1 Consists of ferronickel, electrolytic nickel, nickel shot, nickel alloy ingot, etc. 3,078 2,368 * Based on an average of 50 percent nickel in ferronickel and 90 percent nickel in balance of materials. 1 Based on average 8 percent nickel content. ? Based on average of 50 percent nickel content. Source: Bureau of Census data for gross weight of shipments. BDSA for estimates of nickel contents of shipments. ! Senator SYMINGTON. Senator Young? Senator YOUNG. I just have one question to ask, I believe. How do these gray market operators secure their supplies of metal that you are talking about? Mr. TURNER. Sir, we would like to go on record as saying that this is something we would like to find out. We would even say publicly that if those of our industry are guilty of this, we are interested in finding that out also. This is the one point that we have been trying to fathom for a year now. At the time that International Nickel had the strike-all of a sudden, for the small businessman in our industry-the sources of nickel dried up. And out of the woodwork came all the nickel you wanted, but we could not buy it through our legitimate suppliers. The people who buy nickel legitimately from International Nickel Co. do not supply it to us. But people who we never hear from during the course-speculators, I assume-just came out of the woodwork. And you could get they are not selling you a hundred pounds. They would offer you 30,000 of nickel, on the telephone. We have a stack of brochures this deep which we submitted to the House Subcommittee, substantiating this. They just send them through the mail. To answer you, I do not have the answer. Mr. KOVATIS. The Department of Justice, however, is checking this out. We have fed that information to the Department of Justice, in addition to the other complaints. Senator SYMINGTON. You furnished all the information available to you, is that correct? Mr. TURNER. Yes, sir. Mr. MARINARO. Senator-in fifteen minutes I can make four telephone calls and receive a hundred thousand pounds of nickel, ranging between a price of $2.20 and $2.65. I can do that within fifteen minutes. Senator YoUNG. You could do that now? Mr. MARINARO. Right now. Mr. TURNER. And we are currently paying approximately $1.05 through legitimate sources. Mr. MARINARO. It is getting to a point in our industry, the small platers, sir-material cost runs somewhere around 25 percent of selling price. In a nickel plating operation, the nickel cost itself is about 25 cents out of the dollar. That is for the nickel itself. If you triple that cost, you have increased your selling price somewhere around 20 percent. Some of us are caught with contracts, a year contract-a specific part for a specific dollar. And now you have to pay three times as much for your nickel. You just cannot complete the contract. Now you either are not completing the contract or you lose money. And this is what what is happening to our industry, sir. The small business plater is hurting very badly. When you talk about inventories on stock, or on the floor, this is non-existent to 75 per cent of the platers. There are people in our area that have maybe 50 per cent of nickel in their tanks, and nothing on the floor. As a result of this, technically speaking, when you have a low anode area, with titanium baskets which the squares go into, it breaks down the brightener, and doubles and triples the cost of your brightener cost. Where brightener cost may cost 30 cents on a dollar of nickel, it may cost you 60, 80, $1, $1.20. Senator SYMINGTON. What is your best substitute for plate? Senator SYMINGTON. Well, for cadmium Mr. MARINARO. Cadmium, you can substitute zinc or tin. When it comes to nickel, I am sorry, Senator, there is no substitute. Senator SYMINGTON. Thank you very much. Senator CANNON. Mr. Chairman-Mr. Turner, you stated that you are paying $1.05 now from the regular suppliers? Mr. TURNER. Yes, sir. Senator CANNON. Did you hear the testimony here today that the market is about 85? Mr. TURNER. That is because of the form, sir. We use it in a rather special form-in these chips, or anode form. And that is the difference between the 85 and the $1.05, the $1.05-we are very happy. We wish we could buy all the nickel we wanted at $1.05. Senator ČANNON. If you are paying $1.05, I would not want to see the Government turn around and sell from the stockpile for 85. Mr. TURNER. But it needs processing, sir, in the form in which the Government is going to sell it. Senator SYMINGTON. Thank you, gentlemen. Your testimony has been interesting and constructive, and we appreciate your coming. Mr. TURNER. Sir, may I say one thing. Since I have been informed by Mr. Kovatis, who is more familiar with it, that the method recomm mended by the Commerce Department is substantially similar to that of BDSA, I would like right now, sir, to answer your question. We would definitely be in favor of it. Senator SYMINGTON. Mr. Kovatis has answered that. When we talked in 1956, we had about 450,000 tons of nickel as the stockpile objective, and were not in a war. Today they have been cutting and black-marketing, based on your testimony this afternoon, down to 20,000 tons; and we are in a large war. This is the type and character of problem this Subcommittee has to face. I know you are in sympathy with that. We would like to see you get nickel, but as the stock of nickel continues to decrease it gets down to a question of priorities. Thank you very much gentlemen. Mr. Thomas F. Shannon, of the Tool and Stainless Steel Industry Committee has a statement he would like to have filed in the record. We will be glad to do so. (The prepared statement of Mr. Shannon follows:) STATEMENT OF THOMAS F. SHANNON, SECRETARY, TOOL AND STAINLESS STEEL INDUSTRY COMMITTEE OF WASHINGTON, D.C. The Tool and Stainless Steel Industry Committee is an association of seventeen domestic producers of specialty steels. A list of members is attached. This statement is submitted to the Subcommittee on the National Stockpile and Naval Petroleum Reserves of the United States Senate Committee on the Armed Services in order to express to the Subcommittee the vigorous support of the American specialty steel industry for H.R. 5786, the bill to authorize the release of 60 million pounds of contained nickel from the national stockpile. CRITICAL SITUATION The specialty steel industry, particularly producers of stainless steels, finds its nickel situation extremely critical at present. Free world consumption of nickel has exceeded production in each of the past three years. Projected increases in capacity have failed to materialize on schedule, while consumption of this vital material has jumped an average of more than ten percent per year. Consumer inventories are now dangerously low. Small users of nickel are increasingly being forced into the black market, where $.93 nickel may sell at the inflationary price of $2.90 to $3.20 per pound. The announcement earlier this year of a 100 percent increase in the nickel set-aside for defense rated orders, plus some pessimistic statements from producers such as International Nickel Company have made it plain that no relief can be expected from this critical shortage in 1967. A statement on May 11, 1967 by Rodney L. Borum, Business and Defense Services Administrator, supports our view that supply will not catch up with demand in 1967. Meanwhile the 24.5 million pounds of stockpile nickel released by the 89th Congress in 1966 is gone. Free world production is again expected to fall well short of consumption in 1967. The only relief in sight is the 60 million pounds of stockpile nickel which became excess upon the establishment of the revised stockpile objective on January 13, 1967. The objective was revised by the Office of Emergency Planning with the concurrence of the Departments of Defense, Commerce, State, and Interior, and with full consideration of estimated war-time requirements, possible production levels, and industrial needs. We strongly urge your Subcommittee to accept these carefully considered findings. Our industry desperately needs the nickel you can release. The Tool and Stainless Steel Industry Committee asks you to take prompt action to recommend passage of H.R. 5786. Respectfully submitted, THOMAS F. SHANNON, Secretary. Senator SYMINGTON. There was a gentleman back there who wanted to say something. Do you want to come up? We do not want to cut anybody off. STATEMENT OF RALPH WALKER, PRESIDENT OF THE WALKER METALLURGICAL CORP., DETROIT, MICH. Sentor SYMINGTON. You wrote me a letter and said you felt this nickel was going abroad. Mr. WALKER. That is right. Senator SYMINGTON. Would you like to testify before this subcommittee? Mr. WALKER. The only thing I could say, Senator-it was not mentioned by the platers' association. They mentioned that at a previous meeting. I talked to Mr. Kovatis and I said you mentioned about two big scrap dealers in the United States who are sending out literature saying they could get you all the nickel you want. I told him the place they get their nickel was from his own platers' association-as well as some nonmembers. And that nickel goes out of black market in that manner. Now, there is a sufficient amount of nickel, if it is distributed properly. Senator SYMINGTON. In your opinion, without taking any out of the stockpile? Mr. WALKER. Yes, sir. If it is distributed properly. I know where there is a hundred thousand pounds in Ohio. Senator SYMINGTON. Where? Mr. WALKER. Sorry, sir. I know where there is a hundred thousand pounds in Ohio. It is not in the hands of a dealer. It is in the hands of a plater. And they are all 36 and 30 and 24 inch anodes. Mr. Kovatis. I was offered 35 tons last week out of New York, of nickel cathodes, and another lot of 15 tons this last Friday morning. And they are all in sizes for the platers. It will go into titanium baskets. I do not believe I could sit here and say that this is the right thing to do. The last war was never the last one. We never know when we are going to get another good one. And what we have in the stockpile is very important, right at this minute. Senator SYMINGTON. And not very large. Senator SYMINGTON. Do you use nickel? Mr. WALKER. No, sir. I buy and sell it. And I did not do very much with it until last March. Then I had to go out on the market and trade it against my own best wishes. Mr. Kropf of International Nickel, is a very good friend of mine. I told him at the time I was not doing any business in nickel, and I did not. And I had to keep going. And that is my business, trading in nickel and other high temperature metals and alloys for foundry consumption. Senator SYMINGTON. Senator Cannon, any questions? Senator CANNON. No questions. Senator YOUNG. No questions. Senator SYMINGTON. Thank you very much, Mr. Walker. Mr. WALKER. Thank you, sir. Senator SYMINGTON. The subcommittee will recess subject to the call of the Chair. (Whereupon, at 4:35 p.m., the subcommittee was adjourned, to reconvene subject to the call of the Chair.) ( ) |