Stripping for Action

In their New Britain, Conn, plant last week., appliance-makers Landers, Frary & Clark (Universal Appliances) were busy with a new vacuum cleaner which had one radical change from their old model--the price. Instead of retailing at $79.95, the new model sold for $49.95.

It was more than a simple price cut.

Landers had stripped all the frills and doodads from its de luxe tank-type cleaner to get a cheaper one on the market. Example: the light that flashed when the tank needed emptying was eliminated.

Tricks. Faced with slumping sales, many other manufacturers were trying similar tricks. They were well aware that the drop in buying was caused less by a lack of customers' cash than a stubborn rebellion against high prices. Though businessmen grumbled about recession, it was still the most prosperous recession the U.S. had ever had. Consumers' dollars could still be lured out for the right product at the right price.

General Electric Co. shaved $10 off the price of its upright vacuum cleaner (new price: $44.95) by such changes as a wood-and-metal for an all-metal handle. G.E. was about to bring out a new dishwasher that would not require permanent plumbing fixtures, thus abolishing installation costs running to $125 on current models. G.E. had also eliminated a soaking gadget on a new-model automatic washing machine, thereby saving the buyer $70 (price: $299.50). After two years of experiments and a $2,500,000 outlay for development, Bendix Home Appliances, Inc. introduced a completely new automatic washing machine for $179.95--$70 under its cheapest old model.

Pack One. Other industries did likewise. Kling Furniture Factories brought out cheaper new lines and priced their regular furniture 4 1/2% to 10% lower. Most of the major tiremakers had introduced low-priced tires and even some automakers were joining the parade: some "extras" became standard equipment. This week General Motors Corp. cut its auto prices from $10 to $40 as G.M. wages (tied to the cost-of-living index) came down 1-c- an hour.

Some manufacturers were finding ways to cut prices while retaining all the features of their old higher-priced lines. The Detroit-Michigan Stove Co. brought out a new line of gas ranges to retail 12% to 20% below the market for competing ranges. With department-store sales slipping behind last year's, more industries were facing the problem of whether to cut production or take a chance with ingenious cost-cutting practices. In many cases ingenuity was already paying off.

Many manufacturers were still answering the sales slump with layoffs and production cuts. Last week, the Department of Commerce reported that first-quarter output of goods and services in the U.S. was at an annual rate of $256 billion, off $9 billion from the final quarter of 1948 in the sharpest drop since the war. Still, the pace was $1 billion ahead of the average for 1948, biggest year on record. The Bureau of Labor Statistics reported that manufacturing employment fell by 330,000 between mid-March and mid-April. But seasonal increases in trade and construction offset the loss, and the three-month decline in overall nonagricultural employment had stopped at 43,900,000, about 400,000 below April 1948.

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