Mr. Chairman, I am not overstating the case. At this time, and under present circumstances, I see no happy ending. This is Armageddon for American small business unless a powerful stand is taken in its behalf by the Congress.

The Federal Trade Commission is not strong enough by itself to "save the day" and the Justice Department has been a timid umpire too many times in the past. The Congress, as always, is really the court of last appeal when the little man is hurting. History has shown, beyond the shadow of a doubt, that Congress has come consistently closer to objectivity than either of the other two branches of Government.

Gentlemen, the hour grows late for those of us who represent small business. The facts that have been presented must be looked upon as characteristic of the threats that all small business in America now face. The question goes far beyond the tool and die industry-it becomes a question of gut philosophy: Shall we have a strong and healthy small business community in America or shall we concentrate all manufacturing and economic power in a handful of corporate supergiants and turn from democratic free enterprise to industrial dictatorship? I think that the answer has to be obvious-small business must not only be preserved but strengthened.

One of the surest ways to serve notice that this will be done is to use congressional wisdom in correcting the industrial inequities and the affronts to taxpayers that have been described and documented these past 2 days.

Before these hearings are over, this subcommittee will be presented with testimony from the automakers and others, much of which unfortunately may serve only to becloud the issues. The automakers will come and tell you that they have no intention of putting the contract tool and die industry out of business, thta they have extremely limited plans for the use of in-house tooling facilities. In the same breath, they will also tell you that they have had to build additional facilities for the sake of insurance" because they are not certain that there is enough capacity in the contract industry.

As a last resort, and this they have only been saying recently, "the contract industry will have to change technically, they will have to put in numerically controlled profilers, scanners and sensors tied to computers, and all of the new equipment necessary for manufacturing dies by the methods which the automotive people are now developing."

To the layman, this will sound as though all the processes that they are talking about are being utilized in all production this very moment, and therefore without these new machines the contract industry could not possibly manufacture their tooling.

The truth of the matter is, of course, that these processes are not yet ready, although they soon will be, and when they are ready, we will also be ready so long as they tell us we still have a market to serve.

The problem is basically this: The automotive manufacturers have set in motion a trend that is difficult to stop, that can only be stopped if they take a realistic look at costs and make a serious attempt to see where their industry and ours are going to be in 10 years if present conditions continue."

The major point we must get across is that our industry's capacity serving the automotive sector cannot exist on a spillover of work

every 3 or 4 years while the captive toolrooms attempt to handle regular tooling programs. If captive facilities are needed for "insurance," then they should be the last to be filled, not the first.

The subcommittee should consider on a larger scale the implications of this captive trend in the automotive industry. Because of the automotive industry's traditional demands for outside tooling, an independent capacity has been created which serves thousands of other industries and many small- and medium-sized manufacturing companies in those industries that could not develop their own tooling facilities.

What will happen to them if the contract industry is weakened and eroded? Will they purchase their tooling from Chrysler or General Motors at their prices?

Consider the possibility of one new entry into the automobile industry itself, which is not out of the question in view of the development of the steam engine primarily to answer the need for some control of air pollution. Where would a new automobile company in this field obtain its tooling? If the capacity of our industry is not available, this type of entry will be effectively foreclosed and the public will simply have to wait until the established auto manufacturers decide to develop this field.

I do not know what excuse the aerospace companies will have for subcontracting huge amounts of tooling to each other, companies that are not in the tooling business, companies whose cost for the manufacture of tooling has to be higher than ours. I have no idea how they will rationalize that, especially when there is not a clear-cut bid situation involved.

In the case of Government-owned machine tools being furnished to prime contractors, well, if I were to rationalize that, I could think of a thousand ways of doing it, a thousand excuses for it, all flimsy ones.

I defy even General Stanwix-Hay to find a way to becloud this particular issue. I am sure that any average citizen in the street would understand it very clearly. It is just one more way of being terribly careless with the taxpayers' dollar.

I wonder how American Motors, after receiving congressional tax relief, could commit such a breach of faith as to go to Europe for much of its tooling and then come back immediately and advertise in leading American magazines with a caption stating, "Buy American"—all this while highly paid American tool and diemakers walk the streets of Detroit and American small businessmen fall into bankruptcy.

I wonder how the Pentagon can call a prime supplier and give him. an order for military spare parts which he may not have manufactured in several years and then sit back and wait an eternity for them to be delivered while paying an exorbitant price. All of this when the contract tool, die, and precision machining industry is totally equipped to do this work quickly and economically.

The tool and die industry operates the largest skills training program in the United States through its national association. I wonder how the Big Three automakers rationalize it when they brazenly pirate our skilled help, our apprentices, our best journeymen.

Last year, when close to 2,000 skilled diemakers of the contract shops were walking the streets of Detroit because these shops were lacking

business, the automotive manufacturers were running huge space ads in the Detroit papers attempting to hire, in numbers, the skilled people who were on the streets from the job shops.

It has been common knowledge for many years that the best training for tool and diemakers is conducted by the contract tool and die industry, and the big three have fed on this skills pool for many years.

Yes, I am sure that when the other testimony is given, the questions we are discussing today will take on a thousand nuances which will be used as a smokescreen to try to obscure the real issues at hand. I am confident, however, that the committee will see through these and go on to prescribe the remedies that are so badly needed.

The first remedy I would suggest is a very tightly written law prohibiting any use whatsoever of Government-owned machine tools for commercial work. A law which would also prohibit the Government from renting surplus machine tools at any time under any circumstances except when absolutely needed for military work. This law should also make it mandatory for a contractor, or a would-be Government contractor, to furnish incontrovertible proof that the requested machine tools are not available from privately owned sources.

Another badly needed remedy is a regulation prohibiting any company acting as a Government prime contractor from usurping the business of the tool and die industry by building their own tooling for the contract or letting out such tooling to other large aircraft prime

contractors.

With respect to the automotive problems, the remedy is more complex. The Government does not have the control over the buying practices of Chrysler or General Motors that it has over its prime contractors. First of all, this subcommittee can consider the evidence submitted by all parties and condemn publicly the unlimited expansion of in-house tooling facilities which will undermine the small businesses of our industries. It can offer constructive proposals to the automotive industry and seek their cooperation in maintaining conditions whereby the capacity of our industry can be preserved.

The subcommittee can also recommend appropriate investigations or action by the executive agencies of the Government to determine. whether present law and policies are being violated. If present laws and policies are not adequate to deal with these problems, the subcommittee can recommend new legislation.

In the case of rising imports of tooling, the subcommittee can determine whether present trade policies and tariff schedules are satisfactory to maintain the essential elements of our economy and defense production base.

In first glancing at these suggestions, one might think me an enemy of free enterprise, or someone who is trying to bend the system to his own narrow purposes. Quite the contrary-my objective in making these statements is the preservation of free enterprise. The paradox of free enterprise is such that when the system is allowed to operate to the fullest, in a totally laissez-faire situation, it cannot help but ultimately extinguish itself; in short, a handful of firms or possibly one firm ultimately has to wind up owning all of the goods and controlling all of the market.

This is the very goal of unfettered free enterprise. Economists and legislators have recognized this for many years and have taken steps,

from time to time, to make sure that it did not happen. The remedies that I have asked for are really adjustments to the rules of the game of free enterprise which, if enacted, will allow the game to continue. If they are not enacted, the game will be over.

Mr. Chairman and members of the committee, thank you very much for this opportunity to testify. If you have any questions, I shall be very happy to attempt to answer them.

Mr. SMITH. I think you have summarized the problem very well, or the problems I should say.

It occurred to me where is the new technology in the automotive tooling going? Are the companies getting it?

Mr. HARDMAN. I would like very much to answer that. I think that there has been, as a result of testimony, maybe not complete in the last day or so, a misconception about the new technology in machining and in tooling and in the manufacture of tooling.

First of all, let us get it on the record very clearly, as we have put it on the record with the Pentagon by supplying them computer print out of the inventory of machine tools for this industry, that the contract tool die and precision machining industry probably is as advanced or more advanced than any other segment of manufacture in the United States, in the utilization of the new technology, which boils down specifically to the use of numerically controlled machines, electrical discharge machining, electrochemical machining, the tying in of the computer to all of these activities.

The job shops that you have heard described here for the past 2 days are heavily engaged in this. They are heavily invested in this, maybe as much as $50 million in the industry already. The gentleman that just testified on spare parts said that he had a 15-man shop, if you remember, in St. Louis. Well, he has one numerically controlled machine even in that small shop. He has a Cintomatic that is probably worth $40,000 or more. That is in a 15-man shop. You heard Mr. Kraus talk about a 120-man shop with a $1,200,000 investment in the last 2 years. These are not exceptions. They are typical of our industry, and give you an idea of how technically qualified we are with the new equipment.

We are in this condition in every single area of our business except in one tiny pocket. Ten or fifteen major die shops in Detroit that manufacture skin dies for automotive, and they are still well equipped to do their job, but are ready to spend the money for numerically controlled profilers as soon as someone assures them that they have a market. That is the only isolated spot in our industry that anyone could point a finger at and say it is not technically up to snuff with the very latest equipment.

Now you probably also are asking what are the automobile people doing. They are developing a process and it is virtually developed in General Motors, Chrysler is still fooling around with it, of going from clay to tape, directly from clay to cutting metal.

What that means simply is this in layman's language.

A sculptor, an artist, a designer makes a clay model of the fender or the hood or whatever it is, and a sensor is passed over the surface, which is tied to a computer which in turn is recording points of the curve as rapidly as a computer can work, and I think you know how

rapid that is, and it is just a projection of the old way of draftsmen laying out points and connecting lines to draw a curve, only the computer can lay out an infinite number of points and do it instantaneously, and transfer this into tape at the same time and punch out a tape which can be put on a numerically controlled profiler. The hunk of metal is already on there. You can start cutting metal. There is no blueprint, there is no inbetween, there is no messing around. That is the ultimate that is being searched for right now.

I am pretty sure that General Motors is almost there.

Now that still is no excuse for them to be in the die business. Even at that point, these tapes, can be handed over to the low bidder in the die business, and he can run it on his numerically controlled machine which he is quite willing to buy if he knows he can get that work. Mr. SMITH. Have the automotive companies asked the independents to purchase numerically controlled machines?

Mr. HARDMAN. The automotive manufacturers have been I think less than forthright in this respect. They have been saying to some of our people just the opposite when people have questioned them. They have said, "Don't you worry about buying any NC equipment for another 4 or 5 years" and this is as recent as 2 years ago. The only time that anyone in automotive to my knowledge has ever said, "You had better get with it, you die shops, you had better get with it with the new NC profilers" is in the last 8 or 9 months since I have been carrying on a dialog with the vice president of General Motors, and finally in what I would say was a position where his argument was getting weak he said this as a last resort, and he did not sound too convincing when he said it.

Mr. SMITH. Several of the witnesses have indicated that the inhouse shops are securing their employees from independents. Do they have a program of their own for training these employees?

Mr. HARDMAN. To the best of my knowledge Ford and GM have apprentice programs. It is a matter of record, and is so stated by the U.S. Labor Department that the National Tool Die & Precision Machining Association, within its industry, runs the largest skills training program of tool and diemakers and machinists, and many people have described it as the most outstanding and the most effective in the country, and we have been called such things as pioneers and innovators of techniques for training and teaching. We have written many textbooks or are in the process of writing several more.

Mr. SMITH. I just wondered what effect the expansion of inhouse facilities would have upon the long-run supply of skilled employees. Mr. HARDMAN. All right. Our biggest problem as a result of that the way I see it is that we not only do this skills training and have for many years, but we have been creating special techniques for bringing minorities and disadvantaged into our programs, and we find all of our trainees jobs. We have a hundred percent job placement record.

Now as they start to kill us in the respect that we are describing here, it becomes much more difficult for us to place these people into jobs.

Mr. SMITH. Do you have questions, Mr. Hungate?

Mr. HUNGATE. You say you have some 1,500 members?