Consumers had to pay higher prices for food during June, July, and August of 1971 than the same months during 1970. However, part of the increase in the Consumer Price Index for food may be traced to inflationary factors and to severe droughts on the mainland and in Maui. The national wage-price freeze, which was in effect during the strike, also helped keep prices down. Only in the case of raw agricultural produce were merchants allowed to raise prices.

Hawaii's food and feed requirements, which are virtually dependent on U.S. mainland suppliers for food and animal feed needs were also affected. Hawaii produces less than one-half of her meat, poultry, pork. and fruit and vegetable requirements, and virtually no animal feeds. Rice, a major staple item in Hawaii, and all canned meats and canned and frozen fruits and vegetables must be imported into the State.

Under normal circumstances Hawaii's food and feed suppliers maintain average inventories of 4 to 6 weeks' supply. In situations where a transportation disruption is expected, suppliers attempt to build up a 3 months' inventory.

Transportation disruptions or even fear of a disruption causes hoarding of major food and feed items. This situation creates a serious imbalance in food and feed distribution with a resulting rapid decline in available supplies during the early days of a transportation disruption.

The possibility of strikes occurring also raises the cost of doing business in Hawaii. Businesses need to keep large inventories as well as discount expected profit rates of return on investments to make allowances for shipping interruptions. These result in higher costs which inevitably are passed on to consumers and contribute to this State's exceptionally high cost of living.

H.R. 7189, if it does not tread on the principle of free collective bargaining or violate existing and effective concepts embodied in Federal laws relating to maritime commerce, can insure the maintenance of normal supply lines to Hawaii while providing additional time necessary for the settlement of any future disputes.

We respectfully urge your committee's favorable consideration of H.R. 7189, bearing in mind the importance of preserving our State's economic integrity and security as a requirement for the continued progress and security of our entire Union.

I thank you for the opportunity to make this statement.

Mr. DINGELL. I think you have done a very excellent job of making the presentation here.

You have given us a most able and carefully presented statement. The Chair certainly commends you. I want you to convey to Acting Governor Ariyoshi our appreciation for your presence. Again the committee wants you to know the high regard we have for Mr. Matsunaga, who is one of the most outstanding and able Representatives in the Congress, and Mrs. Mink who in the view of all of us is without peer in this body.

I want you to know their interest in this bill is the reason that we are holding the hearing today.

It may be as matters proceed we will have additional questions. We hope you will remain so that if we do, we can direct them to you. Mr. Matsunaga.

Mr. MATSUNAGA. Our next witness, Mr. Chairman, is the publisher of the Pacific Business News and chairman of the Chamber of Commerce of Hawaii Ad Hoc Committee on Uninterrupted Shipping. He was founder of a citizens' organization known as STOP (Shipping Tieups Over Permanently). I am privileged to present George Mason. Mr. DINGELL. Mr. Mason, we are certainly pleased to welcome you. If you will identify yourself fully for the record to assist our reporter, you may proceed.

STATEMENT OF GEORGE MASON, CHAIRMAN, AD HOC COMMITTEE ON UNINTERRUPTED SHIPPING, CHAMBER OF COMMERCE OF HAWAII AND CHAIRMAN, STOP (SHIPPING TIEUPS OVER PERMANENTLY)

Mr. MASON. Mr. Chairman, I am George Mason. I am here in the capacity of chairman of the Ad Hoc Committee on Uninterrupted Shipping, Chamber of Commerce of Hawaii, and chairman of STOP (Shipping Tieups Over Permanently). I am president of Crossroads Press, Inc., publishers of Pacific Business News and other publications. Mr. Chairman, I am a small businessman and am here primarily to represent the 13,000 small businesses in Hawaii (those with fewer than 100 employees)-almost every one of whom feels helpless in the face of frequent confrontations between employers and labor unions 2,500 miles from their place of business.

To illustrate how relatively helpless the vast majority of businesses in Hawaii are, I submit the following data compiled by the Bureau of the Census in March 1972 for the State of Hawaii:

Note: 100 or more employees-346 firms (2.7 percent); 20 to 99 employees-1,778 firms (13.7 percent); 1 to 19 employees-10,835 firms (83.6 percent); 1 to 7 employees-8,110 firms (62.5 percent).

You will note, Mr. Chairman, that 62.5 percent of all employers in Hawaii have from 1 to 7 employees and that only 346 (or 2.7 percent) of all employers have 100 or more workers.

About one-third of all employers are in retailing. Many are marginal and unable to withstand serious dislocations such as those that occur when shipping interruptions are threatened or underway.

Other than the immediate effects of imminent or actual shipping tieups, there is an ever-present economic dislocation-one not easily apparent on the surface. I am referring to the constant state of preparation for unexpected shipping interruptions that businesses of every size are compelled to maintain.

To illustrate the extent of this impact, I submit for the record a copy of a study conducted in early September 1974, by the Bank of Hawaii Business Research Department [see p. 214]. An examination of the replies submitted by a variety of businesses dealing in consumer and industrial commodities revealed that the average inventory carried year-round was 103 days. Asked what inventory they would carry if assured that a west coast shipping interruption would last no longer than 10 days, the average of the replies of the respondents to this question was 68 days or a saving of 35 days because of such

an assurance.

Further, 70 percent of the respondents said they are affected yearround because of a lack of such assurance; 19 percent said they take the risk of building inventory only when the possibility of a shipping interruption looms; and only 11 percent said they are not affected by shipping interruption threats.

The 70 percent who said they are affected on a year-round basis reported that their average inventory valuation was over $2,615,000 and that a guarantee that shipping from the west coast would not be interrupted for more than 10 days would enable them to reduce inventory valuation to an average of about $1.8 million-or a reduction of 31 percent.

Considering the high warehousing and financing costs in Hawaii, a 31-percent reduction in valuation and a 34-percent reduction in inventory days, if extended across the entire commodity spectrum, would mean a savings of tens, if not hundreds of millions of dollars annually to Hawaii's consumers.

Permit me to cite another study, one made by the C. W. Shafer Distributing Co., an appliance and television wholesaler in Honolulu. with a copy of the complete material presented on September 14, 1974. submitted for the record.

The 40 cents per square foot per month for warehouse space in Honolulu compares with 6 cents per square foot per month in San Diego. Warehouse space can be found in Honolulu at less than 40 cents per square foot, but anything below 30 cents is virtually impossible to find. The Shafer survey indicates that the same kind of operation in San Diego has an inventory investment of $100,000 as compared to an inventory investment of $300,000 in Honolulu. The survey also states that an appliance distributor's expenses in Honolulu average 15 percent more than for distributors on the mainland. An example cited is a color television set selling for $500 on the mainland which has to be priced at $575 in Honolulu.

Mr. Shafer reported to me that the passage of H.R. 7189 would enable his company to reduce its standard 90-day inventory to 60 days and his inventory investment from $300,000 to about $200,000. Further, his interest expense would drop from $39,000 to $26,000 or less and warehousing costs could decline from $4,800 per month to $3,200 per month. The savings on warehousing and interest costs alone would reduce his cost of doing business in the range of $32,000 to $35,000 per year-or almost 3 percent of his annual sales figure of $1.2 million. I conducted a poll of five major printers in Honolulu (August 1974) and learned that their average paper inventory is 5 months. I assure this committee that no printers on the mainland would consider ware

housing a 5-month supply of paper on a year-round basis. As a publisher of a weekly newspaper, I can attest to the fact that our printer makes every effort to maintain a 7 month's supply of our particular grade of newsprint and that we begin to push the panic button when delayed mill runs or shipping delays force us down to a 4-month inventory. At one point during the several strikes in 1971 and 1972 we were down to a 3-week inventory and faced with having to suspend publication.

I personally conducted another survey in mid-September 1974 of the three largest automobile dealers in Honolulu. On the average these dealers maintain about a 60-day inventory of cars and trucks, approximately double what their counterparts in California carry. When contracts are being renegotiated on the west coast, these dealers immediately move to go to a 90-day or higher inventory. One auto and truck dealer who maintains a steady inventory of 500 units makes it a practice to build his inventory to 1,000 units when the possibility of a strike looms. The cost of financing and storing such a huge inventory of high-priced merchandise is staggering. It costs $15 a month to hold an automobile in open field storage and at least $35 a month to finance that unsold vehicle. There is also an added insurance factor and an added cost of preparation because of extended exposure to weathering. These costs are passed on to the consumer, and, depending on the type of vehicle, means an increased purchase price of from $60 to $100 because of extended inventory resulting from threatened shipping interruptions.

Mr. Chairman, permit me to generalize from the standpoint of most small enterprises in Hawaii. They have had to adapt to the uncertainties of our isolated situation where there is no reasonable alternative to surface ocean shipping. The consumer fresh from the mainland is rather startled to be in a modern urban situation and to find so much merchandise to which he has become accustomed not available in Honolulu; and, further, to be almost constantly confronted by the response: "Sorry, we're out of that item now-come back in 2 or 3 weeks." Even after 27 years in Hawaii I find this situation less than comforting. But the merchandisers in Hawaii are not careless and inefficient, they are only trying to avoid financial disaster. They try their best to keep a level flow of goods coming in but are fearful of having to bear the cost of more than a 3- or 4-month inventory. When demand for a particular item exceeds their advance estimates, it's easy to run out while replacement merchandise is still in transit.

While a long list of commodities are in short supply or completely depleted during the 100-day west coast longshore strike in 1971, the most publicized shortage was toilet paper. Actually, there was enough inventory of this commodity at the start of the strike to last for 100 days. But panic buying cleaned the shelves of the major retail outlets and, soon, other paper products began to disappear. Some people were using their homes as warehouses. Unhappily, people who did not hoard or were too poor to hoard were unable to find essential paper products for weeks. The same thing happened with salt, rice and other staples.

The merchant is caught in the middle. While he and his wholesalers may have enough stock on hand to withstand up to 3 months of ship