How to Beat the Squeeze

1962 was the year in which the profit squeeze became not only an unpleasant phrase but an unhappy reality. When corporate executives could not push their sales up, they set out to work their costs down.

Last week the appearance of the first fourth-quarter earnings reports showed encouraging proof that the profit squeeze can be successfully overcome--and added substance to business's expectations of a 10% overall profit increase in 1963. Almost without exception, the brightest examples among the new earnings were recorded by businesses that were not content simply to complain about the profit squeeze, but concentrated on doing something about it.

A few 1962 fourth-quarter profits compared with the same period in '61:

Control Data 1962 $ .24 1961 $ .16

Douglas 1962 .98 1961 .37

Erie-Lackawanna 1962 .13 1961 (.89)*

Inland Steel 1962 .68 1961 1.04

IBM 1962 2.37 1961 1.97

Joy Manufacturing 1962 .51 1961 .31

Standard Oil (N.J.) 1962 .92 1961 .77

Union Bag 1962 .52 1961 .60

Westinghouse Electric 1962 1.65 1961 1.23

Youngstown Sheet & Tube 1962 3.15 1961 2.93

The earnings reports showed how the profit-hiking companies did it:

P: Youngstown Sheet & Tube has been chopping costs for years by automating rolling mills, using oxygen and the highest iron-content ores to speed up its furnaces, and finally, says President A. S. Glossbrenner, "all our efforts seemed to have clicked."

P: Control Data, Minneapolis computermaker, put one of its own $125,000 computers to work to guard company costs.

P: Douglas Aircraft reorganized its divisional structure and closed its costly El Segundo, Calif., plant to score a profit increase in the face of a sales decline.

P: Pittsburgh's Joy Manufacturing Co. managed to turn its profits around in the fourth quarter by such measures as slashing supervisory staff and closing eight obsolete plants.

P: Westinghouse profits are up in large part because of its automated system of handling orders, which speeds deliveries and cuts inventories.

P: The struggling Erie-Lackawanna Railroad consolidated facilities to slice costs last year by $6,300,000. Result: it reduced its deficit by $10 million.

* deficit

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