could you tell us what the leadtime is without utilizing numerical machines for the total model production and what you see lying ahead in terms of cutting that leadtime down?

Mr. BOGART. I wish that I could document a reduction based on our work to date. Actually, I cannot, because the total system that we have in our company is still on an experimental basis. We have not completed the system, we do not have all of the components, particularly as it relates back into the clay where we get the information from the clay itself.

As of right now, regaining the time difference between numerical control and direct machining, if we are dealing with a single die, there is very little difference.

Mr. POTVIN. Without meaning to get Buck Rogerish about it, if Ford were successful in some of the technology breakthroughs that you need, what would you see as the optimum reduction in the next, say, 8 or 10 years, something in that order?

Mr. BOGART. We will do most anything to get 1, 2, 4 weeks from the system.

Mr. POTVIN. In other words, you are implying that it is that valuable to save only 1, 2, or 4 weeks?

Mr. BOGART. Yes, sir.

Mr. POTVIN. I see.

Mr. BOGART. So, again, I am not trying to avoid your question, it is only that I cannot document it-there has been much published in the paper or in the technical trade that have some rather outlandish suggestions of reductions that we think would be wonderful if we could achieve them. Numbers like 4, 5, 6 months. I cannot describe them at this point in time. I have the responsibility for getting that tooling time down, and this question has not only been asked by the committee here but by my own management.

Mr. POTVIN. Could you, sir, for the subcommittee, explain the extreme value to your company of even a week's reduction? I suspect that the name "Edsel" may figure large in this somewhere.

Mr. BOGART. Well, I will avoid that one last question about the Edsel, sir. Actually, it has to do with the matter of change of design and being responsive to the marketplace. It is quite conceivable that one could be well along in designing an automobile in the clay model stage and find out that the public's taste, as identified in models that have just come out, has suddenly changed, and that which you thought is the way to go is no longer the way to go. So, on that basis, you may look at the car and you may say, "I would like to change that." Now, if you can do this faster, then this allows you to get back into the marketplace with a changed model. Now, this does not mean that we are going to start out the 1970 model year next fall and decide that the next week we have to have a different theme, stylewise, and be able to put it in the 1970 model. But it does mean that future models will be influenced by what happens in the marketplace next fall.

I say 1 week because that, to us, is a finite period of time that is useful to us. Every time-and I do not think about the weeks as we go down the line-I would think that 4 weeks would be somewhat more valuable than four times 1 week.

Mr. SMITH. If you were to decide as a hypothetical to increase your in-house capacity from 15 percent, we will say, to 25 or 30 percent, how long would it take to do that?

Mr. BOGART. I want to be sure that, when we say the 15 percent, you are looking at our total tools manufactured in-house.

Mr. SMITH. Yes.

Mr. BOGART. Actually, because of the weight of the figures in front of you, to go to 30 percent, where we have very little capability in areas other than body dies, we would either have to make a major change in our body die sourcing and take almost 100 percent of it, or we would have to develop entirely new capability in the other portion of our tooling. So again the leadtime in our modern planning is from 2 to 4 and even 5 years. In other words, were we to approach that— and I see no signs that we might-we would be examining very carefully what is the technology in these other areas. And we would like to introduce a new modern facility that borrowed on tomorrow's technology. So this probably brings the leadtime more than that required to build a building, to find people, to put machines in, and turn the power on.

Mr. SMITH. Mr. Hungate?

Mr. HUNGATE. Mr. Chairman.

I am back to the taillights again, please. Is that an independent distributor in Canada, or is that partially owned by your company? Mr. BOGART. It is an independent contractor.

Mr. HUNGATE. Is there any approximation of the dollar volume of Government contracts with your company in this field, or is that available?

Mr. BOGART. We have no facilities that do Government contracts work in the automotive part of the business. The Detroit area is exclusively dedicated to the automotive end of the business. The minor exception would be as it relates to our making for the Government trucks, cars, and special vehicles of that nature. But it is all part of the same complex. It does not involve Government tooling and it is a normal procurement by the Government.

Mr. HUNGATE. Then is there a certain dollar volume for trucks and things of that nature, perhaps spare parts?

Mr. BOGART. With respect to what, sir?

Mr. HUNGATE. The Government purchases for trucks and things of that kind.

Mr. BOGART. As far as the tools are concerned, I cannot break it out. Mr. HUNGATE. Is all of your automotive division, then, in the Detroit area?

Mr. BOGART. We have tooling facilities, which I presume you are speaking to

Mr. HUNGATE. Yes, sir.

Mr. BOGART (continuing). Outside of the Detroit area-in Buffalo, N.Y.; in Cleveland, Ohio; and Chicago, Ill.; plus a plant, the Woodhaven plant, which is essentially in the Detroit area. It is midway between Detroit and Monroe.

Mr. HUNGATE. And your statement would apply to all those plants! Mr. BOGART. Yes, sir.

Mr. HUNGATE. Then it would appear-what would be the percent of the automotive operation in that Detroit area? Could we roughly approximate that? Is half of it there or more than half or less?

Mr. BOGART. Well, let us see. A little more than half. Somewhat more than half.

Mr. HUNGATE. Now, the committee has had testimony as follows from Mr. Lasco, who is president of the Republic Die & Tool Co., at Wayne, Mich.: "Expressing my concern along with others in the industry, the expanding use of captive in-house facilities by the automotive industry."

Then he goes on to say, "Hundreds of tool and die shops in the Detroit area have gone out of business in the last 2 or 3 years mainly as a result of a decline of the automotive business. At least 50 shops have closed their doors."

Would you say that is a correct statement or an incorrect statement? Mr. BOGART. Ås it relates to our normal line of vendors, I think it is a little high. We would not have said 50 as being the number. We think the number is closer to five that have become unavailable to us. Some of them have gone out of business, I guess.

Mr. HUNGATE. That is all I have.
Mr. SMITH. Mr. Dingell?

Mr. DINGELL. No questions.

Mr. ODEN. I have one question.

Referring to your chart, as far as the total tooling used for 1969, you show a total of 17.2 percent. I wonder if you can give us any projection as to what percentage of this 17.2 percent that you believe work could be done on numerical control equipment. I am talking about in-house. Of that 17 percent, what percent can you see in the future would be done by numerical control equipment if you can develop the technology?

Mr. BOGART. Because of the other operations that are performed, including the tryout that I described, the barbering or polishing of the dies, this number is less than 5 percent.

Mr. ODEN. Well, let us say removing the polishing and the touchup work, as I say, making the basic die, what percentage, do you think, of dies were made strictly off numerical control? Would it be 80 percent, 60 percent?

Mr. BOGART. Of this 17 percent?

Mr. ODEN. Yes.

Mr. BOGART. Oh, 25 or 30 percent.

Mr. ODEN. That is projecting what, 5 or 6 years from now, 8 years? Mr. BOGART. This is beyond the 5-year period.

Mr. ODEN. Thank you.

Mr. SMITH. Mr. Addabbo?

Mr. ADDABBO. Thank you, Mr. Chairman.

Mr. Bogart, you mention several plants. Could you for the record give us the dates these plants were opened?

Mr. BOGART. Will an approximation of the numbers satisfy you? Mr. ADDABBO. Yes.

Mr. BOGART. Buffalo in 1950; Cleveland in 1954; Chicago in 1956; Woodhaven-this I have to go back and see what I said here. We will try to keep it consistent, 1965. Those are approximate dates, sir.

Mr. ADDABBO. Are you contemplating opening any other new stamping facilities?

Mr. BOGART. We have no approved plans at the moment, although we continue to study when we need additional stamping capacity. Mr. ADDABBO. Thank you.

Mr. SMITH. Thank you, Mr. Bogart. You have been a very responsive witness and permitted us to cover a great deal of territory in a short time. We appreciate it.

Mr. BOGART. Thank you very much.

(The following letter was ordered to be inserted at this point :)

FORD MOTOR CO., Dearborn, Mich., July 10, 1969.

Hon. NEAL SMITH, Chairman, Subcommittee on Special Small Business Problems, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: At the June 3, 1969 hearings of the Subcommittee on Special Small Business Problems, we were requested to provide additional information regarding Ford Motor Company's in-house manufacture of special tools other than body dies. Referring to the attachment to our prepared statement, Representative Horton noted that the costs of "other" special tools manufactured in-house increased from $9.2 million in 1965 to $13.2 million in 1969 and asked what caused the increase.

The increase of $4 million from 1965 to 1969 resulted primarily from an increase in in-house development and manufacture of Body Assembly Fixtures. Body Assembly Fixtures are used in the build-up of sheet metal and subassemblies into body sides which are then merged together to form the auto body. These fixtures are comprised of many units, such as risers, locating blocks, clamps, welding equipment and transfer equipment. (To attempt to graphically illustrate the complex nature of the fixtures, I have attached a photograph of one such development fixture showing the way in which the auto body nests into the fixtures.)

During this same period, 1965 to 1969 under consideration, our outside purchase of Body Assembly Fixtures did not decrease but, in fact, increased slightly. We appreciate the opportunity to present this additional information to the Subcommittee. If there are any other questions we may be of help with, we shall be happy to be of service.

Very truly yours,

HAROLD N. BOGART,
Director, Numerical Control Office,

Mr. SMITH. Mr. Kerigan.

Manufacturing Staff.

TESTIMONY OF JOSEPH F. KERIGAN, VICE PRESIDENT, CHRYSLER CORP., DETROIT, MICH.; ACCOMPANIED BY VICTOR C. TOMLINSON, COUNSEL

Mr. KERIGAN. Mr. Chairman, gentlemen.

I would like, first of all, to introduce Mr. V. C. Tomlinson, our counsel.

My name is Joseph Kerigan, and I am vice president of Chrysler Corp. in charge of the car assembly and stamping group. I am here in response to your request for a representative of Chrysler to appear today regarding your inquiry into the status and condition of small business in the tool and die industry. More specifically, I understand a fear has been expressed that in-house facilities of members of the automobile industry will be expanded in a way that will adversely affect the independent tool and die business or radically alter the ability of the independent tool and die industry to survive.

The condition of the tool and die industry was investigated by your committee in 1966. At the time your committee reported "that the tool and die industry and the machine tool industry face a growing need for modernization and increased production in order to meet the everincreasing consumer demand in our expanding economy." The report emphasized two problem areas in making progress toward technological modernization and increased production: "(1) finance, the need for capital to modernize plants by purchasing modern cost-reducing machine tools, and (2) manpower, the great need for adequate skilled labor to meet production demands." Another problem seemed to have been created by the temporary suspension of the 7-percent investment credit on machinery and equipment. Ironically, the committee found that these problems were not derived from a lack of business prosperity within these industries. On the contrary, it was found that the problems were "spawned by an expanding economy and improvements in technology." We would not be surprised if your investigations should reveal that the tool and die industry is in the same situation today as it was in 1966, and for the same reasons.

Chrysler Corp., as you know, makes large outlays each year for tools, dies, and fixtures needed to produce new-model passenger cars and trucks. A large percentage of these purchases are made from independent businesses in the tool and die industry, most of whom satisfy the definition of small businesses which qualify for assistance by the Small Business Administration. Our expenditures for tools and dies vary from 1 year to the next, however, principally as a result of the scope of our new model programs, and not as a result of changing our own in-house capacity.

Our purposes of advance planning, we provide our principal suppliers in the tool and die industry 3-year forecasts of our requirements for tools and dies. They have received and will continue to receive, sufficient information to permit advance planning for our requirements. In addition, if the needs of a particular model year are expected to be heavy, releases are scheduled so that construction can begin immediately following the completion of work for the previous year. In effect, we provide a continuing flow of essential advance information to our principal sources so that they can intelligently compete for our tooling requirements and plan their long-range operations.

The dollar value of Chrysler Corp.'s tooling requirements from outside sources has increased approximately 300 percent since 1964, yet in each of those 6 years our outside tooling purchases remained at between 71 and 79 percent of our total tooling expenditure.

Of this expenditure, more than 50 percent of the necessary die work, the great majority of our fixtures, and almost all of our special machines were provided by outside sources.

It is important to emphasize the fact that, during the 6-year period in question, 1964 to 1969, the share of our tooling requirements purchased outside remained at a fairly constant three-quarters of the total need, while volume of the demand itself has tripled.

At this point, Mr. Chairman, I would like to submit for the record a schedule of Chrysler's total tooling expenditures for these years, including the percentage of in-house and outside work performed. (The document referred to follows:)