General Motors has also made strides in the area of Numerical Control.
Primarily this N/C program would provide reductions in lead time.

However, the associated increased efficiency and productivity would help reduce our manpower requirements. Sufficient manpower is and will continue to be a problem.

In addition to the increased capacity, the facility would also provide certain other benefits.

1. It would provide added flexibility and security in our tool building programs. Flexibility would assure capacity for late releases or engineering changes.

2. It would allow tooling to be adequately refined during tryout. This would be reflected in quality parts on early production vehicles. This is because this plant will have its own tryout facilities, which were not available in our existing shops as well as many of the outside shops.

3. It would provide added assurance of meeting start-up dates, as this increased capacity would indeed greatly reduce the present risk element.

4. It would help to reduce the long periods of production inefficiencies during model start-up. This would reduce direct labor costs because qualified tools would produce quality parts for the first vehicle assembled.

5. It would help to reduce the associated Burden Expenses at both the Manufacturing and Assembly Plants, because we would have reduced scrap losses, reduced maintenance and increased production efficiency.

These benefits, however, should be considered of only secondary importance in the final consideration of our proposal. The prime consideration is need. This stems from the fact that the outside sources do not have the capacity to adequately fulfill our requirements.

CHEVROLET MOTOR DIVISION,
GENERAL MOTORS CORP.,
July 11, 1969.

INTER-ORGANIZATION LETTER

Mr. R. KOPKE: This is in reference to the 26,000,000 build hours quoted in the speech given to the Detroit Tool and Die Association in 1966.

The 26,000,000 build hours provided by tool and die makers in Michigan in 1963 was estimated from information contained in the September 1965 issue of Tooling Information Service published by the Detroit Tooling Association. In that issue it was stated that the U.S. Bureau of Commerce reported in the 1963 Census of Manufacturers that Michigan shipped special tools and dies during 1963 amounting to $427.8 million. Chevrolet personnel estimated that this amount of tooling value would represent approximately 26,000,000 build hours, based on general tooling rates prevailing in the industry at that time.

J. W. BEGGS, Director of Facilities Control.

DETROIT TOOLING ASSOCIATION,
September 1965.

MICHIGAN MAINTAINS ITS TOOL AND DIE LEADERSHIP

PRELIMINARY U.S. BUREAU OF CENSUS FIGURES SHOW MICHIGAN LEADS ALL OTHER STATES IN THE PRODUCTION OF TOOLS, DIES, JIGS, AND FIXTURES-PRESS DIES ACCOUNT FOR 30 PERCENT OF THE TOTAL

Michigan's share of the tool, die, jig and fixture business is more than double that of its nearest state rival.

During the year 1963, the total value added by manufacture by Michigan plants was more than double that of its nearest rival, Ohio; 3.4 times the Illinois total; 4.3 times as big as California and more than 5 times the amount reported by the state of New York.

These conclusions are based on preliminary reports issued by the U.S. Bureau of Commerce as part of the 1963 Census of Manufacturers.

If total value of shipments is used as a basis for comparison, Michigan shipments of special tools and dies during 1963 aggregated $427.8 millions or 30% of all shipments by tool and die establishments in the entire country.

Here are additional highlights of the 1963 Census of Manufacturers Report on the tool and die and related industries by tool and die shops:

The state of Michigan alone accounts for 26% of all the establishments in the tool and die industry employing 20 or more workers.

Tool and die employes working in Michigan shops represent 28% of this country's tool and die workers.

In 1963, all of this country's tool and die shops shipped tools and dies valued at more than $1.4 billion. The total for Michigan alone is $427.8 million.

Value added by manufacture for the entire U.S. industry climbed from $780 million to more than a billion dollars between 1958 and 1963.

The total value of all tools and dies and related products produced in the entire country during 1963 was $1,592 million. Press dies accounted for 30% of the total.

All product classifications except foundry molds were higher in 1963 than they were in 1958.

Here are some of the tool classifications that made impressive gains during the period, 1958-1963:

Classification:

Percentage increase 1958-63

Industry total_.

21

Die casting dies-.

Plastic molds_____

Special designed tooling, prototypes, and models...

Carbide and other dies, including rod and wire drawing, cold heading

and cold extrusion dies__.

Press dies____

Special gages and checking fixtures..

Additional details are given in table 3.

Other interesting observations that are justified by the most recent reports by the U.S. Census of Manufacturers are:

Total value of press die shipments in 1963 for the entire U.S. industry was slightly less than $500 million. It is a fair assumption that for 1965, the industry's total for press dies will be well beyond the half billion mark.

For the entire industry, the U.S. market for molds of all types is now well past $225 million.

U.S. output of die casting molds (or dies) practically doubled between 1958 and 1963.

More than one-fourth of the money spent by the tool and die industry for capital improvements during 1963 were invested by Michigan tool and die shops.

The Special Dies and Tools Industry, as defined by the U.S. Census of Manufacturers, includes only firms engaged primarily in the manufacture of special tools and fixtures for use with presses, die casting machines, hammers, and machine tools.

To be specific, the tools classified in this industry includes dies; punches; die sets and components; jigs and fixtures and special checking devices.

Also classified with the group are establishments engaged primarily in the production of metal molds for use by foundry, plaster working, rubber working, plastic working, glass working and other industries.

The report does not include administration, warehousing and servicing employes and expenditures.

The published figure for value added by manufacture is an adjusted figure. The adjustment is made to eliminate duplication.

The value of shipments figure includes products that are primary to the industry as well as selected secondary products.

In the opinion of many economists, the value added by manufacture figure is the best value measure available for comparing the relative economic importance of manufacturing industry or geographical areas.

Using any of the yardsticks that are generally accepted for measuring the leadership qualities of a business, Michigan is continuing its top role in the tool and die industry. With 26% of the establishments; 28% of the employees; 28% of the value added by manufacture and 30% of the all U.S. tool and die shipments, Michigan's leadership . . . and that of the Detroit area . . . continues unchallenged. Probably most significant of all is the fact that 26% of tool and die capital expenditures in this country are being made by Michigan plants, assuring for years to come, a continuation of Michigan's highly successful leadership.

TABLE 3.-VALUE OF SPECIAL DIES AND TOOLS SHIPPED IN UNITED STATES, 1958 VERSUS 1963 [Dollar amounts in millions]

Mr. POTVIN. You referred to the fact that only 35 percent-I believe that was your figure-of the total independent tool and die business is a function of the automotive industry?

Mr. RILEY. I believe that was the testimony and it was presented to this committee by the tool and die people.

Mr. POTVIN. There is a distinction, it seems to me, that needs badly to be made for purposes of this record, Mr. Riley. That, of course, is in a national context; is that not correct?

Mr. RILEY. I believe that is correct.

Mr. POTVIN. And when you speak to the Detroit-only decision-by the Detroit areas, I understand you and the industry are not talking about the city limits, you are talking about perhaps a 200 or 300 mile diameter.

Mr. RILEY. I do not think we have an exact definition of the Detroit area and I would request that you define it, sir.

Mr. POTVIN. Well, at any rate, when one speaks to the Detroit sector of the tool and die industry, whatever that means to those of you in your business, various students of your industry have noted that as an example, 85.6 percent of 135 tool and die firms surveyed sell more than half and 25 percent of all of their output to the transportation industry, which would, of course, primarily include automotive. So, would you not concede, sir, that the 35 percent figure when applied to Detroit only very significantly understates the amount of your importance to the tool and die people?

Mr. RILEY. If I understand your question correctly, in the Detroit area, whatever that is, I would rather refer to those shops that specialize in dealing with the automotive industry. More of these sell a higher percentage of their total output to the automobile than onethird. I agree there are some shops whose total output is sold to the automobile industry.

Mr. POTVIN. So in a sense although the figure would be appropriate in a national sense, in the Detroit sense, it is not relevant.

Mr. RILEY. Yes, sir.

Mr. POTVIN. Thank you, Mr. Chairman.

Mr. ODEN. Mr. Riley, there has been testimony both during the May hearings and today that the primary reason for having a captive inhouse tool and die facility is for maintenance and repair work. I wonder whether you would have any figure in relation to your 1969 percentage of in-house work, which I believe is 59 percent, that is directly related to maintenance and repair work? In other words, out of 59 percent, would you have any idea how much of that is direct maintenance and repair work?

Mr. RILEY. Well, that will vary to some extent between various plants and various locations. I would guess that probably in the neighborhood of 60 percent of our skilled tool and die employees are employed full time on repair work. But you must have the other facilities there because if you have a special need for it, you cannot wait, you cannot shut the plant down while you are obtaining this. So that even though the capacity may be there, it does not necessarily follow that it would be used for new construction.

Mr. SMITH. Are any of the Government-owned or Governmentleased machines used in the automobile industry?

Mr. RILEY. Not in the automobile industry. We have two divisions, AC and Allison, that have some Government-owned machines, and they are engaged primarily in the production of defense or aerospace products.

Mr. SMITHI. But you do not use those at all?

Mr. RILEY. There may be a very small minimal amount of commercial tool work that might be produced on them, but if it is, I am sure that we adhere strictly to the Government policies that pertain to the use of those machines in such work.

Mr. SMITH. One of the complaints is that the Government policy needs to be adjusted. That is the reason I asked.

Mr. RILEY. I Would say that the percentage might be from 2 to 5 percent at the most, and if there were any change in that relationship, and we would obtain our own machines to replace those, there would be some problem with the amount of reimbursement under the Govern

ment rules for the use of these machines that would not accrue to the Government.

Mr. POTVIN. Mr. Riley, one of the things that seems to emerge with some clarity from the charts and graphs that you and your competitors were good enough to furnish us is, as an example I am looking now at the 1969 annual column for the Ford Motor Co. The percent of the body dies purchased outside was 61.3 percent. For the same year in the percentage chart you were good enough to give us, which as I understand is purely a function of outer dies, is it not-you show outside 41 percent. Your lag in terms of patronage of the independents from Chrysler is roughly comparable.

Could you tell us what reasons, if any, might explain what is-well, it is a 50-percent difference, roughly. It would be 50 percent of your total that would constitute a difference between yourself and Ford. Is there some inherent cause for this?

Mr. RILEY. Mr. Potvin, are you asking why is our percentage so much different from theirs?

Mr. POTVIN. Yes, sir.

Mr. RILEY. The reason is that historically, Fisher Body Division, which is the division of General Motors that fabricates and uses most of these panels have from the time they started the steel construction in the body made these tools in their own tooling facilities. At no time was this percentage outside greater.

Mr. POTVIN. We are talking about a decade roughly from 1961 to 1970 when the attrition or whatever eroded it was from 41 percent, jump back up to 44 percent in your 1971 model. That would be a 3-percent attrition in 9 years.

Mr. RILEY. A part of what you are looking at is a result of the cyclical fluctuation in tooling demands.

Mr. POTVIN. You would not feel that 3 percent is in and of itself significant?

Mr. RILEY. No; I would not.

Mr. POTVIN. And your answer as to the overall difference between your operation and in this case, Ford, would be a matter of historical evolution, the way you got started in the industry?

Mr. RILEY. That is the main reason for it.

Mr. POTVIN. Mr. Chairman, rather than burden you and your colleagues further, might I submit some questions in writing for submission in answer at some period of time?"

Mr. SMITH. Several questions were developed here as a result of looking over the testimony. They were not really too important to the public hearing, but they are some questions we wanted before we write up our report. We will submit those to you in advance of printing and you submit the answers.

(The information follows:)

QUESTIONS ASKED OF GENERAL MOTORS BY HOUSE SMALL BUSINESS SUBCOMMITTEE

Question No. 1.-The substance of your statement is that there simply is no increase or plan to increase in the use of in-house tooling facilities, that the independent shops are going to get as much, indeed more, business in the coming years from you. Are you saying that all of the new machine tool purchases GM has reportedly made in the past few years were not in fact made or, if made, that they have not increased your in-house capacity?