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Mr. DENT. We would be appreciative of any additional information you can give us.
We have another witness, but at this moment both of us have to go down to another meeting. They need two persons for a quorum and we're going down to make the quorum. We'll be right back up for the next witness.
Thank you kindly and I hope we see each other again. [Whereupon, a recess was taken.]
Mr. DENT. The committee will come to order.
The next witness is Frank S. Day, president, Condamatic Co., Warren, Mich. Mr. Day, do you have anybody with you? Both of you give your names to the Clerk so they will be made a part of
STATEMENT OF FRANK S. DAY, PRESIDENT, CONDAMATIC CO., WARREN, MICH.; ACCOMPANIED BY HERBERT LIEBENSON, VICE PRESIDENT, GOVERNMENTAL AFFAIRS, NATIONAL SMALL BUSINESS ASSOCIATION
Mr. DAY. I have Mr. Herbert Liebenson of the National Small Business Association with me. I called him yesterday. I send in a few bucks each year. I don't have a lobbyist in Washington and I'm a small businessman, so I've got to rely on somebody. So Mr. Liebenson is here.
Mr. DENT. I understand you have no prepared statement for us. Please proceed.
Mr. DAY. My name is Frank Day and my company is Condamatic Co. of Detroit, Mich. and I'm an automotive parts supplier.
I might say to you I have actually four companies. Three are automotive related. They are all small companies. I manufacture this gear shift lever for General Motors and Chrysler and I have another small company that does what I call subsequent operations like drilling holes and that sort of thing. Then I have a plastic company and I started a company in the tape cartridge business making music for automobiles at one time. I got out of that part of the auto business because I found getting into the music business was a type of cartel and it was pretty well locked up with the record companies. Sc eventually I expanded into making cassettes for educational program: having nothing to do with automotive. But my principal company is Condamatic Co.
Would you like to know a little of my background, who I am?] started in business 30 years ago with $2,000. I saved $1,000 while I was in combat in Italy in World War II and then I borrowed $1,000 from a restaurant owner. I call him that rather than a saloonkeeper My dad did some drinking there, so that's how I got started.
My father was a depression product. He kind of had a strang occupation. He was a politician and he was a rare politician, he was poor Republican and there aren't too many of those anymore.
Mr. DENT. Yeah, they're all rich.
Mr. DAY. I assume you're a Democrat?
Mr. DENT. You assume right.
Mr. DAY. He was poorer than most Democrats I know but it was ugh during the Depression and I worked my way through the Liversity of Michigan. I was a short order cook and I drove some
cabs and that type of thing and I was a football player at the niversity of Michigan and I was a second string halfback to a feissman Trophy winner, Tom Harmon. You've got another man Washington who played some football, too.
I went into combat in World War II and I was in the 15th Airce and I was a B-24 pilot and when I came out of the service decided to give a shot at business and that was my start in business dit's been a long tough grind and I think I've built it up fairly well. I think that's basically my background. I'll get into the other hing. I was listening here to Mr. Eberle and some of the things he ed to say and it was very complex, some of the figures he gave and read through this. There are many inequities in here and there are any untruths and I know because I'm part of it.
To give you an example, and by the way, I want to stress I'm not ere to gain something for me or my company. I couldn't care less if e Canada Auto Trade Agreement goes on. I'm still going to be in iness. I am here because I feel strongly about what we have to do at is right for the United States, right for our country and I'm a tizen and a small businessman.
Let me get right into something with my Canadian competitors and what has happened to me in the last 10 years. I would say I ave lost about 25 to 30 jobs and these have gone to Canada. My articular competitor was a Yugoslav schoolteacher who came to anada about 12 years ago and he met a mechanic. He couldn't et a job teaching school so he started in business manufacturing etal parts such as this and knew nothing about it and suddenly found myself with a fierce competitor for General Motors and hrysler business. If he took his equipment and came to the United tates, never in God's name could he compete with anybody. He has what are called tracer lathes, which are little lathes about this high. You put a master part into it and a stylus traces it with a single int tool that cuts. This cycle time is a minute and a quarter to a inute and a half depending on the length. I do this in 13 seconds ad my machine cost $140,000 new, only I can't afford to pay $140,000 hen I need a new one so I buy a used one for $60,000 or $70,000. I'll get into that a little later.
This investment tax credit I'd like to touch on for just a second, And I'll touch on that a little later.
So he beats me by 5 or 10 percent in price plus his costs are less and every time I read about the Auto Trade Act, it's about assembly ants in Canada, General Motors, Chrysler, Ford assembly plants Lnd jobs placed there. What about all the thousands of jobs of supders that are lost to Canada? Nobody has ever mentioned that and i don't know how many there are.
And again when I read the report I see where you are frustrated because you can't get any number from the MVMA but those numbers are available and it's very simple and you can get them all and you can know how many jobs are lost. For example, every division at General Motors, at Chrysler, and Ford sends out a sheet to each of their suppliers. You list the name of your company, your address,
the number of employees, your telephone number, all the per information. They have this information. Ford has it, Chrysle it and General Motors and they can tell you how many Cansuppliers there are and how many people they have.
Now, you take that number and add to it the number of emp at assembly plants in Canada and if we use Mr. Eberle's figur about the gain of employment in the United States, 32,019 F and subtract that from it and you have the total of jobs the lost. It's just my guess that it's got to be well over 100,000
Mr. GAYDOS. Would you go over that again? You made a for instance, your 30 jobs-where do your 30 jobs appear in 1 being a small supplier making this gear shift.
Mr. DAY. First of all, I had about 95 employees and I have 65 in what I call the parent company. The other little companydoes all this drilling and bending, has about 35 employees. My p company where I make cassettes [pointing to knob] these are the parts I make. I mold these knobs in plastic. It's partially autom oriented and I have about 55 employees in the plastics company.
Mr. GAYDOS. Assuming you never appeared before this commi where would your 30 jobs appear in these figures?
Mr. DAY. Those 30 jobs aren't in those figures at all.
Mr. GAYDOS. That's what I want to know.
Mr. DAY. They're not in there.
Mr. GAYDOS. How can we find them, yours and many others
Mr. DAY. You call General Motors in here and Ford and Chry not the MVMA. Call them in. Their purchasing departments. 1division of GM, Pontiac, Buick, Oldsmobile, Chevrolet, and Cad has a list of all the outside suppliers who make parts, a list of number of employers and where they are located. So have them b you in the Canadian suppliers and how many employees they h That's how many jobs they have.
Mr. ASHBROOK. Would the gentleman yield? I understand w you're saying and I say at the outset that I agree with you. It's attitude of the people, Mr. Eberle and the others that come inpick up on what you're saying and what a lot of us feel is that we up losing. It's a little like the old argument of the man selling television set and losing $5 on each set but he'll keep telling you will make it up on the volume. If we keep adding up what we lose these deals-the figures make it look like we're picking up jobs when you add it all up were not.
Mr. DAY. I can make some beautiful figures for you and comm with the absolute. If you want to get meaningful figures
Mr. ASHBROOK. They think we're making it on the volume and a of us don't think we are.
Mr. DAY. You're making nothing on the volume. I ship af parts to Canada, a very, very few, but don't forget the Canad assembly plants have grown and built. They take care of the Canadi output, the Canadian use, and whatever overage they have at t Canadian assembly comes back into the United States. I'll give you example. The hottest car Chrysler has is the Cordoba. Not a sing Cordoba is assembled in the United States and most of the parts th go into the Cordoba are made in Canada.
Mr. ASHBROOK. I would add a point to that also. I come from an area that makes most of the large equipment in the country like Bucyrus, Galion, earth movers and so forth. I can tell you specifically that Galion, which makes a steam shovel, for example, if they send one of them up to Canada there is a 172-percent duty on it but if the exact same one comes into the United States there is a 5-percent duty. I asked why we do this; "Oh, we've got to do this to keep our relations with Canada." Now how many jobs did they lose not just in automobiles but in heavy equipment?
My area makes road graders, steam shovels, and there is three times the duty on the product going into Canada as against their product coming back into the United States and they wonder how they lose business.
Mr. DAY. I don't know how to answer that. I remember a statement Nixon said on the grain deal, he said, "We've been suckered.”
Mr. ASHBROOK. We've been suckered for 30 years on this one. Mr. DAY. We've been suckered for 30 years on the Japanese cars. I'll get into that.
Mr. DENT. Mr. Day, you mentioned the Cordoba. At this point, we ought to put the figures in which corroborate the statement you made. No Cordobas are made in the United States. Canada produces 193,638, of which 171,365 are returned to the United States and 1,222 are shipped to other countries. Eighty-eight percent of Cordoba production in Canada is shipped back to the United States. Now, how many American parts are in those?
Mr. DAY. I can't answer that.
Mr. DENT. How many do you put in? How many do you make for Chyrsler, your gear shift?
Mr. DAY. Five parts for Chrysler.
Mr. DENT. That part, your gear shift?
Mr. DAY. Oh, this part.
Mr. DENT. Did you ship 193,000?
Mr. DAY. Into Canada?
Mr. DENT. Yes.
Mr. DAY. No, not into Canada. I did in the States. My supplier makes them in Canada. He's Canadian and he ships for their needs. You see, there are multiple suppliers on parts, on certain parts. Mr. ASHBROOK. You're saying you're not the only one that makes
Mr. DAY. That's right.
Mr. DENT. But we're told that the parts trade pursuant to the agreement makes up for the losses we take in the imported assembled
Mr. DAY. It's not true. There may be some that are shippedI may ship some parts into Canada where my Canadian competitor isn't making, say, a truck lever at a low volume. I can give you my volume figures, but my volume to Canada is almost infinitesimal on these parts. The Canadian supplier makes most of them for Chrysler and General Motors.
Mr. DENT. And also for their own manufacturing of their own
Mr. DAY. He's a Canadian, he's making this in Canada with Canadian labor and then it's going into a Canadian assembly plant
with more Canadian labor to make the finished product. So it 1 be like 95 percent Canadian labor all the way through from pa finish.
Mr. GAYDOS. It's being claimed 175,000 units come to this cou and when they do we have by law certain prerequisite requirer that so many substitute repair parts be available for every unit is sold. Do you supply any of those substitute parts? After Cordoba reaches this county and is sold to me and I buy it, do I get the part if my gear shift goes out of whack?
Mr. DAY. Yes, I supply replacement parts. The only thing this particular part, if you have to replace this you replace the car. If this is damaged, the whole car is totaled. Now fenders bumpers are a different story.
Mr. GAYDOS. If you ran hubcaps you would be in better sł
I want to tell you something else, when this started I talked gentleman, a General Motors executive for Pontiac and he "Frank, I've got a little advice for you, why don't you mo Canada?" He said, "You would be better off." I got a littl depressed about that and I went home that night and I notice boxes I have on the shelf which contain my Air Medal and Distinguished Flying Cross, which a lot of veterans have and I to myself, "I volunteered for combat and I went to fight," a started to laugh. I fought for this country. I pay taxes and some tells me I should move out of this country. It doesn't make sense to Mr. DENT. Mr. Day, earlier this morning Mr. Eberle ma recommendation, the effect of which, would give the United St an access to Canada's market for aftermarket parts, original e ment tires and so forth. Obviously, then, Canada does not & American parts manufacturers access to the Canadian market after market and replacement parts.
Mr. DAY. Right.
Mr. DENT. They also don't allow original equipment tires and t Mr. Eberle recommended that the trade agreement include t parts so that aftermarket tubes and tires can be brought back to United States for the cars in the United States. In the agreem as it stands now, parts are not dutyfree unless they are assemble automobiles. I thought at first the recommendation would be help but at second glance, the effect of such a recommendation woul to open the replacement market to Canadian manufacturers.
Mr. DAY. My replacement parts, by the way, don't go to Can I send them to a central place in the United States, a central distributing place and what they do with them from there on I d know or how many go to Canada; therefore, I can't answer that.
Mr. DENT. I don't think they go to Canada because it says that the agreement does not contain this privilege of selling or tr ferring aftermarket parts between one country and another duty f Mr. GAYDOS. Your part is distributed to my dealer and he has i stock? That's where your part is?
Mr. GAYDOS. It will open up a competitive priced article. Mr. DAY. By the way, no used cars can go into Canada. You kn that, don't you?
Mr. DAY. That's right.
Mr. DENT. This will take it away.