the effect of increased selling prices on the course of the recovery movement........ . The hope might be expressed, however, that sooner or later the fact will be recognized that sound and desirable progress, reflecting a higher standard of living, never can be made possible by the policy of arbitrarily increasing wages, shortening hours and reducing efficiency, without regard to the effect on real prices. Higher real wages and shorter hours--highly desirable objectives--are a by-product of technological advance. It is an evolutionary and cannot be a revolutionary process."

Day before Mr. Sloan released his tract, another report from another freshman in modern labor relations--U. S. Steel Corp. --published June quarter earnings. Without strife or struggle Big Steel came to terms with John L. Lewis late last winter, and if it had any complaints on the subsequent behavior of the steel union, it kept them strictly to itself. While "Little Steel" was fighting Labor on a dozen bloody fronts, Big Steel piled up the biggest first-half profit in seven years--$64,000,000, quadruple the figure for the same period of 1936. With part of these profits the U. S. Steel directors paid up the last arrears on their 7% preferred stock, making dividends on the common a possibility for the first time in five years.

Pittsburgh's Jones & Laughlin Steel Corp., which not only recognized the Steel Workers Organizing Committee but signed an exclusive bargaining contract, apparently had as little trouble with the union as U. S. Steel. First-half profits were up from a measly $182,000 in 1936 to a fat $4,400,000 in 1937. For American Rolling Mill, whose name is not among the 260 steel companies in the C. I. O. fold, the six-month period was the best in its history--$6,600,000, more than the figure for the entire year 1929. Ernest Tener Weir's National Steel made $11,700,000 in the first half, double its earnings for the same six months of 1936. And Steelman Weir is so thoroughly anti-union that S. W. O. C. not only has left him for the last but plans no move against him until the National Labor Relations Board and, perhaps, the La Follette Civil Liberties Committee, has put him in the headlines.

As was expected, Tom Girdler's Republic Steel made the worst showing in "Little Steel.* The strike centred on Republic, as the official release from the Girdler office understated it, "because of its determined efforts to carry on operations." Earnings in the June quarter were only $487,000, as against $5,500,000 in the preceding quarter and $2,600,000 in the June quarter, 1936. Embattled Youngstown Sheet & Tube managed to clear $2,000,000, off 20% from the June quarter the year before and considerably less than half what it made in the March quarter this year. Bethlehem Steel, with only one plant affected, the Cambria works in Johnstown, Pa., made a relatively good showing-- $10,000,000 for the quarter, $18,000,000 for the half. Last year the company earned $3,400,000 in the June quarter, $4,000,000 in the six months. Chicago's Inland Steel, the sixth and least enthusiastic member of "Little Steel," reported a good gain for the half ($8,187,000 as against $5,232,000) but its June quarter showing was nearly $2,000,000 below the $5,000,000 earned in the previous quarter.

*Relieved was the rest of the industry last week when Henry Ford took the initiative, boosting prices on certain models $15 to $35. *Republic strike losses may not be over. Suits for $220,000 damages were filed last week against the company and three of its employes by two men wounded and the estate of one man killed in the Massillon massacre and by the estate of another killed in Youngstown.

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