Broadcasting Telecasting (Apr - June 1951)

MANPOWER SHORTAGE RTMA Hears By JANE PINKERTON SHORTAGES of technically trained manpower eventually may become "as difficult a problem as shortages of materials," whose full impact will be felt in 1952, Edwin T. Gibson, Acting Defense Production Administrator, told the nation's electronic makers last week. Mr. Gibson's address highlighted the banquet, closing the MondayThursday convention of the RadioTelevision Mfrs. Assn. at the Hotel Stevens in Chicago. The DPA official advised manufacturers that the Controlled Materials Plan of the National Production Authority will assure them of "getting your supply of critical materials for defense and defensesupporting programs." As civilian production is cut back, defense orders will move in to fill the void with the prospect "that an active market and a high product demand will continue." Sprague Re-elected Robert C. Sprague, president of Sprague Electric Co., was re-elected RTMA board chairman Thursday. Mr. Sprague, RTMA's first board chairman, has been a director since 1943 and served as president until April 1 when Glen McDaniel was elected the first paid president. Five hundred manufacturers of radio and TV sets and components convened for discussion of their individual activities and those of the entire industry. Color television came in for a large share of debate during informal meetings in suites and corridors and at a scheduled closed session Tuesday afternoon. At that time, W. R. G. Baker, chairman of the television committee, presented the ad hoc report of the National Television System Committee (see story page 65). No RTMA members made public their decisions, if any, to adapt their production lines to CBS color sets. Apparently, only those manufacturers who have publicly said they would "go along" with CBS are planning set production in the near future. They include Hytron, Air King, John Meek and Muntz TV. RTMA's target date for completion of field tests on color systems and equipment has been set at Jan. 1, after which the established stand of the committee will be aired before the FCC. Eight new panels will be added by the NTSC at its next meeting in New York June 18. Mr. Gibson said he had no doubt that manufacturers can deliver to the military as many end-products as are necessary "on schedule" and commended the industry as one of those "which grow vigorously" and which "continually rise to new levels of achievement." Stressing the need for production, Mr. Gibson asserted that "controls are simply a means to an end, and the end is production." By 1953, "unless we are attacked," the U. S. should enjoy military security and expanded productive ca 26 • June 11, 1951 pacity, with high level civilian economy. Meanwhile, "complex electronic equipment requires a vastly greater investment of labor and engineering by the end-product manufacturer than a comparable home television combination," Mr. Gibson stated. As an example, he said that about 86% of the price of a typical 17-inch TV Set represents purchased materials and components, and labor and engineering the remainder. He also observed: You have not been asked to discontinue civilian production entirely [despite 30% cutbacks in steel, 40% in copper and 50% in aluminum in consumer durable goods], as you were asked to do — and willingly did — in World War II. I ask you to remember that in this defense mobilization, we are preparing for readiness and not for all-out war. Television, "which is here to stay and has a universal appeal," is nowhere near the saturation point, Mr. Sprague said Thursday in his annual report to the convention. Reminding set makers that in 1930 there were 13 million radio sets in circulation with a 40% saturation among 29 million homes, Mr. Sprague said radio in 20 years reached a 95%. circulation. Television now has about a 40% circulation, he said. "No one can deny it is rapidly becoming a necessity in every home, and within 10 years few American families will be without a TV receiver," he predicted. He reminded set makers that "all past records" on commercial sales were broken in 1950, when equipment and parts produced were valued at more than $2.25 billion on the manufacturer's level. Impact on Profits Profits of 1950 will not be equalled "in the strictly commercial field" until the defense emergency "subsides" and the freeze on construction of TV stations is lifted. Continued military requirements combined with material shortages "will certainly curtail production of radio and TV sets and other equipment," he said, but predicted the military program "would take up much of the slack." The "industry was rocked" during the height of TV set sales, Mr. Sprague said, by the FCC's decision favoring standardization of the CBS, incompatible color television system, "which practically all manufacturers and industry engineers considered impractical both technically and commercially." If "this blow" had come at a more normal time, Mr. Sprague said, "it might well have had a disastrous effect on the consumer market." As it was, it had "little" effect on sales, and the public "apparently was not so concerned with color as were members of the FCC," he noted. The board chairman noted that 42 members were admitted to RTMA during the year, which, combined with losses, brought the total membership from 314 to 330. Benjamin Abrams of Emerson Radio & Phonograph Corp., chairman of the Trade Practice Conference Committee, was authorized to complete preparation of a set of trade practice rules for the television industry, to include a provision against deceptive advertising on color television and the UHF. Such advertising would be classed as "an unfair trade practice" under the code. A general public hearing for testimony would be held probably in Washington this fall or winter. The TV code is an (Continued on page 38) h bo; jjpr da jf . i'. n fc K Jo 0c 35 n eh in In F: AD BUDGETS SAFE OPS Assures Industry ADVERTISING budgets should not be sliced because of price ceilings imposed on manufacturers, an Office of Price Stabilization economist said last Thursday. Charges that OPS regulations — Ceiling Price Regulation 22 in particular— tend to curtail advertising expenditures were labeled "fallacious" by this expert, Gardner Ackley, assistant director for economic policy. Critics assert CPR 22 and related agency orders to manufacturers "will severely restrict manufacturers' expenditures for advertising." It was understood that the official statement of OPS was issued as the result of a surge of complaints and inquiries following attacks on CPR 22 by such critics as James D. Shouse, vice president of Avco Mfg. Corp. and board chairman of Crosley Broadcasting Corp. [Broadcasting • Telecasting, May 28]. Mr. Ackley, acting as OPS' standard bearer, offered the following points to allay fears of "manufacturers and advertising men" : ® Assurance that "no OPS regulations will be issued which will in any way restrict the use of advertising." £ Purpose of the regulations is to set ceiling prices for manufactured products "that will be in sound and balanced relationships to each other and to costs." ® Fact that neither advertising "nor other overhead cost increases are taken into account does not mean that OPS regards them as any less legitimate or essential than other kinds of costs." £ All "available evidence" underlies profitable operation for manufacturers under ceiling prices set by the regulations. £ "Even if profits are in some cases reduced, it is inconceivable that any manufacturer would imperil his future market position by cutting down on his advertising budget." ® Best way for him to increase profits is by expanding sales, whether operating in normal markets or in fixed ceilings. "This often can be done only by the effective use of all advertising media." $ OPS "recognizes the important role" of advertising in the American economy. Mr. Shouse's opinions were registered forcibly in an address to the American Marketing Assn. in New York, May 24. CPR 22 is an "interim" pricing measure for manufacturers and is designed to take care of increased costs for factory labor and manufacturing materials up to specified cut-off dates. These increases are to be applied by formula to the price of the manufactured product. However, there is no formula for applying increased costs in administration, sales, advertising or research, points which were deplored by Mr. Shouse. Mr. Shouse had declared that CPR 22 was "actually profit control and not price control . . . these regulations are aimed at minimiz I ran to li d ma ing the very profits which supply the tax base for all of our defense effort financing. . . . Always before, excessive profits have been siphoned off in taxes or devices such as price renegotiation and price redetermination, but here profits will., not be allowed to occur in the first place. This will destroy everything that has made the American economic system great." To this argument OPS answers that the formula was issued to arrive at a manufacturer's price, "not to arrive at the manufacturer's; profit." Helps Cut Costs Far from adding to the cost of <fras an article, Mr. Ackley said, largescale advertising "often makes it possible to reduce costs by enlarg i ing markets, thus creating econ omies of mass production." Arguments that increased advertising is not taken into account in pricing formulas, and thus would force reduction in manufacturers' budgets are "completely unwarranted," he asserted. "For advertisers and advertising men to claim that OPS regulations will squeeze advertising expenditures by not recognizing advertis-'^1 ing costs is to misunderstand both the regulations" and the nature of advertising itself, Mr. Ackley said. In reviewing the regulations, he said, "The formulas do not permit increases in general overhead costs to be taken into account for a number of reasons, one of the most important being that overhead costs vary with volume." to isi Si) la ife trei BROADCASTING • Telecasting