Mr RARAUT. They keep them on? Mr. SMITH. They keep them on. Mr. CULKIN. It depends on how they spend their youth, I guess, more or less? Mr. SMITH. There is a good deal in that; yes. Mr. RABAUT. We have a lot of them that have their youth worn t at 36 in the automobile industry. Mr. CULKIN. There is no arbitrary longevity? Mr. SMITH. Most shipyards have retirement provisions. Mr. CUIKIN. I am in sympathy with the suggestion of Mr. Eat. Mr. SMITH. The cost of the plans on one combined passenger ar i cargo ship of 18,000 gross tons may amount to as much as Songno. This may be somewhat startling to you gentlemen. And tat means not only hundreds, but many hundreds of plans and every piece of that ship must be built to that plan. That is one of tfa tors, and the most important factor, of course, involved in the cost is the fact that it is so highly specialized. Therefore, if you were building one ship, the cost of those plans is $500,000 aga not that ship. If you could build 10 ships to that same design, would have only $50,000 against each ship; if you could build ke they build automobiles and could build a thousand, then The whole cost for plans would be only $500 against each ship. In her words, the item would be so small it would be absorbed and toff in the quantity production. But when you put $300,000 23 a particular ship, there you have a substantial part of the ert re first cost. Mr. HAMLIN. I do not want to stop your very understandable and rating and interesting talk to me, but I would like to ask you, Mrth, relative to the Bath Iron Works Corporation which I have 1wn here and which seems to be the only place in Maine, which I present laughter), that we have as a shipbuilding concern. i you tell us how well up that is in the amount of shipbuilding whit does as compared to the others? Mr. SMITH. Well, at the present time it is engaged in the construt on of two torpedo-boat destroyers for the United States Government. It is a shipyard of the highest class for its size. It never *as attempted to build large commercial ships; it never has aimed tee that. Mr. HAMLIN. So that it is one of the small shipbuilding concerns. a. these that you enumerate! Mr. SMITH. It is what you might call intermediate as to size, but verve sent and a very excellent plant. Mr HAMIIN. Just one more question: What board fixes the place fr the building of the ship, names the place for the building of the Mr SMITH. If the owner has a ship to build, he puts it out at publie 1, and practically generally the lowest bidder gets the job. That is kwise the case with naval vessels; the two ships they have now were se ured on competitive bids, Mr. HAMLIN. I want to get some trade up there in Maine if I can. Mr. SMITH. Bath at one time did build one of the battleships of the United States Navy, the Georgia, which was delivered some 25 years ago. Mr. MANSFIELD. Speaking of standardization, Mr. Smith, were not the ships that were built during the World War more or less standardized? Mr. SMITH. Yes, sir: they were, but in groups, with a maximum of about 50 in one group built at Hog Island, which were all supposed to be of the same type. In other yards they ran as high as from 5 to 8, or possibly 10 in one or two instances. And with the small vessels on the Lakes, I think there was one instance where there were 35. Mr. RABAUT. What boats were those that Henry Ford built during the war-submarine chasers? Mr. SMITH. No; they were what were called "Eagle " boats, a little larger than the submarine. Mr. RABAUT. He turned out about three a day at one time, did he not, toward the end? Mr. SMITH. He said he was going to, but he did not. The CHAIRMAN. All this was in answer to the plea to "bridge the sea with ships was it not? Mr. SMITH. Yes. The CHAIRMAN. They sought to get ships regardless of the particular plan or the particular quality of the ships. Mr. SMITH. Yes; a great deal was sacrificed undoubtedly to speed of construction and to get them into service. Every part of a ship must be fabricated to a plan with the result that the cost of a ship in the United States, as compared with the cost of a similar ship abroad, is much more closely related to the actual labor rates in the United States as compared with those abroad and is very much higher in the United States than abroad. In this connection there will be found on page 130 of the book filed with your committee entitled "The American Merchant Marine ", a statement of the wage rates of various representative trades in shipbuilding in the United States, Great Britain, Germany, and Italy in 1930. The CHAIRMAN. That is the booklet entitled "American Merchant Marine"? Mr. SMITH. Yes. Unfortunately, I have not the rates today, but the best information we have is that the differential is a little greater than it was at that time. Mr. CULKIN. In our favor, or in their favor? Mr. SMITH. In their favor. As you will note on page 130, the wage rates in the United States are approximately, on the average, two and one-quarter times what they are in Great Britain; from two and three-quarters to three times what they are in Germanythey were, in other words, at that time-and about three and a half times what they are in Italy. Now, of course, I cannot tell you what the relative efficiency is, but I have no reason to doubt that the efficiency of the mechanics, I know in Great Britain, is of a high quality and I have no reason to doubt the efficiency of the mechanics in these other countries. But in view of the fact that about half of the total cost of the ship is expended in the shipyard, where you have to compare these relative labor rates you can see tvolves in the United States a much higher cost than it does When you make a purchase of steel, copper, and the various prodits that are purchased in great quantity in the United States, base of our enormous buying power in this country, why then, fh items that are produced in great quantities, the price in the United States as compared with abroad is more nearly equal. Iere is still a differential, but it is not comparable to that of the ptor rate. Steel, for instance, might range from 10 to 15 percent ger, sometimes as high as 20 percent, depending on conditions. M» CULKIN. There was a witness here who said that our steel panies, compete in the English market, the German market, and Ial.an market in the sale of steel. Mr. SMITH. Not very much. Mr. CUKIN. And compete successfully. Mr. SMITH. I think it is mostly in products of a particular kind. Mr. CULKIN. You mean in specialized products! Mr. SMITH. Specialized products. It is more in that line. I cantell you what pro lucts are sold most to foreign markets, but it a fact that they do sell some abroad. At what prices, I do not .W. Mr. CULKIN. That statement was made in connection with the nt ownership of the steel companies by the construction yards. He made some criticism of that. I do not know whether you were *re at the time or not. Mr. SMITH. Yes; I was here when that criticism was made. As far as I know, the shipbuilding industry has had very little advantage -and in many cases I might say the reverse- in those two or the plants that are associated with steel companies. There are only two of them. The CHAIRMAN. What are they? Mr. SMITH. The Bethlehem plants and the Federal. But I have teen on the operating side and have been on all sides of the business, ani I have never seen any differential in the price that gave the .builder any advantage. He had to stand on his own. பாடும் 1 CHAIRMAN. This witness tried to make us believe that practaly all--although I believe he did class the Newport News Shipbg Co. as an independent-but that nearly all of the rest were owned by the steel companies. Mr. SMITH. That is not right; I think that is absolutely wrong. Ine CHAIRMAN. I think there was one out in San Francisco ar i Mr. SMITH. Of course, the Bethlehem has several plants, which are tly in the repair business at the present time, except the Fore K ver plant, and the Federal has one plant at Carneys Point, N. J. Mr. CULKIN. How many are owned by steel companies! Mr. SMITH. Only the Bethlehem plants and the Federal plant. The Fore River plant is the one that is doing shipbuilding now. It as numerous repair plants both on the east and west coasts. Mr. CULKIN. You can say generally, then, there is no tie-up of stified charge for steel by reason of any such tie-up between the steel companies and the construction companies? Mr. SMITH. Certainly not. Now, as to the cost of insurance on a ship, charges for depreciation and interest on investment, which you can see are factors in this first cost, they are a percentage based upon the cost of the ship itself, so that those factors entering into the cost are dependent upon and affected by the higher costs of ships in the United States, which is, of course, immediately reflected in the higher cost of operation through these three factors that they must carry throughout the life of a ship, and it is those factors that the interdepartmental committee, in its report, recommended be covered by a shipbuilding subsidy. The shipbuilding industry, at the present time, is operating under a code of fair competition and trade practice approved by the President of the United States on July 26, 1933, and is operating on the basis of 36 hours per week for shipbuilding and on an average of 36 hours per week over a 6-months' period for ship repairing. Mr. CULKIN. How many hours do they work, say, in Japan in the shipyards, if you know? Mr. SMITH. I do not know. In Great Britain it is 47. Mr. Saugstad may be able to tell you, but I cannot for the moment. My belief is it is in excess of 50. Mr. CULKIN. Do you know what the Germans do? The CHAIRMAN. Do you know, Mr. Saugstad? Mr. SAUGSTAD. I did not hear the question, Mr. Chairman. Mr. CULKIN. You say you are working on a 36-hour basis? Mr. CULKIN. Under the code? Mr. SMITH. Yes. I might mention this, that the Government navy yards, who are working on building ships of the same type and in competition with us, are working 40 hours-the Government navy yards of the United States are working 40 hours, and we were required under the code, as a start-off, to work 42 hours, and this was reduced after 8 or 9 months to 36 hours. Mr. CULKIN. Of course, that makes the overhead tremendously greater as compared with countries that work 40 hours and 50 hours. Mr. SMITH. Yes, sir. Mr. HAMLIN. You do not know of any nation that has as low as 30 hours, do you? Mr. SMITH. I doubt whether you will find any working less than in Great Britain-47 hours. When the code first went into effect the hours of work in those yards engaged on naval construction were 32 hours a week, whereas they had been 40 hours a week before the code, with the result that a wage increase of 25 percent was necessary in order that there should be no reduction in weekly earnings. A further increase of from 10 to 14 percent was made in the industry in 1934, so that at the present time hourly rates in the industry are from 15 to 25 percent higher than they were in 1929, with their corresponding effect upon the cost of ships in the United States and increase in the differential in cost between a ship built in the United States and one built abroad over what these differentials were in 1929. Mr. CULKIN. That is one place the N. R. A. is not as dead as a dodo. Mr. SMITH. It has not been dead in its effect upon us, sir. Mr. RABAUT. It has not been as dead, either, as some people report. Mr SMITH. In our particular industry I am sorry to say that the et, rovment has been less than it would have been on new ship. 1:1 g, because of the fact that most of our contracts were naval cor.tract- entered into shortly after the code went into effect, and the y way to get employment in shipbuilding is to speed up during the first, 9, or 10 months with everybody you can, in order to open work on the ship outside, where a larger number of men can be [ ! jive] A question arose before this committee as to what saving might benvorved in the building of duplicate ships, and I am glad to form the committee that a substantial saving in cost is involved Lere more than one ship from the same design is built. The actual a sutit of savings due to duplicate construction depends a good deal - n the type of ship and other factors but will range from 6 to 8 percent reduction for each of 2 ships over the cost of 1, up to about ¡ percent for each of 4 ships from the same design, and some re... which is more or less indefinite, beyond that point and ... unfortunately, we have not had an opportunity to show what we mi gut do, because we have not had the ships, except during the ar time, at any time of more than 4 of one type. A factor of great importance in the cost of merchant ships is the bing of naval vessels in private shipyards. The more vessels ere are under construction in a shipyard, within the working caa ty of the yard, the greater will be the distribution of the overSea 1 involved against each ship under construction. A considerable part of overhead is what is known as "fixed overhead" that must tinue whether 1 or 5 ships are building, such as management, aretas.ng, policing, lighting, heating, and many other items, so that the banding of naval vessels will for this reason substantially decrease the cost of a merchant vessel building in the same shipyard, because of the fact they will absorb part of this overhead expense. Te present trend toward the construction of the larger percentage of naval vessels in Government navy yards rather than in private yarts will result in a higher cost of merchant vessels in those yards. Now you asked Mr. Saugstad this morning about the possibility of tabulating the cost differentials, or the advantage of other countres. In a very brief way, there has been shown on pages 90 to 99 of this booklet (Pertinent Facts) the more recent subsidies. There a double page there for each of the countries concerned that gives me of the high spots. They are so different in different countries, that it is almost impossible to tabulate them in such a way that they are comparable. 1: ere was a question arose at one of these meetings as to ships bing in the shipyards of other nations and I have here a copy of the Glasgow Herald on those ships that shows the actual ships but last year in each of the yards in all of the nations of the world, whh I would like to file with your committee. (The paper referred to will be filed with the committee.) Mr. CULKIN. Can you state, generally, how much tonnage Italy has built abroad? Mr. SMITH. That Italy built abroad? Mr. CULKIN. Yes. Mr. SMITH. NO; I cannot. You mean in other countries! |