Break 'Em Up

Eager as a beaver, American Motors President George Romney appeared last week before the Senate Antitrust and Monopoly Subcommittee investigating auto prices. The committee, which is concentrating on the Big Three, had not originally invited Romney; he himself had asked to appear. But the committee was soon delighted that he had.

The trouble with the auto industry, said Romney, is too much concentration of power by Big Business and Big Labor, too little competition. To increase competition, said Romney, both General Motors and Ford should be forced to split up into smaller companies. Going beyond the auto industry, Romney said that any company should be forced to split up if it has more than 35% of its industry's sales or only 25% if engaged in more than one industry. Since both Ford and G.M. are in several industries, they would each be eligible for only 25% of the auto industry. To nip what he called "union monopolies," Romney would split up big unions such as the U.A.W. In any basic industry, said he, the bargaining power should be lodged with unions "exclusively representing the employees of a single employer."

"A big company," said Romney, "becomes muscle-bound and resistant to change." As it stands, the big carmakers are so laden with heavy fixed investment, Romney said, that they cannot afford to change from big cars to small even though the public may want them. As expected, he feels it does. American's January production of its small Ramblers was up 163% over the same 1957 period, and Romney expects "a substantial profit in 1958." Every other automaker had a January production slump. Chrysler slashed output 54% below the same period last year, Studebaker-Packard was down 59%, Ford 34%, General Motors 15%.

Are higher 1958 prices the trouble? The Senators heard Chrysler's President Lester Lum Colbert implicitly deny it. "Tex" Colbert insisted that automakers can still have a good year "as soon as we get over this psychological thing" of recession-minded customers. "Prices are only a part of competition," he said. "You just can't go along with supply and demand. You price over a long-range program." Chrysler tried smaller cars in 1953-54. They were shunned in favor of larger (and cheaper) models made by G.M. and Ford. Chrysler tried cutting prices up to $274 a car. "What did that do for our volume?" asked Colbert. "Absolutely nothing." Profits skidded from $74.8 million in 1953 to $18.5 million in 1954. "It was obvious the public wanted bigger automobiles. We learned quite a lesson."

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