Business: Rubber 1939

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Goodyear reported first half sales up 23%, profits up 116% to $3,610,595 from the year before. Boss of Goodyear is opinionated, poker-playing Paul W. Litchfield, who has tough Steelmaster Tom Girdler on his board. Litchfield is a great dirigible booster, a chum of Germany's Zeppeliner Dr. Hugo Eckener. In 1936 he wanted to nominate Colonel Charles A. Lindbergh for Vice President on the Republican ticket. Last spring he urged the U. S. to barter (as it soon did) surplus cotton for a stockpile of rubber which a war would shut off.

For 31 years President Litchfield has personally done Goodyear's rubber shopping, still gives it 20 minutes to an hour a day. He carries the industry's biggest market basket, for Goodyear buys about 14 2/7% (the United States from 30% to 50%) of the world's crude rubber. With only about 10% of Goodyear's requirements produced by Goodyear's own plantations, he must gamble more heavily than his competitors on war or peace as well as recovery or depression when he goes to market. In the spring of 1937, when commodity prices threatened to run away, Goodyear bought heavily, and when Depression II got under way, Goodyear had to take a $10,343,000 loss—in spite of which Goodyear had enough operating profit left over to net $7,257,000.

Goodrich, when the rubber market collapsed in 1937, took a $5,653,000 inventory write-down which put it $878,580 in the red (even after a $593,249 profit on foreign exchange). But last week, Goodrich's President Samuel Brown Robertson reported sales up 27.4%, a $3,122,728 profit, instead of last year's $209,551 loss.

In contrast to Goodyear, which is decentralized, Goodrich is concentrated in Akron, blames 25-75% higher wages for its inability in the past to show as high a profit margin.

Last spring Goodrich demanded a 12-14.8% wage cut, compromised on 5.7%. This spring it pruned interest, like U. S. Rubber, by getting a cheap six-year bank loan with which to retire $18,319,200 of 6% bonds.

Firestone, which shoes the wheels of most top-flight U. S. racing cars, publishes its half-year report at the end of April. Last spring it had encouraging news for its stockholders in spite of the fact that one of its major customers, Motorman Henry Ford, is rapidly expanding his own tire production in the River Rouge plant. For fiscal 1938's first half (October-April) Firestone turned a net income of $2,429,738. This year's six-month net was up 11.2% to $2,851,538.