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The nation began paying its pound of flesh last week for the steel and coal strikes. All over the country, the vise-tight pinch on steel and other metals began to shut down plants or curtail industrial production. Though U.S. industry was still far from capacity, production was already bumping the materials ceiling.

Detroit's automakers were the hardest hit. Last week, Chevrolet production dropped from 12,347 to 7,792. Briggs Manufacturing Co., which makes bodies for Chrysler and Packard, laid off 7,000 workers, cut schedules in half. Result: Chrysler cut its daily production from 3,600 to 2,775 cars, is expected to lay off 18,000 workers. Ford production too began to slip.

No one knew for sure when the workers would be rehired. Said Briggs: perhaps January, perhaps not till April. The industry had hoped to turn out 500,000 cars in October. Instead, Ward's automotive reports estimated that production would now be only 356,000, down to where it was in August. Packard Sales Manager Lyman W. Slack gloomily predicted: "The average person simply will not be able to buy a car until well into 1947."

Out Expansion. The steel shortage had hit autos most spectacularly because automakers are the biggest users of finished steel (17% of U.S. production). Steel had been tight ever since war's end. But the coal & steel strikes which cost the U.S. 16,000,000 tons of steel had run down manufacturers' inventories just when they should have been building up to meet increasing production. Though overall steel production had been stepped up to 90% of capacity, there was no quick way to step up production of steel sheets (25% of all steel).

Steel plant expansions have been stymied by strikes & shortages of building materials. And as the production curve rose in one industry after another in the last few months, the steel supply was spread thinner all around. In many spots it was bound to run out entirely.

In Retrenchment. No one expected the pinch to loosen for at least six months. Even the normally optimistic CPA said: "The shortage in steel will last for 18 months or two years."

Faced with these cold facts, money-losing corporations, which had kept payrolls fat in hopes that peak production would pull them out of the red, now began to think about trimming. After the stockmarket crash, Wall Streeters had predicted that many a businessman would start using the ugly word "retrenchment" instead of expansion. Last week, in one of the country's key industries, at least, it looked as if the retrenchment had started.

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