not qualified to, in the beginning. However, I believe one or two of our additional witnesses may answer that question better than I. Senator SYMINGTON. This illegitimate source that you are referring to, is that a black market, you might say?

Mr. KOVATIS. Yes, sir; black market.

Senator SYMINGTON. You say other witnesses are going to talk about it?

Mr.KOVATIS. I believe so, sir.

From the Engineering and Mining Journal, April 6, 1961, issue, it was reported that about 60 percent of the domestic consumption of cadmium as metal is used in electroplating. We estimate that our job metal finishers consume over 5 million pounds yearly, and, therefore, as indicated before, constitutes one of the largest single users of the metal.

There is another item here that comes to the fore and that is the business of some of our people who can't get cadmium from their regular suppliers, based on the fact, even if they had defense contract order numbers, however, this will be covered in greater detail and more qualifiedly by one of our witnesses.

I would like to get into the meat of this and that is in the way of recommendations.

It is our recommendation that at least 3 million pounds of cadmium be released at once from the national stockpile for exclusive use in and by our specific industry.

We recommend that additional amounts be released to the refiners in the same proportion or amounts that they sold it to the Government originally.

Further, we recommend that cadmium be sold to anyone possessing defense order numbers, thus removing the unrealistic restriction imposed on users who are guided by a base computed for a recessionary economy.

Senator SYMINGTON. I am sorry I don't understand what that means. Mr. KOVATIS. That gets into the testimony of the other witnesses, sir. I can, if you wish, try to explain it.

Senator SYMINGTON. You think some other witness will also explain this to us?

Mr. KOVATIS. Yes.

And finally, we strongly urge the formation of a bona fide "watch dog" committee on metals and chemicals, comprising representatives of our industry and others concerned, to meet when necessary to make proper recommendations on such similar matters as the cadmium problem before such matters reach the problem stage.

This was attempted following the 1956 congressional investigation on the inequitable distribution of nickel to our industry, but unfortunately it came to an ill-fated end possibly because of the disinterest on the part of the agencies concerned or improper follow through or both.

I want to thank this committee for the privilege of coming here today and to voice an important concern and I hope I have given it some information which will help it to reach a favorable decision.

Mr. COBURN. May I ask you this, Mr. Kovatis, with reference to your recommendation as to what should be done with surplus in stock

pile, you say you recommend the sale of 3 million pounds from the stockpile, is that right?

Mr. KOVATIS. Yes, sir.

Mr. COBURN. Over what period of time?

I want to be sure I got it.

Mr. KOVATIS. There were two recommendations, actually; one, immediate release of 3 million pounds to our industry.

Mr. COBURN. Yes.

Mr. KOVATIS. And, second, to release the metal to the refiners in the proportion that it was originally sold by them to the Government. Mr. COBURN. That is, your recommendation is that the entire surplus be disposed of by returning the surplus to the producers in proportion to their contributions to the stockpile, is that it?

Mr. KOVATIS. Yes, sir.

We believe, therefore, to emphasize the point that this metal for the most part, if not entirely, should be given to the refiners, to the producers of the metal, and sold by them back to, or rather to our industry or to others.

Mr. COBURN. Do the people from your association buy directly from the primary producers of cadmium or do you buy from distributors? Mr. KOVATIS. I believe, sir, for the most part it is from distributors Mr. COBURN. I have no further questions, Mr. Chairman. Senator SYMINGTON. Senator Beall.

Senator BEALL. I have no questions.

Senator SYMINGTON. Thank you very much, Mr. Kovatis, we appreciate your coming down.

Mr. KOVATIS. Thank you.

Senator SYMINGTON. Who is your next witness, Mr. Counsel?

Mr. COBURN. Glenn H. Friedt, Jr.

Senator SYMINGTON. It is the custom of this committee to swear the witnesses.

Will you raise your hand?

Do you swear the testimony to be given to this subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. FRIEDT. I do.

Mr. COBURN. Will you give us your name and address.

TESTIMONY OF GLENN H. FRIEDT, JR., PRESIDENT, UNITED PLATERS, INC., DETROIT, MICH.

Mr. FRIEDT. My name is Glenn H. Friedt, Jr., 3456 Trenton Avenue, Hamtramck, Mich.; I am president of United Platers, Inc., of Detroit, actually.

Mr. COBURN. Does your company use-is your company a user of cadmium?

Mr. FRIEDT. Yes, sir.

Mr. COBURN. In what way?

Mr. FRIEDT. In the electroplating field. We are a job shop and a member of the National Association of Metal Finishers. I am also a director of that organization.

Mr. COBURN. And your company does electroplating for what kind of products?

Mr. FRIEDT. For the automotive, household appliance, aircraft, and related industries.

Mr. COBURN. Do you have a statement you want to read, Mr. Friedt? Mr. FRIEDT. I have a statement, sir, but I think I will just ask to have you make it a part of the record and I will paraphrase it as briefly as possible.

Mr. COBURN. Suppose you go ahead and paraphrase it and we will ask you questions.

Mr. FRIEDT. Our company has been in business since 1926, and we do work for these various industries that I have mentioned.

We are certified for a number of finishes by the Government, and were when they were using that program. We consider ourselves to be small business. We employ approximately 100 people. We consume an average of about 3,000 pounds of cadmium a month.

However, during the period that the base allocation was set by our regular supplier we were on strike, so, therefore, we have no base allocation to speak of. It is a relatively small amount. We were on strike for some 5 months during that period and after the strike was over, why our business naturally was off being a service organization, so our end of the program is very slight, so that is one thing they have no way of getting around, at least that is what they tell us.

In the meantime this year we have tried to get cadmium from just about every supplier of the product in the United States. We have written letters to all of them and our answer is pretty much the same, they don't have any, "try your regular supplier.

Our regular supplier furnished us 500 pounds last month. We were able to get some 2,000 pounds at a premium price over the market. The market is now about $1.90 to $1.95 as previously mentioned and we paid $1.95 for this.

Senator SYMINGTON. I have to leave the hearing for a moment for a meeting, I will be back. Senator Beall has kindly said he would chair the meeting while I am gone.

But I would ask this question as long as you also brought it up.

Where do you go to get cadmium at $1.95 when you can't get it for $1.80?

Mr. FRIEDT. Well, to be very candid, Senator, we have a supplier of another metal, nickel, in the area and that supplier obtained it for us and where he got it, I frankly don't know.

Senator SYMINGTON. Did you ever ask him?

Mr. FRIEDT. We asked him and they said they bought it from a broker in New York City and that is all they told us. Senator SYMINGTON. What was his name?

Mr. FRIEDT. The regular supplier?

Senator SYMINGTON. Yes, nickel.

Mr. FRIEDT. Univertical Co. of Detroit.

Senator SYMINGTON. He is a nickel supplier who can buy cadmium on a side market?

Mr. FRIEDT. For a premium.

Senator SYMINGTON. At a premium?

Mr. FRIEDT. Based, perhaps, on the law of supply and demand. The demand being way up at this time.

Senator SYMINGTON. Thank you.

Mr. FRIEDT. I have no particular inference to make from that statement except that we can get it.

Senator SYMINGTON. I understand.

Mr. FRIEDT. Also the price has gone in our case from $1.25 in early 1960 to $1.80 which is the market price today which is a 44-percent increase.

Senator SYMINGTON. And that is true even though the Government has a good deal more cadmium than it figures it can use?

Mr. FRIEDT. That is right.

And the market price in early 1960 was a dollar and a half and we are able to buy it for a dollar and a quarter, so it has gone both ways. Mr. COBURN. Go ahead with your interpolated statement there. [Laughter.]

Mr. FRIEDT. Well, I think you have to be perfectly candid at these meetings.

Mr. COBURN. Certainly, that is the way we want you to be.

Mr. FRIEDT. We feel that enough cadmium should be released to offset or to bring the market price back down to a realistic level, to offset the nonproduction of cadmium at this time, and those figures are all over the map so I really don't know what they mean.

I understand you are going to have some testimony from primary sources and perhaps they can tell you what should be released.

From what I understand they don't feel as much should be released as we do. We feel up to 3 million pounds should be released, to bring the thing back down into the normal channels of supply and demand again, and we don't recommend any price fixing or anything like that. Just put enough cadmium, if you don't need it, out through regular channels, to people who have sold it in the past and let us buy it.

Mr. COBURN. All right.

Is there more that you want to say as part of your statement? Mr. FRIEDT. No, I think that covers it very well as far as I am concerned, Mr. Coburn.

Thank you very much.

Mr. COBURN. I want to ask you a few questions.

How long, Mr. Friedt, have you had trouble buying your cadmium requirements?

Mr. FRIEDT. I would say roughly 2 or 3 months. Really it has become acute within the last 2 months.

Mr. COBURN. Not before then?

Mr. FRIEDT. No, sir.

Mr. COBURN. Prior to that you were able to get all the cadmium that you needed?

Mr. FRIEDT. That is right.

From the first of the year, and I have figures here, in January we purchased cadmium at a dollar and a half a hundredweight or a dollar and a half a pound, and today we are buying it for $1.95, the last purchase we made.

Mr. COBURN. How long has your company been using cadmium? Mr. FRIEDT. Since 1926.

Mr. COBURN. Have you ever followed a policy of doing a little stockpiling of your own where you purchased an inventory that would carry you through lean periods?

Mr. FRIEDT. Yes, sir; we have done that, in the past when the money was available to tie up for such purposes. In the last few years as you

know Detroit hasn't been the most prosperous area for the automotive industry and we haven't been able to do that so we have been operating on a hand-to-mouth basis and we have been buying from wherever we could buy it, to be candid, which also reduces our base period with the regular suppliers.

When you go back to a regular supplier date naturally they say, "Where were you 2 years ago when everybody was buying it?" and we had to buy it to get it to advantage because of our competitive situation.

Mr. COBURN. How long has it been since your company has undertaken to maintain an inventory of cadmium against times of short supply?

Mr. FRIEDT. It has been since right after the Korean situation. Mr. COBURN. Are there a good many shops in Detroit that use cadmium?

Mr. FRIEDT. Yes, sir; there are, sir.
Mr. COBURN. Besides your own shop?
Mr. FRIEDT. Yes, sir.

Mr. COBURN. There are, you say?

Mr. FRIEDT. Yes, there are; there are approximately maybe 10 or 15. Mr. COBURN. Have they experienced difficulty getting cadmium recently?

Mr. FRIEDT. Oh, yes, very definitely; our local association of which I am also a director, the Plating Institute of Michigan, has had several meetings on this particular problem and I am actually here as a spokesman here today, too.

Mr. COBURN. Has it been their experience that this shortage has existed in the last 2 or 3 months?

Mr. FRIEDT. Yes, that is right.

Mr. COBURN. Do those other companies up there, users, undertake to carry an inventory of cadmium ordinarily?

Mr. FRIEDT. I don't believe so. The financial position of most of us in this industry just isn't such that he can afford to tie up a substantial amount of money in this metal which is an expensive metal, and if you use 36,000 pounds a year, and it is costing $2 a pound, why it is 70-some-thousand dollars tied up if you tied up a year's supply. Mr. COBURN. I believe I have no further questions.

Senator BEALL. I have no questions.

Mr. COBURN. That is all, Mr. Friedt.
Mr. FRIEDT. Thank you, sir.

(The prepared statement of Mr. Friedt follows:)

STATEMENT OF GLENN H. FRIEDT, JR., PRESIDENT, UNITED PLATERS, INC., DETROIT, MICH., AND DIRECTOR OF THE NATIONAL ASSOCIATION OF METAL FINISHERS

My name is Glenn H. Friedt, Jr., and I am president of United Platers, Inc., of Detroit, Mich., one of the largest job metal finishing firms in the Detroit area. I am also a member of the board of directors of the National Association of Metal Finishers whom I am also representing today.

United Platers, Inc., has been in business since 1926 and performs metal finishing work for the automotive, appliance, electronic, and building industries principally. We also perform work for the Government requiring rigid specifications. In fact, I believe we are certified for more finishes than any other plater in our area. We employ 100 persons and have some 400 accounts.

The National Association of Metal Finishers is a nonprofit organization of some 400 job metal finishing companies located in the United States and Canada.