January 10, 1973
Although warmer weather in late December temporarily alleviated District fuel shortages, the problem reappeared with the return of colder weather in early January and currently threatens District economic activity. District grain shippers are now experiencing difficulty in obtaining boxcars, and this problem will probably persist until spring. District retailers enjoyed a very good Christmas season and are very optimistic about their sales prospects for the first six months of 1973.
Although economic activity was not seriously hampered, unseasonably cold weather in December revealed severe fuel shortages in the District, especially in the Minneapolis-St. Paul metropolitan area. No major District manufacturing facility was shut down due to fuel shortages, but several large manufacturers' fuel supplies were strained and a number of smaller manufacturing plants actually did shut down or reduce operations. A steel plant in St. Paul, for example, lost forty-eight production hours in December due to lack of fuel, and two metal-treating plants in Minneapolis curtailed operations. A South Dakota director reports that fuel shortages interrupted crop-drying operations in his area and, as a consequence, many farmers will be forced to sell their crops at a considerable discount.
Warmer weather in late December temporarily alleviated District fuel shortages, but they reemerged as colder weather returned in early January. Minnesota's state civil defense director indicated that some fuel oil users currently are having difficulty obtaining needed supplies. Also, in order to meet residential heating requirements, a major fuel supplier in Minnesota reduced January's fuel allotments of airlines, railroads, and trucking firms by 20 percent to 25 percent, which could result in District transportation services being curtailed. In addition, in North Dakota, the Governor has instituted emergency measures in order to avoid closing some public facilities because of a lack of heating fuel.
Several directors report the District is currently experiencing a boxcar shortage. A major grain merchant in the Twin Cities reports difficulty obtaining cars and currently could use an additional 1,000 hopper cars. This firm has resorted to using coal and refrigeration cars and does not expect the problem to improve until the Great Lakes shipping season starts this spring. Although rail transportation was available to fill all ships before shipping on the Great Lakes ceased, a Duluth banker reports that sufficient boxcars are not available to ship grain currently stored in Duluth, especially sunflower seeds destined for Gulf ports, and his area's shippers have had to use coal cars. In South Dakota no boxcar shortage had yet occurred, but the potential exists. A large amount of grain in South Dakota is currently stored under the Government loan programs from the 1968, 1969, and 1970 growing seasons, and the United States Department of Agriculture recently announced these storage contracts will not be renewed. Much of this grain will be shipped out of South Dakota when these contracts expire in 1973, and a South Dakota director anticipates problems in obtaining needed boxcars. A North Dakota director reports that grain elevators in his area are full and are refusing to buy grain because boxcars are not available for shipping it. No grain is piled outdoors, however, and as long as the grain prices remain high no one is losing money because of the lack of boxcars. In contrast to the rest of the District, directors from Montana indicated that their state, for the first time in several years, is not experiencing a boxcar shortage.
District retailers enjoyed a very good Christmas season and have a very optimistic sales outlook for the first six months of 1973. A major Minneapolis-St. Paul area retailer revealed that his firm enjoyed excellent business in 1972 and achieved its largest year-to-year relative sales gains in December. His firm estimates that department-discount store sales in the Minneapolis-St. Paul metropolitan area will be up 12 percent from a year earlier in 1973. Other reports from the Twin Cities are that retailers indicated that they also enjoyed a very good fourth quarter and expect business to remain strong during the first six months of 1973. In addition, directors from outside the Twin Cities metropolitan area disclosed that their area's merchants had an excellent Christmas season and are very encouraged about their business prospects in 1973. A South Dakota director, however, stated that many farmers' incomes will be curtailed because they were unable to dry their crops in December, and this could curb his area's retail spending. Although retailers are optimistic about business in 1973, the consensus was that inventory rebuilding will be in line with year-earlier levels.