Deep Bite

Despite settlements by Kaiser Steel Corp. and two other small steelmakers, the steel strike is biting deep into the U.S. economy. Steelworkers have lost $1.1 billion in wages; steel companies, $3.3 billion in sales; the Government, $710 million in taxes; the nation, 30.9 million tons of steel production. The Commerce Department estimated that the rate of the gross national product dropped $3.5 billion in the third quarter. An index of the eight key economic barometers fell farther in the first three months of the strike than during the first three months of the 1957 recession. The U.S. faced widespread shutdowns in industries that depend on the basic metal.

Stoppage for G.M. By the end of last week, General Motors had laid off 185,000 production workers across the U.S. Following nine Chevrolet assembly plants previously shut down, G.M. halted all production of Pontiacs, Oldsmobiles and Cadillacs, closed down all but one Buick plant. By the end of this week, General Motors production, now at a mere trickle, will be stopped completely. Chrysler has already laid off 5,000 workers in ten plants, by week's end will be forced to lay off many more. Ford cut back to three-and four-day weeks to conserve its dwindling steel supply into December. Suppliers suffered with the auto companies; Chevrolet has canceled orders affecting most of its 26,000 suppliers.

In October, as a result of the steel shortage, the auto industry operated at only 77.8% of its planned 646,200-unit level; in November it is planning only 290,000 units, the lowest schedule for the month since 1946. Even an early resumption of steelmaking would not help the industry in November, because of the time needed to fabricate the steel into auto parts and fill supplier pipelines. Faced with an auto shortage, buyers rushed to the showrooms. Dealers sold almost as many new cars in the first 20 days of October (338,465) as they sold in all of September, and sales for the last ten-day period were running 20% over the previous ten days. Some dealers took advantage of the scramble to hike prices, and even unsold 1959 models, in some areas, were commanding full list prices.

Icy Trouble. Layoffs were spreading in other industries. At General Electric's appliance park in Louisville, 28% of the 11,000 employees have been furloughed. Caterpillar Tractor has laid off 12,000.

Even after the steel strike ends, industry will face a host of other problems. Companies that have exhausted their inventories will have to wait for new stock before they can resume production, even then will need several days to get their plants humming again. Moving ore to steel plants is almost certain to be a problem. The Great Lakes ore fleet, most of which is idled by the strike, has little more than a month left before the lakes freeze over, may not be able to supply enough iron ore to keep the mills operating until spring. Even if the steel firms decide to use more-costly rail transportation, not enough cars are available to move all the ore they need--and cold weather freezes ore in the cars, makes it more difficult to load and unload.

The steel strike has done so much damage that the effects will be felt long after the strike itself is just an unpleasant memory.

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