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KAISER, HENRY 1882-1967

INDUSTRIALIST

Political Connections

Henry Kaiser was one of the industrialists who most benefited from America's mobilization for World War II He headed the Liberty Ship program, which incorporated techniques of prefabrication and mass production to speed ship production. During the war his companies also built roads, boats, and shelters for the government, but primarily they built ships. His contacts allowed him access to the government officials who over-saw the allocation of resources, particularly steel, and they also provided him with access to the officials who supervised labor contracts and the allocation of materials.

Propagandist

Kaiser's production techniques fit in with President Franklin D. Roosevelt's belief that speed and energy were more important than efficiency in producing quality war goods. Kaiser was originally from the West, where he had developed a reputation for taking risks, for getting things done, and for receiving generous government contracts. His reputation for speed was belied by his physical appearance: he was a large, lumbering man of about 250 pounds who tended to bully people. He was also a braggart who loved public attention and who became possessive of the companies and agencies with which he associated, once referring to a company of which he owned 7.5 percent as "my engine company." Much to the irritation of his business partners, he often took personal credit for accomplishments for which he was only partly responsible, going so far as to proclaim himself "at least a joint savior of the free-enterprise system." A contemporary biography described Kaiser as a "catalyst" upon the economy who was "bubbling over with ideas" and "endowed with dynamic energy."

Background

Kaiser dropped out of school in the eighth grade in his native Sprout Brook, New York. He then went to work as a cash boy in a dry-goods store located in nearby Utica. Eventually he went into sales, which led him to move to Spokane, Washington. There he entered sales in the gravel and cement business and in 1914 established the Henry J. Kaiser Company, which successfully won contracts and built roads in British Columbia, California, Washington, and Idaho and made $25 million between 1921 and 1930. Before the war he had made a fortune on government contracts, a trend that only increased during the war. Kaiser, as part of a consortium called the Six Companies, won the contract to build the Boulder, Hoover, Bonneville, Grand Coulee, and Shasta Dams. The profits from building Boulder Dam alone exceeded $10 million. During this time Kaiser developed a reputation for borrowing capital against future earnings, for organizing workers, and for sticking to a schedule. He also became well connected with the government and skilled at public relations.

Liberty Ships

With the war Kaiser used his government contacts to acquire war contracts, many of which were on a cost-plus basis. He used prefabrication techniques to build ships at a speed previously considered impossible, sacrificing quality to achieve quantity, as the ships his companies built were less sturdy than ships manufactured by conventional methods. However, enemy submarines sank so many American ships during 1942 and 1943 that a high volume of production seemed more important than sturdiness or longevity. In 1941 it took on average 355 days to produce one Liberty Ship, the basic cargo carrier of the war. For that year a little more than one million naval tons were delivered by the nation's shipyards. Roosevelt wanted that volume increased eightfold in 1942. Kaiser cut the average delivery time to 56 days, with one ship being completed in 14 days. By June 1942 his four West Coast shipyards had been assigned one-third of the war contracts. His yard in Vancouver, Washington, built and launched a 10,500-ton ship in a record 4 1/2 days. In addition to Kaiser's Liberty Ships, the Six Companies built small aircraft carriers, tankers, troop ships, destroyer escorts, and landing ships. By 1943 the company was responsible for 30 percent of the nation's total tonnage and had received more than $3 billion in contracts. Kaiser used his connections with Roosevelt to overrule the navy's objections to putting flight decks on cargo-ship hulls to make a fleet of baby flattops to use against German submarines, which proved extremely successful.

Competition

One of the difficulties Kaiser and the Six Companies encountered was the jealousy of their competitors. United States Steel and Bethlehem Steel were also in the shipbuilding business, and these companies began withholding steel shipments from Kaiser's shipyards. Kaiser again used innovation and government contacts to get around the problem by deciding to integrate his shipyards vertically—that is, by producing the materials needed for shipbuilding rather than acquiring them from other steel companies. Kaiser went to the War Production Board and gained permission to build his own steel plant, then secured a $20-million loan from the Reconstruction Finance Corporation (RFC) against future profits at his shipyards and began to produce the steel his shipyards needed.

Gambler

Kaiser was involved in a variety of projects during the war, including a cooperative venture with Howard Hughes in the use of magnesium (again with a loan from the RFC) for the purpose of building a light transport plane to be used after the war. The venture eventually failed. Kaiser, however, had already begun several postwar ventures in automobiles, prefabricated housing, and helicopters, most of which were financed by the profits he made during World War II. Kaiser Community Homes, for instance, built eighty houses a week in 1947. He eventually abandoned the daring style he used during the war, especially after his plan for a Kaiser-Frazer automobile company failed. Kaiser wanted to build automobiles and sold $53 million worth of stock before producing one, but he lacked the necessary steel. He charged that the steel industry was conspiring to keep him out of the automobile industry and asked for public assistance. This time the tactic he used so successfully during the war failed. Eventually Kaiser bought his own sheet-metal mill and briefly became the fourth largest manufacturer of cars in the United States.