Beige Book Report: Atlanta
August 12, 1970
This report is based on a special poll made of ex-Directors, a telephone survey of selected retailers, and reports of the Directors from the only Board meeting in August. The main findings emerging from the survey of ex-Directors were: (1) price shading was not widely practiced; (2) there was significant business retrenchment, and only isolated instances of improved production following reduced operations; (3) cancellations of capital spending plans were few and announcements of new ones moderate; and (4) there was a lack of consensus on business prospects, and reportedly few increases in loan repayment schedules at banks. Directors serving on the Birmingham Branch Board confirmed many of the same findings for their own area. Most of the retailers that were specially polled expected no upsurge in consumer buying.
Conforming to the conclusion drawn from last month's reports of present Directors, only a few of the ex-Directors knew of instances of price shading from official indices. One who did notice this practice mentioned discounts in certain plastics. Another reported price discounts for capital equipment items used in textiles. A large apparel manufacturer mentioned price reductions on heavy inventory stocks. All ex-Directors, however, reported recent and significant price increases by suppliers.
Almost virtually universal mention was made of business retrenchment, taking the
form of production cutbacks and of tightening-up in employment practices and
expense cutting. These practices extended to the rapid growth areas of Florida.
In one Florida area, even the telephone company reportedly had joined other
companies in retrenching. One
ex-Director observed, however, that expense—cutting and employment reductions were limited to firms with significant profit
declines.
In manufacturing, excess inventories reportedly have proved troublesome only in isolated instances. One large apparel manufacturer who had experienced inventory troubles reported that many retailers were afraid to stock the new fashions; therefore, manufacturers were slow to build inventories.
Only a few ex-Directors mentioned increases in the level of manufacturing operations after a period of reduced operations. One noted that his company was getting over its cutbacks and shortly would be in a position to increase production. Another mentioned that several large contractors who build manufacturing plants throughout the United States reportedly had an increase in backlogs.
Few could come up with specific instances of cuts, cancellations, or postponements in outlays on new plant and equipment, although several mentioned stretch-outs and delays or cancellations in commercial and large construction projects. A far greater number cited significant announcements of new or expanded plans for capital investment but, generally speaking, these were only on a moderate scale.
Attitudes toward economic prospects varied widely, with about an equal division between those expecting an upturn in the near future and those seeing recovery delayed until the winter and next spring.
Several bank Directors answered affirmatively to whether requests were being made of them to alter loan payment schedules because of a cash squeeze. However, the number of such requests cited was small. The number of increases in loan demands coming from borrowers to carry inventories and accounts receivable or to replace former financing from nonbank sources was also small.
Directors now serving on one of our branch Boards confirmed the ex-Directors' reports of production cutbacks and layoffs and the go-ahead on previous plans for new plants. In the soil pipe market, there are indications that closings will continue. Similarly, another company is reducing its operations because of an order cancellation by Penn Central. On the other hand, an influx of orders in cast iron pipe has surprised most manufacturers. While mention was made of various new plant announcements, one Director observed that "there was more caution evident in project planning than was prevalent in 1969."
A special contact made of retailers indicated that while they expect increases in consumer buying, no upsurge is likely. Generally speaking, they expected sales over the next four months to range from no gain from a year ago to 3 per cent.