Automakers' Troubles

For months almost everyone has known that Chrysler has been having its troubles (TIME, Jan. 25). Last week Board Chairman K. T. Keller and President Lester Lum ("Tex") Colbert told the worst. In the first half of 1954, they reported, Chrysler sales dropped 42% to $1.1 billion, while earnings dipped 64% to $1.81 a share. Directors forthwith chopped the quarterly dividend rate in half, to 75-c-. Keller and Colbert indicated that third-quarter results would be no better, due to shutdowns for new model changes.

As stock traders rushed to unload, Chrysler broke 5 3/4 points to 59 1/8, led the Dow-Jones industrial average down more than eight points (to 339.64) before the market steadied, closed at 343.06. In one hectic day, New York Stock Exchange volume soared to 3,347,040 shares, second highest of the year.

Chrysler was not alone in its troubles; from independent automakers last week came more evidence of 1954-5 rugged competition. Packard reported a $2,794,400 loss in the first half of the year. Its new partner, Studebaker, which lost $8,925,800 in the same period, last week asked its workers to take a pay cut of about 15% from the average $2.37 hourly rate (v. $2.00 for the Big Three). Against the wishes of their leaders, U.A.W. rank-and-filers voted it down. Studebaker threatened to cancel its contract with the union in 60 days and close its South Bend factory unless they reconsidered.

Elsewhere there were encouraging business symptoms: P: Building outlays in July hit a record $3.5 billion, up 6% from 1953. Private-housing's share: $1.2 billion, up 10%. P: July unemployment decreased slightly to 3,346,000, instead of rising seasonally as expected.

P: For the second straight week, electric utilities set a new record, turning out 9.1 billion kwh. Chief reason: increased use of air conditioners.

P: At Chicago's Merchandise Mart, orders for such bellwether luxury products as china and glass were running 20% to 40% ahead of a year ago.

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