we had more than we could ship. We had a lot of trucks tied up in New York. But the shipping has greatly increased, has greatly improved, and the port facilities have been greatly improved. So we are about in balance. But we have got to keep it coming along together. We have to have new ships as planned. We have to have the existing ships repaired.

The CHAIRMAN. Generally speaking then, in your major elements, in the carrying on of the war, the transportation facilities and the ability to get the supplies, you are pretty well in balance and there are no big bottlenecks, major bottlenecks, in the war effort at the present time; is that true?

Mr. KRUG. I don't think you can answer it quite that way. We are definitely short of some things that are handicapping operations in the sense of doing it in the way it should be done. For example, this cotton duck situation has caused all kinds of material inconvenience. But to say that the lack of cotton duck is holding up anything in a military way is not a correct statement. On the other hand that is a very urgent matter that must be met, if we are going to keep our men who are there properly housed and taken care of. It is one of the things that goes to make up the morale of the Army and has an effect on the final victory.

The CHAIRMAN. So far, however, they have what they need at the present time?

Mr. KRUG. Yes, sir; they have.

The CHAIRMAN. You are talking, as so many of the other witnesses talked, about things that are in the back of your head, the fear of the future?

Mr. KRUG. No. It is a fear of what is going on right now. In other words, what they are using at the front now has nothing to do with production today except on a few limited items. The flow time is a matter of several months. I am worried about our lack of production today, as it will affect operations as soon as that material reaches the front. If we don't keep these things up to schedule, they have to keep revising the military program to adjust it to what they get from us.

Just one other comment in closing. There has been a lot of talk that we aren't going to need this bill because the Germans are going to quit anyway. I feel, and feel strongly, that we are going to need this bill even more desperately after the Germans quit. We hear a lot of people say: "Well, war production is important but one of these fellows is out of the game now and I don't have to stay, I can go back home." I feel the production requirements, although perhaps not as great as they are at the moment, will continue at a very high level after the German phase of the war is over. I hope there is no thinking on the part of the committee of postponing action in the hopes that the German war will clear this up.

The CHAIRMAN. Off the record.

(Discussion was had outside the record.)

Senator O'MAHONEY. Mr. Chairman, I have before me a copy of a release given out by the War Production Board on December 7, given to the newspapers, on the critical programs. It was prepared by Mr. Hiland G. Batcheller, Chief of Operations.

No doubt you are familiar with it, Mr. Krug?
Mr. KRUG. I am familiar with it.

Senator O'MAHONEY. On page 3 there is a chart entitled: "Why Are the Programs Critical?".

That chart indicates that labor constitutes only 22 percent of the cause of the critical condition of the programs whereas other factors, facilities, for example, 12 percent, and change of plan is-what is it, 26 percent there?

Mr. KRUG. Yes. Design changes, 26 percent; labor, 22 percent; facilities, 12 percent; and the steep increases in the programs, 40 percent.

Senator O'MAHONEY. So that it is the increase of the program more than anyting else that is the cause of our difficulty?

Mr. KRUG. Well, I want to make this very clear, and I am glad you brought this chart up, Senator I think it was misinterpreted by the House committee. This chart has the top factors holding up the program, but in the case of the step-up in the design changes, there is scarcely one that if you had the time lag corrected, labor would not be a factor. In other words, if you had the other things cured this segment of labor affecting the program would swing around a larger center or circle.

Senator O'MAHONEY. I think it has been clearly demonstrated and none more effectively than by you, that labor is an important factor, a factor that we have got to handle some way or other, but I just wanted to make sure that it is known that there are other factors more important.

Mr. KRUG. In some programs there are other factors that are more important.

Senator O'MAHONEY. Now, it is my recollection from the statements of the War Production Board that there are about 1,200 facilities in the United States which are really critical.

Mr. KRUG. Well, I don't think you can measure the seriousness of this problem in terms of certain plants which are in a desperate situation at a given moment.

Senator O'MAHONEY. That may be, but what I am driving at for the moment is the demand for labor; is that right, 1,200?

Mr. KRUG. No; it is true that we have a limited number of plants included in the so-called must list. They are spread all over the country, however. But, as I said, I think before you came in, Senator, we have used that technique because it is the only technique we have had available to us. It has been gradually starving the basic war industries. I put in the record figures on steel, copper, and aluminum, et cetera, to show the effect of this technique on the supporting structure of our entire war-production program. The net effect is that now the whole core of our war production is feeling the impact of diminished labor supply. Unless we do something to correct it very promptly, something more effective than what we have been doing, we will be in very serious trouble.

Senator O'MAHONEY. What is being done, if you know, with respect to a situation such as was described in the telegram read by Senator Thomas to make it known to the shipyard workers who are now being laid off; that is, the ship construction workers, to make it known to them that their labor will be immediately needed perhaps in ship repair facilities?

Mr. KRUG. They have been told in about every way I can think of. I made a trip to the west coast and talked in both Los Angeles and

San Francisco on this very point. I met with the labor people in Los Angeles. I didn't get a chance to meet with them in San Francisco. I explained the picture for 1945. I think they know it. It isn't a very pleasant prospect for the fellow affected. He is now working in a yard at a certain job. He has to find another job. He may not be qualified for some other job nearby. There is a dislocation that is serious, and it has its repercussions upon workers who have worked faithfully in the war effort. That is one of the difficulties in the 1945 program.

Senator O'MAHONEY. Your reports also show that the estimates of the cost of new construction for the year 1945 have been reduced from, as I recall it, approximately $100,000,000 to something like $60,000,000, because you are thinking now in terms of reconversion rather than in terms of new construction.

Mr. KRUG. I don't know of any such reduction. I thought on the contrary the construction program for 1945 had gone up.

Senator Ŏ'MAHONEY. Well, I know only what I see in your reports, that plant expansion is a declining program, and was 93 percent completed in 1944.

Mr. KRUG. Well, it is true that comparatively the peak years of construction were 1942 and 1943; 1944 was much lower, and 1945 will be at the same level as 1944, which is very much lower than 1943 and 1942.

Senator O'MAHONEY. I was mistaken in saying that this applied to all construction. Those figures that I had in mind, I see from my notes, referred only to plant construction for the new tire program. Your report seemed to indicate that it was first estimated that $100,000,000 would be the cost of plant expansion. Now, the estimate has been cut to $60,000,000.

Mr. KRUG. Yes; that is right.

Senator O'MAHONEY. As an illustration of how that cut is effected, you have cited the conversion from the manufacture of engines to the manufacture of tires of the Jacobs Aircraft Engine Co., of Pottstown, Pa.

Mr. KRUG. That is right. In other words, we found a facility there that was ideally suited for part of this program and so we didn't have to build a new building, power plant, and all that.

Senator O'MAHONEY. Now, this statement with respect to the utilization of ship workers is based upon the assumption that a ship construction yard cannot be used for ship repair?

Mr. KRUG. No. We are in every case where it is possible converting those ship construction yards to ship repair yards and that work is going ahead.

I might say, I am not sure I made it clear, that the navy yards already have facilities for some of the ship repairs, and which constitute a tremendous investment. For example, at Los Angeles we have built tremendous drydocks that take care of the big ships. You cannot reproduce that investment shortly over in some ship construction job. On the other hand, the Navy is working out details with the ship construction people to take care of the above water repairs wherever possible at the existing shipyards rather than moving that work into the navy yards.

Senator O'MAHONEY. These questions were designed to get your opinion as to the possibilites of conserving manpower by this type of reconversion which you are undertaking.

Mr. KRUG. Wherever possible we are trying to fit the new programs into the existing facilities. If you try to start a new plant and recruit labor for it, it is relatively ineffective as compared with changing a business in a plant where you already have the working force. Unfortunately, at this stage of the war, there aren't very many opportunities to do that.

Senator O'MAHONEY. Isn't it possible that the same reduction of estimate with respect to dollars which is apparent from your figures may reflect itself with respect to men also?

Mr. KRUG. Not on the production programs, because they are laid out in very concrete terms. It is true that estimates of new facilities are revised when you find out to what extent you can fit the new program into the existing facilities. I am quite sure that in almost every case the first estimate is higher than what we end up with. However, there are some very sad experience to the contrary, too.

Senator O'MAHONEY. I confess there is one difficulty that I have in comprehending the conclusions which have been reached here by those who are advocating this bill because there is no doubt that the construction work, the building of plant facilities is practically over, except for a few changes here and there.

Mr. KRUG. We are going to carry on, we figure, a total of $4,000,000,000 of new construction in 1945. That is about the same level as was carried out in 1944. I think that is about one-fourth of what was carried on in 1943.

Senator O'MAHONEY. Do you care to say for what particular type of work that new construction will be?

Mr. KRUG. Yes; I can give you a break-down on that. I can't give it to you at the moment, but I will be glad to submit it for your record.

Senator O'MAHONEY. I think it would be well to have it.

(War Production Board release of January 15, 1945, containing the information referred to, follows:)

Preliminary estimates of new construction volume in the United States in 1945, based on the assumption that war on both fronts will continue throughout the year, indicate an activity volume of $3,250,000,000, the War Production Board reported today. The volume forecast for 1945 is the lowest volume of construction since 1935.

This estimated activity is 82 percent of the 1944 volume and 24 percent of the peak 1942 performance. Almost half the 1945 volume will be accounted for by privately financed work as contrasted to 40 percent in 1944 and 20 percent in 1942 and 1943, War Production Board said.

Construction activity generated by purely military requirements is expected to be about a third less in 1945 than in 1944, both for industrial and nonindustrial work. Activity in the construction categories for essential civilian and indirect war purposes is expected to continue in 1945 at about the 1944 rate, with an estimated decline in new housing volume being offset by increased nonmilitary work in the industrial field and other nonresidential categories.

Military construction (troop housing, airfields, storage facilities, etc.) within the United States is expected to decline from $730,000,000 to $480,000,000, and Government-financed plant construction from $745,000,000 to $470,000,000. Privately financed factory construction in 1945 is estimated at $250,000,000, a 7-percent increase over the 1944 level. Over-all housing volume is expected to decline from $690,000,000 to $500,000,000, or 28 percent under the 1944 volume, with the bulk of the decrease occurring in Government-financed work. All other types of nonindustrial construction-comprising highways, community buildings, sewer and water, conservation and development, utilities, farm, and other nonresidential work-are expected to total $1,550,000,000, a slight increase over the 1944 activity for these types, the War Production Board estimate reveals.

Deliveries of processing machinery and equipment to industrial plants in 1945 will be down to an estimated 75 percent of the 1944 rate and will have a total

value of $1,150,000,000. Of this amount, $650,000,000 represents the estimated volume of deliveries to Government-financed plants.

Over-all new construction volume during December 1944 amounted to $292,000,000, a 6-percent decline from November. All major types of construction declined during the month except industrial building. Government-financed plant construction as a whole continued at the previous month's level and totaled $65,000,000 as further activity increases at recently programed Army ordnance facilities offset continued declines at projects in other agency categories. Privately financed industrial building also increased during December 1944 contrary to the normal seasonal trend, and amounted to $26,000,000, which was 53 percent above the activity for this type in December 1943. Military construction in December held the November level, while civilian housing activity and all other types of nonindustrial construction registered seasonal declines.

December activity brought the grand total of new construction work put in place for 1944 to $3,940,000,000, which was slightly more than half the $7,732,000,000 volume of 1943, and less than one-third the 1942 peak activity of $13,434,000,000. Activity volume for all major types of construction was less in 1944 than in 1943, with the sharpest decrease occurring in nonindustrial military construction, which declined to $730,000,000, as compared with $2,423,000,000 in 1943. Government-financed industrial construction in 1944 totaled $745,000,000, or 38 percent of the 1943 volume. Housing, privately financed industrial, and other types of construction showed more moderate declines from 1943 levels. These figures exclude repair activity and in this respect differ from the construction activity estimates compiled by other Federal agencies.

Deliveries of machinery and equipment to industrial plants in December amounted to $110,000,000, to bring the total deliveries for 1944 to $1,530,000,000, as compared with the 1913 volume of $3,430,000,000, and the 1942 volume of $4,104,000,000. Machinery and equipment for Government-financed plants in 1944 accounted for almost two-thirds of the 1944 total delivery volume.

Senator MAYBANK. Mr. Krug, have you made any investigation as to where changes in jobs are taking place, is it in the shipbuilding plants, in the navy yards, or in the ammunition plants, or just generally, the same proportion everywhere?

Mr. KRUG. No; it is not the same all over. It seems to be higher in the shipyards than most any other place.

Senator MAYBANK. What do you attribute that to?

Mr. KRUG. There are a great many causes. Perhaps one of the most important is the fact that the shipyards grew up almost entirely during the war and brought people from all over the country, and therefore you have a larger turn-over than in the old stable organizations. Furthermore, work in the shipyards in some seasons of the year isn't too pleasant, and that affects the quit rate. In most of these yards the kind of work a lot of the men have to do isn't quite as pleasant as they can find perhaps in some other category.

Senator MAYBANK. In other words, outdoor activity has its effect? Mr. KRUG. Yes.

Senator MAYBANK. I take it, Mr. Krug, for instance in the navy yard on the docks at Boston it would be a little rougher work than, we might say, in an ammunition plant.

Mr. KRUG. Yes. Less pleasant than working in an aviation plant, such as the Martin plant at Baltimore.

Senator MAYBANK. You don't think these various changes in construction is a factor?

Mr. KRUG. No; because that was in the picture during the entire period of the war. has developed only in the past year.

picture, has been in the The ship-repair problem

Senator KILGORE. Mr. Krug, you mentioned the fact the 1945 program contemplated $4,000,000,000 of new construction.

Mr. KRUG. Yes.