Special Message to the Congress Transmitting Report on Rubber Requirements and Resources.

To the Congress of the United States:

Section 10 of the Rubber Producing Facilities Disposal Act of 1953 requires that "at the expiration of one year after the transfer period or as soon thereafter as the Congress is in session, the President shall report to the Congress concerning the Nation's rubber requirements and resources, and the need, if any, for further research by the Government relative to the production or use of synthetic rubber and its component materials."

DISPOSAL OF SYNTHETIC RUBBER PLANTS

A year has now elapsed since the transfer to private owners, April 29, 1955, of 24 of the 27 Government-owned synthetic rubber producing facilities. During this year two additional facilities have been disposed of, in accordance with amendments to the Disposal Act, and legislation has recently been enacted which authorizes sale of the only remaining Government plant, now under lease.

In my message to the Congress of April 14, 1953 recommending rubber producing facilities disposal legislation, I pointed out that such disposal must be consistent with three objectives: "In the first place the Government should realize their full fair value; secondly, disposal should be effected in such a way as to insure to the consuming public, and to large and small rubber fabricators the benefits of fair competition; and, finally, to insure against the hazards of unforeseeable contingencies, the facilities must be sold on such terms as will guarantee their ready availability for the production of synthetic rubber in time of emergency."

I am pleased to be able to report to the Congress that all three of the above objectives of the disposal program appear to have been achieved to a highly satisfactory degree.

As respects the first point, the synthetic rubber facilities were built during World War II at a cost of approximately $700,000,000. After plant operations over the years and disposal of some of the facilities in the 1946-1950 period had recovered more than half of this investment, the recent disposal of 26 plants for $285,000,000 has resulted in the recovery of the entire remaining investment, and, beyond this, yielded to the United States Treasury an additional $22,500,000. This does not include such additional returns as may come from the sale or lease of the alcohol butadiene plant at Louisville, and disposal of the Government Laboratories at Akron. Plant disposal, signaling the end of Government production and marketing of synthetic rubber, has also freed approximately $162,000,000 of working capital formerly committed to plant operations.

From the all-important security angle, not only have all sales been made with a national security clause which guarantees availability for rubber production in time of emergency, but the plants, in general, are now operating intensively and already have effected marked increases in capacity. Synthetic rubber has become a highly viable private industry; facilities are being expanded and technical advances and progress toward the development of new rubbers are being made.

Government agencies having responsibilities relative to this industry and its consuming public have been alert to note any adverse effects of the substitution of private for Government supply. To date only two requests for assistance have been received. Both of these were handled with suppliers to the satisfaction of the customers.

The details of the Nation's rubber requirements and resources have been reviewed, as background for this report, by an ad hoc Rubber Committee of the Office of Defense Mobilization, on which were staff members of the Departments of Commerce, Defense, Interior, and Treasury, the Rubber Producing Facilities Disposal Commission, and the National Science Foundation. The findings of this Committee constitute Appendix A of the attached report to me from the Director of the Office of Defense Mobilization.

Appendix B is a report on research needs and the future relationship of the Government to rubber research. This report was made to the National Science Foundation by its Special Commission for Rubber Research and was approved by the National Science Board in December, 1955.

RUBBER REQUIREMENTS AND RESOURCES

According to the estimates prepared by the ODM ad hoc Rubber Committee, total United States' requirements for new rubber (natural and synthetic) may by 1960 reach a level of about 1,700,000 tons--or equal to total new rubber requirements, for United States' productive capacity for synthetic rubber was already more than 1,250,000 tons. By January 1, 1958, reported planned expansions would bring synthetic capacity to about 1,700,000 tons--or equal to total new rubber requirements, for both synthetic and natural, as estimated for 1960.

The planned expansions referred to are to some degree dependent on the growth of demand in this country and overseas. They include commitments already reduced to definite contracts; but also less definite expectations which may not come to fruition. In a broad sense, however, these steps reflect the policy of the industry to assure that the future supplies of synthetic rubber will be ample to meet all demands.

At the present time a part of the rubber requirements of the United States can be met only by natural rubber. Use of natural rubber in the United States has become of secondary magnitude, however, compared with its use abroad. Should the world natural rubber supply not be large enough to meet both United States and foreign requirements, there are such possibilities for increasing foreign use of synthetic rubber, either through larger export from an abundant American supply or through construction of foreign capacity, that there should be no enduring shortage of natural rubber available for the United States. If such a shortage should nevertheless occur, American industry would have the alternative of further increasing its use of synthetic rubber.

Under the Strategic and Critical Materials Stock Piling Act, the United States is maintaining a stockpile of natural rubber adequate to supply military and essential civilian requirements during an emergency notwithstanding interruptions of supply. This stockpiled natural rubber, plus the potential output of our synthetic plants, will be ample for rubber mobilization needs as very recently estimated by ODM.

Although the United States has overcome one of its gravest pre-World War II strategic weaknesses by establishing an industry for producing synthetic rubber and a strategic stockpile of natural rubber, it must not be overlooked that natural rubber is still the world's chief rubber resource, supplying over two-thirds of the world's new rubber requirements. Even the United States, where 60 percent of the rubber now used is synthetic, imports and consumes as much natural rubber as before World War II.

In view of the ever-expanding needs of rubber consumers, the synthetic rubber industry is bound to continue rapid growth in the immediate future; because new synthetic capacity can be created in one-third the time required to bring rubber trees to maturity, and some of the demand for additional rubber will come too early to be met by expansion of natural rubber production. In the long run, however, the greatly improved techniques now available for natural rubber production should make it possible for producers of natural rubber to share in supplying the ever-growing rubber demand.

RUBBER RESEARCH

The report to the National Science Foundation from its Special Commission for Rubber Research (entitled "Recommended Future Role of the Federal Government with Respect to Research in Synthetic Rubber") is addressed primarily to the question as to what should be done with respect to two phases of the Government's synthetic rubber program, both presently the responsibility of the Foundation: (1) Government support of rubber research conducted by universities and other research organizations; and (2) the Government Laboratories at Akron, which have been engaged in developing the production characteristics and feasibility of new types of rubber.

The National Science Foundation's Special Commission holds that increasing financial support of fundamental research by the Federal Government is essential to the national interest, but that the Foundation should not request funds from the Congress for research specifically for rubber or the rubber industry. It feels that a far better focus for Government research would be polymers in general (of which rubber and elastomers generally are only examples).

The Commission therefore recommends termination of National Science Foundation's program of Government-sponsored rubber research projects as such, but conservation of some of the human and scientific assets developed, through early inauguration by National Science Foundation of a more general research program.

The Commission found that, although the Akron Laboratories include large-scale pilot plant facilities, these are not unique in the rubber industry. The Commission therefore recommended disposal of the laboratories.

This recommendation and that to terminate the Government-sponsored rubber research program now administered by the National Science Foundation have my approval.

SYNTHETIC "NATURAL" RUBBER

In its report, the Special Commission goes beyond the subject of research and urges that immediate consideration be given, at the highest Government levels, to the question as to whether the national security requires governmental action to foster the industrial development of the new processes of synthesizing "natural" rubber. The Commission had earlier observed that three companies have reported success in synthesizing material with composition and properties similar to natural rubber.

Inasmuch as the United States already has an adequate stockpile of natural rubber, there is, in this connection, no immediate security problem. In the long run, however, maintenance of security would be vastly simplified if we could--if need be--produce types of rubber domestically which could take the place of natural rubber in large truck, bus and airplane tires. The newly synthesized rubbers hold this promise.

It is believed that we can rely upon the private synthetic rubber industry to move from laboratory synthesis to commercial production of synthetic "natural" rubber. Pilot plants are already being constructed on private initiative. The nature of the problems which may arise when quantity production is contemplated is as yet undefined.

The Government has available a number of means for assisting industrial development and expansion where such aid is found to be essential to national security. It is not now expected that any unique measures, such as would require new legislation, will need to be taken with reference to the development of capacity to produce synthetic "natural" rubber.

DWIGHT D. EISENHOWER