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Mr. WARD. Mr. Hibben, of the International Association of Ice Cream Manufacturers, has a statement, I believe, that he wants to insert in the record.
STATEMENT OF ROBERT C. HIBBEN, EXECUTIVE SECRETARY,
INTERNATIONAL ASSOCIATION OF ICE CREAM MANUFACTURERS
Mr. Hibben. My name is Robert C. Hibben. I am executive secretary of the International Association of Ice Cream Manufacturers.
We have a membership of 920 corporations operating 2,235 plants. Our members manufacture over 80 percent of the ice-cream manufactured in the United States.
We appeared before the Harden committee and presented a brief and a survey, and I would like to have this brief-it may not be possible to repeat it in these hearings, but make a notation, refer back to our previous testimony. (See Harden committee report, pt. 1, pp. 153-158.)
Mr. Osmers. All of that testimony by reference is going to become a part of this record.
Mr. HIBBEN. I didn't become too interested in this hearing, having previously testified, until I received the first increment of commercial and industr al facilities to be reviewed, continental United States, Department of Defense, instruction 1400.16, from the Department of Defense, on which page 11 they show that the Department of Defense only manufactures ice cream in three places in the United States.
Mr. Chairman, in our survey we find that our ice-cream manufacturers, small, medium, and large compete with the Federal Government in 36 States, the District of Columbia, Hawaii, Philippine Islands, and it comprises 168 ice-cream plants operated by the Federal Government, and there may be more.
Analyzing these, you will find that 82 of these are being operated by the national defense and not 3 as they say in their statement.
Mr. OSMERS. Mr. Hibben, this might be a d fficult question for you to answer. Maybe you are going to touch on it, anyway, later on, but are you in a position to tell us how many of the total number of plants that you have mentioned are located in what might be called competitive ice cream markets?
Mr. HIBBEN. Yes, sir; I can tell you.
Mr. HIBBEN. I can tell you right now, they are all in competitive areas.
Now, with the Army and the Navy we don't want to in any way stop their manufacture of ice cream on the battlefield of Korea, or on a battleship.
We even have a liquid and a dry mix that the dairy industry furnishes those establishments.
There is even a competitive area in the Philippine Islands, Cook Field, because we are an international association and have a member there, and that is one of the complaints coming from a Philippine ice cream manufacturer, that he is deprived of that business.
You will find that every one of these 168 are here on the continental United States and are in areas where they are in competition with us in the different towns and cities.
We, as I stated, find 82 of these establishments in national defense and 79 in the Veterans' Administration.
We have worked on this a year. We find it is a matter of frustration.
I feel sorry for a small-business man; he doesn't know where to go to find out how to stop such competition, because up to date, the only place you can go to is the Department of Defense, Veterans Administration, or the agencies which are competing against you.
We were told that they can manufacture our product from 40 to 50 cents a gallon less than we can. We will in no way criticize the Government's method of cost accounting. However, we have offered to actually pay, as they did in Honolulu, for a separate survey on costs, on an outside agency, using their system of cost compared with the industry's, and we have been turned down.
Then we have another proposition that has been thrown up to us all over town and the different places I have contacted, namely that we, the Government, are not competing with the dairy industry, "That our organization is buying ice cream mix, and all we are doing is freezing it. Therefore, there is no competition."
Well, you have about half of the ice cream plants, the smaller ones in your district buy that ice cream mix from creameries, flavor it and freeze it and harden it and distribute it.
Even though the Government buys ice cream mix and from this mix makes ice cream, it is in competition with the ice cream industry.
I came here to review these situations and, if you will study exhibit A, you will find the Federal Government in competition with the ice cream industry in 36 States.
And, Mrs. Harden, there are none in Indiana..
Mr. HIBBEN. But you will find the biggest offender is California, where there are 23 ice cream plants operated by the Federal Government.
Mr. McDonough. That is a big country out there.
Mr. HỊBBEN. We want legislation that will designate some place to go to solve our problem.
I have gone to your committee people. I have talked to your committee people. I have talked to the Hoover Commission. I have talked to the Department of Commerce. Now, again I just say I am frustrated.
Now, coming to your two bills--frankly, I like both of them, and I am referring to the Hoffman bill, 9835, and also H.R. 9890. Í like it a bit better than 8832 because it is a little bit more definite.
Now, H. R. 9890 should include some of the language in the Hoffman bill for this reason: This machinery is set up in H. R. 9890 but the direction is not there; 9835 tells the President of the United States, If you are carrying on business that is competing with business for profit and it doesn't interfere with the operations of the Government, get out.
Now, we could have a little bit more of this in H. R. 9890. However, H. R. 9890 fills the bill, as does H. R. 8832, because you have an actual place to go to lay your cards on the table.
The only thing I don't like about H. R. 8832 is that commission, the large commission, as I understand, that will be formed.
H. R. 9890 places the responsibility of solving this problem in the Department of Commerce.
Now, another thing in H. R. 9890—when the Government reports to the Bureau of the Budget, that should be a public report because a Government agency can report to the Bureau of the Budget and if there is a report on a certain ice cream establishment, or some other establishment out in the country, the industry would never know about it.
For example, when the different agencies report to the Bureau of the Budget on statistical surveys, we are informed, and we have the privilege of going over and discussing it with the Bureau of the Budget. Because of such a policy, industry has saved--the industry through the trade associations particularly have saved—the Government thousands of dollars on helping them with their surveys, and they could do the same thing here.
I don't know whether you are going to get legislation through this session because you folks, I know, hope to get out of here August 1; but this legislation should be No. 1 on the docket next year, at the next session, because our people are definitely interested in solving this problem.
Now, you study this exhibit-you will find a little post or a little town, or a field, or a PX—well, that doesn't mean much on paper, but if you were a small-business man—and we have got over 200 in the association-manufacturing from fifty to seventy-five thousand gallons a year, and he loses a 10,000-gallon account in a PX, or other Government agency, it means something to him.
Mr. OsmERS. Yes; it does.
Mr. HIBBEN. Now, in all fairness to the Army, we sell millions of gallons to the Army. They are buying a lot of ice cream for the commissaries and PX's. It is only in these certain cases that they are going into the manufacture of ice cream.
The Navy is a larger offender, having ice cream plants in the continental United States.
That is my statement, Mr. Chairman.
Mr. OSMERS. Mr. Hibben, there is one phase you touched on there that I would like to develop with you for just a minute. You mentioned that if the job was turned over to the Secretary of Commerce, as proposed under 9890, the Secretary would unquestionably establish a section within the Department of Commerce to handle this matter and, as one of my colleagues here, when we discussed this earlier in the day, said, that would cost some money. Now, obviously, it would. It would require personnel. It would require personnel of judgment, wisdom, and experience, and it might cost thousands of dollars; but I would just like to have your statement on the amount of tax revenue--not in dollars, but the comparative amount of tax revenue that the Government could pick up by getting the Government out of some of these unnecessary competitive activities and have private business perform them and pay taxes.
Mr. HIBBEN. Well, I have not that figure in mind, sir.
Mr. HIBBEN. But if this goes forward into legislation I have right in my mind a questionnaire that I can send out to my members to secure the desired information, and when you consider some other
statements made here today it runs into the thousands of dollars, the loss in taxation.
Mr. Osmers. Obviously, if we are dealing with things like laundries doing 70, 80 million dollars of laundry business a year, the corporate income taxes that would bring into the Government, if private industry took that over, for example, would 10 times over repay any personnel we might employ here in the Government to sit in judgment on the matter.
Mr. HIBBEN. You see, Honolulu is the worst example, and we have five members over there, and they write to me, and similar to the letter that Colonel Castle got, that they have an ice-cream plant, and they deliver ice cream to every military establishment in the Army on that island. Our members have been struggling for years to get rid of such competition, and have never been able to do it.
Mr. OSMERS. In other words, it is just a straight out-and-out business, commercial-type activity of the Government in a competitive private market?
Mr. HIBBEN. And I neglected to say we have other agencies. There is an ice-cream plant right over in the South Building of the Agriculture that supplies all their cateterias.
Mr. OSMERS. We don't have to go to Honolulu?
Mr. OSMERS. At this time I would like to insert in the record the statement of Mr. L. R. Sanford, president of the Shipbuilders Council of America.
(The statement referred to is as follows:) STATEMENT OF L. R. SANFORD, PRESIDENT, SHIPBUILDERS COUNCIL OF AMERICA
I am president of the Shipbuilders Council of America, a trade association of the shipbuilding and ship-repairing industry which includes in its membership, in addition to shipbuilding and ship-repairing companies, allied industries which specialize in the design and manufacture of marine machinery and equipment. I appear here today in response to your telegraphic request that the organization which I represent testify at this hearing on the subject of Government competition with private industry.
The principal Government competition with which private shipbuilding and ship-repairing yards are concerned is that of the naval shipyards, of which there are 10 located in various parts of the country, 6 on the east coast and 4 on the west coast. Those on the east coast are located at Portsmouth, N. H.; Boston, Mass.; New York, N. Y.; Philadelphia, Pa.; Norfolk, Va.; and Charleston, S. C. Those on the west coast are located at Long Beach, Calif.; San Francisco, Calif.; Vallejo, Calif., on the Sacramento River about 20 miles from San Francisco; and Bremerton, Wash., across Puget Sound from Seattle.
It should be noted at the outset that the shipbuilding and ship-repairing industry does not in any way advocate the elimination of the naval shipyards as they are recognized as facilities necessary to the operation of the Navy, both in peacetime and during a war. All that the industry has ever advocated is that the function of the naval shipyards be considered, not as a primary source of naval shipbuilding and ship repair, but as a necessary auxiliary to the private industry, and that they be operated in such a manner as to permit the private industry a reasonable share of naval shipbuilding and ship repairing rather than as a monopolization of such work to the exclusion of the private industry. Such a procedure would be consistent with the practice of the British Admiralty in the operation of its royal dockyards.
It has been conclusively established that in time of national emergency or war, the Navy must rely upon the private shipbuilding and ship-repair yards for the
bulk of the naval shipbuilding and ship repairing required under such circumstances, as the naval shipyards cannot possibly handle the volume of work necessary under such conditions.
It obviously follows that the industry, as a vital element of the mobilization potential, must, in peacetime, have adequate work to assure the maintenance of its extensive facilities and an adequate nucleus of skilled manpower for wartime utilization, as well as to assure competency to undertake naval shipbuilding and naval ship repairing under stress of war. Competency to perform a specialized task during a war can only be gained through the performance of such work in time of peace. In addition, the volume of commercial shipbuilding and shiprepair work presently is not sufficient to maintain the facilities and the manpower considered adequate as a mobilization potential and hence must be supplemented by naval shipbuilding and ship repairing.
At present there has been a complete lack of orders for seagoing merchant vessels since November 1952, resulting in an extremely critical situation in the shipbuilding yards, on the one hand, and on the other a substantial decrease in the volume of commercial repair work, due to progressive reduction in the number of vessels of the American merchant marine in active operation, to such an extent that the ship-repair yards likewise face a critical situation.
It is evident from the record that while the naval shipyards necessarily expanded their employment during World War II, as did the private shipbuilding and shiprepairing yards, they have not been demobilized to the same extent as the private yards. The demobilization of the naval shipyards was within the control of the Navy, but that of the private shipyards was the result of the inexorable pressure of economic necessity.
It is interesting and instructive to note the relative employment in the naval shipyards as compared with the private yards over the years. There is attached hereto as exhibit A a chart showing that relative employment from 1923 to date. It will be noted that the pattern of relative employment in the naval shipyards prewar averaged approximately 50 percent of that in the private yards, whereas postwar it was greater than that in the private yards and even now is approximately equal to that in the private yards. If the employment in the private yards continues to dwindle as it presently is doing, the employment in the naval shipyards soon will again exceed that in the private yards.
The capital investment by the Government in the naval shipyards is a heavy one, but is not available to the courcil. It would have to be obtained directly from the Navy. Likewise, there are no statistics available as a basis for estimating the capital investment in private-shipbuilding and ship-repairing facilities, but it also is a heavy one. In the case of the private yards, however, it is necessary for their earnings to be sufficient to maintain the facilities and absorb the costs incident to the operation of a private enterprise. The naval shipyards are under no such compulsion. There is no financial incentive involved. The maintenance is taken care çf by the appropriation of Government funds acquired by the taxes paid in by the individuals and industries of the country. That maintenance continues, whatever the level of operation, and there is no deterioration of facilities as a result of a low level of operation. A naval shipyard could be maintained on å standby status. In a private enterprise, however, there is a minimum level of operation below which the facilities cannot be maintained or an adequate nucleus of skilled manpower retained.
Let us now consider the present policy of the Navy with respect to the operation of the naval shipyards and the utilization by the Navy of the private shipbuilding and ship-repairing facilities of the country.
With regard to shipbuilding, the cooperation of the Navy in recent years has been excellent. The Navy has recognized the critical situation with respect to private shipbuilding and has allocated naval construction contracts to shipbuilding yards to the extent possible under a limited naval construction program as a means of helping to maintain at least part of such yards at a reasonable level of operation. It is in the Navy's own interest to take this action, as it necessarily must rely upon the mobilization potential of the private yards in any war shipbuilding program, covering both naval combatant ships and various types of naval auxiliaries.
With respect to naval repair work, the situation is somewhat different although here again the Navy during the past year has cooperated in the allocation of naval repair work to the private ship repair yards, not to the extent or at the rate that the private industry would like to see done, but to an appreciable extent. As a result of representations made early last year to the present Secretary of the Navy when he was Under Secretary of the Navy, a policy was inaugurated by Mr. Thomas to divert a greater proportion of naval ship repair work to the