"THE DANGERS AND OPPORTUNITIES WE SHARE"
An Address by PAUL WEEKS LITCHFIELD, Chairman, Goodyear Tire and Rubber Company Akron, Ohio
Thursday, March 25th, 1954
CHAIRMAN: The President, Mr. A. E. M. Inwood.
MR. INWOOD: Gentlemen, may I have a moment of your time for routine business. Article 6, subsection .2, of this Club's Constitution reads in part as follows:
"A nominating committee consisting of five members of the executive committee and four other members shall be appointed by the executive committee and approved at a regular or special meeting of the club and such committee shall report to the annual meeting." Your Executive has appointed the following gentlemen to serve on this committee.
From the Executive Committee
S. S. Fletcher
Dr. C. C. Goldring Donald H. Jupp H. R. Lawson
J. W. Griffin
From the Membership R. A. Stappels
Joseph Cornish Alex Stark Marvin Gelber
It has been moved by Mr. Joyce and seconded by Dr. Crummey that these gentlemen from the Executive be approved and moved by Dr. Goldring and seconded by Mr. Buyers that these gentlemen from the membership be approved as your nominating committee.
All in favour of these motions please indicate contrary if any? The motions are carried.
Today we are pleased to have with us from the United States, the dean of America's rubber industry, Mr. P. W. Litchfield, the Chairman of the Board of the Goodyear Tire and Rubber Company.
We are honoured indeed Sir, that you chose to accept our invitation to come here and share with us some of your rich knowledge and world-wide experience acquired over three-quarters of a century.
Our guest of honour was educated in Boston and graduated from the Massachusetts Institute of Technology in 1396, following which he started his business career as a nine dollars-a-week engineer with a bicycle tire factory. Fifty-four years ago he joined Goodyear in Akron, Ohio--then an infant concern 2 years old, which was to become, first the largest builder of tires, and later, the world's largest rubber manufacturer, and today the sponsor of one of the best programmes on .television. Having served his company in various important capacities over the years, he was elected president in 1926, and Chairman of the Board in 1930. Mr. Litchfield played a major part in the vast American programme of developing synthetic rubber production so badly needed during World War II.
His personal interests include civil and masonic affairs and the Boy Scouts of America. He has received numerous awards and decorations, both domestic and foreign, in recognition of his contributions to the rubber, automotive and aeronautical sciences as well as to the economic and spiritual public welfare.
Mr. Litchfield is also author of two books--"Autumn Leaves" and "The Industrial Republic."
He became interested very early in his career in aeronautics and eventually formed an Aeronautics Department at Goodyear which expanded over a 40-year period to produce hundreds of military or observation balloons and some 100 airships for the United States in World War I., including the dirigibles U.S.S. Akron and Macon. They manufactured the stratosphere balloon, which in 1935 reached the highest altitude gained by man, and produced 168 navy patrol and training airships in World War II. Mr. Litchfield became the world's leading layman advocate of lighter-than-air ships for commercial and military use.
Mr. Litchfield has for many years been proud of his famous company's slogan-"More people ride on Goodyear tires than any other kind,"--and I am sure he is equally proud of the fact that they built a plant in New Toronto in 1917 which is well-known to all of us and so capably administered by our distinguished head table guest, Mr. R. C. Berkinshaw.
Today, the colossal Goodyear employs some 101,000 employees throughout the world and their sales last year exceeded one billion, two hundred million dollars and their assets exceeded six hundred million dollars.
Gentlemen, it is my pleasure to present to you, Mr. Paul Weeks Litchfield, whose subject is "The Dangers and Opportunities We Share."
MR. LITCHFIELD: I appreciate the compliment and the hospitality of your invitation, and I greatly enjoy the opportunity of meeting with some of the men who are leading this great Dominion toward a great future.
As a matter of fact, I am always happy to come to Canada because, more than forty years ago, I discovered something in Canada that has, year after year, lured me back to this side of the border.
That "something" is a spot in the heart of the Timagami country--a couple of small, rugged islands in a surrounding of great natural beauty and tranquillity. The snug cabins now have electric lights and the Indian canoes have been crowded out by powered craft. Where it used to be a tiresome and rough two-day journey from Akron, we now make it by plane in less than three hours. But with all of these modern touches, nothing has replaced or changed the original charm and magnetic pull of that spot which, in truth, became a second home to me. I have returned to it in person year after year and, many times during each year, when the going gets wearisome and complicated, I return to it in spirit. It is a never-failing source of relaxation and composure.
Then, too, it has been my fortune to have many business contacts with Canada and Canadians over a span of forty years. I have been not only an observer of Canada's fascinating economic progress and development, but I believe I can also claim a certain degree of participation in this changing picture. Our manufacturing operations, which began on a very modest scale way back in 1910, have grown to the point where the Company has many millions of capital investment in plants at New Toronto, Bowmanville, St. Hyacinthe and Quebec. We have warehouses and sales branches scattered across the Dominion.
The more I have come to know about Canada, the more confidence I have gained in her ultimate rise to high rank among the great nations of the free world.
As a young man out of college, I moved from Boston to what we then called "the West"-Ohio. As I had sized things up at the beginning of this century, there was where I would find opportunity. In retrospect, I have no reason to regret that decision.
Were I making that choice today, however, I believe my instinct would point toward Canada, because it offers such boundless opportunity.
To be a member of the rising generation in Canada today is to be in a most enviable position, I assure you.
The rubber business has occupied the central point in my life for more than fifty years. If I had it to do all over again, I would not have had it otherwise.
As an old timer in the field of rubber, I am proud of its record of achievement in human progress, and enthusastic about its opportunities for the future.
If we liken our business-economic structure to the human body, we may identify steel as the bone, oil as the blood, and rubber as the flexing muscles.
Rubber provides an indispensable ingredient of our economy. It has enabled us to develop mobility--and mobility, in turn, has enabled this North American community of nations to attain the highest standards of living and well-being this old world has ever known.
No basic industry in this community can boast of a more consistent record of technological progress. And no such industry can point to a more consistent record of passing along to the public the lion's share of the rewards of this technological progress.
Let me briefly document this claim.
One of the first tires produced by our Canadian tire plant forty years ago was a 30 x 3-1/2 clincher type for the old Ford Model T. It was the best merchandise we could produce at the time. It cost the consumer around $31.20 and gave him about two to three thousand miles of service.
Today, the popular tire size is 6.70 x 15. It is a softriding, skid-resistant tire which will give more than ten times the mileage of the 30 x 3-1/2--and the consumer gets it for 35% or $11.00 less.
The 1913 tire cost the consumer about $10.00 per, 1,000 miles. At the same rate per mile, today's 6.70 x 15 would cost over $300.00. Today's tire price even includes excise and sales taxes, which were non-existent then.
Thus, these years of success on the part of our tire experts result in the customer getting over ten times more miles with one-third less dollar cost, carrying greater loads at higher speeds.
This notable record of progress has been accompanied by similar benefits to the rubber-worker. His hours have been reduced; his work load immeasurably lightened; his wage rates have risen to the top of the industrial level, and he has been given the benefits of vacations, life insurance, health and hospitalization protection and retirement pensions.
Historically, the return on the capital required to develop this industry has been conservative. The records belie any charge of greed or excessive profits. Profit margin on sales over the years has been on the order of three to four cents on the dollar in the rubber industry. Clearly on the record is a dominating urge to give ever better service and value to the consumer. I make this point not as a smug claim, but as an observation of the beneficial forces which come into play under our principles of free enterprise. I know of no industry where there is keener competition, or a better record of real service to the public.
During the past decade, a new and powerful factor has entered the industry-synthetic rubber.
In a matter of ten brief years, synthetic rubber has developed from obscurity to dominance--from a mere infant of industry to an indispensable giant. And it is here to stay--make no mistake about that!
During the post-war period, here in Canada and the States, we have witnessed a most amazing economic growth and an unprecendented rise in our living standards. This development becomes all the more spectacular when you consider that it has occurred during a period when the requirements of defense and security have placed added, enormous burdens upon our productive capacity.
Let me remind you that without a high degree of mobility and the facilities for moving people and goods from place to place, there could have been no such progress as we have witnessed.
Until about ten years ago, our raw rubber was tree-grown. Ninety percent of it came from the general vicinity of the Malayan Archipelago, half way around the world from us.
The vulnerability of this distant source of vital supply was always apparent to us. It was a potential, ever-present threat to our very way of life. That threat abruptly changed from potential to real when the Japanese armed forces swept down the Asiatic coast and seized control of these vast rubber-growing areas.
The fact that we of North America were able to meet this threat and thus turn possible defeat into ultimate victory, can be traced in great measure to a modern miracle -the creation and development of a synthetic rubber industry, using all home produced raw materials.
With our reserves of raw natural rubber running dangerously low, the vast new synthetic rubber industry came into production in time to maintain our military mobility. That is a proud chapter in the history of our free people.' And Canada, through its own accomplishments in the production of synthetic rubber, helped to write that proud chapter.
Today, world production of natural rubber is estimated at one million, seven hundred thousand long tons per year. But-and this most important-world consumption of new rubber in 1953 was at a rate some six hundred thousand tons in excess of the total supply of natural rubber.
The difference in supply and requirements-in other words, the margin which has enabled our post-war economic progress in North America-is made up by the synthetic rubber industry.
Now, let us tie the past and present of synthetic rubber in with the future as I envision that future for both of our nations.
While we have reached new heights of economic and social progress, we are really just beginning to climb. Perhaps we may hesitate momentarily to catch our breath--perhaps the rate of production and industrial expansion will taper off a bit in the next few months. But I do not believe this is cause for alarm.
Significant and encouraging changes are taking place. Canada led the way by bringing its income and outgo into balance many months ago. The Canadian dollar went to a premium, and a fine example was thereby set for your neighbor to the south.
But I am confident that, though slightly tardy, we in the States are now on our way to fundamental improvement. We are setting our house in order.
Our new administration has brought a change in the very tone and atmosphere of our economy. Government spending is being reduced and gradually brought into balance with our capacity to pay. Taxes are being lowered.
The waste of active fighting in Korea has been halted. The punitive attitude toward business, expressed for long years by preceding administrations, is being reversed. The trend is toward greater freedom and opportunity for private business and less dependence upon government planning; more reward, rather than heavier penalties for success.
It's all very encouraging. It will make more jobs for our people, and better markets for an expanding output of goods and services.
The haze of creeping socialism is beginning to lift.
I realize the magnitude of the job Canada has already done. The value of her production has more than doubled between 1946 and 1952. Manufacturing has jumped into the lead in the creation of these values.
But these brilliant accomplishments are but the forerunner of what is in store for us if we will but protect our joint security against attack and maintain our staunch faith in our free, competitive economy.
Now, to bring this premise into sharper focus and, at the same time, get back to the subject of rubber, I should like briefly to recite some basic statistics.
Our studies indicate that by 1958, world consumption of rubber will have increased to a total one million tons in excess of what may be harvested from existing plantings.
By 1956-just two years from now-the world requirement for new rubber will just about equal the maximum output of our plantations and the total capacity of existing synthetic plants.
Even if conditions were favorable to expanding the rubber plantations so as to keep pace with growing demand, it could not be done. Seven years, as a minimum, are required before a newly-planted rubber tree can come into economic bearing. We don't have that much time.
In the States and in Canada we are now using about 50% synthetic and 50% natural rubber. In both countries the per cent of synthetic will inevitably continue to rise, as demand catches up with supply.
If we are to avoid severe restraints upon our expected economic expansion, we will soon be required to begin a substantial expansion of our synthetic rubber plant capacity.
Herein Canada, your fine plant at Sarnia is more than adequate for your present domestic requirements. I have watched that operation from the very beginning and have been very favorably impressed by its notable success. It shows what can be done when industry and government work together as a team.
In the States, the synthetic rubber industry, which was created by such joint effort, is now in process of being transferred to private ownership.
The United States Government really wants to get out of this business and, even though we realize we are in for a hectic period of transition, the rubber industry welcomes the opportunity to take over. We on our side of the border are trying to get away from "big" government and restore more power and responsibility to the individual. In the long run-and particularly in view of the steadily increasing demands for this commodity-we believe our synthetic rubber business will do a better job in private hands.
Now it doesn't necessarily follow that Canada should adopt the same pattern.
And that, by the way, illustrates another advantage enjoyed by Canada. You are in position flexibly to pick that which is best from the evolutionary pattern of the United States and avoid that which is not so good or not so timely. If we, on the other hand, could have avoided some of our past mistakes of deed and timing, we would be even farther along.
But to return to the rubber industry.
The past year was a genuine record-breaker.
The current year is likely to reflect some tapering off. Present planning in the automotive industry calls for a reduction in the number of cars which will be produced.
This means there will be a corresponding decrease in the market for tires for original equipment.
But, because of the high production of automobiles in 1950, 1951 and 1952, the market for renewal tires may be greater in 1954 than it was in 1953.
Another favorable factor is found in the growing market for rubber products other than tires. The use of foam rubber is growing by leaps and bounds. We have branched out into plastics and chemicals. Research is going ahead full blast. New products are coming along, and greater values are in store for the consuming public. It is a bright picture indeed and the benefits will be realized on both sides of the border.
And now, in closing, I should like to touch upon a subject of transcending importance to the individual citizens of our two nations.
It is the mutuality of our interests, the co-incidence of our ideals and aspirations, and the cohesion of our obligations to humanity.
As I flew across the border on my way to Toronto, there was no semblance of a jar or bump. I couldn't tell I had passed from one country to another. When I arrived in Toronto, I was made aware of no basic change of surroundings. The people looked and acted the same. They talked in the same language about the same general interests. They appeared similarly busy, friendly and endowed. I felt just as much at home and at ease on this side of the border as on the other.
I believe the Toronto businessman has a similar experience when he flies south.
These are evidences of a natural brotherhood which surmounts geographical lines and binds us to a common destiny.
As events have shaped themselves, particularly in recent years, our jointly-held concept of personal liberty and our acceptance of the basic Christian code of morality have created here in North America a distinct community. We are blessed with great natural resources and schooled in the free way of life. These are the keys to our magnificent progress. It is natural that the peoples of less fortunate parts of the world should look upon us as a symbol and to us for hope and courage.
Here we have on this North American continent freedom's strongest fortress. It must be kept strong. We must guard any moves-political, economic or otherwise, domestic or foreign-which will seriously drain or deplete our fundamental strength to resist aggression. Such considerations must underlie any helpful programs we may develop on behalf of other parts of the free world. To further our idealism, we must be intensely realistic on these points.
As we share great opportunity for human progress, so too do we share an identical danger-the threat of Communist aggression. Common sense tells us that our defense against this menace calls for a high degree of integration. And experience tells us that this is not solely an external threat-boring from within has placed the yoke of Communist tyranny about the neck of one nation after another in Europe and Asia.
Under these circumstances, the geographical boundry line separating Canada and the United States loses still more its original significance. We must act together as one in our defense.
Our common danger is made infinitely more awful by two great new forces: the development of the atomic and hydrogen bombs, and the development of jet-powered planes which can travel faster than sound in delivering these frightful agencies of destruction.
The jet plane and the bomb are capable of obliterating our whole structure of society in a matter of minutes. They have changed the whole historic concept of warfare.
The blockbusters of World War 11, which rained down on European cities, have become as obsolete as the crossbow and the battle-axe. Vast land armies are becoming liability targets rather than effective striking forces. What point can there be to the deployment of armies and navies to the far points of the world if the land they are supposed to protect is wiped out behind them?
Our danger is even further magnified by another development of recent years-recognition of the fact that the shortest distance between two points is not a straight line but, rather, a circular route.
If we are attacked, it will not be by armadas proceeding in a straight line from one seaport to a likely coastal target. It will be by jet planes which fly across the top of the world and find their targets in the industrial heart of Canada and the States-Toronto and Hamilton; Chicago, Detroit and Akron.
Thus we are confronted by the ugly but inevitable fact that the outer ramparts of this North American fortress of human freedom stretch across the arctic reaches of Canada and Alaska. Once the assault has cleared these points, it would be difficult if not impossible to avoid catastrophe.
Clearly, then, the matter of adequate joint defense measures is of such gravity and urgency as to be dominant over all other considerations.
We are not afraid.
Standing firmly with us, sharing our ideals, the heritage of Magna Charta, are all of the English-speaking nations of the world. Thus we are strong and, as an enlightened brotherhood, ready and determined to present a united front in the face of this danger--one for all--all for one. But, though strong, we do not wish to start anything.
I, for one, believe the blow will never fall on us IF--If we build and equip the strongest possible defense surface across the polar approaches to our free land, and
If we pool our resources in the creation and maintenance of supremacy in swift retaliatory striking power. If we do these things, it should become apparent to any potential aggressor that there can be no hope of victory--the best they could hope for would be a "draw". And a "draw" in the atomic sense of the term is, in actuality, destruction of the populations and resources of both combatants.
Under these grim prospects, it may well be that thoughts of aggression will ultimately depart from the minds of even the most ruthless of power-mad men.
For forty centuries, moving armies of men had the power to control the destiny of nations. In the last five centuries, the increased mobility of ocean transport and navies caused sea power to become dominant. The great world rivals were England and Spain.
With the defeat of the Spanish Armada in the days of the first Queen Elizabeth, England became the greatest world power and built her great Empire. In our present century, when Bleriot crossed the English Channel and Lindbergh crossed the Atlantic by air, a new era began. We changed from an earth-bound civilization--we entered the third dimension. Air transport covered both land and sea, speed was multiplied many times, and the destructive power of munitions increased still faster. This has made air power the world power in the future for good or evil. No present nation can stand alone, from now on, but must have definite and fast-moving alliances to command the dominance of air transport for both military and commercial needs of the future.
It may well be that the combination of jet plane and atomic power will, through the magnitude of their destructive potentiality, lead us to peace rather than to doom.
Let us pray it may be in the hands of those who use it for right, rather than might.
But meanwhile, let our two free nations join hands more firmly than ever before in defense-not only of our own richly blessed lands, but in defense of the whole living structure of civilization.
THANKS OF THE MEETING were expressed by Mr. Warren Hastings.