The Iron Age 1923-07-12: Vol 112 Iss 2

THE IRON AGE New York, July 12, 1923 ESTABLISHED 1855 VOL. 112, No. te Accounting for F oundry Overhead kixpense Attempt to Give Simplest Possible Method of Distributing General Expenses Equitably—Steam and Power Considered BY F. C. EVERITT AND JOHNSON HEYWOOD RONG costs frequently come from considering the overhead expense of the business as a whole; a fault largely due to old-fashioned accountants who lumped all figures and were inter- ested only to find out at the end of the year how much money the business as a whole had made or lost. Modern cost finding aims to discover not only “how *Of Miller, Franklin, Basset & Co., Inc., New York. In the issue of April 26 was given the procedure for material cost accounting and in the issue of June 14 that for labor cost accounting. much,” but “why.” That requires that the figures be divided and subdivided so that the manager may know, say, that the final profit of $100,000 represents a loss of $20,000 on one line and a profit of $120,000 on an- other. He wishes also to know if the profit was made in spite of exceedingly inefficient methods in one manu- facturing department which were more than offset by excellent methods in another. The overhead expense is in effect a rental which each casting must pay for the manufacturing facilities which the business provides, and it should be plain EXPENSE ANALYSIS eee ee Se SS ES ee FIREMAN MAINTENANCE misc. LABOR LABok ENGINEER TMINTEN ANCE LAbae ICEL 4AbaR es "0185, GREASE, WASTE OS GLEASE, ware SoTALe Teoes SMALL Teens ee rT } f i | \ \ VEC Surmisegs Ltweh ms 47 Pegenaseo LIUIN TENANCE MAT RIALS LRIAL YAECT Lrg sa pike SMARGES ake SHARE STEALS © LIEK AALE ES TOTAL P&T £PENSE LETH BYTEO Fe .- De Aaermtn Ts 3) ae. & Mamntemavce ¢ AATTERY Sige CMERM OEP CE - : te £_GaN 4AM OFF (EE ig AST PRY $= a « —+1_£4£4 46 * = AN MEAL iG , 13 MACH Ne SUO2 ____— | 14. Pack. & S412 + VAMME $NOP 1/4 PACK. Me Sip. + , + — 1+ [a0 al aa ! | 4 } | pot = et } How Departmental Expense Items Ar Compiled and then All 67 68 THE IRON AGE that one casting will use more of some of the facilities than will another. A compact, heavy, simple casting will properly carry only a slight proportion of the molding expense, although it may take a much larger share of the melting expense. A large, complicated ] casting will take more molding expense and less lting expense. Each casting must be charged with its proper share manufacturing department To do that, the total overhead gathered separately, and a way found by which to measure the proper share of each department’s overhead which each casting should bear. It may be spread on the basis of the productive productive hour, machine hour, f casting or in any of a number of other ways. The test for a department—or as it is called “production center”—for the overhead expense of all of the overhead of each whose facilities it uses, of each department must be weight sometimes cost purposes is: “Can operations in this depart- ment be justly spread on the same basis?” If not, further subdivision is necessary. By nstance, bench molding should not be charged with part of the expense of heavy machine molding which bench floor per cent on tne aqirect The overhead of 75 heavy machine show an overhead of 200 the basis of requires constant crane services. may perhaps be operated with an labor, while the work with crane service may per cent or operated on expense per machine hour. If there are widely varying condition due to the character of the work and the nature of the equipment, the molding floor must be divided into sev eral departments. Departments of a Foundry The proper departments can be set up only after investigation by men familiar both with and cost finding principles. The de partments a foundry will depend upon the kind of done. The following are fairly typical of what most foundries require: a thorough foundry practice needed by work No Department Nan Ni Dep tment Name l (boiler) a Core room é and light 10 Molding 3 and maintenance 11 Cleaning 4 ern shop 12 Annealing 5 General office ; Machine shop 6 General factor 14 Packing and shipping General foundry) r Selling expense Ss Melting In a gray iron foundry, the annealing department would be left out. We include it here because it pre- sents some difficult problems Other foundries might need such other departments as carpenter shop, blacksmith, electrical and so on. In the foundry whose departments have been listed, the pattern shop will handle all carpentry, while the blacksmith, electricians, plumbers, millwrights, etc., are included in the tool and maintenance departments. This combination is usual in medium-sized foundries, while in larger ones a division is quite necessary. In a stove and range plant, the machine shop would be replaced by the departments for cast iron mount- ing, sheet metal mounting, pipe cutting, japanning, nickeling, punch press and forming and so on. Ina plant where much testing is necessary, such as in the manufacture of radiators, boilers, etc., there would be such departments as first test, machining, assembling, second test, finishing, etc. In the malleable plant, the cleaning must be divided into hard iron cleaning, sand blasting, soft iron cleaning, testing and _ inspection, straightening, etc. A steel foundry would be divided into the same de partments as the gray iron foundry, although the de- tailed method of handling the melting department changed somewhat to suit the different melting. would ve method of For the foundry casting ingots, the core molding and cleaning departments would be omit ed. The important departments to be added to the ist are handling ingot molds, pouring and removing the ingots. Let us show by a simple calculation how spreading overhead for the factory as a whole instead of by de Assume operated DY electric steel } A ] those for partments gives dangerously incorrect costs. the not uncommon case of two foundries July 12, 1923 a single concern, one doing all hand molding with no machine or crane equipment, the other all machine work with two cranes. For hand molding the expense should be distributed on the productive labor dollar or the man hour; for the machine molding the distribution should be on the machine hour basis. Incorrect Overhead Calculation Illustrated If for the hand molding the labor cost is 80 cents an hour and the expense rate 100 per cent of the labor, the labor and expense cost for a casting, taking one hour to make, will be $1.60. Suppose that five of these same castings can be made on the machine in one hour. If the machine hour $4.65 for all of the expenses and the direct labor cost $1.75 per hour, the total labor and expense cost for five castings is $6.40 or $1.28 each. These are the correct methods of figuring the costs for each case. Suppose, however, that the two shops lump their overhead and find that it is 150 per cent on the pro- ductive labor dollar. The for the hand molding by this method would seem to be: Direct molding labor per casting 80 cents plus 150 per cent overhead, giving a cost per casting of $2. This increases the apparent 10 cents because the first foundry is made to carry a part of the burden of the other which it should not be compelled to do. This incor- rectly high cost may result in losing considerable busi- ness to foundries which know their real costs. Using this incorrect method in the machine molding will give an apparent cost per casting of 80 cents, which is 40 cents per casting less than the real cost, because part of the expense of this foundry is loaded upon the other. This may result in considerable unprofitable business flowing in as a result of the low price. Gathering the overhead expense by departments does more than merely to make certain that the ex- pense will be distributed to the various castings in the proper proportion. For one thing it makes it possible ie in the costs with the general books of account, cannot be done accurately when expense is lumped for the plant as a whole. This method also reduces the bookkeeping greatly, for instead of a multitude of ledger accounts only a single one—manufacturing expense—is needed. The expense analyses for all of the departments, taken together, give a complete analysis of the controlling ledger account. At the same time they provide a definite control of efficiency. There are, however, besides the items of expense which come from the manufacturing expense account, certain fixed charges that are part of the overhead expense. They are taxes, insurance and depreciation. To gather these items the fixed charge sheet form The purpose of this form is to provide a means by which each department of the plant may be charged with its fair share of the fixed charges. Since taxes and insurance are paid at infrequent intervals, one-twelfth of the charge is carried to the expense analysis monthly. So much has been written about rates of deprecia- tion and the necessity for reflecting depreciation in the costs that we shall not stress the point here. The im- portant thing about fixed charges is to make sure that each department bears all, but no more, of its fixed charges based upon the value of buildings and equip- ment which it contains. How this is done will be evi- dent from a careful study of the fixed charge sheet, form 5. rate is cost cost per casting by + to tie which 5 is used. Not all of the departments in the plant do produc- tive work in getting out the casting. Such depart- ments as the power department, which are called con- tributory departments, serve the productive depart- ments, but the expense of them must ultimately get into the final cost of every casting made. Plainly it is not feasible to measure directly the amount of power which each casting has used. But we can measure closely the amount of power each productive depart- So the expense of each contributory de- partment is passed on to the productive departments department ment uses. in the proportion that each productive July 12, 1923 benefits from the service of the contributory depart- ment. Ultimately the productive departments absorb ail of the expense of all of the contributory depart- ments. And at last the total expense of the productive departments is absorbed by the castings. This, in brief, is the principle underlying the departmental ex- pense analysis method of spreading overhead. It has been found, however, that by drawing up the expense analyses in proper form they can be made to give information on operations which is invaluable as a means to control the manufacturing, to spot in efficiencies, and to suggest economies The expense analysis sheet which is actually used in the operation of any foundry cost system, is shown as form 37. It provides columns for the current month’s expense and for the expense for the period to date. This set of columns is repeated for succeed- —— _ cemaiatosttay y/<sTpP + es R/8 ON @. j THE ABC MFG Co ee — a “y tT j | DEPARTMENTS | U/L O/NGS BUILDING CHARG “¢ | —- —$_——__—___4—__ — vo NAME Seurte 4 ‘3s PoTe | LATE \Atour Wake Mak yaive ila fet? TOTAL \Dertec WrPtic TALES | (w Sve _ + a * + + + + +—=+ =? ++ ii 4 } / STEAM bee J re\oo to oe I ja é¢e 60720 = fowl ea £UGHT Zee fecal Zee | See #¥e Peo feeee! Jee 3 TOOL & MAINTENANCE 900| Leelo oo tel rio dee aoe l @ PATTERN SHOP eee 3eepeo fo bya Iie éwo | } | > GENERAL OFFICE | foo Cove Se | | Zpe we zve 1 ; | @ GENERAL SaCroRy Ze00e Fo~e| Leo Spo am See GCONELAL AOUNORY eeo Zecpe oe | i 4 we i“ ig MELTING eo ee J pe 1? Cote Loam S200 hoe ’ WOW DING Zeecee| <evepe | CLEANING See0 | \ 2 ANNEALING a | j «nr | ; MACHINE SOP | | | 4+ | Arcrme gsmireng | | b | aactnietiphinalagensad Atiaaiaceipesiitiadbilaaiil Discniptanatiokemiae , r | 1 | } i} i rer | 1 } Tova 20000 |20008 po /a0%% | 422 WAL 4a \ee| feo \oa e2een fe — A Pe} “oo7e | i : ee t if | | we ora * 4 at TOTALS THE AMOUNTS ACCOUNTS ANO TNE Sut OF lo TAE MANUFACTURING SEE MONTHLY SOURNA On This Form Are Gathered the Fixed Cl ing months so that constant comparison can be made to determine abnormal operating expenses and to cor- rect bad tendencies quickly. To save space a condensed form of analysis sheet is used in this article. The items on the expense analysis come from the charge register, the fixed charge sheet and the sum- maries of supplies and of labor which were described in preceding articles. The expenses of each department start with the salary of the foreman or superintendent, the miscella- neous non-productive labor and the supplies which rep- resent the largest expenditures. The sum of these items is the total direct expense for which the depart- ment head may be held strictly responsible since he can, to a degree, control it. Then come the shares of expense of the contributory departments from which that department benefits, and the share of fixed charges. Opposite each labor and expense item is a no- tation indicating its source. The items listed on the expense analysis will not necessarily be the same for all foundries. Those shown are, however, typical. An item of expense that may be important for one foundry may be a minor item to another. For instance, the small foundry may group several items such as “oils, grease and waste,” while in a large foundry the consumption of each may be so + large that for close control it is desirable to show ea Hh THE IRON AGE 69 item by itself. Minute subdivision does not pay unless the item is so large that worthwhile economies may De effected DY the closer control. Allocating Expenses of Steam Department The contributory department “steam” comprises the oiler room. It supplies steam for power, heating and process work. Certain departments, however, receive no direct heat; they depend upon the by-product heat from the processes. Arriving at a basis for distrib- uting the steam expense is an excellent example of the need of engineering knowledge as a basis for accurate costing. The foundry may be heated with live steam with the engines exhausting to atmosphere. If the boiler is used for heating only, all steam is chargeable f ror this purpose. If e boiler is operated at high pres- aa | ° Sia A ? 4 LOW PMes VAL at. 4 wr é 4 7 au Taage YF ALLY MON TM o | #4 awe At +00 4 e oe ez wrue | TaTMs rere 4 62¢ coe 4416 ¢ + t ‘ i * | i ‘ bebe be “ fe) 75 eel rr ‘ pe 7 i roe i Ao we “ee ; wo oe : sve ; | , ' wo j y } i t i i : je é « i towel an <A ee | : loos | i ren a * t+ ++ + e+ $* : : + ¢ ¢ ¢ % ve z Pig ’ ¢00 pa /new sope (¢d2go Sease 6000) 256 4 1 = f . ¢ + 74+ ‘+ ++ po | . “~ or. 3 oO we foe Fb aoe a '* ° MANSFACTE Ep PEMSE | RESELL Fal DLP REC | WEIR LESPECT VE "6.00 /3S DeMT VANUPACTE EXPENSE j Taxes MAN SFACTE LUPENTE IMIB/RANE A rges for All Departments of the Foundry sure to furnish steam for testing purposes, a reducing valve may be introduced in the heating lines in order to furnish low pressure heating. If steam is furnished to the engine for power, and the exhaust steam used for heating, the engine takes out, theoretically, only about 5 per cent of the heat. For practical purposes we use 10 per cent to cover the losses from radiation and condensation in the piping and elsewhere. Sometimes the power required to manufacture is small and the amount of exhaust steam delivered not sufficient to heat the plant. In this case enough addi- tional steam for this purpose must be furnished direct. This may be necessary only during severe cold weather. Nevertheless these conditions determine the basis for distributing the expense of the department. To determine how much steam is used by the en- gines an evaporative test of the boilers and an indica- tor test of the engines may be made. Such a tést re- cently made on a plant which uses the exhaust steam for heating, showed that the engine used about 60 per cent of the steam produced. Since the engine practi- cally turns only 10 per cent of the heat in the steam into power and passes on the rest of the heat, it is apparent that only 6 per cent of the steam depart- ment’s expense can be charged to the light and power department. The other 94 per cent must be distributed direct to other departments. The amount of steam required to heat any depart- 70 THE IRON ment depends upon the cubical contents, the exposed wall, glass surface and type of construction. If the buildings are so constructed that the volume of each department is in fairly uniform proportion to the floor space, and the type of construction of all buildings is the same, the floor space may be used as a basis of dis- tribution, considering, of course, those departments which do not require direct heating. An alternative method is to use the square feet of radiation and thus irrive at a percentage basis. No hard and fast rule can be laid down. The method to be used must be decided upon after a thorough examination of the heating installation and in conjunction with all other equipment which makes use of steam. The one chosen must be the oné Which will be most accurate. Usually the’power house requires, in addition to the 6 per cent of steam for power, about 4 per cent for heat, making a total of 10 per cent chargeable to power and light 3y some one of the possible methods it will be decided how much steam is used by the other de- partments. Let us say that they have been found to be as follows: No [ irtment Per Cent 1mount I l ligt 10 $39.40 ilntenance 8 31.52 I 10 9.40 fice & 1.52 6 ictory 8 1.52 In that way the total expense of the steam depart- ment for the month—$393.98—is charged to the proper departments by posting the correct amount on their expense analysis sheets opposite the item “Share of steam.” Attachment for Use in Grinding No-Pitch Hobs A spacing indicator, designed primarily for use in the grinding of no-pitch hobs but also applicable when the accurate spacing of shoulders is required in the boring of holes difficult to measure otherwise, has ‘been Spacing Indicato1 Mounted Or Lathe and Used Ii (al a t Of a No-Pitch Hob Having 11 Threads Per Inch The insert shows components of the device placed on the market by the Precision & Thread Grind er Mfg. Co., 1 South Twenty-first Street, Philadelphia. The device, which may be clamped to the ways of any lathe, is made up of a cast-iron base and clamp, a fine pitch screw and dial which is graduated to 0.0001 in. The dial is designed so that when making the first spacing, for example, 0.016 in. and 3/10th, the opera tion may be repeated by simply starting at the zero point each time. A dial indicator is mounted upon a AGE July 12, 1923 The proportions given may serve very well for, say, the six months ending April 30. In some of the de- partments during the remaining six months little or no steam may be required. It may even be advisable to set a normal consumption of steam for heating for each month. The expense analysis for the power and light de- partment is shown as form 37-2. Power and light are used by all departments of the plant, so a basis must be found for charging each department with its share of the expense. The most accurate method is to meter the amount of current and air used by each depart- ment, but there are few foundries equipped with meters. Usually the accuracy gained by metering would not be worth the ost of the equipment in the small foundry. A complete power test of the foundry when operat- ing at normal capacity may be a satisfactory substi- tute for metering. When the horse power consumed by each department is known it is expressed as a per- centage of the total horse power consumption of the entire factory and the light and power expense dis- tributed to the departments on that basis. Since these results may soon become inaccurate with the change of manufacturing activities, it is often best—in order to avoid frequent tests—to base the departmental share of the power expense upon the power consumption rating given the various equipment and lighting units y their makers. The distribution is shown on the expense analysis of the power department. - (To be continued ) sliding rod. The position of this is controlled by the fine pitch screw and dial above referred to. The illustration shows the grinding of a no-pitch hob which is used for milling self-opening die-head chasers and has 11 threads per inch, spacing of 0.0909 in. being required from center to center of thread. To operate, starting at zero on the dial, revolve until the reading is 0.0909 in. The stop pin mounted on the carriage of the lathe is brought over until the needle on the dial indicator registers zero. Then release the dial on the screw and bring back to zero and repeat the operation. The device was invented by W. H. Frick, vice- president and chief engineer of the company. Coal Stocks at Steel Plants Show Slow Increase WASHINGTON, July 10.—Steel plants had an average of 29 days’ supply of coal on hand on June 1, 1923, while by-product coke plants had an average supply of 23 days on that date, according to a survey of commer- cial stocks of coal undertaken by the Bureau of the Census and the Geological Survey, under the authority of the Federal Fuel Distributor. The average of coal stocks at steel plants showed an increase of 11 per cent on June 1, when compared with March 1, the average supply on the latter day having been 26 days. The average on June 1 is made up of 27 days’ supply of steam coal and 31 days’ supply of gas coal. The sup- ply on June 1 at the by-product coke plants was 12 per cent more than on March 1, when the average was 19 days. The average of 23 days on June 1 is made up of 21 days’ supply of low volatile and 24 days’ supply of high volatile coal. Stocks of by-product coke increased 132 per cent da during the period March 1-May 31, and the quantity on hand June 1 was 202,000 tons. In spite of this large increase the supply on June 1 was less than one-fourth that on March 1, 1922, when the reserve was heaviest. On June 1, 1923, commercial consumers had in stor- ge approximately 41,000,000 tons of soft coal. This was an increase over stocks on March 1, 1923, of 5,000,000 tons, and is the highest level recorded since March, 1922. Strictly comparable records for corre- sponding dates are not available except for June 1, 1920, when stocks were at the lowest point on record. The supply on June 1, 1923, was more than twice as large as that three years before and probably about the same as on June 1, 1921. Institute Directors Act on Kight-Hour Day Assure President Harding That Twelve-Hour Shift Will Be Abolished at Earliest Time Practicable -~Judge Gary Gives His Views and Answers (Questions T Tacoma, Wash., July 5, President Harding made public recent correspondence which he had had with Judge Elbert H. Gary, president of the Hoard of directors of the United States Steel Corpora- tion, in regard to the abolition of the twelve-hour day in the steel industry. The President’s letter to Judge Gary was as fol- lows: The White House, June 18, 1923 My dear Judge Gary: I have now had an opportunity of reading the full re- port of the commission of the Iron and Steel Institute on the question of the abolition of the twelve-hour day in the steel industry. As I have stated before, I am of course disappointed that no conclusive arrangement was proposed for determina tion of what might be manifestly accepted as a practice that should be obsolete in American industry I still entertain the hope that these questions of social importance should be solved by action inside the industries themselves, for it is only such solutions that are consonant with American life and institutions I am impressed that in the reasoning of the report great weight should be attached to the fact that in the present shortage of labor it would cripple our entire prosperity if the change were abruptly made In the hope that this question could be disposed of I am wondering if it would not be possible for the steel industry to consider giving an understanding that before there shall be any reduction in the staff or employees of the industry through any recession of demand for steel products, or at any time when there is a surplus of labor available that then the change should be made from the two shifts to the three- shift basis I cannot but believe that such an undertaking would give satisfaction to the American people as a whole and would indeed establish pride and confidence in the ability of our industries themselves to solve matters where so con- clusivelv advoceted hv the rublic With very cordial expression of personal regard, I am very truly yours, WARREN G. HARDING Response of the Directors The letter from 15 of the 23 directors of the insti- tute was as follows: New York, June 27, 1923. To the Honorable Warren G. Harding, President of the United States: Dear Mr. President.—Careful consideration has been given to your letter of June 18 by the undersigned directors of the American Iron and Steel Institute, comprising all of those whose attendance could be secured at this time Undoubtedly there is a strong sentiment throughout the country in favor of eliminating the twelve-hour day and this we do not underestimats On account of this sentiment, and especially because it is in accordance with your own ex- pressed views, we are determined to exert every effort at our command to secure in the iron and steel industry of this country a total abolition of the twelve-hour day at the earli- est time practicable This means the employment of larg: numbers of workmen on an eight-hour basis and all others on a basis of ten hours or less without an unjustifiable in terruption to operations The change cannot be effected overnight It will involve many adjustments, some of them complicated and difficult but we think it can be brought about without undue delay when, as you state it there is a surplus of labor available The iron and steel manufacturers generally of the United States, outside ff the directors referred to, are expected concur in the conclusion reached by the directors as above stated With highest regards, we are cordially yours, Elbert H. Gary, John A. Topping, W. A. Rogers, W. H Donner, W. J. Filbert, E. A. S. Clarke, James A. Farrell, E G. Grace, Willis L. King, James A. Burden, L. E. Block, Sev- ern P Ker, J. A. Campbell, A. C. Dinkey, Charles M. Schwab Directors. American Iron and Steel Institute President Harding’s Remarks President Harding in addressing the meeting at Tacoma said: “T have received a joint communication from the large majority of steel manufacturers of America in which they have undertaken to abolish the 12-hr. day in the American steel industry at the earliest moment that the additional labor required shall be available.” Will Heal Sore in Industry Calling the 12-hour day an “anachronism in Amer- ican life,” the President told the audience the steps he had taken to induce the steel industry to adopt this big reform. “I wish to congratulate the steel indus- try,” he said, “on this important step. It will heal a sore in American industrial life which has been the cause of infinite struggle and bitterness for over a generation, and it marks an accomplishment from the conscience of industry itself, a recognition of responsi- bility from employer to employee that gives us faith in rightful solutions of the many tangled problems that are the concomitant of the rapid growth of America. It is an example that I trust the few other continuous processes in industry which still maintain the 12-hr. shift may rapidly follow. I shall be proud indeed if my Administration were marked by the total passing of the 12-hr. working day in American life.” Judge Gary Comments on the Manufacturers’ Action Judge Gary on Friday of last week, complying with the request of newspaper men, talked with them in re- gard to the correspondence with the President on the 12-hr. day. Judge Gary said that he was pleased to read in the papers that the President had given to the press letters which had passed between the President and representatives of the steel industry. “There is,” said Judge Gary, “one other letter that should be re- ferred to. That is a letter from me to the President dated June 20. Upon receiving from the President his letter dated June 18 which he has given to the press I immediately wrote to him this letter: My dear Mr. President: I have just received and read your letter of June 18 I will immediately call a meeting of our committee (and prob ably including the whole membership of the directors of the institute residing in this country). Wednesday of next week 71 s the earliest time that the attendance of all, or practically all, of them can be secured. 3e assured that the subject matter of your letter will b« given the most careful consideration and with a spirit to cooperate with yourself to the fullest extent practicable. With highest esteem, believe me Cordially yours, ELBERT H. GARY. June 20, 1923 “IT refer to that letter to show that there was no delay whatever in responding to the President’s letter.” Judge Gary continuing, said: “The 12-hr. day was started by the men long before the United States Steel Corporation was organized. I do not believe the 12-hr. day in the steel industry could have heretofore been entirely abolished by consent of all or substantially all of the employers in that industry. Certain it is that ra : : ’ . } . — 72 THE IRON several and perhaps many of the employers, from the time of the President’s dinner in May, 1922, have been using every reasonable effort to eliminate the 12-hr. day. And now that within 14 months practically all of the manufacturers of iron and steel in this country have positively agreed to the entire abolition of the 12-hr. day so soon as there is sufficient labor to permit it, I think we may say this is a wonderful achievement. “Many of you here can bear witness to the fact that I have been opposed to it always, and for the reasons which have been published, and no other. Any single company or corporation could have made more rapid progress than has been made by the industry gener- ally, but that would have been unavailing. And it has been recognized by everyone who has carefully studied the situation that in order to make an effort to. elimi- nate the 12-hr. day successfully, there must be substan- tial unanimity in the whole industry. It was felt bet- ter to go slowly and go right than to go rapidly and to make the mistake of risking success. “Just when the 12-hr. day will be substantially, and I hope entirely eliminated in the steel industry, cannot be now stated with certainty. But it can be said that efforts to get rid of the 12-hr. day will be very prompt y made and that good progress will result and perfect success reached within a comparatively short provided the increases in the number of workmen which time, now seem apparent continue. I can’t say exactly when the United States Stee Corporation or any other company will get rid of the 12-hr. day entirely, but I can positively they will commence to act in that direction very soon ind be very diligent in their efforts state that President Very Earnest “President Harding is and has been very earnest in his efforts to abolish the 12-hr. day in the iron and steel industry, and I am glad to see by his statement published this morning that he intends to do every thing practicable to abolish the 12-hr. day in all other lines of industry. He is a very consistent and per sistent President, and when he knows he is right, he is pretty strong. But he will get the full cordial sup- port of the iron and steel industry in this undertaking. “If you gentlemen would take the pains to read the statements which I have made from time to time, you would have a full and consistent record of our position with relation to the 12-hr. day, representing not only my own judgment but also that of my associate officers and associate members of the board of directors and finance committee of this corporation and also a sub- stantial part of the steel industry of the United States, although not all of it. For many months, and I might say for several years, the steel industry has recognized the growing public sentiment which is quite different from what it was a few years ago; and in fact after the President’s dinner one corporation I might mention brought about a reduction of the 12-hr. day to about 16 per cent throughout its whole organization, and some other companies did as well and others better. 3ut the volume of the iron and steel business increased rapidly, the demand was very great, production was considered of high importance, and the percentage of the 12-hr. day, instead of continuing to grow smaller, began to increase, until I think on the average it is equal to about 25 per cent at the present time in this country, very much to my regret. But there will soon be an improvement in that situation, I think, because there are expected to be increases in the numbers of workmen. Men coming from the South, from Mexico, from the Philippines and Canada and from countries abroad have already made some showing, al- though the present numbers of workmen are _ in- adequate. “We shall have some difficulty in making adjust ments which will satisfy large numbers of our work- men. I mean by that that many, if not most of the foreigners who come to this country desire to work longer hours, even at the same rate per hour, and that is because by so doing they receive a larger daily al- lowance. We will have to make some adjustments that will be more or less expensive and possibly will result various AGE July 12, 1923 in some reductions of the quantities produced, though I hope not much, but as stated in our letter, we are determined to get rid of the 12-hr. day at the earliest practicable moment and for the reason that the public sentiment favors that, and especially because the Pres- ident so desires. “Of course, there are some men who do not agree with the large majority and who would like to work less hours. But so far as we know there are very few work- men who are willing to work less hours unless they receive the same amount per day that they were get- ting for the long hours. The inferences that have been made by a few that the workmen have been ill treated in the iron and steel industry during the last few years are without substantial foundation. Also the state* ments that have been made, though not often, I am glad to say, that the Steel Corporation is still working its men seven days a week, are absolutely untrue so far as we at these offices know or are informed. War-Time Experience “During the war we were requested by governmental representatives to produce as much steel as possible and keep our mills and furnaces running night and day for the seven days a week. The necessities of the Gov- ernment for military purposes justified them. But so soon as Mr. Baker, the Secretary of War, gave notice that we need not continue seven days a week, we imme- diately gave positive instructions to discontinue and limit the work to six days per week by any one work- man, and that rule has been strictly adhered to by our ( orporations. “You understand that where furnaces are continu ous they have to be kept going continuously. That is the only practicable way of keeping our furnaces in condition and of securing our production. But no one employee has been requested or permitted to work more than six days a week since the war so far as our in- structions go and so far as our knowledge or informa- tion extends. “Now I am going to allow you gentlemen to ask questions, provided your questions relate to the subject matter of our meeting. I do not want to take up any other item of business on this occasion. I have not time to do it.” “What is the reason for supposing that there will be more labor available in the near future?” “T thought I answered that. It is because the work- men are coming from the South, the colored men, and the Mexicans from Mexico and the Filipinos from the Philippines and men from Canada, and immigration is increasing a little I think. I still think, as I said be- fore, that the laws in relation to immigration should be amended, that we should have more here to take care of the business of this country. By that I do not mean that any labor which is not desirable for this country should be permitted to come nor that the numbers per- mitted should be large enough to interfere with the best interests of the laboring people of this country or any other interests nor extend beyond the actual neces- sities of the purchasing public of this country. But I think, and that is what I have attempted to say always when I have spoken on this subject, that this country cannot afford in its own interest to prohibit a sufficient number of workmen in this country to take care of the public necessities, which means a large consuming pub- lic, and of course, also, the export trade. That, how- ever, is a matter of opinion and not for me to decide. I understand it is in accordance with President Har- ding’s ideas.” “Don’t you think that the reduction in the number of hours will possibly draw a good deal more American labor, who are unwilling to work at the present time on the 12-hr. day?” “I do not, certainly not.” “You speak about Mexican and Philippine coming 1n. labor Does the Steel Corporation employ them only as they come in or are you bringing any in?” Judge Gary: “We are not bringing any in.” “What is the effect of the shorter working day on the cost of steel products?” “It will increase the cost more or less. I made an estimate at the institute of about 15 per cent, and I July 12, 1923 think that is about right. Now of course we shal! do everything possible to increase the use of machinery so as to enable us to get along with fewer workmen, but we have done everything we could do in that direc- tion up to date.” “Your figures of 60,000 additional men needed—are they approximately correct still?” “Yes, for the whole industry.” “An increase of 15 per cent in the cost of produc- tion, that will mean an increase in cost to the con- sumer?” “That is what it ought to mean, provided there is not sufficient profit without it, and I am sorry to say that for the last few years there has not been enough profit.” “Would the steel industry then go on an 8-hr. basis for the continuous operating mills or would 10 hours THE IRON AGE 73 , still continue with some men, yard men and others?’ “Oh, yes, the continuous process works will go on an 8-hr. basis. You will notice our letter to the Presi- dent was very specific.” “When the report of the committee was made pub- lic at the meeting, the inference seemed to be drawn that the committee was opposed to the abolition of the 12-hr. day?” “Drawn by newspaper readers,” replied Judge Gary. “And that was because they did not read the report carefully, that was the only reason. The report itself was very clear. I am very sorry to say that a great many wrong impressions were created in regard to that report. Our action now is entirely consistent with it.” “Your intention or the intention of the industry is to make it a straight 8-hr. day, not a basic 8-hr. day?” “No, a straight 8-hr. day.” Washington Comment on President Harding’s Announcement WASHINGTON, July 10.—Apparently the announce- ment by President Harding at Tacoma, Wash., last Thursday, of the correspondence between himself and Judge Gary, regarding the total abolition of the 12-hr. day in the iron and steel industry, was intended as a climax of the Chief Executive’s labor-and-capital speeches made during his Western tour. The outstand- ing theme of the President’s addresses has dealt with the relationship between labor and capital and has denoted a sincere desire on the part of the President to bring the two more closely together. It has been pointed out that from its outset the present Administration has concentrated its efforts in this direction. This was the purpose of the White House confer ence on May 18, 1922, with 48 leading iron and steel manufacturers, at which proposed abolition of the 12-hr. day was discussed. The President himself has made it manifest that this particular question is only one phase of an effort to bring about a profound change in social rather than in economic conditions in industry. The steel industry, being the largest manu- facturing enterprise in the United States, evidently was selected first in the hope that if agreement could be reached with it to do away with the 12-hr. day, it would be a comparatively simple matter, if indeed it would not be almost automatic, to abolish the long work day in other industries. The President’s remarks made in connection with the letter of Chairman Elbert H. Gary of the United States Stee] Corporation, speak- ing as the head of the Committee of American Iron and Steel Institute Directors, which investigated the 12-hr. day problem, show that the President was greatly pleased with the reply to his own letter urging abolition of the 12-hr. day, when there is a surplus of labor. Considerable interest was attached to the announce- ment made by Acting Secretary of Labor E. J. Hen- ning that the substitution of an 8-hr. day would be helpful to the steel industry. It will be observed that the President, realizing the difficulties involved, has treated the matter largely from a social point of view. Mr. Henning, however, dealt with it from an economic point of view, and predicted that the 8-hr. day would reduce the overhead by speeding up production. The statement of Mr. Henning was not convincing. His contention that an 8-hr. day man can produce as much in the aggregate as he can if he works 12 hr., it is pointed out, certainly cannot be applied to blast fur- naces and open-hearth furnaces, because obviously they can be charged and tapped and poured only when the heats are ready. Therefore, it has been pointed out, it is not a matter of substituting labor-saving machin- ery to hold down the increased cost arising from the abolition of the 12-hr. day, which Judge Gary has said will average 15 per cent and call for at least 60,000 additional employees. Mr. Henning, referring to the surplus of labor, said he did not believe in an excess of labor, but would rather see a shortage of labor. He also declared that there is a surplus of labor now in the bituminous coal industry, and asserted that big industrial employers could obtain employees by going to immigration centers and choosing men suited for their particular work. The latter resort, it has been explained, would provide but little help when measured against the 60,000 additional employees that will be required upon the abolition of the 12-hr. day. Proposed Steel Rates’ Suspended WASHINGTON, July 10.—The Interstate Commerce Commission last Saturday entered an order suspending from July 15 until Nov. 12 tariffs of the Lehigh Valley Railroad, which would have the effect of reducing rates on finished iron and steel products from the Pittsburgh- Buffalo territories and related points to Roanoke, Va. The commission set July 16 as the date for the hearing in this proceeding. It will come before Examiner Wagner. This is the first supplemental order in connection with general readjustment of rates proposed on iron and steel products from territories mentioned to Vir- ginia cities. Unlike the case of the Lehigh Valley tariff on rates to Roanoke, new tariffs provide increased rates amounting to 1% to 6c. per 100 lbs. This is brought about by changing-from a commodity rate basis to the fifth class basis. For instance, the commodity rate from Pittsburgh to Newport News is 38c. while the fifth class rate is 40%c. This readjustment is in line with the change made some time ago in putting rates on iron and steel products on the Columbus-Baltimore basis, instead of on the previous basis providing a 3c. differential under the New York rate. Proposed increased rates on plate and sheet iron and steel in carloads from St. Louis, Peoria, Chicago and St. Paul, and points taking the same rates to points in Kansas, Nebraska and Colorado, were held not justified in a decision handed down by the Interstate Commerce Commission last Saturday. Suspended sched- ules proposing these increased rates were ordered can- celed. Typical of the proposed increase was the ad- vance from 72.5c. to 79.5c. per 100 Ib. on sheets and plates from St. Louis to Great Bend, Dodge City and Coolidge, Kan., and La Junta, Colo. Electric Furnace Co. Changes Hands The Electric Furnace Co., Salem, Ohio, of which T. F. Baily was formerly president, and which went into the hands of receivers a few months ago, has been purchased by F. A. Hoiles and R. F. Benzinger, Alli- ance, Ohio, and F. T. Cope of Salem. The new com- pany expects to continue to manufacture Baily electric melting furnaces for non-ferrous metals, high tempera- ture heating furnaces, and heat-treating and anneal- ing furnaces. The officers of the new company are: F. A. Hoiles, president; R. F. Benzinger, vice-president, secretary and sales manager, and F. T. Cope, treasurer and general manager. The officers state that the new organization is entirely a new company, adequately financed. 74 THE IRON AGE Steel Corporation’s Orders Decrease Unfilled business on the books of the United States Steel Corporation as of June 30 amounted to 6,386,261 tons, or 595,090 tons less than reported for May 31. During May the unfilled business showed a decrease of 307,158 and during April of 114,823 tons, while in- creases of 119,343 tons, 373,213 tons and 165,073 tons were shown respectively in March, February and Janu- ary. A year ago the unfilled tonnage was 5,635,531 tons, or 750,730 tons less than on June 30 last. Follow- ing is the unfilled tonnage as reported by months since January, 1920: 1923 1922 1921 1920 Jan 31 6,910,776 1,241,678 7,573,164 9,285,441 Feb 28 7,283,989 4,141,069 6,933,867 9,502,081 March 31 7,405,332 4,494,148 6,284,765 9,892,075 April 30 7,288,509 5,096,913 5,845,224 10,359,747 May dl 6,981,351 d,254,228 5,482,487 10,940,465 June 30 6.386.261 635,531 5,117,868 10,978,817 July 31 »>,776,161 4,830,324 11,118,468 Aug 31 5,950,105 4,531,926 10,805,038 Sept 3h 6,691,607 4,560,670 10,374,804 Oct 3] 6,902,287 4,286,829 9,836,852 Nov oO : : ; 6,840,242 4,250,542 9,021,481 Dec 31 6,745,703 4,268,414 8,148,122 The largest total of unfilled orders was on April 30, 1917, at 12,183,083 tons. The lowest was on Dec. 31, 1910, at 2,605,747 tons. Youngstown Sheet & Tube Co. Signs with Amalgamated It is announced that the Youngstown Sheet & Tube Co. has signed an agreement with the Amalgamated Association of Iron, Steel and Tin Workers, covering the operation of the sheet mills acquired through pur- chase of the Brier Hill Steel Co. The Brier Hill com- pany has always dealt with its organized sheet mill employees through the Amalgamated association, and the Sheet & Tube company decided to continue this policy with respect to the affected Brier Hill properties. National Enameling & Stamping Co. Opera- tions The National Enameling & Stamping Co., Granite City, Ill., began operations July 2 in its new plate mill, which has a capacity of 20,000 tons a month of plates up to 90 in. wide and from % to 1% in. thick. The new mill requires 100 additional employees. George W. Niedringhaus, president of the company, said the six sheet mills and one 12-in. jobbing mill will have been completed and in operation within the next six weeks. These operations will require an addition of 600 to 700 employees. Mr. Niedringhaus also said that the com- pany is contemplating enlarging its open-hearth de- partment. Waste of Gas by Beehive Ovens WASHINGTON, July 10.—At the present time, under average conditions, the beehive coke ovens in the United States waste annually about 240 billion cubic feet of gas that could be used for public utility service, says Samuel S. Wyer, Associate in Mineral Technology, United States National Museum, in Bulletin 102, Part 8, entitled “Manufactured Gas in the Home.” Mr. Wyer continues: “Since the total annual manu- factured gas sold is 326 billion cubic feet, this beehive coke oven waste is equivalent to nearly three-fourths of the gas sold. There is little wonder that the for- eigner has referred to us as ‘butchers’ in connection with the misuse of our own resources. “About one-half of this beehive coke oven waste, or 120 billion cubic feet annually, is wasted in the State of Pennsylvania. Since the manufactured gas used in the State is 27 billion cubic feet annually, this waste represents four and one-half times the manufactured gas made in the State. “Much oil is now needlessly used in maintaining obsolete candle-power standards.” Of the total manufactured gas sold, 22 per cent is credited to industrial consumption, 57 per cent to do- mestic use, 18 per cent to lighting, the remaining 3 per cent being unclassified. The bulletin states that the demand for natural gas is now greater than the available supply and less will be available each year. This rapid decline, it is de- , July 12, 1923 clared, will make necessary the present natural-gas- using towns ultimately using manufactured gas if they are large enough to maintain a manufactured-gas plant. Many of the appliances now in use for natural gas are declared to be so crude and grossly inefficient that they cannot be used at all with manufactured gas and this will make a marked demand for better manu- factured-gas appliances. The New Rates to the South BIRMINGHAM, ALA., July 9.—With the refusal of the Interstate Commerce Commission to suspend the re- alined commodity rates to and from the South, July 1, they went into effect, as stated in THE IRON AGE last week. The new rate on iron and steel products from Pittsburgh to Birmingham and Atlanta is 58c., com- pared with old rate of 69c. to Birmingham and 70%c. to Atlanta. The new rate to Mobile, Pensacola and New Orleans is 67¢c., compared with old rate of 51%c. The new rate to Memphis is 56c., compared with the old rate of 38%c. Birmingham’s rate per ton is re- duced by