Bad News

STATE OF BUSINESS Bad News In Washington last week, 300 manufacturers of autos, refrigerators and a long list of other civilian goods gathered to find out how much the arms program will pinch them in the rest of the year. For the third quarter, the news was bad; it would probably be worse later on. In a series of new control edicts, the National Production Authority's Boss Manly Fleischmann ordered civilian-goods makers to: P:Cut their third quarter use of steel, now limited to 80% of the average for the six months preceding Korea, to 70% (65% for autos).

P:Cut their use of aluminum, now limited to 65% of pre-Korean averages, to 50%.

P:Cut their use of copper, now at 75%, to 60%.

The reason for the slashes, said Fleischmann, is that the defense program is picking up steam. He didn't know just how much steam. Nor does NPA have any idea how much metal is now actually being used in defense and essential industries. It hopes to find out when the Controlled Materials Plan goes into effect in July. But even without that knowledge, it has been earmarking ever-increasing chunks of raw materials for defense. For example, U.S. Steel Corp., which makes one-third of the nation's steel, set aside 25% of its March output for defense and for industries NPA called essential. It will have to set aside 50% next month, and 75% in July, far more than anyone had estimated before.

Coming as they did, the new cutbacks may not hit industry too hard. With inventories piled sky-high and sales lagging in many industries, plenty of manufacturers may welcome an excuse to slow down production. But if another wave of scare buying starts when the top-heavy stocks are trimmed later in the year, the new cutbacks may hit consumers and businessmen hard.

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