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to develop new and substitute materials for such prefabricated houses. A committee of experts has been set up in the Laenderrat for this purpose.

The future of the building materials industry is unlimited within the bounds of the natural resources for such material to be found in Germany. It is not anticipated that the production of building materials using such items as asbestos, which was always imported, will proceed at the same rate as that of other materials using items indigenous to the country. In view of the fact that demands for building materials of all kinds will for many years far exceed the supply of such standard material, it is anticipated that the Germans will turn to new and substitute materials for many purposes; but the use of new building materials such as plastics may be considerably handicapped by the levels of production established for the chemical industry. The development and use of such new materials and methods of construction as well as the maximum production of standard material, will be encouraged as part of the overall plan to make Germany self-supporting within the limitations imposed by the Allies. Current Production

During the first part of the past year, everything possible was done to expedite the production of building materials in the U.S. Zone. Such efforts were necessary if even the military requirements for building materials and for emergency repairs of civilian homes were to be met. The production of building materials on the whole was increased steadily within the limits of coal allocation, but anything approaching full capacity production is not yet in sight. For instance, the present production of cement could be increased over 200 percent and still stay within the level established for this material. Future Production

The level of industry plan, agreed to in March, 1946, set no limits on the production of building materials, with the exception of cement, and none on construction within the limits of the materials available. Although the production of cement was never declared a direct war potential, it was determined that an estimated production level be determined for this industry and that excess capacity be declared for reparations. A level of eight million tons annually was finally established for the cement industry, of which 2.2 million lons were to remain in the U. S. Zone. Since Germany produced between 11 and 16 million tons of cement yearly during the last ten years, during which time there was no problem of reconstruction, and that Germany will now need more cement than ever because of reduced production of reinforcing steel, the level of eight million tons for which capacity is retained represents a severe restriction upon this phase of German economy.

Lumber

In the U. S. Zone of Germany, Military Government has succeeded in re-establishing and reorganizing the German forestry and lumber organizations. Although denazification, as in many other sections of industry, stripped the new organizations of many of their technicians, it was still possible to bring them back to some semblance of their former condition. These organizations have now been turned over to Germans and are operating under the Laenderrat. The production of lumber and timber products in the U. S. Zone is now approximately 76 percent of its prewar capacity.

The largest single export transaction that has been concluded by Military Government to date is a $ 14,300,000 contract for the export of lumber produced in the U.S. Zone to the United Kingdom. Negotiations with the Controller of Timber Supplies of the United Kingdom were successfully concluded early in April, 1946, and an order was received for 650,000 cubic meters of sawn lumber to be delivered before April 1, 1947. This lumber will be shipped mainly by Rhine river transportation from Mannheim and Karlsruhe. The British will provide barges for transportation to Rotterdam and thence to the United Kingdom.

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