11657-Economic Survey-Galley 13
Page 33
full capacity. A considerable part of the new arms production will, however, be provided by firms whose capacity is already fully employed. In some cases it will be necessary for such firms to defer work on other orders so that they can turn over, in whole or in part, to more urgent defence work. Double or treble shift working may also require to be undertaken.
68. One of the most difficult problems arising from rearmament will be the supply of machine tools. The re-tooling of existing plant and the creation of new capacity will together involve an expenditure of over £100 million on machine tools during the next two years. United Kingdom output of metal- working machine tools in 1950 was valued at £40 million, of which about two-fifths was exported. Even after allowing for the greatest practicable reduction in exports and expansion in production, it is clear that many of the machine tools needed will have to be imported. Orders have now been placed, or will be placed shortly, in Belgium, France, Germany, Italy, Sweden, Switzerland and the United States. Discussions are taking place with the United States Government about the granting of priorities for orders placed there.
69. During 1950 the shipbuilding industry received orders for 1.6 million. gross tons of new merchant shipping, and at the beginning of 1951 the tonnage under construction and on order amounted to 3.4 million tons-- somewhat more than at the beginning of 1950. Orders for over a million tons came in in the first two months of 1951, and in addition a substantial volume of new naval construction is in hand or on order. The shipbuilding industry now has sufficient orders to keep it fully occupied until at least the end of 1953, although there are some small firms whose prospects are not so definitely assured. Roughly two-thirds of the merchant shipping tonnage under construction and on order is for United Kingdom owners.
70. The ship-repairing industry has overtaken the arrears of maintenance work on merchant ships which accumulated during the war, and reconver- sions of ships used for special war services have been almost completed. The industry has thus virtually reverted to what can now be regarded as the normal peacetime level, and there is no reason to suppose that there will be any major changes in the level of activity over the next two or three years.
71. A larger proportion of the capacity of the motor-vehicle industry will have to be devoted to defence production to meet the increased demand for some tank and aircraft components as well as for non-fighting vehicles for the Services. Production of motor vehicles has been increasing rapidly in the past few years, but this expansion has been checked by raw material shortages. Supplies of sheet steel had to be reduced in the first quarter of this year to 15 per cent. below the level of the last quarter of 1950, mainly as a result of a reduction in supplies from the United States. Short-time working has become necessary, and home supplies of civilian vehicles will have to be curtailed if exports are to be maintained. The allocation of new cars to the home market has therefore been reduced from 110,000 in 1950 to 80,000 in 1951, and there is to be a corresponding fall in home supplies of commercial vehicles from 105,000 to 80,000.
72. Home supplies of many durable consumer goods produced by the metal- using industries will also have to be reduced. The radio industry, for instance, is being called upon to raise its production of radio and radar equipment for the Services in the first year of the new defence programme to more than double the 1950-51 level. A number of firms now making durable metal consumer goods will be required either to switch over themselves to defence orders or to release labour for such work elsewhere. In addition, the Govern- ment is taking direct action to restrict supplies of metal consumer goods through allocations of scarce raw materials and through the limitation or prohibition of less important end-uses. Certain specific uses of zinc, copper and their alloys were prohibited from 1st March, though up to the end of June firms are allowed to use their stocks of semi-fabricated and partly-processed articles.
73. Of the total output of the metal-using industries last year, about two- fifths was exported, just over one-third used for investment at home and the remainder divided between defence, consumption and other uses.
If a moderate increase in output can be achieved in 1951, while supplies for civilian consumption are reduced, it should be possible for these industries to meet the additional claims of rearmament without seriously reducing total supplies available for export and investment. Exports of some particular products such as machine tools will, however, certainly have to be reduced. The aim must be to make up for these losses by increasing exports of other metal products, so that the total volume of exports from the group in 1951 is at least maintained at the 1950 level. This will, of course, be lower than the level reached at the end of 1950, and indeed a steady decline may be expected in the rate of export during 1951, as arms orders go into production. As for supplies of plant, machinery and vehicles for home investment, there is likely to be some reduction in 1951, but no precise timate FanfvF87 be given of
33