Detroit contributions—Public Housing and Urban Renewal

Public housing projects: year ending | Urban renewal, year ending June 30: June 30:

1953

6, 909, 989. 61

1953

395, 908. 77

282, 264, 54

154, 858. 46

562, 000. 28

282, 098. 37

Direct labor computed at 50 percent of total project cost. Indirect labor computed at 25 percent of total project cost. Allowance for labor-$5 per hour; 40-hour week considered; 32-week season is normal construction season in this area. The city normally does approximately $8,000,000 of capital improvement on streets per season. Projects which could be started within 90 days and within 180 days total $24,000,000. This $24,000,000 is added to the amount normally done by the city, producing an accelerated program totaling $32,000,000. All of this work could be completed within 1 construction season.

Mr. FALLON. Are there any questions on my right?

Mr. Scherer?

Mr. SCHERER. Mayor, you apparently have made a very exhaustive study of the situation in Detroit, including your unemployment. problem.

In making your studies, have you ever determined in Detroit how much Detroit industry has invested in new plants abroad in the last few years?

Mayor CAVANAGH. No, I do not have that information, Mr. Scherer. Mr. SCHERER. It has been considerable, has it not?

Mayor CAVANAGH. I think throughout the country there has been some considerable investment in foreign enterprise. Probably more than some local communities would desire. But we are constantly within our community making serious attempts on a municipal government level to stimulate expansion in our own community, and I am sure that other communities are doing the same.

Mr. SCHERER. Has not Detroit had its industries, particularly the automobile industry, invest a little more than the average community in the United States in new plants abroad?

Mayor CAVANAGH. I think there has been considerable decentralization from Detroit into other parts of the country. I would say there has probably been a greater investment in new industrial facility within the country than there has been outside of the country, moving into areas such as Ohio, and areas like that.

Mr. SCHERER. I understand that is true, but do you know the cause for that? Do you know why they have decentralized?

Mayor CAVANAGH. Well, of course, there are various causes assigned. You can get many reasons why there has been decentralization from just about everyone to whom you speak, including various conflicting opinions from men in the automotive field. There was an industrial trend in both the automotive and other major industries to decentralize

because I assume they felt it was a cheaper and more economical way to produce their product.

Mr. SCHERER. Has Detroit taken any steps to prevent that decentralization?

Mayor CAVANAGH. Yes. We have, locally. We have attempted to stimulate an industrial development corporation within our community which, incidentally, the business community in the city of Detroit is strongly endorsing the concept of. There have been many citizens' committees formed even by gentlemen in the automotive industry to stem this tide of movement. Further I might say this, Congressman Scherer: Some gentlemen in the automotive industry now feel it would probably be more economical had they not decentralized, and had they stayed in the city of Detroit, for example.

Mr. SCHERER. Your studies do not disclose how much has been invested by these companies in plants in Europe and abroad, do they? Mayor CAVANAGH. No, I do not have that information, but I am sure it is available.

Mr. SCHERER. It is available?

Mayor CAVANAGH. Yes.

Mr. SCHERER. When we do that, we export jobs, don't we, by the thousands?

Mayor CAVANAGH. Well, I was going to say you might call it exporting jobs. If this was an expansion program in effect you are not adding a greater number of jobs to your local industrial capacity, but adding them elsewhere in whatever market you have built your new industrial facility.

Mr. SCHERER. Suppose one of your Detroit concerns spends $10 million in the establishment of a plant in England, rather than in normal plant expansion in the city of Detroit. That adversely affects your employment situation in Detroit, does it not?

Mayor CAVANAGH. Yes. Obviously, if they were to build within our city those jobs would be available. I might emphasize this, and it is a private conviction because, as I say, I do not have any statistics to back me up, but much of the expansion, particularly by the automotive industry, in countries other than the United States, has been done to meet the demands of a foreign market.

Mr. SCHERER. Competition.

Mayor CAVANAGH. Yes.

Mr. SCHERER. They can no longer compete because of high abor costs, and high taxes, compared to those same costs in other countries. That is the reason why instead of spending the money in normal plant expansion in the Detroit area they invest millions of dollars abroad, so that they can capture or recapture some of their foreign markets. Is that not correct?

Mayor CAVANAGH. Yes. Of course, they have had industrial facilities for years, but they have expanded thein since the wartime. There is no question about that. But they have spent, I hate to guess, astronomical amounts of money in plant expansion and in the construction of new industrial facilities all over the country, including States in the Midwest, and East, and Southern parts of the country. Mr. SCHERER. I am not saying this is happening in Detroit alone, because I represent a city that has many machine tool industries, and these industries are constantly building plants abroad to do the very

same thing that you just said, namely, to meet foreign competition. They have lost out because of high taxes and high labor costs in this market. They have lost their European markets and are now trying to recapture them by investing abroad.

We all know if that money were spent in plant expansion here, it would provide many, many times the jobs that any public works program by the Federal Government would provide.

Mayor CAVANAGH. I might say this too, Congressman Scherer: I was looking at some figures coming down here on the plane and one thing which has certainly contributed to the high and sharp rise in unemployment in the city of Detroit and other areas, I am sure, is the impact of automation on industrial facilities within our community. The Chrysler Corp., for example, which has about relatively the same level of production today as it had maybe 6 or 7 years ago, employs some 25,000 fewer people to turn out that same amount of production, which could be attributed almost directly to automation, I might say.

Mr. SCHERER. Automation, I understand, is certainly part of the problem, but don't you find, and haven't you found from your studies, that these plants that have been built by American industry and American business abroad are not only recapturing their European and foreign markets, but are now shipping some of the products they make in their plants abroad back to the United States to compete with what is still made here in this country? That is happening too, is it not? Mayor CAVANAGH. Yes, sir.

Mr. SCHERER. And at a greater rate every day. That does not help the unemployment situation in the United States, does it?

Mayor CAVANAGH. No. And I might mention this too, Congressman Scherer: That since I have been in office, at least to the extent of our ability on the municipal level, we have attempted to have a realistic reappraisal of our taxing policies relative to business and industry. There is a strong movement within the State by all segments of the community for almost complete fiscal reform as it relates to some taxes, and many types of taxes which are considered oppressive as far as business is concerned. This is a bipartisan situation in which leaders of both political parties, the labor community, the business and industry community, have formulated several programs that are possibly going to be adopted this year which would not be completely, but which would substantially assist the business community from the tax standpoint.

So there is a continuing effort, at least on the part of the local officials within our community, who recognize the fact that tax situations, or tax programs, have to be developed which will encourage industrial stimulation.

Mr. SCHERER. What I am trying to do is to put my finger on the disease that must be cured. One of the major causes for unemployment is the flight of jobs to foreign countries through this tremendous investment by American industry abroad. I am not criticizing American industry. They have lost their foreign markets, and in order to recapture them and, in order, as you said, to compete, and in order to avoid high labor costs and high taxes in the United States so that they can compete, they have spent millions and millions of dollars. abroad which should be spent in normal plant expansion here. That is all I have.

Mr. FALLON. Mr. Cramer.

Mr. CRAMER. I have attempted to bring out in the past that this proposed legislation would permit the expenditures of Federal grant moneys in the area of local public works, where Federal money has never before been made available, and therefore smacks somewhat of a WPA-type approach, that is, going into new areas of public works where there is no established program for public works. That is pretty well documented and corroborated by your own statement of public works projects that you have under consideration on page 8, for instance, under "Parks and Recreation."

You suggest "Outdoor swimming pools, 75 feet long, with locker rooms, showers and equipment, at an estimated cost of $250,000 each are planned in six locations." That makes $12 million.

Then you have 16 artificial ice rinks for $125,000.

Mayor CAVANAGH. Excuse me, Congressman. Let me find that. What page?

Mr. CRAMER. Page 8. In the Detroit narrative.

Then you say:

Public service improvements include parking lots at $47,000 for Chandler, Palmer and Rouge golf courses, plus a water system at the above courses, and Redford golf course, at a cost of $220,000. Golf maintenance buildings at Chandler, Palmer Park addition, and Woodrow Wilson playfield are also needed. You do not give any price tags with that.

On page 7 is a marina at Engel Park for $981,300. Then back on page 5, the detail of public works projects, we see under the "Zoo" an Australian plain exhibit, apparently, of $220,000; a fur and elephant seal exhibit in the amount of $105,000; a carniverous animal building in the amount of $264,000.

Of course, this leads to the question certainly in my mind, Do you think that this is a proper area for Federal grant moneys under a broad authorization for the President to put money into any such type of program anywhere in the country, in areas that we have never gone into before, through the medium of Federal grants? Don't you think there is some limit to what the Federal taxpayer can afford to pay for these things? Don't you think there is some limitation as to where the money should be spent coming from Federal funds?

Mayor CAVANAGH. Congressman Cramer, let me say this: Our Detroit taxpayers, for example, and taxpayers within every other section of the country, have been paying locally for these things which they consider to be their unmet needs.

Mr. CRAMER. But they are not high-priority needs, are they?

Mayor CAVANAGH. In my judgment, yes. Parks and recreation are as important to any community as practically any other area of governmental services.

Mr. CRAMER. Golf courses are as important

Mayor CAVANAGH. Yes, for a senior

Mr. CRAMER. As hospitals, for instance?

Mayor CAVANAGH. For our senior citizens.

Mr. CRAMER. Golf courses are as important as hospitals to senior citizens?

Mayor CAVANAGU. Well, obviously hospitals would probably have a greater priority, but I do believe that parks and recreational developments, Mr. Cramer, have equal importance to the citizens of any