and more of it could, and I am sure that within 10 to 15 years pearhaps a majority of our technology could be applied to commercial or industrial market areas.

Senator CLARK. I note your suggestion that the location of production operations in centers strategically situated with relation to markets, raw materials, and so forth, presents a major problem in this conversion from military to civilian use of the brains and techniques and products which are presently being provided to the military.

Then you end up by saying the application of advanced technology to new civilian products will contribute little to the employment of resources, including human resources, in areas currently devoted to defense and space operation.

Does this mean that California may be on the skids and Pennsylvania on the way up? We do not get much defense in my State, you know.

Mr. DENNIS. I understand.

Senator CLARK. To be more serious, that those areas of the countryMassachusetts, Texas, California-which are getting a major part of the defense dollar, are going to be in more trouble than elsewhere if and when this conversion comes along.

Mr. DENNIS. I do not think I could make a general statement to that extent, I think it has to be examined on a specific basis.

Let me cite an example.

We acquired several years ago a small company in the architectural aluminum products business, they are making aluminum door and window frames. They needed to have additional facilities and we had some surplus defense-oriented facilities at that time and there was consideration given to moving this into these surplus facilities.

It happened that these facilities were not adjacent to a freeway; as a matter of fact, they were within 30 minutes of a freeway and in Los Angeles this is, businesswise, quite catastrophic. We could not be competitive and utilize our defense-oriented facility, we had to put a new facility up that was adjacent to a freeway. This is an example of the point I would like to make, it does not say that the whole area would be depressed, it means that specific buildings and maybe a locale may not be easily transferable to commercial industrial activity.

Senator CLARK. I think that is a very interesting observation and it leads me to your final paragraph from which I conclude that one of the real limiting factors in the conversion from defense production to civilian production is the serious doubt as to whether that conversion will result in a profitable undertaking and that this is a matter which really throws grave doubt on the ability of the economy to make the transition in anything shorter than a period of, say, 10 or 15 years? Mr. DENNIS. If I interpret your term "profitable" correctly I do not know how you are looking at this, whether through the company's eyes or through the civilian economy's eyes.

Senator CLARK. The company's eyes. Why should you, as an executive of a company, make a conversion to a civilian use from a defense use unless you are pretty sure you can do it at a profit?

Mr. DENNIS. We should not. But the point that I wanted to make here was that just to apply advanced technology to civilian and consumer needs is not necessarily the answer. There must be an economic payoff for the community, not the company, and the company as well,

but for the community. It does not make sense to us to apply technology to the community's needs if it is not something that they can fruitfully use and benefit by in an economic manner.

Senator CLARK. In other words, if they do not have a need there is no use trying to fill it?

Mr. DENNIS. That is correct, and this is a concern that we have and one of the difficulties we have in considering the transfer of our technology is that we are on an entirely different plane for the Defense Department and to try and satisfy an economic need of our society is extremely difficult.

Senator CLARK. That is a problem which has been worrying the subcommittee for some months now, that there is no use converting from defense to the production of consumables which are not wanted. Maybe the limit is close to being reached in terms of how many more automobiles we can assimilate, not only within this country but through foreign trade.

The same might be true for washing machines and refrigerators, and that whole area of the civilian economy which comprised the principal source of demand when we demobilized after World War II. It is not like that any more.

Mr. DENNIS. That is correct.
Senator CLARK. Thank you.
Senator Pell?

Senator PELL. Are you by any chance familiar with the McGovern proposal for an economic conversion commission to be set with regard to those companies who have more than 25 percent of their business with the Government?

Mr. DENNIS. Senator, I have heard it referred to but I have not studied it in detail.

Senator PELL. I have no further questions.

Senator CLARK. Senator Kennedy?

Senator KENNEDY. No questions.

Senator CLARK. Senator Jordan?
Senator JORDAN. No questions.

Senator CLARK. Senator Randolph ?

Senator RANDOLPH. Mr. Dennis, I note that in your closing sentence, you state that the application of advanced technology should be paced not only by the test of technical soundness but also to the test of economic feasibility, and I should be able to know exactly what you meant, but I do not.

Senator CLARK. We have just been over that.

Senator RANDOLPH. I am sorry, I have been on the phone.

Senator CLARK. I think you should repeat what you just said for Senator Randolph's benefit.

Mr. DENNIS. În many of the opportunities that have arisen in our country to apply advanced technology to commercial or industrial markets we have found that perhaps we could make a substantial technical contribution. However, what happens when the technical contribution is made is that the civilian industrial community does not benefit economically as a result of its application. In other words, it is too expensive a solution, it is too complex a solution, that just the straight application of technology is not alone the answer, there must be a reason in the economic market for such a transfer.

Senator RANDOLPH. I asked that question, in order to carry our discussion into another phase. Are both the economic feasibility and the economic impact to be considered?

Mr. DENNIS. Yes, sir; that is what I am trying to refer to here as the economic impact. It has to be a useful product in the hands of the consumer and the industrial market on an economic basis as well as advanced technological basis.

Senator RANDOLPH. I appreciate, Mr. Dennis, the soundness of your approach here, I have read your statement and I believe it is very helpful to the subcommittee.

I do not want to draw this out into an expression of opinions. I do not think you can polarize opinions on this subject. I think there has been as many sides to this issue as there are parties involved. You are one of those parties, as are these plants, the legislators, our communities, and the people. I want to ask you now, if you feel that there is reason to go more deeply into this subject of the impact of a sudden automation on our industrial economic society than we have ever gone before?

Do you think we just can take this in stride, just have these hearings, just to find these situations as they exist in certain areas of this country, or do you think we have to get more deeply involved in this subject?

Mr. DENNIS. Sir, did you refer to automation?

Senator RANDOLPH. Yes, sir.

Maybe it is not a serious problem.

Mr. DENNIS. I am not sure I am qualified to discuss this, Senator. Senator RANDOLPH. Well, you are vice president for development and planning.

Mr. DENNIS. Yes. Well, you are speaking of a national problem. In our own company as in Mr. Hyland's company, we have gone to a fairly large quantity of automated equipment, and similar to his organization, we use it in our administrative and payroll accounting business. We use it in our technical computations. As a matter of fact, we provide considerable employment for technical people in simply running these machines and programing the problems to put on them.

I am not involved in the impact on our employment as a result of putting in this data processing equipment in our plants.

Senator RANDOLPH. Thank you, sir.

Senator CLARK. Mr. Dennis, have you had a look at S. 2298, the bill introduced by Senator Hart for himself, Senator Humphrey, and me?

Mr. DENNIS. Yes, I have.

Senator CLARK. Are you in favor of that bill?

Mr. DENNIS. Yes, sir; I am. I think this problem that you are addressing yourself to is so complicated and involved that certainly any light that the proposed commission can shed on it is to everybody's benefit.

I would like to make one suggestion if I might concerning the bill. Senator CLARK. I wish you would.

Mr. DENNIS. I noticed it was limited to the needs of our Nation, and I think this is the fifth or sixth line down on the first page.

I would like to suggest the possibility of looking into the application of technology to worldwide needs as well. There are some possibilities, for example, of our technology being applied to geographical areas where there is deserts, jungles, and high altitude terrain that we do not have in this country that may make a contribution to the human needs of the world.

Senator CLARK. And in turn would result in some profit to our own employment situation.

Mr. DENNIS. That is correct.

Senator CLARK. Thank you very much, sir; I think that is a useful suggestion. Any other questions? The subcommittee will stand in recess until 10 o'clock tomorrow morning.

(Whereupon, at 12:15 p.m., the subcommittee recessed to reconvene at 10 a.m., Tuesday, November 19, 1963.)

NATION'S MANPOWER REVOLUTION

TUESDAY, NOVEMBER 19, 1963

U.S. SENATE,

SUBCOMMITTEE ON EMPLOYMENT AND MANPOWER

OF THE COMMITTEE ON LABOR AND PUBLIC WELFARE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 4232, New Senate Office Building, Senator Joseph S. Clark (chairman of the subcommittee) presiding.

Present: Senator Clark.

Committee staff members present: Stewart E. McClure, chief clerk of the subcommittee; and John Stringer, minority associate counsel. Senator CLARK. The subcommittee will resume its hearings.

We are concerned this morning with civilian applications of defense technology.

Our first witness is Mr. John Stack, vice president of Republic Aviation.

Mr. Stack, we are happy to have you with us.

I will ask to have your prepared statement printed in full in the record at this point.

(The prepared statement of Mr. Stack follows:)

PREPARED STATEMENT OF MR. JOHN STACK, VICE PRESIDENT, REPUBLIC AVIATION

Mr. Chairman, the problem for which your committee seeks solution is not unique to our times. It seems to be almost a feature of our life for the last half century. Over the last 15 years the mean of this unemployment rate has increased from 4 to nearly 6 percent.

Defense industry alone may indeed have a significant part in this overall increase. It is not, however, a problem peculiar to or caused solely by defense industry.

Changes in the products employed by the Department of Defense have, however, caused major shifts in emphasis on the class of type of employment. We are, for example, producing fewer types of aircraft and each is of superior capability to those that have gone before. We are now seeking "multicapability" in our aircraft. In so doing we tend in the direction of employing increasing numbers of highly trained technical types, i.e., scientists, engineers, technicians, and fewer of the purely mechanical types, i.e., journeymen down through the semiskilled and unskilled types. It can be expected that this trend will be accelerated. It has been suggested in studies of the effects of disarmament that our newer and expanded efforts in space will absorb some of the slack. This has not been the effect of ov: space effort. This effort, so far, leads to production of only a few copies of ach item. Each item produced on even a given project tends to be somewhat different from its predecessor and necessarily so if the aims are to be achieved. Each project is at the frontier of scientific and technological knowledge. Hence, only those highly skilled either as scientists, engineers, or technicians can cope with the problems. There is but small opportunity for the mechanic that cannot rise above journeyman level and virtually no opportunity for the semiskilled or unskilled.