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FEDERAL RESERVE BANK OF SAN FRANCISCO MONTHLY REVIEW ^ e n of Steel . . . Steel negotiations this year are taking place against a backdrop of rising production, productivity, and prices— and rising imports. lie n e y of Midyear . . . Congress moves into action on the tax front, while the Federal Reserve moves to dampen stock-market speculation. $101 Billion In the W est . . . The regional market, after doubling in size within a decade, is now larger than any nation in the Western world except the U.S. itself. Editor: W illia m Burke June 1%S MONTHLY REVIEW Men ©f Steel teel, which in 1968 provides the skeletal frame and sinews of American industry, may well play the same basic role in the year 2000 that it does today. Despite the continued competitive inroads of substitute materials and foreign steel, the domestic steel industry hopes to triple its production over the last third of the 20th century. And despite the great advances of technology, hundreds of thousands of workers will still be required to produce the steel frame of the growing na tional economy—which means that negotia tions between the United Steel Workers (USW) and the major steel companies will continue to provide newsworthy copy in the 21st cen tury. Workers in primary-metals manufacturing (the basic constituency of the USW) number about 1.3 million, with roughly half working in iron and steel and the other half in nonferrous metals and metal fabrication. Most of these workers are concentrated in the Great Lakes States and the Eastern Seaboard, but they are also heavily represented in Califor nia’s steel works, the Northwest’s aluminum mills, and the Mountain States’ copper smel ters. In the West, primary-metals employ ment has risen almost 10 percent over the past decade to 95,000—two thirds of the total be ing employed in California—while employ ment elsewhere has returned to the decade-ago level of 1.2 million after a significant dip in the early 1960’s. New contracts signed earlier this year in the copper and can-making industries have affected the regional and national economies, but this summer’s negotiations in aluminum § and in steel will exert an even greater impact on future wage-price developments. In view of the crucial nature of the steel negotiations, the industry’s past record of labor negotia tions and its present economic environment merit a review. Pre-war bitterness Since the late 19th century, steel negotia tions have been marked by a number of bitter strikes, several ending in violence, but they have also led to substantial advances in wages and working conditions for the industry’s work force. The first important event in the industry’s annals was the Homestead strike of 1892, wherein a skilled-worker group (the Amalgamated Association of Iron, Steel, and Tin Workers) fought against wage reductions by calling a strike, which was defeated when the state militia intervened after a pitched bat tle between strikers and Pinkerton agents. 121 FEDERAL 122 RESERVE BANK OF SAN FRANCISCO In later decades, a S teel p ro v id e s s k e le ta l fra m e of national economy, paternalistic manage although shipments lag behind output of major users ment policy made it possible for skilled workers to obtain com pany pensions, low-rent housing, and company stock on the instal ment plan. But the lessfavored circumstances of the unskilled work force, accentuated by the World War I infla tion, led to a massive organizing strike in late 1919. This strike was engaged in a number of major wage negotia broken after 3X A months with the loss of 2 0 tions, but most of the agreements in the early lives and $ 1 0 0 million in wages, and unioniz postwar period were accomplished only at the ing efforts thereafter were unsuccessful until expense of prolonged strikes (1946,1949,1952, the advent of the New Deal. 1956, and 1959). The contract gains of the Under Section 7A of the National Indus present decade, however, have been achieved trial Recovery Act, which granted employees without the use of the strike weapon. the right to bargain collectively through repre The first postwar round, in 1946, occurred sentatives of their own choosing, and under when the union obtained an 1 8 y2 -cents-anthe stronger language of the National Labor hour wage increase and the industry responded Relations Act (Wagner Act), organizing ac with a $5.00-a-ton price increase. The second tivity began again under the auspices of the and third rounds, in 1947 and 1948, provided Steel Workers Organizing Committee. These the union with smaller packages of wages and efforts met with partial success in “Big Steel” fringe benefits, but led to the institution of in 1937, with the top-level agreement between John L. Lewis and Myron W. Taylor, but they annual wage re-openers. Until 1956, steel ne met with failure in “Little Steel” until the gotiators utilized this system rather than the auto industry’s escalator system, which tied War Labor Board forced that group of firms to recognize the union in 1941. Incidentally, wage increases to changes in the consumerthe Little Steel formula devised in those nego price index. (But steel, unlike autos, has dropped the escalator clause in recent years.) tiations provided the basis for all wartime wage increases in industry, essentially by tying In 1949, a settlement was obtained only after the intervention of a presidential fact wage awards to the rise in living costs since the outset of the war. finding board, and in 1952, only after presi dential seizure of the mills and the eventual Postwar gains use of Taft-Hartley Act procedures. But more important, these and later negotiations In the postwar period, a nation-wide pat rounded out a complete package of job-secu tern of wage increases followed by price in rity measures, such as pensions, insurance, creases was set by the steel and auto agree extended vacations, and supplementary un ments of 1946. Between 1946 and 1965, steel labor and management representatives have employment benefits. June 1968 MONTHLY Human relations: post-1959 At the end of the bitter 116-day strike of 1959, the union got no more than a 3.5-per cent package increase—considerably less than the 8-percent annual average of the earlier postwar period—and management got no satisfaction in its attempt to revise local work practices. To protect against a repetition of that experience, both sides agreed to set up the Human Relations Committee to find solu tions to their mutual problems, especially those generated by technological progress. Later, under the Kaiser Plan of 1962—a notable Western innovation in labor-manage ment relations—a method was devised for sharing the savings resulting from improve ments of productivity. Under this plan, tech nologically unemployed workers are not laid off but rather are retrained and reassigned to REVIEW other work, and workers get roughly onethird of all dollar savings created by techno logical improvements. In the 1962 negotiations, the union obtained only a small increase, with no straight-time wage increase in the package, and manage ment was forced to get by without any price increase after a traumatic confrontation with the White House. In 1963, as in 1962, improve ments in fringe benefits made up the entire package. But in both these and the 1965 ne gotiations, overall increases conformed fairly closely to Administration guidelines, with a major part of the contract improvements go ing to meet the union’s job-security demands —for example, through 1963’s extended-vaca tion plan, which provided 13 weeks’ vacation every five years for the senior half of the unionrepresented work force. Aluminum Settlement Major aluminum producers settled with the United Steelworkers union but failed to reach an agreement with the Aluminum Workers union prior to the June 1 strike deadline. The pact with the Steelworkers, which should set the final pattern for the aluminum industry—and perhaps for the steel industry as well—contained a 6.5-percent annual package increase for the three-year contract period. The basic package calls for average wage boosts of 55.9 cents over three years, including 45 cents for straight wage increases, 8.2 cents for increased differentials be tween job classes, and 2.7 cents for upgrading jobs to higher classifications. The pact also contains significant improvements in fringe benefits, including bonus vacation pay, increased pension benefits, and (in the third contract year) increased supple mental unemployment benefits. The 97-cents pricetag for the hourly package increase puts it above the 90-cents package negotiated by the Steelworkers and the can industry earlier this year. Following the settlement, one major producer immediately raised prices from 25 to 26 cents a pound on unalloyed ingot, the primary form of the metal, and simi larly added 4 percent to the prices of most fabricated products. Ingot prices had been as high as 26 cents in 1961 and as low as 22% cents the following year. Aluminum prices were last raised in January 1967, when they went up by one cent on ingot and % cent on fabricated products. The industry was unsuccessful in an earlier try, in November 1965, when the Administration forced a rollback by threatening to dump aluminum from the Government stockpile. 123 FEDERAL RESERVE BANK Job security: perennial The drive for job security reflects the rela tively stagnant growth of the USW member ship rolls and of primary-metals employment in general. Union membership jumped from 125,000 in 1937 to 858,000 a decade later, and to 1,086,000 at the 1957 peak. After a decline to below 900,000 in the early 1960’s, member ship again is back to its peak level, but pri marily because of the union’s absorption last year of the mine-mill-smelter union. More over, employment in all primary-metals facili ties amounts to no more than 7 percent of total manufacturing employment today, as against a 9-percent share two decades ago. In steel especially, the core of the industrialrelations problem is the shrinking workforce required to meet the economy’s needs for the metal. The union leadership throughout the postwar period has thus worked to cushion the required workforce adjustments, through such means as shorter hours, longer vacations, and expanded pension, insurance, and employ ment benefits. Yet, as each of these costly goals is achieved, management is forced to intensify its cost-cutting (and job-reducing) efforts in order to remain competitive in the face of the challenge posed by domestic sub stitutes and foreign imports. 124 Conflicting goals Management’s negotiating problems will be increased this year by the discrepancy be tween two conflicting union goals: a veteran leadership’s perennial drive for future job security and a younger rank-and-file’s infla tion-fueled drive for higher take-home pay right now. Whereas the USW a generation ago represented a relatively old work force drawn from all the ends of the Austro-Hungarian empire, today it also represents a younger ele ment drawn from all segments of American society, including suburbia. Press reports of an unpublished yet widely quoted AFL-CIO survey indicate that roughly half of all union OF SAN FRANCISCO members live in middle-income suburban com munities, and that they are far more con cerned with local community issues of schools, highways, and garbage collection than with such traditional union issues as improved social-security benefits. The 1966 USW convention, reflecting the conflict in goals between the old and the new union members, adopted a “decentralization” policy to give the rank-and-file greater partici pation in bargaining. The 163-member wagepolicy committee continues to be responsible for general policy, but special industry prob lems will henceforth be delegated to separate policy committees in steel, aluminum, nonferrous metals, and can-making. The general committee will no longer settle the overall contract for the entire jurisdiction; instead, the separate industry committees will partici pate in setting contract goals and will them selves vote on contract ratifications and strike authorizations. Future negotiations thus will see some ex tension of present special agreements across a wider range of negotiating topics. But even with greater decentralization, the bargaining scene may not be so complicated as in 1965, when union policy was set by the 163 members of the wage-policy committee, 700 presidents of union locals—and two candidates for the USW presidency. More money? Basically, however, the USW and its rankand-file simply want “more” this year than they achieved in 1965. The package increase negotiated last time averaged 3.5 percent an nually for the three-year period, or little more than was called for by the Administration’s then-current wage guidelines. But unions in the auto, rubber, and can industries have re cently obtained 6-percent package increases, so that the 6-percent figure effectively repre sents the minimum desired by USW negotia tors in aluminum and steel. The union also is June 1968 MONTHLY REVIEW asking for liberalized pensions and shorter work periods, along with further progress in the direction of a guaranteed annual wage. Steel bargaining began at the plant level in mid-April, when 15,000 individual demands were introduced for discussion, while bargain ing on the economic package was set to begin in mid-June, only about five weeks before the contract deadline. In contrast, negotiations began at least four months prior to the dead line in each of the strike-free years, 1962-63-65. Bargaining this year is taking place against a backdrop of rising production, rising pro ductivity, rising prices, and also rising im ports. Negotiators on both sides of the bar gaining table are especially conscious of the challenge to the industry—and the challenge to the balance of payments—generated by a modern, efficient, low-cost foreign steel in dustry. With world steel capacity doubling over the last decade to more than 600 million tons, the U.S. share has dropped to not much more than one-quarter of the total, and U.S. plants have dropped behind European and Japanese plants in terms of efficiency. Foreign invasion of U.S. market leads to widening export deficit More imports? Steel imports, which totaled only about 1.0 million tons in 1955 (as against exports of 4.0 million tons), first made serious inroads in the American market during the prolonged strike in 1959. Imports totaled 4.4 million tons that year, and the import challenge has increased during each of the four strike-hedge negotiat ing periods of the 1960’s. Imports reached 11.5 million tons in 1967, and may well climb to 17 million tons this year. With exports mean while declining, the steel industry’s balance of trade has shifted over the past decade from + $650 million to —$900 million. But the import challenge is due to more than just the demands of a booming U.S. economy and the relationship of steel costs here and abroad. This challenge also reflects the fact that foreign producers developed almost all Production and prices Yet, with all that, the domestic industry has in recent years posted a creditable production and productivity record, and, until recently, a record of stable prices as well. (Some steel puddlers recently even began to peddle steel, quoting discounts of 15 percent or more on flat-rolled stainless, but most of the industry greeted this heretical notion with dignified silence.) On the strength of the booming 1968 economy, steel consumption may exceed 100 million tons this year, as against totals of 95 million tons in both 1967 and the last contract year, 1965. Imports, as indicated, are siphoning away a major part of the expanding American market, but the industry has managed to avoid 1965’s severe supply problem through the expansion of finishing capacity and through smoother Millions of Tons the basic technological breakthroughs of the postwar period. The Austrians first used the oxygen-injection method in blast furnaces and steel converters; the French and Swedes per fected the electric furnace to make pig iron; the French pioneered the efficient use of lowquality coke, and the British and Japanese first developed ways of concentrating, pelletiz ing, and sintering low-grade ore. 125 FEDERAL RE SERVE BANK OF SAN FRANCISCO Ste e l i@ses mcaricets to substitute materials, reflecting sharp price advances of late '50s and late '60s 1955 = 100 126 scheduling of orders. Steel mills this year have not only added new rolling capacity but have also built up mill stocks of in-process and semi-finished steel, and in addition, they have offered to store steel orders or give users 120 extra days to pay. Inventories of finished steel jumped 20 percent over the fall and winter period alone, so production in the second half of 1968 should decline even if a strike is avoided. But since output in the January-May period exceeded the year-ago figure by at least 15 percent, 1968 as a whole should still wind up with a quite respectable record. The price outlook is another major element in the 1968 environment. Despite improve ments in productivity and despite the import challenge, steel prices rose about 5 percent over the 1962-67 period, and have risen about 2 percent since last summer alone. This per formance is not nearly so bad as the 25-percent increase of the 1955-59 period—the in crease which caused steel to be branded as the major culprit for the inflationary push of the late 1950’s—but it creates substantial prob lems for the economy in the present inflation ary year. The rising price trend for steel products, moreover, has helped to account for steel’s Percent Change in Output, 1955-67 0 20 40 60 80 100 tv 430 440 loss of markets to substitute materials over the past dozen years. Between 1955 and 1967, steel output increased 9 percent, as against a 109-percent increase for aluminum and a 434percent increase for plastics. Largely because of the legacy of the 1950’s, then, steel produc tion has increased only about 50 percent for the entire postwar period, as against a 150percent expansion for all manufacturing. More productivity? more pay? Productivity, however, is now the key to the domestic industry’s prospects for stable prices and international competitiveness—and to labor’s demand for an expanded wage pack age. On the basis of a strong technological performance in recent years, output per man hour in steel manufacturing last year was about 30 percent above the 1957-59 base, roughly in line with the productivity increase in all manufacturing. The American industry is now beginning to benefit from the innovations developed abroad in the early postwar period. The basic-oxygen furnace, which is some four to six times faster than the open-hearth process and is also sub stantially cheaper in terms of capital and operating costs, has increased its share of total June 1968 MONTHLY capacity from roughly zero a decade ago to about one-fourth of the total today. The con tinuous-casting process, which converts mol ten steel directly into semi-finished shapes, has also stimulated large productivity gains. Labor, of course, hopes to benefit from these and future productivity savings, espe cially since the trend of real compensation in steel and other primary metals has lagged be hind the metals industry’s productivity trend in recent years—in contrast to the situation in the earlier postwar period. Moreover, average real compensation per full-time worker—wages plus fringe benefits, adjusted for changes in consumer prices— increased only about 1 percent annually in primary metals in the 1962-67 period, as against a 2-percent average gain in other manufacturing and a 3-percent average gain Rising p ro d u c tiv ity permits rising output with stable workforce REVIEW P rim a ry -m e ta ls w o rk e rs set pace in earlier postwar periods, but now lag in growth of compensation Average Annual Increase (Percent) outside manufacturing. Yet, productivity gains have been somewhat higher in the metals in dustries than elsewhere over this recent timespan. Nonetheless, because of the sharp ad vances in compensation in the earlier postwar period, primary-metals workers still earn sig nificantly more than other workers—in 1967, average total compensation per full-time em ployee was roughly $9,200 in primary metals, as against roughly $7,800 in other manufactur ing and $6,700 in nonmanufacturing industries. In the light of these favorable develop ments in production and productivity, and in the face of the steel import challenge, USW negotiators will strive hard to restore earlier inter-industry differentials and to gain a larger share of the savings generated by technologi cal progress. Management negotiators, how ever, will bargain with an eye on the heavy costs of technology, along with the inroads made into steel’s markets by foreign steel and by domestically produced substitutes. Inter ested onlookers meanwhile will remain con cerned with the impact of the price of this key industrial material on both the domestic price level and the nation’s trade balance. William Burke 127 FEDERAL RESERVE BANK OF SAN FRANCISCO Money at M id year Tax BUS: The Surcharge In late June, Congress responded to the President’s invitation to “bite the bullet” and passed the long-delayed tax bill. The surcharge, which is retroactive to January 1 for corporations and to April 1 for individuals, will increase their income taxes at the rate of 10 percent a year. . . . The bill is expected to yield the Treasury $15.5 billion by the end of fiscal 1969, with $7.8 billion coming from individuals and $3.8 billion from the corporate surcharge. The package also includes $1 billion from a speed-up of corporate tax payments and $3 billion from the extension of automobile and tele phone excises. Tax Bill: The Cutbacks The bill incorporating the revenue increases also included several budget restraints, 6-8-10 being the relevant numbers. Actual spending for fiscal 1969 was reduced $6 billion below the total in the President’s January budget, to $180.1 billion. Moreover, cutbacks of $8 billion from old obligational authority must be shown in next January’s budget document, while a reduction of $10 billion from last January’s request for new obligational authority must be recorded for fiscal 1969. (These figures refer to commitments for disbursements over more than one fiscal year.) . . . The spending cutbacks are still only target figures, and do not apply to four major budget areas—Vietnam, debt interest, veterans’ benefits, and socialsecurity expenditures. But the bill requires a reduction of almost 10 percent in Federal employment. Besides, a number of normal appropriations bills already showed the effects of the economy drive as they wound their way through Congress, as the ax fell on NASA’s space hardware purchases, the AEC’s 200-billion-electron-volt proton accelerator, and even on usually sacrosanct rivers-and-harbors appropriations. Monetary Environment 128 Monetary policy continued tight in the inflationary atmosphere of late spring. During May, member-bank net borrowed reserves averaged about $380 million, or somewhat above the April average. Member-bank borrowings continued to increase, while excess reserves showed little further June 1968 MONTHLY REVIEW change. . . . Yields on most Treasury notes and bonds rose to their highest levels in a century around mid-May, but they then declined sharply over the following month. Yields on new corporate and municipal bonds also declined in early June. Treasury bills generally moved in the same direction as Treasury bonds over this period. The three-month bill was bid at around 5.70 percent in mid-June, but then dropped as the market reflected expec tations of less monetary tightness in the tightening fiscal atmosphere. Curbs on Speculation The Federal Reserve Board, expressing concern over the “excessive” amount of credit fueling the nation’s stock markets, in early June raised the minimum down payments for listed stocks and convertible bonds bought on margin. The Board increased margin requirements on loans for listed-stock purchases from 70 to 80 percent of the purchase price, and also raised the margin level on convertible-bond credit purchases from 50 to 60 percent. . . . Wall St. authorities took several steps of their own to curb the speculative upsurge, which created severe difficulties for the exchanges and “sheer pandemonium” in over-the-counter trading. Among other steps, the industry began to eliminate trading for one day a week over a fourweek period, as a means of clearing up the logjam in back-office paperwork, and major firms reduced their advertising for new accounts and cut back their dealings in low-priced securities and margin transactions. 129 FEDERAL RESERVE BANK OF SAN FRANCISCO $101 BilBion in the West were helped along by their very sharp popula booming regional economy lifted per tion gains. The state accounting for the vast sonal income in the West to $101 billion in 1967—up from $93 billion the year before. bulk ($35 billion) of the dollar increase in With the District economy now twice the size income—California—also found over half of of a decade ago, this region boasts a larger its 98-percent increase attributable to popu consumer market than any nation in the West lation growth. ern world outside the U.S. itself. By the second half of 1967, the District Per capita: shifting margins economy accounted for 16.3 percent of the Between 1957 and 1967, per capita income national market, according to recently re outside the District rose from about $2,000 to leased Commerce Department data. This was almost $3,100. The Pacific Southwest region up strongly from the 14.9-percent share of a (California and Hawaii) maintained a 24decade ago, but was a notch below the level percent margin over the non-District figure of several years ago. The District share had over most of the decade, but the margin drifted down from 16.4 to 16.1 percent of total slipped from 24 to 18 percent in the 1964-67 personal income between early 1964 and late period because of the stepped-up growth else 1966, partly because of sluggishness in Cali where. Even so, in 1967 only New York and fornia’s aerospace and construction industries Illinois among the major states recorded a and partly because of the defense boom’s higher per capita income than the Pacific relatively greater impact elsewhere during the Southwest’s $3,640 figure. early Vietnam period. A 130 A decade's growth The rest of the national market expanded by 75 percent in the 1957-67 period, with rising per capita income accounting for 54 percent of that increase and rising population for the remainder. All but one of the nine District states recorded increases of over 75 percent in total income, but most did so only because of a faster-than-national pace of population growth. Only Hawaii, Washington, and Alaska —with per capita increases of 71, 60, and 56 percent, respectively—outdistanced the nonWestern states in terms of per capita growth. The states boasting the fastest growth of total income over the decade—Nevada, with 139 percent, and Arizona, with 116 percent— G o v e rn m e n t, fin a n c e , services post largest increases in income Percent Change (1957-67) 0 50 100 150 June 1968 MONTHLY REVIEW W e s t e r n sfo te s © ufpace n a tio n in terms of total income, but mostly because of faster rate of population growth Per capita income in the Pacific Northwest (Washington, Oregon, and Alaska) ranged be tween 6V2 and l l/i percent above the nonDistrict figure during most of the past decade, but the boom in “Pugetopolis” has widened the margin from 7 to 8 percent over the last three years. With the boom reaching everhigher levels, the Northwest’s per capita in come rose to $3,320 last year. Per capita income in the Mountain region (Idaho, Utah, Nevada, and Arizona) re mained consistently below the figures recorded elsewhere over the 1957-67 period, although this was offset in some measure by the lower level of living costs in this area. The Mountain region’s per capita income was about 6 per cent below the non-District figure in both 1957 and 1964, but the margin widened to 10 per cent last year because of the impact of the pro longed copper strike on mining communities. Total income: shifting industries The strongest growth sectors over the past decade, in the West as elsewhere, were govern ment, services, and finance: in District states, income from those sources expanded by 167, 141, and 101 percent, respectively, over the ten-year time-span. These gains were larger even than the substantial gains reported else where, and the West thus expanded its share of the national total in each category. In 1967, this region accounted for almost 20 percent of the (civilian) government sector, 18 percent of services, and I 6V2 percent of finance. Personal income from manufacturing, the West’s single largest industrial sector, in creased by 98 percent over the 1957-67 period —a faster pace than elsewhere—and Western manufacturers thus increased their share of total manufacturing income. But in two other major District activities, construction and farming, the pace was considerably slow erslower even than in the comparable national industries. Personal income from Western construction activity increased by 57 percent over the period, while income from Western farming rose less than 15 percent, and the regional industries’ income shares thus slipped somewhat. 131 FEDERAL RESERVE BANK OF SAN FRANCISCO Western Digest Expansion in Bank Credit In spite of increased reserve pressure and higher discounting, large Twelfth District banks reported a $ 173-million increase in bank credit in May, following an exceptionally large ($808 million) gain in April. The May increase, however, was all in security holdings. Loans declined slightly as a consequence of reduced credit flows to brokers and dealers, which offset increases in real-estate and consumer loans. . . . Business loans fell moderately ($7 million) as corporations repaid some of their April tax borrowings. But this small decline contrasted sharply with a $885-million drop in business credit at large banks elsewhere. Mixed Trends in Deposits At the end of May, demand deposits (adjusted) at large District banks were $465 million below the end-April level. The decline reflected the reduced balances of corpo rations and individuals resulting from debiting of April income-tax checks.. . . May’s '$56-million increase in time and savings deposits, like the April increase, was about one-third below the gain recorded in the comparable year-ago period. The attrition in large negotiable CD’s, which had been particularly heavy in April, tapered off in the following month. Decline in Aerospace California aerospace-manufacturing employment, with a decline of 3,900 in May, fell to a level 4 percent below last December’s peak of 618,000. Aerospace jobs in Washington meanwhile increased slightly over the month, to a point slightly below January’s peak figure of 111,000. . . . The sluggishness in employment in these key states—in contrast to the strength in defense employment elsewhere—reflects the recent downtrend in defense contracts awarded to Western states. The volume of con tracts received by District firms during the January-March period roughly equalled the preceding quarter’s volume but was off 25 percent from the first-quarter ’67 figure. Western Sentinel Sites Four Western areas—Los Angeles, San Francisco, Seattle, and Salt Lake City— were among the first sites chosen by the Pentagon this spring for Sentinel antiballistic missile installations. About 15 to 20 sites will eventually be included in this “thin” missile defense system, which is designed to counter the potential Chinese threat of the mid-1970s. . . . The four Western sites will be operated by the Sixth Region of the Army Air Defense Command, headquartered at Colorado Springs. Each of the in stallations is scheduled to cost about $50 million and to produce an annual payroll of $2-3 million. 132
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