At Full Capacity

Extraordinary--for 1939--were conditions in the shipyards of the U. S. when the Navy last week split $350,000,000 of new shipbuilding business (for 24 ships) among five companies and seven navy yards. Private shipbuilders got $107,131,000 of orders for twelve ships, divided among:

Bath Iron Works: $9,626,000 for two destroyers.

Federal Shipbuilding & Dry Dock: $34,042,000 for two destroyers and two cruisers.

Electric Boat Co.: $8,811,000 for three submarines.

Newport News Shipbuilding & Dry Dock Co.: $31,800,000 for an aircraft carrier.

General Motors and Fairbanks Morse: each $2,000,000 plus for marine Diesel engines, electrical equipment.

Two 45,000-ton battleships awarded went to the Brooklyn and Philadelphia Navy Yards, giving navy yard ways five out of eight U. S. battlewagons now on order.

The extraordinary facts about these new orders:

1) They will cause shipyards to step up production little if at all. Reason: shipbuilding is one industry in which large companies are already operating at virtually full capacity. Major U. S. shipyards, with a backlog of $1,062,800,000 of U. S. Navy business, are jammed up, cannot get busy on more new orders until ships now on the ways are launched.

2) The new orders will not help materially to up the rate of production in the steel industry. Until the ways are free to begin building, steel will not be wanted. When it is wanted--about 50,000 tons of plain steel and 34,000 tons of armor plate for the 24 ships--it will be only a drop in the ocean. As a market for steel, shipbuilding is a bottleneck due to limited capacity. In 1938, operating at the highest rate since the War, the industry was able to use slightly over 300,000 tons of steel, about 1.65% of 1938's low steel consumption.

A partial solution to this problem was explored last week when the U. S. Navy was authorized to open negotiations with the No. 1 U. S. shipbuilder, No. 2 steel unit--Bethlehem Steel Corp.--to buy its West Coast shipyard, helping to free Bethlehem to concentrate on expanding its East Coast shipbuilding capacity hard by its East Coast steel and armor plate shops. Meanwhile Army & Navy men are exploring possibilities of organizing a West Coast steel industry to serve local shipyards.

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