Turn-Around to Efficiency

Burdened with the world's highest labor costs, the 15 U.S. shipping lines are kept afloat financially only by the Federal Government, which pays the difference between U.S. and foreign operating costs. Since wages are un likely ever to be rolled back, the ship ping industry's sole chance of getting off the federal dole ($245 million in 1963) is to replace men with machines. Steaming ahead of all the others in that direction, Lykes Bros. Steamship Co. last week asked the Government for an unusual subsidy: to put up, in the interest of efficiency, half of the $6,000,000 required to modernize and automate 21 Lykes freighters that are already sailing the seas.

Daring & Saving. Lykes wants to install an electronic central control system that would enable one officer on the bridge to control the entire engine room, thus cutting each ship's crew from 46 to 35. Multiplied over the 25-year life of the ships, the crew reductions would save the Government $37 million in subsidy payments. The Government can hardly afford to pass up such an opportunity, and the unions cannot complain too loudly. Reason: they have already consented to similar crew cuts on twelve new automated freighters now being built for Lykes.

Such deft maneuvers are the work of Lykes Chairman Solon B. Turman, 64, the son of Tillie Lykes, who joined her seven brothers in founding the line. A tough-minded patriarch, Turman started out as a young man shoveling manure on Lykes's boats when the line was still ferrying cattle between Cuba and Florida. Now, with 52 ships regularly calling at 156 ports in 68 nations, Lykes is the largest U.S. dry-cargo shipping line. Turman runs the company so well that it earned $8,400,000 last year on revenues of $65.9 million.

Despite Lykes's present prosperity, there was considerable doubt only a few years ago about whether the line would keep on sailing. To qualify for continued Government subsidies, Lykes was faced with the necessity of raising $250 million to modernize its fleet, or the alternative: getting out of the shipping business. "We could have made a pile of dough by liquidating," says Turman, "but finally we decided that if any American shipping line could make a go of it, we could." To raise the money, family-owned Lykes went public in 1958, though the family still owns 64% of the stock and fills nearly all of top management.

Hours v. Days. Making a go of it, Lykes fought the Federal Maritime Administration to win the right to become the first U.S. line to design its own ships, though they are partly paid for by federal subsidy. As a result, each Lykes ship is so equipped that it can load and unload all its own cargo without help of dock booms, can "turn around" in port in as few as five or six hours. Efficiency applies at the home office too. Turman rises at 4 a.m., breakfasts with his staff before 7 in the bleak company cafeteria. The early schedule is the only way he knows to keep up with his European competitors, who, he complains, enjoy the advantage of being six hours ahead of him on the clock.

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