Only the Beginning

For U.S. industry, which will spend an estimated $35 billion on expansion this year, the talk last week was that 1956 is only the beginning. Speaking to the Investment Bankers Association in Hollywood, Fla., Bethlehem Steel Corp. President Arthur Bartlett Homer gave the steel industry's forecast for tomorrow and beyond: "We will have to increase capacity by more than 50% in the next 15 years to meet the continuing longterm growth needs of the American economy." In hard figures, said Steelman Homer, that means another 70 million tons of capacity, or a total of 200 million tons of steel annually by 1971. The expansion cost in the next 15 years: as much as $21 billion.

At the Investment Bankers meeting last week, industry after industry gave similar forecasts. All added up to the greatest expansion program in history. Electric-plant investment alone will jump from less than $4 billion annually to $11 billion annually by 1970 to keep up with rapidly expanding demand. Railroads will have to spend $20 billion for new equipment and facilities over the next ten years. The soft-coal industry, which is coming out of its postwar doldrums, will plunk down $300 million annually for new mines and equipment in the years to come.

"No Leveling Off." To meet the goals, individual companies were boldly raising their already lofty sights. General Electric Chairman Philip D. Reed, whose company is committed to a $500 million expansion program in the next three years, announced last week that the figure was "very much on the conservative side." As predictions of future markets soar, General Electric may well have to boost its original estimate by a spectacular 40%. Said Reed: "There is no leveling off in the need for capital expenditures, and nothing in the picture to suggest any lessening of pressure for new equipment and facilities."

As for 1957, all predictions pointed to another record-smashing year. After a survey of 340 capital-goods producers and buyers, FORTUNE predicted that capital spending (which includes farm outlay, office building, machinery purchases, etc., in addition to industrial expansion) would hit $50 billion next year. Part of the dollar increase, said FORTUNE, will be the result of price rises, but even so, physical volume will increase greatly next year.

Oil & Steel. Scanning the statistics last week, businessmen had good reason to be optimistic. Cranking up to help supply Western Europe's oil shortage (see NATIONAL AFFAIRS); the U.S. oil industry was producing at the highest level in history, and the steel industry was straining hard to keep up with demand (see below). In Pittsburgh, U.S. Steel President Clifford F. Hood and Steelworkers Union Chief David J. McDonald formally opened a new office building at the Homestead plant, constructed out of a new kind of cost-cutting, space-saving stainless steel. Said Big Steel's President Hood: "This is the first true stainless-steel curtain-wall office building ever built. It marks the kickoff by U.S. Steel into a brand new market that has a potential demand for 500,000 tons of steel sheets yearly."

This file is automatically generated by a robot program, so reader's discretion is required.