"A CENTER OF CONFIDENCE"
An Address by LESTER L. COLBERT President of the Chrysler Corporation of Detroit.
Thursday, January 10th, 1957
CHAIRMAN: The President, Mr. Donald H. Jupp, O.B.E.
MR. JUPP: Distinguished Guests and Members of the Empire Club of Canada.
We are privileged today to have a visit from one of America's top executives, the President of Chrysler Corporation of Detroit, Michigan, Mr. Lester L. Colbert. Born and educated in Texas he bought and sold spot cotton to pay for his education at the University of Texas and to go on to the Haward University Law School graduating in 1929. He practised law in New York with the firm which is general counsel for Chrysler Corporation and soon attracted the attention of Walter P. Chrysler, founder and President of the Chrysler Corporation. So in July 1933 the young lawyer moved to Detroit as resident attorney, dealt with labour relations and served on the Operations Committee. The climb which was to lead to the Presidency was by way of a Vice-Presidency of Dodge Brothers Corporation and of several subsidiaries of Chrysler Corporation, a two-year stint at night-school, three nights a week studying machine operations and blueprint reading, general management in 1943 of the Dodge Chicago plant which turned out engines for B.29 Superfortresses, and the Presidency of the Dodge Division in December 1945. Elected a Vice-President and director of Chrysler Corporation in September 1949, Mr. Colbert became President in November 1950.
Everyone of us knows that Chrysler favours the "Forward Look" and the Empire Club is delighted that this involved among other things the appointment of Mr. Ron Todgham, a native of Toronto, as President of Chrysler Corporation of Canada Ltd. We are delighted to have Mr. Todgham here today at the head table with Mr. Colbert. It is encouraging to reflect also that Mr. E. C. Row, his predecessor in Windsor, now holds the key job of Administrative Vice-President in Detroit.
A thumbnail sketch of our guest speaker would be incomplete without mention of the fact that he is married and has three children, he plays golf and grows flowers in the summertime, maintains a home in Texas where he relaxes twice a year and, wonder of wonders, he takes a long walk every night before going to bed.
Mr. Colbert has titled his address "a Center of Confidence".-Mr. Colbert.
MR. COLBERT: You members of the Empire Club of Canada are to be congratulated on your program chairman. That man is a very long range planner. It was at least seven months ago that I was honored by your invitation to speak here today.
At that time-to all outward appearances-the world was in a relatively settled condition. There were clouds on the horizon, but they were the same ones we had been looking at for quite a while. A lot of people were beginning to think that maybe the international situation had settled down into a kind of atomic stalemate, and that for an indefinite period we would be engaged in a primarily economic competition between the free world and the communist countries. The communist bloc looked pretty solid and wasn't showing any cracks.
We all knew the Middle East was loaded with potential trouble, but few of us expected anything like the developments of the last two months.
In that kind of world it seemed logical and appropriate to come over here and talk with you about the tremendous economic promise of your country and mine--without becoming too concerned with international complications.
Today the world scene presents new problems that none of us can ignore. In recent months we have become aware of new dangers as well as new opportunities. We are confronted with a world situation loaded with menace and hope. Few, if any of us claim that we can see a way through the tangle.
In spite of my own perplexity, however, in recent weeks I have arrived at one clear conclusion-a conclusion that must occur to every other businessman who sits down at his desk every morning to carry on with his regular duties. That conclusion is that with the world in its present state, the greatest contribution the working citizen can make to bringing about the kind of peaceful world we all want is to get on with his own job and do it to the best of his ability. This is one way all of us can help to preserve strength and stability in the free world.
And from this thought comes another that is closely related. Canada and the United States are functioning now-as they have for close to two decades-as the economic heart of the free world. Our two countries certainly cannot claim a monopoly, or anything like it, on sound democratic institutions or on devotion to political freedom.
We both owe our free political institutions to the great democratic tradition of England. Other lands have also made their contributions. And the inspiring demonstration of courage by the Hungarian freedom fighters against overwhelming odds is new evidence that the willingness to fight and die for freedom is a universal trait and not the exclusive possession of any one people or group of peoples. And let's hope their tragic sacrifice will not have been in vain.
We in Canada and the United States have been endowed with tremendous natural resources, including climate, inland waterways, soil, and mineral resources. And by a fortunate combination of events we have been left free to work out on this continent the world's most dynamic way of doing business. We have become the economic prime movers of the modern world.
And together-in great part because of our economic power and economic potential - we constitute a center of confidence for the free world. This center of confidence can continue to be a rallying point and a source of moral and material strength. And the stronger and more productive we are, the more effectively we will demonstrate to the world the power of freedom-and the faster the forces of discontent and revolt will work to destroy the communist tyranny.
We in Detroit have had a very down-to-earth reminder in recent weeks of the confidence which the world places in your great and growing Canadian economy. Living as we do just across the Detroit River from Windsor, we are very much aware that your Canadian dollar now carries a four per cent premium over ours. This premium on the Canadian dollar-resulting as it has in large part from the flow of funds into Canada from other countries-is the clearest possible indication of the confidence which the world has in Canada and its future. We in the United States share that confidence. No country gives greater promise of continued strength and stability. And, incidentally, no country treats investors from outside its borders with greater consideration and fairness.
We at Chrysler have enjoyed doing business in Canada since 1925. In that year Chrysler of Canada was established simultaneously with Chrysler Corporation in the United States. In the first year, Chrysler of Canada produced 2,349 passenger cars. In the year 1956 it produced 92,354 passenger cars. But this is not the only way to measure its growth. Right along with the increase in production, our Canadian company has expanded to many times its original size in number of employees, number of dealers, number of suppliers, and in the extent of its investment in physical facilities.
At the present time, Chrysler of Canada employs 11,000 people. It sells its cars and trucks through 1200 independent dealers, who employ over 20,000 people and have a total investment of close to 80 million dollars in their own businesses. And in 1956 it bought about 150 million dollars worth of components, materials and services from approximately 450 Canadian suppliers, who in turn employ many thousands of people.
In the last three years we have invested 55 million dollars in new plants and equipment in Canada. Among the most important additions to our Canadian facilities are a new plant for the production of V-8 engines, the most advanced installation of its kind in Canada; a doubling of the size of our assembly plant; a new administration building; and a number of other buildings, including warehouses, regional sales offices, and a new experimental engineering laboratory.
It may be of interest to you that the staff of Chrysler of Canada is rhade up overwhelmingly of people born and raised in Canada. That goes right from the top down, starting with Ron Todgham, president of the company. Of the last sixty people appointed to executive positions in the organization, it happens that only one was a United States citizen.
The cars and trucks we assemble in Canada are made up in great part of components produced by Canadian firms. The only parts imported from plants in the United States are frames, major body stampings, and automatic transmissions. Everything else, from batteries to sparkplugs, from tires to upholstery, and from engines to steering wheels, is made in Canada.
The day may come when our Canadian plants will supply our plants in the United States with some of their components. At present this is not happening. I would like to say, however, that Chrysler Corporation has recently made one import from Chrysler of Canada that we consider very important to the future of our business. Last summer we persuaded Ed Row, who had been president of Chrysler of Canada since 1951, to come across the river and become our administrative vice-president. We are confident that the skill with which he built a strong Canadian organization and kept it moving ahead in the business is going to be a key factor in making gains against our competition in the United States.
In the last three years Chrysler of Canada has made sizable gains in its share of the Canadian automobile market-and its plans to go right on making gains.
Chrysler of Canada has been increasing its manufacturing and distributing facilities and strengthening its organization steadily in the confident anticipation of excellent future markets for cars and trucks. For one thing, your population is growing so fast that by 1985, at the present rate of growth, there will be nearly 32 million Canadians -about twice as many as there are at present. And I don't need to tell you that this fast increase in your population is being caused in great part by the inflow of people who have decided to cast their lot with Canada and its future.
Besides the rapid growth of the Canadian population, however, there is the equally important fact that family incomes are rising and will continue to rise with the rapid development now taking place in the country. No businessman today--either in Canada or the United States is basing his plans on a straight-line increase of demand in direct proportion to the growth of population. Living standards in a dynamic economy like Canada's have a way of increasing even faster than the population, and all of us have to plan for the future with those rising standards in mind.
During the past year it has been very impressive to see the Canadian automotive industry scoring gains over its production in 1955, which was the biggest previous year on the books. In most years the production of cars and trucks in Canada has paralleled roughly the ups and downs of automotive production in the United States. But 1956 was a big exception. With the production of motor vehicles in the States down nearly 25 per cent from the all-time high of 1955, Canada's automotive production showed a healthy gain of about four per cent over 1955. Maybe this is the tip-off to the start of a long period of steady expansion. Let's hope so.
I don't want to give you the impression that in the United States the automobile industry has slowed down to a walk-or that from now on we are going to be satisfied with producing on a replacement basis. Far from it. We may not triple the number of passenger cars on our roads in the next thirty years, as you people in Canada are likely to do, but we are looking for a very healthy growth. And from your point of view this can only be good news, considering the tonnages of Canadian metals that go into our cars every year.
One of our basic reasons for optimism about the longrange future of the automobile business in the United States is the rate of growth of our population. Just recently one of our leading experts on population said that if the present trend toward younger marriages and bigger families continues, by 1975 there will be 249 million people in the United States. That would be an increase of nearly 80 million in the next 18 years!
More people, more families, more teen-agers, more suburban living, higher incomes--all these things will continue to create demands for cars. And, in addition, demand is being created by the kind of cars the industry is designing and building. I won't take advantage of this occasion to tell you about all the features of the new Chrysler Corporation cars, which have been making so much news on both sides of the border. Let me simply invite you to examine them for yourselves, and by all means drive one of them.
Taking all these things into consideration, by 1965 we could see an average annual market of something like 8 million new cars a year. And during the later nineteen sixties some years could possibly even reach 10 million cars.
The meaning for Canadian industry of these high levels of production is very clear. Consider, for example, the amount of aluminum being used in a contemporary automobile. At Chrysler Corporation alone we buy close to 100 million pounds of aluminum a year. It may be of some interest to you that our new 1957 cars contain an average of 100 pounds of aluminum for each four-door sedan as compared with an average of 75 pounds for our 1956 models and an average for the industry of 45 pounds for all 1957 models. The use of aluminum may increase at an even faster pace in the future as the result of new techniques of precision die-casting now being developed. Until quite recently, aluminum die castings were limited to parts weighing 8 to 10 pounds. New techniques have made castings of 75 pounds entirely feasible. With this new art developing so fast, it is feasible to look forward to die-cast automotive engine blocks made of aluminum and alloyed with zinc and weighing less than a hundred pounds.
The automobile industry is not the only part of the United States economy that is using increasing amounts of aluminum. Fortune Magazine reported just recently that the yearly per capita consumption of aluminum in the United States has risen from three and a half pounds in 1947 to twenty-four pounds today. And by 1965 it is expected to reach forty pounds a year.
The use by industry in the United States of aluminum and the whole range of metals produced in Canada--nickel, iron, uranium, cobalt, titanium and many others is only one way in which our two economies are linked together in the most dynamic combination of economic activities in the history of the world. This relationship has its frictions and its problems, and there would be very little point in my standing here today and trying to pretend they just don't exist. The healthy thing is to talk about them realistically, and with as much objectivity as possible.
In recent months we on our side of the border have heard a number of excellent speeches by eminent Canadians on the subject of investments in Canada by firms in the United States. These men have given us some very straight talk. All of us have been impressed by the frankness as well as the fairness of their approach. They have mentioned the fact that investment funds from the United States have a stabilizing influence on Canada's balance of payments. They have described in some detail the effect of United States investments on the filling out, the diversifying, the broadening of the Canadian economy. They have taken pains to make clear how Canada, through these investments, benefits from the technical and scientific resources of American industry. And they have pointed out that in spite of the very sizable amounts of capital flowing into Canada from the United States and the rest of the world, Canada is financing three-fourths of her own capital needs.
They have also reminded us in the United States that Canada is a sovereign nation--that even if the border is so invisible as to seem non-existent, Canada has her own objectives as a nation which she intends to reach in her own way. And they have made specific and courteous suggestions to United States companies with operations in Canada regarding the participation of Canadians in those operations. From what I have said today I think you will agree that we at Chrysler have anticipated some of the suggestions of these distinguished men, and I assure you that we are taking all of their suggestions into consideration in planning our course in Canada for the future.
Sound working relationships between Canada and the United States are vital to the future of our great economic partnership. And it is important to the future stability and security of the free world that this partnership remain strong, so that together, through the normal course of trade and investment, we can help set in motion in other parts of the free world the same forces that have made our own countries so productive.
Each one of us looks at the world from his own point of vantage. And I, naturally, think of all the constructive developments that may take place when people in other parts of the world begin to use the motor vehicle as we have used it on this continent. A very impressive mass of facts can be assembled to demonstrate that motor transport and all the activities associated with it constitute the heart of our dynamic North American economy. On a recent trip to Europe I saw on all sides the widespread economic effects of the recent rapid expansion of the automobile industry. And it is pretty safe to predict that as the passenger car and truck come into wider use in the underdeveloped countries of the world, economic growth will receive a similar stimulation.
There is some real hope that we may be in the very early stages of a world-wide automotive revolution of the kind we have seen in our own countries. According to the International Road Federation, motor vehicle registration has at least doubled in every major geographic area since 1940. In Latin America and Asia the number of cars and trucks has tripled in the same period-but the number to start with was of course very small. India, with a population of close to 400 million, still has only slightly more than 300,000 motor vehicles. And China, with 600 million people, has only 120,000 cars, trucks and buses. But here and there real progress is being made. In Turkey, in the Union of South Africa, in Venezuela and many other countries, roads are being built at a very high rate and the motor vehicle population is rising rapidly. Because it will lead to economic growth of all kinds, this increasing use of motor vehicles means opportunity for every other kind of business with trade or investment activities in other parts of the world.
The ability to export private capital from this continent in anything like the amounts demanded by an expanding world economy is going to require steady expansion of our two great economies on a sound and stable basis. Right now one of the most serious problems on our side of the border is the control of inflation. Demands for goods and services of all kinds-combined with the highest levels of personal income on record-are pushing our economy right up against its top limits of performance. After enjoying several years of remarkable stability in the value of the dollar, we now find prices creeping upward. Controlling inflation-without starting a trend toward deflation-is going to continue to require steady hands in Washington. And it is up to us in business to give solid support to the efforts of our government officials as long as their programs are aimed at encouraging a big volume of sound business.
To keep the economies of Canada and the United States expanding steadily and soundly is also going to require sound and confident forward planning by private business. Contemporary business management in Canada as well as the United States has come to look upon planning as one of its most important functions. The higher the level of management, the more preoccupied it must be with the shape of things to come. The fundamental responsibility of top business management is to make sure the longrange objectives of an organization are consistent with the long-term possibilities of its own national economy and with the society in which the organization lives and develops. When private business managements in Canada and the United States take the long view, they help to build stability and confidence throughout the world.
The present world situation calls for foresightedness, patience and restraint on the part of all of us who help to get work done in this part of the world. That means just about everybody-in business, government, the professions, labor and agriculture. In these troubled times the big job for both our countries is to keep strong and keep moving ahead. Every one of us is part of this great effort. And we can all take satisfaction from the knowledge that what we do from day to day is helping to build strength and confidence here at the heart of the free world.
THANKS OF THE MEETING was expressed by Mr. Arthur Inwood.