The Strike's Effects

As the U.S.'s basic industry last week shuttered up the mills that produce the bulk of its steel, the broad-based U.S. economy was so sound in its nonsteel elements that it suffered few serious effects. In Washington high Administration economists predicted that the walkout would not imperil the economic boom--unless it lasts a painfully long time. But the shutdown immediately began to produce a stock of troubles.

For Want of a Nail. Each week it lasts. the strike will siphon off from the economy 2,000,000 tons of steel worth $300 million, plus $70 million in steel wages and an estimated $21 million in industry profits. The drain is affecting satellite industries. Around the country, of the 35,000 workers laid off in industries depending on steel, 9,000 were truckers, more than 10,000 railroadmen, several thousand seamen (on the Great Lakes. 300 broad-beamed ore carriers dropped anchor). This week at least another 30,000 nonsteel workers will be idled; next week the number will grow by far more than that. If the strike lasts 30 days, Mississippi's Ingalls Shipbuilding Corp. will have to stop work on two atomic submarines.

How many men and industries will eventually be hurt depends mainly on how long stockpiles hold out. They now bulge at more than 21 million tons, a two-month supply, and the nonstruck 15% of the industry is adding to them at top-speed rate of 1,200,000 tons a month. Speaking for many an industrialist, Chairman Robert Black of White Motor Co. said: "We began preparing for this strike six or seven months ago. We've got a 60-to 90-day steel stock. But you never know--one missing item can stop your production. For want of a nail, a battle can be lost."'

The well-inventoried machine-tool manufacturers make a case in point. They require so many different specialty steels that they cannot stock all of them, will be in a bad way if warehouses run short of a few kinds. Automakers are in a similar fix. They have stored sufficient steel to run well into the 1960 model year--unless a supplier of some critical component has miscalculated and runs out of steel. Chrysler, which will start producing its 1960 models in mid-August, has a big enough stockpile to roll through mid-November. Ford (which makes 40% of its own steel) and General Motors will begin their 1960 runs about Sept. i, have enough steel to go to Nov. 1.

Worried Stocks. Complicating the situation. United Steelworkers' President David J. McDonald last week presented union demands to the aluminum industry, whose contracts lapse July 31. Dave McDonald wants the same windfall for his 32,000 aluminum members as for his 500,000 steel-industry members: a three-year contract with a 15-c- hourly wage-and-benefit boost every year, plus cost-of-living hikes. The U.S. aluminum industry is softer than steel; if management accedes to a neat compromise package--perhaps iof an hour--it might speed a settlement in steel. If not, the aluminum workers may soon join the Steelworkers on the picket line.

Watching these developments, Wall Street began to sweat. Major steel shares worried off several points, and the Dow-Jones index of industrial stocks dipped from 663.56 to 657.13--despite the fact that steelmakers are expected to report high earnings in the next fortnight. To others, the strike was a cause for joy: foreign steel producers heavily stepped up steel shipments to the U.S., hoped to make strong inroads at the idling industry's expense.

Air of Crisis. The effects of the strike landed nowhere with more personal impact than on the Steelworkers themselves, tramping the streets just as it was announced that the nation's employment had hit an alltime high. Many workers faced out-and-out hardship, but most had a nest egg and meat in the freezer. Workers got one to two weeks' pay before the mills closed (average: $125 a week before deductions ). still have another two to three weeks' vacation wages coming. Dave McDonald halted the pay of 1,000 union officers, including his own $50,000 a year, for the duration of the strike.

A prolonged strike could throw millions out of work and close down more industries. That would clearly be a national emergency, and reason for President Eisenhower to invoke the Taft-Hartley Act, seek a strike injunction that would bring the workers back to the plants for 80 days. Said Chairman Paul Carnahan of Great Lakes Steel Corp.: "I doubt that a settlement, when it comes, will originate with either management or the union. We will have to wait until an air of crisis begins to develop nationally."

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