Beige Book Report: Atlanta
October 14, 1970
A midsummer business recovery in the Sixth District has suffered a setback, yet confidence has not been shaken and our directors remain more concerned with inflation than with the business slowdown. The GM strike has idled workers at two assembly plants in Atlanta. Some of the substantial layoffs occurring in the rubber industry are also tied to the strike. Quite aside from the strike, however, layoffs have occurred in the aluminum, textile, and furniture industries, and employment in the aerospace industry continues to shrivel.
The direct effects of the GM strike on the District have not been large or widespread, since the only GM assembly plants are located in Atlanta, where about 9,000 workers have been affected. However, about 2,200 employees have been laid off by the rubber industry in recent weeks—1,000 at a plant that shut down completely. Although the strike was mentioned as a reason for the plant closing, it is suspected that labor difficulties at the plant and a poor production record also entered into the decision. Another tire plant, which had been on a 7-day week prior to the strike, is down to a 4-day week. Still another tire plant has laid off 600 workers for 9 days, and a chemical plant supplying the tire industry has idled 600. The GM strike is also mentioned by some car dealers as a depressant on sales, as prospective buyers wait out the strike before buying.
Cutbacks in aluminum production in Louisiana, Alabama, and Tennessee have resulted in about 350 workers being laid off, and Alcoa is reportedly "stretching out" its construction schedules. The 23-percent increase in TVA rates, which amounts to a $5-million increase for one company, is hitting the aluminum industry hard. Conversely, the cutbacks in aluminum production may ease pressure on TVA coal supplies, which have been reported as low as a 10-day supply at full burn.
In the textile industry, carpet mills have experienced lower orders in August and September, after an increase in July, yet one carpet mill is raising prices. Hosiery manufacturers are having the worst year in 10 to 15 years and the sewing of women's wear is slow, partly because of a rejection of new styles. Businesses are reportedly switching to the sewing of pantsuits.
In Florida, Brevard County has become eligible for federal aid because of rising unemployment associated with layoffs at the Kennedy Space Center, and Dade County (Miami) has applied for federal aid, also because of increases in unemployment. The tourist business in Florida is sluggish, with receipts only about equal with last year.
A major layoff has occurred at a furniture manufacturer in Jackson, Mississippi. Retail sales in that area, and in many other parts of the District, have been adversely affected, as consumers have diverted funds to private school tuition.
In Jackson, enrollment is up sharply at 17 private schools and off 10,000, or 25 percent, at public schools. Still on the pessimistic side, directors report reduced profit margins and a slowdown in the collection of accounts receivable. Gains in telephone revenues in Alabama and in south Florida continue to lag behind those of recent years, and feedlots in north Florida are taking in few calves because the corn blight has raised doubts about obtaining feed.
On the bright side, several directors report home building on the
rise, although one mentions that most of the homes being built are
"stripped down" versions. An oil and gas find in a Tennessee county
is generating considerable drilling interest. On the "price shading"
front, a firm reports that a machine it considered purchasing at
$100,000, with a six-month delivery, has recently been offered at a
price of $78,000, with a
five-week delivery.