Hon. CHET HOLIFIELD, CLARY MULTIPLIER CORP., Member of Congress, Washington, D. C. DEAR CONGRESSMAN HOLIFIELD: We believe attention should be called to your committee to the fact that substantial quantities of aircraft materials are now being accumulated as excess, or long supply, among the various airframe manufacturers and their subcontractors. These excesses are materials for which the Government is liable. Unless steps are taken to rectify this condition, soon as possible, these excesses brought about by engineering changes, terminations, and the flattening out of aircraft production will ultimately result in the dumping of these materials as surplus, and possibly create undesirable conditions as were brought about after World War II. We feel that a method of redistribution should be established immediately which will result in the saving of manpower, the saving of critical materials, will alleviate the necessity of expanding production facilities, will assist in alleviating shortages in the aircraft industry, and generally result in tremendous savings to the Government. Such a program has been proposed by the Aircraft Production Resources Agency, Wright Field, Dayton, Ohio, and has been endorsed by the Air Force and the Aircraft Industries Association of America. Opposition has been encountered from the Bureau of Aeronautics, and for this reason we feel that your congressional committee should investigate the need and feasibility of such a program and recommend the proper steps to be followed which would have the approval of Congress and be beyond criticism from the people of America. Concurring with the Aircraft Production Resources Agency proposal, we recommend that qualified, established aircraft-parts distributors be invited to participate in such a program, as such groups are best qualified to achieve the aims set forth in the APRA program with the greatest return to Government. Further, such a group would generally be in a position to rehabilitate or modify aircraft parts and components which, if not handled properly, would ultimately be scrapped at no return to the Government. Our company and other companies whom we consider to be thoroughly qualified to participate in such a program are now engaged in the business of distribution and rehabilitation or modification of aircraft parts. By adopting such a program, experience would be gained, and evaluation could be made as to its merits, which could resolve itself into a pattern for the redistribution of other excesses or surpluses as they may be generated by the various branches of the Government. We are prepared to appear before your committee at any time you may so desire to explain the workings of such a program, as our experience and the experience of other qualified distributors was utilized from 1943 until the end of World War II. We respectfully request expeditious action, as we weel that this is the proper time to reestablish the proposed program. Very truly yours, CLARY MULTIPLIER CORP., P. S.-We are enclosing a copy of the APRA proposal and memorandum of understanding for your information. [Held in subcommittee files.] Mr. CHET HOLIFIELD, Member of Congress, Washington, D. C. CLARY MULTIPLIER CORP., DEAR CHET: We are enclosing letters received from Aircraft Production Resources Agency which in general bear out our statements of excesses being in existence. Very truly yours, CLARY MULTIPLIER CORP., General Manager. Subject: Idle and excess inventory reports. To: Clary Multiplier Corp., Aircraft Hardware Division, Los Angeles 11, Calif. 1. For the past few months Aircraft Production Resources Agency has been receiving idle and excess inventory reports from prime and subprime contractors in the aircraft industry for the purpose of relieving critical shortages and assisting contractors in disposing of unnecessary inventories. Idle and excess matériel refers to that matériel which is idle and excess to the needs of one plant but presumably required and usable in another. It is differentiated from surplus matériel in that surplus is regarded as having no further value to the general aircraft industry. 2. The purpose of this letter is to remind all contractors that the next quarterly report is about due and to request complete listings of your excesses as of July 1, 1952, be forwarded to this office, attention: MCLAPRD, not later than July 10, 1952. Upon receipt of these lists, Aircraft Production Resources Agency will assemble the information therein and circulate these lists throughout industry to facilitate redistribution of matériel among manufacturers. In this connection, Aircraft Production Resources Agency will not be responsible for the accuracy of these reports nor will Aircraft Production Resources Agency be involved with any sales. Its sole intent is to apprise industry of the existence of excesses and to assist in relieving shortages. 3. Your attention is invited to APRA letter dated February 11, 1952, outlining minimum quantities to be reported when using APRA Forms 3 and 4. AIRCRAFT PRODUCTION RESOURCES AGENCY, Colonel, United States Air Force. AIRCRAFT PRODUCTION RESOURCES AGENCY, Dayton, Ohio, June 3, 1952. CLARY MULTIPLIER CORP., AIRCRAFT HARDWARE DIVISION, Los Angeles 11, Calif. GENTLEMEN: The attached supplemental lists of idle and excess inventory reports, representing available inventories, are forwarded for your information and use. These lists do not supersede the lists forwarded during May 1952, but are supplements thereto. APRA strongly suggests that these lists be screened for normal procurement requirements as well as for critical items. When items are found that can be used, it is the responsibility of the individual contractor to contact the owning contractor and negotiate directly for the purchase. Aircraft Prodution Resoures Agency will not be involved in any sales nor responsible for the accuracy of the inventories reported. It is intended, by circularizing these lists, to assist the aircraft industry in relieving shortages and to increase production output. Any questions or suggestions may be referred to this agency. AIRCRAFT PRODUCTION RESOURCES AGENCY, Hon. CHET HOLIFIELD, Member of Congress, Washington, D. C. THE LAMSON & SESSIONS CO., DEAR CONGRESSMAN HOLIFIELD: It is with a great deal of pleasure that I have learned that you are taking hold of this matter of redistribution of aircraft idle and excess inventories. It is entirely possible that you are also thinking of the redistribution of idle and excess inventories in other fields but this aircraft situation is probably the one where it is most important to set something up immediately. Aircraft products by and large are not readily redistributed to other than the aviation field. They are much higher priced in the first place than similar products in the nonaviation field and are not readily adapted to nonaviation use. Take for example what are known as AN hex-head bolts. To the average layman they look very much like a commercial cap screw, but if you were to offer General Motors or Ford 10,000,000 or 15,000,000 AN hex-head bolts in place of cap screws, they wouldn't take them if you gave them to them free of charge and delivered them to their door at no cost. During World War II after several cut and try attempts we finally came up with what was known as a Metals Reserve-Murray Cook program. This was working excellently until it was taken over by the War Assets Administration. It was working well in spite of the fact that it was instituted under the most difficult conditions, namely, huge inventories bursting warehouses at the seams. In essence, the Metals Reserve-Murray Cook program is as follows: Material which becomes the property of the Government either because it is material from a cost-plus-fixed-fee contract or from a fixed-price contract but becomes Government property through contract terminations, engineering changes, etc., etc., channels its way into this program. The material is shipped to very carefully selected agents who can give documentary proof of having been successfully engaged in the distribution of identical products over a period of years. The material remains Government property in the custody of the carefully selected agents until sold. The agents receive the material, unpack it, inspect it, properly warehouse it, advertise and sell it. When the agents sell the material, and not until then, they receive a service fee for such service. This redistribution through normal experienced channels of trade is undoubtedly the most effective and most economical method that could be devised. I must emphasize, however, that the proper, intelligent selection of agents is all important. Lt. Gen. E. W. Rawlings administered that program during World War II and is now commanding general of Wright Patterson Air Force Base. The general, I feel, is in accord with the reestablishment of that program and the Air Forces have signed a proposal for a reestablishment of the program. I don't want to give you the impression, however, that this was done without any struggle whatsoever. Each one of the services has its group of officers and civilians known as the disposal group and they, for some reason or other, are always vehemently opposed to any disposal program other than the one they administer. However, their program consists largely of stuffing reported surpluses down the throats of their own Supply Division depots and, while I can't prove it, I think a quick check would indicate that the depots are already heavily overstocked, and possibly overstocked with material which is intended for repairs and maintenance to airplanes not yet built and probably not yet built because of the lack of some of these very materials required to build them. The Bureau of Aeronautics of the Navy have gone on record as being opposed to the reestablishment of the Metals Reserve-Murray Cook program. I take part of the blame for that because of a poor presentation to the Navy. With the Air Force, we got approval at the very top and then went ahead and did a selling job down the line. With the Navy we started at the bottom, got turned down and the "bottom" sold the "top" on the idea of the program being undesirable. A quick check into the correspondence on the subject will indicate that with the Navy as with the Air Force the objection comes from those people on the operating level involved with their own little disposal programs, all of which in their various variations proved wholly inadequate in World War II and are proving wholly inadequate now. Somebody just has to have enough guts to get the various organizations involved together and tell them the facts of life before it is too late and I think you're just the man that can do it. If I can be of any assistance whatsoever, do not hesitate to call upon me. Yours very truly, Hon. CHET HOLIFIELD, Member of Congress, Washington, D. C. A. E. R. PETERKA. DUMONT AVIATION ASSOCIATES, DEAR CONGRESSMAN HOLIFIELD: During my recent visit to Wright Field, Dayton, Ohio, I had the opportunity to meet with various representatives of the Aircraft Production Resources Agency and to discuss with them what consideration had been given to any plans for the redistribution of the excess aircraft materials, which were being generated through engineering changes, production cut-backs, and cancellations in the aircraft production program. I was advised that a plan had been developed by the Agency, which had the approval of the Air Force and the Aircraft Industries Association of America, but opposition had been encountered from the Bureau of Aeronautics, and further, that this plan was being forwarded to your committee for consideration, in accordance with your request of February 22, 1952. It is our opinion that the plan, as outlined by the Aircraft Production Resources Agency, is in the best interests of the United States Government, the armed services, and the aircraft industry. By the establishment of qualified agents presently engaged in servicing the industry and the armed services, the Government will be assured of the highest recovery of cost through the use of this currently existing efficient channel of distribution. Further, through the redistribution of excess materials, it is certain that considerable savings may be effected by the Government in the way of conservation of critical materials, reduction in expansion of productive facilities, and in certain cases, alleviating shortages which exist on a company basis, rather than an industry basis. We feel that your committee will concur in the adoption of an agency program, when additional consideration is given to the manner in which surplus materials were disposed of during and after World War II. Of all the various methods of disposal which were adopted, we are certain that the operations of the War Assets agents returned the highest recovery of cost and permitted the greatest degree of control by the United States Government. In the event our appearance before your committee could be of any help and assistance, we would be only too willing to do so. Very truly yours, CHET HOLIFIELD, DUMONT AVIATION ASSOCIATES, LONG BEACH, CALIF., June 23, 1952. Chairman, Executive and Legislative Reorganization Subcommittee, House of Congress Building, Washington, D. C. DEAR CONGRESSMAN HOLIFIELD: Due to unavoidable circumstances I shall be unable to appear before your committee's hearings on the redistribution of aircraft material. However, we would like to take this opportunity to voice our support of the agency plan as proposed by the Aircraft Production Resources Agency, As indicated in our letter of May 7, 1952, we feel that by the establishment of qualified agents who are presently engaged in servicing the aircraft industry and the armed services, that the Government will be assured of the highest recovery of cost and the greatest degree of control, and that savings may be affected such as conservation of critical material, reduction in expansion of productive facilities, and, in certain cases, alleviation of shortages which exist on a company basis rather than an industry basis. I sincerely regret that I was unable to avail myself of the opportunity to appear personally before your subcommittee. Sincerely yours, Hon. CHET HOLIFIELD, Member of Congress, Washington, D. C. DUMONT AVIATION ASSOCIATES, STANDARD PRODUCTS, INC., DEAR CONGRESSMAN HOLIFIELD: This letter will acknowledge your telegram of June 18, and your invitation to attend the hearing scheduled for June 23, 24, and 25 on the subject of redistribution of aircraft material. Inasmuch as I have accepted dates on another matter quite important to our business, and have found that I cannot on so short a notice change these plans, it will not be possible for me to attend this particular meeting. However, as I expressed to Gen. E. W. Rawlings in my letter to him of April 15, copy of which was attached to my letter to you of April 28, we are vitally interested in this program. Because of our extreme interest, I have requested, by long-distance telephone of this date, that Mr. A. E. R. Peterka, of Lamson & Sessions, Cleveland, Ohio, speak in our behalf. Trusting it will be possible to inform me of the accomplishments of this meeting, and with kindest regards for your interest in this matter, I remain Very truly yours, Hon. CHET HOLIFIELD, Member of Congress, Washington, D. C. STANDARD PRODUCTS, INC., E. L CRABB, President. STANDARD PRODUCTS, INC., Wichita, Kans., April 28, 1952. DEAR CONGRESSMAN HOLIFIELD: I understand that you are interested in the matter of redistribution of idle and excess inventories of aircraft parts and components. Attached is a copy of my letter of April 15 to Lieutenant General Rawlings, Wright Field, which expresses our viewpoint in the matter, and also our interest from the standpoint of careful and sane handling of excess inventories. Any comments you may have will be appreciated. Very truly yours, STANDARD PRODUCTS, INC., APRIL 15, 1952. Lt. Gen. E. W. RAWLINGS, Commanding General, Wright-Patterson Air Force Base, Dayton, Ohio. MY DEAR GENERAL: I understand that you are working on plans to reestablish the redistribution program, and want to congratulate you for taking action on this matter at this time. The experience gained during World War II and the postwar period should be most helpful in creating a sound program to be instituted as quickly as possible, thus holding to a minimum excesses which, if not disposed of in an orderly manner and with dispatch, will result in out-of-balance inventories. As indicated by your interest in this matter, you, too, are aware of the fact that excesses are at this moment building up, due to cancellations, cut-backs, errors in purchasing, and engineering changes. In my opinion, based upon 10 years' experience in the aviation-parts business and many more years in the distributing business, now and not after warehouses are bulging is the time to take action. There should be started, without further delay, an aggressive but sound program to use out-of-balance inventories as a measure toward holding defense costs to a minimum, and the elimination, so far as possible, of overproduction of various parts and components. A program of this kind needs a warm-up period to work out the kinks; thus, a sound reason for getting it on its way now. I have on my desk this morning an imposing list of airframe items entitled "Company-Owned Surplus Property." No mention is made of Air Force property. I have taken the time to check into their plan for disposing of Government property and find that, after the property is screened by AMC, it is disposed of through the channel of bid sales. There are several facts to be injected at this point: First, the usual list of for-sale items by airframe manufacturers is often incomplete because in many instances the nomenclature is confined to company part numbers, whereas many of the items should be given a more general description or reduced to standard AN numbers. Second, the offering of Government property through bid sales should be the final method of disposal and not the first. Bid sales are easy and quick, but usually the most expensive method of disposal, inasmuch as recovery is low, and the successful bidder sharp. I believe I can make the following statement without reservation: The disposal section of a prime contractor is not geared to the type of selling and distribution methods required to adequately move excess inventories, and I further add without reservation that distributors of aircraft parts lack the know-how to produce airframes. |