Possible Programs of the Smaller War Plants Corporation on Surplus Property There could be at least four programs of the Smaller War Plants Corporation on surplus property. Although these programs are closely related, they may be discussed separately, since each is directed toward a slightly different objective in aiding small business." A. Locating surplus property for individual purchasers. · C. Providing assistance in determining the needs of small business for D. Purchasing surplus property for resale, lease, or rental to small business. A. Locating Surplus Property for Small Business 'The Surplus War Property Division of the Reconstruction Finance Corporation is publishing catalogs which, in about two months, will include practically all surplus machine tools as well as other types of properties. However, the information supplied in the catalog will not be sufficient to answer the detailed questions which any buyer, particularly a small buyer, would want to know before purchasing such a costly item as machine tools. In the absence of any assistance provided by the Smaller War Plants Corporation, each prospective buyer would probably have to journey around the country and personally inspect the individual tools of the general type in which he is interested. If the Smaller War Plants Corporation can materially reduce the amount of this personal investigation, it will perform a most useful service for small business. It should be remembered that personal inspection constitutes no serious burden on large businesses with their branch offices scattered throughout the country. It is important to recognize that the major objective of this program will probably be that of focusing the buyer's interest on tools and equipment he can use efficiently. B. Providing Loans for the Acquisition of Surplus Property The questions to be settled on the matter of loans on surplus property all fall back to the general question of whether or not funds will be made available by Congress for this purpose. As discussed elsewhere in this report, our loan experience has been so satisfactory that it should justify confidence that loans on surplus property would be made with absolute regard for both the soundness of the loan and the needs of small business. Once funds have been made available, the Loan Bureau in Washington and the Regional Loan Agents in the field can quickly carry out any type of surplus property loan program. C. Assistance to Small Business in Determining Its Needs for Surplus Property Section 18, paragraph (d), of the Surplus Property Disposal Act states that "the Smaller War Plants Corporation is hereby authorized and directed to consult with small business to obtain full information concerning the needs of small business for surplus property." This section obviously means much more than merely surveying the needs of small business for surplus property, since that function had already been delegated to the Corporation in the preceding section of the act. Section 18, paragraph (c), provides that the Corporation shall make "surveys from time to time" and present to the attention of the agencies and the Board the needs and requirements of small business," for surplus property. Obviously, Congress intended in paragraph (d) that the Smaller War Plants Corporation should render specific assistance to individual small businesses, survey their plant equipment, and suggest the acquisition of certain types of surplus property which would increase the efficiency of small business. Essential to any program of this nature is the existence of a staff of trained engineers who are specialists in the problems of small plant operations. It should be emphasized that any recommendations of the engineer are to be considered only in the nature of suggestions. Large companies pay substantial sums of money in order to obtain the same type of engineering assistance. No small business would be under any obligation to accept these suggestions. D. Purchasing Surplus Property for Resale, Lease or Rental to Small Business The powers granted to the Smaller War Plants Corporation to purchase surplus property are very wide. The Corporation has the power to purchase surplus property for resale when, "in its judgment, such disposition is required to preserve and strengthen the competitive position of small business, and will assist the Corporation in the discharge of duties and responsibilities imposed upon it." Furthermore, the act provides that purchases by the Smaller War Plants Corporation, like purchases by all other Government agencies, "should be given priority over all other disposals provided for in this act.' The power to purchase surplus property for resale in the interest of protecting small business buyers is being given full study, and plans are being developed concerning its possible use. MACHINE TOOL SURVEY: PRELIMINARY FINDINGS As a basis for planning the Corporation's operations in helping small plants to obtain Government-owned machine tools, a trial survey was conducted in Wayne County, Mich., covering 212 small plants in the metalworking, machinery, and transportation equipment industries which had registered with the Corporation. The primary objective was to obtain some measure of the potential demand for such tools from small plants. Results of the survey in Detroit may not be applied arbitrarily across the country, but they offer a fair indication of what may be expected from a more elaborate survey. Some preliminary findings of this survey are as follows: (1) About 60 percent of small manufacturers plan to acquire surplus Government-owned tools for postwar production. (2) About 50 percent of the plants which plan to acquire Government-owned tools will have to finance such purchases either by loans or deferred payment plans. (3) About 50 percent of the plants which will need financing hope to receive credit from a Government agency. The high percentage of plants which expect to pay cash for Government surpluses may reflect undue optimism on the part of most manufacturers. Taxes, renegotiations, and delayed settlement of terminated contracts may leave many a manufacturer with a smaller cash balance than he now anticipates. While the sample of Detroit firms reflects a highly specialized area, it is interesting to note that these small plants owned approximately 30 machine tools apiece on the average. Those that plan to acquire machine tools will buy an average of about 10 tools each and hope to trade in an average of 5 of their present tools as partial payment on the 10 new ones. It is evident that the authority granted to the Corporation under the Surplus Property Act will need to be exercised extensively in the general program of furnishing the Nation's small factories with a better quality of machinery than they now possess. Many small plants have been laboring under the disability of relatively inefficient machinery. The enormous store of Government surpluses of the newest and best production facilities offers a great opportunity to raise the national level of efficiency, increase the standard of living and provide more goods and more jobs for more people. The survey also indicates-what has already been assumed from the general procurement program that the Government surplus tools are largely in the hands of the big companies. It will be necessary to publicize the surplus disposal program of machine tools very widely in order to acquaint the small manufacturers with the specific types of tools available and the channels through which they can acquire them. Moreover, although groups of tools will be purchased by each individual small plant, the total supply must be disposed of in lots small enough to enable the small manufacturer to purchase needed equipment with the least difficulty. Prices are, of course, an important element in the effectiveness of the disposal program. Only 57 percent of the plants surveyed in Detroit, presumably a very well informed area, knew of the present Government formula for pricing surplus tools. The survey disclosed that many plants do not know where or how to locate surplus tools. Most plant officials expected to apply through some Government agency." In this and in other matters relating to disposals, the Smaller War Plants Corporation is actively establishing the organization and procedure, including appropriate arrangements with the disposal agencies, to aid small business in participating to the fullest possible extent in the acquisition of Government surpluses. CONTRACTS PLACED WITH SMALL PLANTS During the months of August and September, the Smaller War Plants Corporation assisted in the placement of 3,894 prime contracts at $408,000,000. It also assisted in placing 4,366 subcontracts, valued at $78,000,000. (See exhibits II and IV.) The total value of these contracts was $486,000,000, as compared to $399,000,000 reported in June and July. This increase of $88,000,000, or 22.1 percent, has been achieved in spite of a decline in the total volume of Government contracts for war material. Comparable statistics from the Army and Navy show that the total number and value of contracts awarded in July and August dropped below the level of the previous 2-month period. However, the proportionate share of Army contracts awarded to small plants in July and August is practically equal to the share for May and June. In the case of the Navy, the record for July and August is even better than that for the previous 2-month period. This encouraging progress reflects the effective cooperation that has been developed between Smaller War Plants Corporation and the Armed Services. (See exhibit VI.) Prime Contracts Taken for Subcontracting During August and September 1944 one prime contract for 25 million. board feet of lumber valued at $1,500,000 was taken by the Corporation from the Army Corps of Engineers. It is estimated that between 100 and 150 small lumber producers and dealers will receive subcontracts under this prime contract. In addition, 10 subcontracts totaling $122,714.86 were placed with 6 different furniture producers under Prime Contract No. 1, covering furniture for the Federal Public Housing Authority. (For details as to subcontracts let under this and other prime contracts, see exhibit I.) FINANCIAL ASSISTANCE TO SMALL PLANTS During the 2-month period of August-September, more money was loaned than in any previous bimonthly period. The value of applications filed was also greater than at any time in the past. Applications made totaled $63,708,000. This represents an increase of $6,619,000, or 11.6 percent over the total of $57,089,000 for the previous period of June and July. Applications approved amounted to $39,886,600, an increase of $10,303,860, or 31 percent over the total of $29,582,000 made in the previous period. This is a good record, because the loans which have been made helped war and vitally needed civilian production. |