Little Man's Clinic

Like a cry for help and its echo from a chasm were statements of the two top U.S. defense officials last week. OPM's William Knudsen in Manhattan said that present defense output of $9 billions annually must be increased to at least $20 billions by next summer. OPACS' Leon Henderson in Washington gloomed, "Soon there will be 2,000,000 more unemployed."

U.S. industry's No. 1 defense problem is double: not enough defense production and too much idle capacity victimized by defense priorities. Said C.I.O., "Within the next few weeks the nation will be shocked at the amount of 'priority unemployed.' " Senator O'Mahoney dropped a bill in the hopper that would amend the priorities law in order "to prevent bankruptcy for thousands of small manufacturers." From mouth to mouth passed OPM's most striking statistic: 75% of defense contracts have gone to 56 big firms.

The answer to both problems--subcontracting--has been verbally agitated by OPM for eight months. Chief method: "defense clinics," at which big & little manufacturers are brought together, given every opportunity to make deals. The biggest of these clinics was run off in New York City last week.

Lasting two days, it brought together 55 prime contractors holding over $3,000,000,000 in defense orders and about 1,200 would-be subcontractors. Like its 50-odd-predecessors, the clinic's procedure was convention-like: registration, handshakes, conferences, cigars. But the atmosphere was far more serious. To many a little businessman, the clinic might easily mean the difference between commercial life & death. Each prime contractor had a table in the hotel ballrooms, a few rickety chairs, a big placard stating his name, the kind of work he could farm out. Soon prime and subcontractors were head-to-head.

In dollars-&-cents contracts signed on the spot, the big New York clinic (like its predecessors) was not worth the trouble. But it served another purpose: contacts and confidence.

One reason why most of the 185,000 U.S. manufacturers are without defense orders is that owners lack the ingenuity and brass to get them. Some got bone chills in a prime contractor's waiting room, some got the Washington run-around,* most never even tried. A few have been burned by phony Washington go-betweens. A few have resorted to real go-betweens (nominally "employes," for legal reasons) and got contracts at the price of large commissions.

Some aggressive little businessmen, however, have turned the defense clinics to good account. One such is Elmira's (N.Y.) Horton Machine Works, which prospered for 52 years at general milling and machine work, for concerns like SKF Industries, B. F. Goodrich, Worthington Pump. Fearing priorities, black-haired, cigar-puffing General Manager Chester Swarthout determined to get some defense business. First he read all he could about contracts, priorities, other mysteries of defense. Then he took a 7,000-mile subcontract-hunting trip. The bacon: a measly $1,000 order. Accidentally he stumbled into a Buffalo clinic last April, was almost floored by so many prime contractors in one place, all so willing to talk. He became a chronic clinic-goer, attended four more, got business from each. Now Horton has 20 defense contracts, has doubled its force to about 70, even has OPM scouting the country for two machines Horton needs.

Not every little manufacturer has a go-getter like Swarthout, nor is every prime contractor willing to share his orders (and possible his profits). Many an OPMite (notably the Trecker Brothers, pioneer gospel-shouters of subcontracting) has therefore urged sterner measures for months. Last week in Manhattan Big Bill Knudsen warned manufacturers that--despite Army & Navy opposition--obligatory subcontracting might soon be written into every U.S. supply contract.

* One man seeking priorities on small instruments needed for electric motors finally cornered five so-called officials, found them ignorant even of OPM routine. At length one suggested: "I'll tell you what to do. Go back to Florida and write us a letter. The messenger in the mail room will know where to send it."

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