Business: Cars Down, Steel Up

Like a happy hot-rodder, the auto industry sped through 1955 leading the economy at a record clip. Last week, when the inevitable pause came, some, grown accustomed to the impossible, expressed alarm.

Chrysler Corp. furloughed 10,300 workers, while other automakers and suppliers made scattered layoffs or cut back overtime and eliminated Sunday work to get back on a normal workweek. All told, some 25,000 were idle in Detroit. Main reason: the 807,000 cars in dealers' hands are more than double the inventory at the same time last year.

American Motors' President George Romney, testifying in Washington, expressed some other ideas on the state of the auto market. "Sales in 1955 exceeded the level justified by the economy," said Romney, and the industry now had to "pay the price" for borrowing from the future. The industry is also paying for "deteriorating market practices . . . price 'pack,' finance 'pack,' absurd, indefensible credit, misleading advertising, overproduction." But, added Romney, there was no need for Government intervention; the automobile industry would straighten itself out.

Last week Detroit cut production into line with demand. Actually, production by any standards was still good—the 147,877 new cars produced last week were 9% fewer than the same week a year ago but still at the high annual rate of 7,700,000 units. This pace will probably not continue. G.M. President Harlow Curtice took another look at '56 sales prospects, whittled his month-ago prediction of a 7,060,000-car year to 6,500,000, which would still make 1956 the automakers' second-best year. He also announced that G.M. will spend $1 billion, a record for one year, on expansion in 1956.

Would the auto cutback hurt steel?

Said one Pennsylvania steelman: "Our other customers say that if we get any cutbacks from Detroit, ship the steel to them, for they're hungry." Said another: "We could sell twice as much steel as we're making." To make sure there is enough, American Iron & Steel Institute President Ben Fairless announced that the industry will spend $3 billion to increase output by 5,000,000 tons yearly for each of the next three years.