The Iron Age 1923-10-11: Vol 112 Iss 15

THE IRON AGE New York, October 11, 1923 ESTABLISHED 1855 VOL. 112, No. 15 White Company Revises Shop Management Bonus Wage Plan and Other Mechanisms Adopted by Truck Man- ufacturer—Personnel Research Department a Feature— Provision for Close Touch With Employees BY F. L. has successfully handled its labor problems, has kept its labor turnover remarkably low, and has won the reputation of maintaining the most friendly relations with its employees. Consequently, the White plant by its policy of square and fair dealing has often been pointed out as a conspicuous example of success- ful industrial management. The personnel policies followed by the White com- pany have been carried out through three generations and have become traditional with the White family. They were first applied in the 70’s in the White Sewing Machine Co.’s plant and are now followed with equa! success in a motor truck plant employing 4300 people. Important changes have been made, particularly in the system of management, but the company regards the new practices as a present day application of old time principles. With relations between management and employees always amicable the company followed a conservative policy and was slow to adopt the newer mechanisms of scientific management. While other companies were adopting new organization plans, employee represen- tation, bonus and piece rate systems, the White com- pany long continued to operate virtually as a one-man organization. It held to a straight day rate for labor and paid wages that kept its men contented and these were often a little higher than the prevailing rates in other plants for corresponding work. The company’s first important change in its indus- trial relations policy was made in 1915, when it adopted a shop committee plan as a means of exchanging ideas hetween the management and the men. Thus was estab- lished an open forum and no subjects are ruled out of the discussions, not even wages. However, and in this - HE White Motor Co., Cleveland, for many years *THE IRON AGE, Cleveland. AVUUASOUTEAL EOLA PRENTISS* particular it is different from many other shop com- mittee plans, the committees were given no authority. This plan, it may be mentioned, has stood the test of eight years of successful operation. Following the trend of the times in industrial man- agement, the White company during the past year has made important changes in its organization scheme and with these changes have come the imtroduction of a bonus system and the working out of various details that are required with the new system of management. Under the new organization plan full management of the plant is vested in the vice-president in charge of manufacturing, who works through division heads. These executives, the chief engineer, head of factory ac- counting department, production manager, director of purchases, personnel director, and parts service man- ager, together with the vice-president, form an execu- tive committee which determines all matters pertaining to plant policy. Bonus Applied to Machine and Other Work Under the bonus system the employees are paid the average going wages for the class of work they are doing and the bonus in addition. Time studies were made to arrive at the standard job and bonus classifica- tions. The bonus chart is set at 100 per cent efficiency, but an employee begins to earn a bonus when his pro- duction reaches 60 per cent of the standard. If his output reaches 100 per cent his earnings are approxi- mately 25 per cent in excess of the day rate. On the average the men earn about 20 per cent above ther regular day rate. Most machine operations and consid- erable of the assembly work and handling of material are already under the bonus system and time studies are now being made with the view of extending it to other departments where practicable. TERT ENN coe THUATHAUAHAUTGUEA ereeeeren PY OUUEUREREET ENT Ee MNOPerPNE yee 7ITH the relations between the management and employees notably amica- W ble through three generations and with labor turnover unusually low, the White Motor Co., Cleveland, has followed a conservative policy. While other com- panies were adoptiug new plans, employee representation, bonus and piece-rate systems, etc., the White company held to a straight day rate for labor and paid wages that kept its men contented. The first important change was in 1915, when a shop committee plan was adopted. including a bonus system as outlined in this article, have been made. Within the past year other changes, The com- pany regards the new practices, however, as a present-day application of its old- time principles. MOUSALAQULROSES AUN GANIC CHO LLU RE MAU ao RAMAAU EAS ULL UENO EAGAN SAMA catty Cad SYUDULLS!Y LL) L060 UAUDSAMAAL UE ASSLT PUNE LSI EMILE SAMO UETENG OUST aA RSE 953 QUSALSYUSUAANSOUUSSQGQUADANY SUCTUAUEREULABADEORADOORPRONED EDA" NA A a 954 The building of a motor truck involves thousands of operations by a class of employees ranging from coni- mon labor to the highest skilled mechanics. All work has been divided into ten classes of jobs. In making these classifications the company has taken into con- sideration the skill required, time required to learn the job, amount of physical strength required, whether the job is agreeable or disagreeable, whether it is a repe- titive operation, and various other factors. Three rates of pay are provided for each job in order to care for the individual skill of the operator concerned. A beginner at the job is paid the lowest rate, then ts promoted to the next higher classification, then to the highest, as his skill These three pay are handled by classifying the job under any one of three basic classifications, for each of which the hourly and the bonus rate varies. For example, a jo) where the average operator would be classified in job class 5, would provide that a beginner would be paid at the rate for job class 4 and an expert would be paid at the rate for job class 6. This automatically cares for a basic pay, and also for a slight variation in the bonus, and enables proper reward to be given the individual. Specifications have been prepared defining all jobs in the plant. These are typewritten on printed forms and are used to select employees and to see that as far as possible the right man is on the right job. One of these specifications, taking a typical case, shows who supervises the operation, the tools the company and the operator furnish, the material used, the technical train- ing required for the job, the actual operations to be performed, working conditions and the amount of ex- perience required. Other somewhat similar job specifi cations cover the operation of various types of ma- chines, rather than specifying the operating details for a certain part. increases. rates ot rate Personnel Director Has Broad Responsibilities Under the plan of the organization, the personnel director plays a part in the management. Under his department comes personnel research, supervision of training, the medical department, sanitary and safety inspection, the employment department, bulletin boards, the house organ and the preparation of job specifica- tions. One of the personnel departments is called “Per- sonnel Research.” The problem of determining the average waze rate for various classes of jobs is one of the functions of the personnel department and the work of the research division is devoted largely to studyinz economic subjects that affect the rate of wages, pub lished notices relating to wages and employment and government statistics. In other words, the research bureau gathers such information as is needed to intel- ligently pass on a change in rates, although the rates themselves are set by the factory executive committee. The management believes that economic information to be of any value must be both authentic and up to the minute, and through the research section it aims to have such information always available. The re- search section keeps a close watch on labor turnover and should the turnover become high in any particular group of employees, it investigates conditions with a view to suggesting changes that may be needed to stop the increase turnover. Management Keeps Close Touch with Employees The management through its personnel director has several means in getting in touch with the plant’s em- ployees, or in conveying a message to them. These include bulletin boards, moving pictures, the Whif- Book, or plant magazine, which is an interesting sixtv- page publication, well illustrated and brim full of matter of a personal nature that appeals to the employees, the training departments and the various meetings of the executive and shop committees. It is stated that through one source or another information may be delivered to every man in the plant in three days at the longest. The bulletin board system is very complete. Through- out the plant are eighty glass-covered bulletin boards on which are posted photographs showing the most ap- proved manufacturing methods for making various parts with accompanying explanations, safety posters and other matter of interest to the men. The matter THE IRON October 11, | AGE on the bulletin boards is changed at least once a The preparation for material for these boards the full time of one employee and part of the tin another. What is regarded as a valuable educat feature is the use of an automatic moving pictur: chine which shows various approved manufactur ing operations on different parts. This machine is operated during the lunch hour and the educational pictur: tract a great deal of interest among the men. The company has no training schools for fa workers. Training of workmen is entirely in the hands of the foremen and this policy has been so succes that the company has never felt the need of makin; expenditure for the conduct of training schools. 1} ever, it has classes of instruction in mathematics, draw- ing, business English, and in the mechanics of a motor truck, and in addition a technical apprentice cours: provided for college men and other employees of ad quate training. Those attending the latter course are given special training in production or special work the engineering department. Last year over 400 regi tered in the classes and the most of these were regula) attendants at class meetings. Class sessions are held for one hour at 3:45 p. m., starting fifteen minutes after the factory closes for the day. Starting in a modest way in 1918, the compan established a liabrary, which has steadily grown ani now contains 875 books owned by the company, and 120) from the Cleveland Public Library. In addition, th: is a technical library in the engineering department. The main library is located in an attractively furnished room 21 by 42 ft., connected to the manufacturing departments. Employment Department Methods All applicants for jobs, whether high grade techni cal men, girls seeking office positions, or factory labor, must pass through the employment office, where they are given identical and courteous treatment. If no posi- tion is open, an application blank is filled out and filed in case of a possible need for the service of the app!i- cant later. All men on being hired are given a physical examination, partly to guard against infectious diseases and partly to ascertain what work the applicant is best fitted for. If an applicant proves satisfactory to the interviewer in the employment department, he is inte1 viewed by the head of the department in which he to work before being hired. A fairly complete recor cf each man is kept in the employment department; this covering his age, family condition, record in the plant and during employment elsewhere. In addition, ‘ condensed information regarding each man is kept on other cards in a visible file. Food for the men, consisting of coffee, soup, sand- wiches and pies, is prepared in a kitchen and delivered to the employees and placed on a table in the locke: room. Each employee places his order for what he wants in the morning and pays for it when the orde! is given. However, it is optional with the men whether they buy all or any of their lunch from the company’s kitchen. The kitchen supplies food to about 3000 of the employees. A large cafeteria is maintained for the supervisers and clerical force and in this 500 are fed daily. Safety inspection work is in charge of a full time inspector, who is given outside expert assistance when needed. One standing rule in the plant is that if a practice is unsafe it must be stopped or made safe. The superintendent and foremen are held responsible fo the safe condition of all equipment. The plant hospital! is unusually well equipped and has a large staff, in- cluding one full time physician, six full time nurses a part time consulting surgeon, a part time eye spe cialist and one employee who devotes his entire time in visiting sick workmen at their homes to see if they are getting proper treatment. The hospital facilities are provided for only immediate treatment. The company provides no medical services for the. employees at thei! homes. Reference was previously made to the shop commit- tee. Each of the fifteen departments, including th: office, has its own committee, and each committee mem- ber represents ten employees. The committees meet twice a month and discuss such matters as plant and October 11, 1923 machinery repairs, replacing of tools with new, opera- tion of the restaurant and kitchen and problems of material and the routing of work. Good Wages Stimulate Production The company believes that it gets more work from its men by paying higher than the average wages. It also holds that its ability to pay wages higher than the average is largely due to better than average manage- ment and that good wages are largely a question of good management. Under good management it includes skill in planning and routing of work, care in inspecting work, and in procuring uniform materials and training foremen and workmen to use skill in managing their own jobs with the minimum of supervision from the higher ranks. The company aims to inculcate principles of good production management among department superintendents and foremen. Superintendents meet frequently and foremen meet by departments once a week, their sessions occasionally being attended by WILL HEAR FURNACE CASE Supreme Court to Pass Upon Power of Federal Trade Commission to Get Cost Data WASHINGTON, Oct. 9.—The Supreme Court of the United States today through Chief Justice Taft an- nounced that the court would hear arguments in the Claire Furnace Co. case on Dec. 3. This case, which involves a proceeding brought by the Federal Trade Commission against 22 independent iron and steel man- ufacturers in an effort to compel them to submit cost data and other information to the commission, is one of the most important of the kind that has ever come before the commission. It and the Maynard Coal Co. case have been accepted as a test as to the power of the commission to compel manufacturing and mining interests to provide the commission with reports con- cerning the cost of production and other items of an intimate business character. Because of the importance of the Claire furnace case, in which the commission has been defeated in the lower courts, it asked the Supreme Court to advance the date for the argument. The announcement of to- day of the Chief Justice was in compliance with the request of the commission, made through the Solicitor General of the Department of Justice. Contention was made by the commission that the decisions of the lower courts in the District of Columbia, the Supreme Court of the District, and the Court of Appeals by which the iron and steel interests were granted an injunction restraining the commission from gathering the desired data have hampered the work of the com- mission in conducting investigations. Being anxious to dispose of the question of its jurisdiction, the com- mission asked that the Claire case be disposed of as quickly as possible, the outcome of which will be of great importance to both the commission and to the business interests of the country. It is reported, that regardless of the outcome of the Claire furnace case before the Supreme Court, the commission will continue to push the Maynard Coal Co. case, despite its simi- larity to the Claire furnace case. The Maynard case now is before the Circuit Court of Appeals, the Su- preme Court of the District having granted the May- nard Coal Co. an injunction against the commission as had been done in the Claire furnace case. The lower courts based their action on the contention that neither the manufacture of iron and steel nor the mining of coal constituted interstate commerce and that conse- quently the commission had no jurisdiction to compel the production of cost and other data. The commission is now engaged in a study of the coal situation at the request of President Coolidge and is going over the voluminous reports of the United States Coal Commission with a view to making recom- mendations, which, it is said, will deal largely with a better system of distribution of coal to consumers, so THE IRON AGE 955 representatives of the general management, and discuss changes proposed or completed in the production scheme. Low labor turnover is an important factor in the success of the management of the White plant. As pointed out by the company, low turnover permits of high production, high production permits of higher wage earnings by employees, and high wages, low turnover, and so on. Realizing that providing steady jobs is fundamental in maintaining low labor turn- over, the company is filling up the valleys and cut- ing off the peaks of seasonal demand by manufacturing parts for stock during the dull season and permitting the inventory to run down in the busier season. The labor turnover computed on what is known as the Rochester formula was only 24 per cent during 1922. It is stated that for the past eight years the turnover for men who have been in the company’s employ five years was only 6 per cent. The plant has 56 employees who have been on its payroll over twenty years. as to eliminate as far as possible the profits of middle- men. It is assumed the commission, in view of the adverse decisions for it in the Claire furnace and Maynard Coal Co. cases, will not make any attempt to get cost of production figures in.connection with its present coal investigation. The commission feels that inability to get data of this kind directly handicaps its work and it is believed it may seek legislation from Congress, provided it would not conflict with the con- stitution, so as to empower it with authority to gather the kind of information sought in the Claire furnace and Maynard coal cases. Clay Fire and Silica Brick Prices Reduced $3 Per 1000 PitTTspurRGH, Oct. 8.—Effective last Friday, prices of clay fire and silica brick were reduced $3 per 1000 in all districts. This change establishes a minimum price of $42 per 1000 on high duty clay fire brick and recognizes on silica brick prices which, as intimated in the most recent report on the refractories situation in THe IRON AGE, was quietly being done even by some of the larger producers two weeks ago. There has been a reduction of 50c. a ton in ground clay prices. Former prices for magnesite brick, grain magnesite and chrome brick are undisturbed. Business in clay fire brick and silica brick has been on a tapering scale for several months and as order books have dwindled, competition among producers has increased with the result that prices have shown considerable irregularity. This horizontal reduction of $3 was made necessary by the lower prices developed by the competition for orders. Prices are given on page 1005. J. H. Williams & Co. Consolidate Brooklyn and Buffalo Plants at Buffalo J. H. Williams & Co., manfacturers of drop-forged wrenches and tools, have arranged to consolidate the Brooklyn plant with the one at Buffalo. The Brooklyn property, consisting of 150,000 sq. ft. and additional land having 1252 ft. frontage in the block bounded by Richards, Columbia and Seabring Street and Hamilton Avenue, will be sold. Offering is made as one parcel but proposals to divide will be considered. James B. Fisher Co., 160 Remsen Street, Brooklyn, is agent. Purdue University, Lafayette, Ind., will offer short courses on “Steel and its Treatment” in 20 Indiana cities during the present scholastic year. Last year classes were held only in Ft. Wayne and South Bend. The courses will consist of six meetings covering the manufacture, hardening and tempering of steel, and will be conducted by John F. Keller, of the university extension staff, under the supervision of Professor Knapp. M5 aaa a eee eerie <o ol oS New Equipment Facilitates Rapid Coaling of Ore and Coal Boats Coal conveyors are important factors in enabling ore and coal boats on the Great Lakes to load and unload quickly, but the rapid fueling of vessels so that their will be no delay in replenishing their bunkers is also an important item in effecting quick dispatch of the large cargo carriers. While the quantity of coal consumed by the lake steamers is small as com- pared with that carried as cargo it amounts to hundreds of thousands of tons per year. One way of fueling the larger lake boats is by means of elevated pockets located on the docks and Equipment for Fueling Ore and Coal Boats shown with the boom folded up The conveyor is provided with chutes arranged to discharge the coal direct into the fueling bunkers. Another method em- ployed is fueling from lighters which lay alongside a steamer and fill its coal bunkers while it is loading or discharging its cargo. As it is essential that when an order is given for fueling a steamer it should be done at once so as not to cause any delay, consequently a quick means of loading these lighters is necessary. The Pittsburgh Coal Co. is one of the largest com- panies handling coal on the Great Lakes and this company has fueling lighters in many of the large ports and fueling docks located on the rivers between the lakes. The latest equipment installed for handling coal from cars in which it is received at the dock to the fueling lighters has just been completed by this company at Ashtabula Harbor, Ohio. The coal is re- ceived at the dock in hopper bottom cars on three tracks having a grade sufficient to handle the cars by gravity to hoppers located underneath these tracks. Each hopper is fitted with an apron feeder which dis- charges the coal to a 54-in. belt conveyor. This belt conveyor is carried out over the slip as shown in the illustration and the outer end is made to fold up clear of the dock line when not in use. The extreme end is fitted with a swinging teloscopic chute so that the coal may be discharged in the pockets on either side of the lighter. The illustration the with the boom folded up. shows conveyor This conveyor is electrically operated and the driving of the belt, the hoisting and the lowering of the boom and the operation of the chute are effected by inde- pendent motors. The feeding aprons are driven from THE IRON AGE October 11, 1922 the belt conveyor motor gearing, each apron being fitted with a clutch so that the coal can be discharge to the belt conveyor from any one of the three hoppers under the tracks. All the motions of the apparatu are controlled from the operator’s cab, which is s placed that he has a full view of all parts of the con veyor as well as the coal from the time it is received in the hopper until it is discharged into a lighter This conveyor was designed to handle coal at the rat: of 1000 tons an hour, but has actually operated at capacity of from 1400 to 1500 tons per hour, This apparatus was designed by J. E. A. Moore consulting engineer, Cleveland, and was built by th: Pittsburgh Coal Co. for the New York Central Rail road, and operates on the latter company’s tracks. Micrometer of Great Accuracy WASHINGTON, Oct. 9.—A micrometer of the ac- curacy of hundred thousandths of an inch has been constructed by the Bureau of Standards for measuring the diameter of 12-in. porcelain cylinders to be used in electrical measurements. In order to obtain this degree of accuracy, says a statement issued by the bureau, it is necessary to operate the micrometer from a distance and to take readings from it through a telescope lest the heat of the observer’s body warp the thick steel ring enough to cause an error. Both in- strument and cylinder must be kept in a constant tem- perature box during the measurement. The micrometer consists of a cast iron ring large enough to pass easily over the 12-in. cylinders. On opposite sides are the micrometer screw and the con- tact pin, while at right angles are adjustable lugs for centering the device on the cylinders. The micrometer screw is driven by a tiny electric motor and when it has pushed the cylinder against the contact pin, the latter breaks the motor circuit and stops the screw. The whole device, when in use, is suspended by three light rods and can move freely the short distance re- quired. The cylinders which are to be measured will be wound with wire on a precision lathe and will form inductance coils of very accurate construction whose inductance can be calculated from the dimensions. This research is part of a program for standardiz- ing all of the electrical units in terms of the funda- mental standards of length, mass and time. Inland Negotiates to Take Over Smaller Plants While the Inland Steel Co., Chicago, has not yet purchased the Acme Steel Goods Co., Chicago and the Milwaukee Rolling Mill Co., Milwaukee, as recently reported in some quarters, negotiations to that end are in progress with the possibility of their com- pletion within the next two or three weeks. The Acme Steel Goods Co. has a plant in: Chicago with an annual capacity of 30,000 tons of light cold- rolled strip steel, and a plant at Riverdale, IIl., with a _ production of 60,000 tons of hoops and bands annually. It is also constructing a large new cold-rolled strip mill at Riverdale, which will be com- pleted in November. The Milwaukee Rolling Mill Co., Milwaukee, Wis., incorporated in 1920, has eight hot sheet mills and four stands of cold rolls, with an annual capacity of 85,000 tons of black and galvanized sheet. Welsh Stee! and Tin Plate Companies Combine A newspaper cablegram from London states that Richard Thomas & Co., steel and tin plate manufac- turers of Swansea, have acquired more than 80 per cent of the shares of the Grovesend Steel & Tin Plate Co., also of South Wales. The-latter company wil! remain a separate entity, but there will be a complete fusion of interests. The combination will have 159 tin plate mills with a capacity of 8000 tons per week, while the steel out- put at full capacity will be about 12,000 tons per week, Outlook in Machine Tool Building Immediate Promise Not Good but Bright Future Fore- casted for the Makers of the Master Tools of Industry at Meeting Last Week N | ACHINE tool questions affecting the metal working industries generally were discussed at the annual meeting last week at Lenox, Mass., of the National Machine Tool Builders’ Association. Frank statements were made of a present unsatisfactory state of demand for machine tools and of a poor outlook for the immediate future, but of the ultimate activity the meeting was highly encouraging in pointing out the definite trend toward things mechanical and toward continued further improvement of existing mechanisms, all calling for new machinery and more metal cutting and therefore for more machine tools. To this picture of what is to come, Edward J. Kearney, secretary and treasurer of the Kearney & Trecker Corporation, Milwaukee, and retiring presi- dent of the association, made the outstanding contribu- tions. His presidential address, reviewed at some length elsewhere, outlining chiefly the marked strides being taken by the railroads to improve mechanical devices, succeeded in creating the belief by inference that there is an unmistakable expansion broadly in the industries in the way of devices and mechanisms for labor saving and efficiency promotion. It should be added that his address had another aspect and that was that the transportation act must not be tampered with by the next Congress, that transportation is too vital for the country’s welfare to be made longer a football of politics and that if the railroads are given a chance to continue to work out their salvation, needed improvements, recognized by many of the railroad ex- ecutives as necessary, will forthwith be made, including even the replacement of antiquated shop machinery by machine tools which may require in some cases only one-third the number of men now employed. In respect to the prospects of the machine tool builder, Mr. Kearney in the course of the meeting, re- ferred also to an important development in the art of printing calculated to bring about a new and large manufacture of printing machinery. For the next few months he described business as likely to be neither good nor bad, “but in ten years,” said he, “or maybe in five, we shall make more tons of machine tools than ever before in our history.” Other features of the meeting were these: A pre- liminary report on what may be termed an ideal divi- sion of the country for dealer territories; a considera- tion of splitting commissions between dealers when a machine is bought in one agent’s district and delivered in that of another—these covering a conference be- tween representatives of the manufacturers and repre- sentatives of the dealers; a tentative draft of a code of ethics and approved business practices, and a spe- cific illustration, explained by General Manager Ernest F. Du Brul, of how one machine tool builder success- fully steered his course in the light of the statistics collected by Mr. Du Brul, for all the group of manu- facturers making a given type of machine. The sentiment of the meeting was formally taken at one session and indicated unanimous approval of the present arrangement of convening outside of the large cities and limiting the attendance practically only to members. If it were necessary to describe briefly the achievement of the convention it would be to say that the members have further cemented the friendships and understandings made possible by the few meetings of the present type, particularly in this last one by definitely recognizing on the program the desire for relaxation, such as reserving the forenoons for the playing of golf. Officers and New Directors R. E. Flanders, manager Jones & Lamson Machine Co., Springfield, Vt., was elected president for the 957 ensuing year by the board of directors. He was one of the directors elected at the meeting, the others being H. M. Lucas, president Lucas Machine Tool Co.. Cleveland, and J. G. Benedict, treasurer and general manager Landis Machine Co., Waynesboro, Pa., and also H. P. Dix, secretary and general manager Wil- marth & Morman Co., Grand Rapids, Mich., elected for the unexpired term of the late Winslow Blanchard, O. B. Iles, president International Machine Tool Co., Indianapolis, was elected first vice-president and Frank N. MacLeod, president Abrasive Machine Tool Co., Elected National Builders’ President of the Machine Tool Association. He is Jones & Lamson Machine Co., Spring- field, Vt., a member of the American Engineering Coun- cil of the Federated Ameri- can Engineering Societies and represents the American Society of Mechanical Engi- neers on the National Screw He be- manager of the Thread Commission. gan as a machinist appren- tice in the shops of the Brown & Sharpe Mfg. Co., Providence, in 1897. He was four years associate editor of and joined the Lamson company in 1912 Machinery Jones & R, E. FLANDERS East Providence, R. I., was elected second vice-presi- dent. Mr. Lucas was elected treasurer. About half of the membership was present. The meeting took place at the Aspinwall Hotel, Lenox. The first regular session was held on the afternoon of Oct. 2 and there was a session on the evening of that day and a round-table discussion provided on the after- noon of Oct. 3. The evening of Oct. 3 and the morning of Thursday, Oct. 4, were reserved for the usual com- mittee meetings. The convention voted a strong resolution against any amendments being made to the transportation act. Learning that Past President J. B. Doan, president American Tool Works Co., Cincinnati, was temporarily confined to a hospital at Utica as the result of an auto- mobile accident, a telegram of good wishes was sent to him. Numerous topics were submitted for the round- table discussions but there was no active participation in this portion of the program. Mention was made of a plan offered by a Mr. Evans whereby sheets of stand- ards could be drawn up for the benefit of designers, covering the matter of pulley sizes, widths of belting, spindle diameters, sizes of tee-slots and the like, and the president appointed as a committee to look further into the standard data sheet Mr. Lucas and E, P. Bur- rell, Warner & Swasey Co., both of Cleveland. Little was said about the prospects of export busi- ness. More particularly it was mentioned that the out- look for doing much business with England was poor, due to high prices from the British standpoint, a re- action following the American tariff and a belief that they, the British, are making good machines. Matters of Research Mr. Flanders told how steps are now in progress for investigating the strength of gear teeth with the 958 Tyé IRON AGE object of producing a new formula to replace that contributed some 30 years ago by Wilfred Lewis of Philadelphia. The factor to be investigated is the ex- tent that stress.increases. as the speed increases. This was arbitrarily "held 'té be a fact originally but with better tooth surfaces ‘and: outlines common today it is the view that stress does not increase as much as was thought. Mr. Lewis has devised a scheme requiring a special mechanism which will do the testing without destroying the gears and the importance of the investi- gation lies in the possibility that lighter gears and gears of narrower faces will hereafter be satisfactory for given requirements. The preliminary estimate of the amount of money required is $3,000 and the Amer- ican Society of Mechanical Engineers has appropriated $400 and Mr. Flanders’ explanation was introductory for making a request for contributions from individual companies. The subject brought up anew the desirability of the association’s going vigorously into research work. A stimulating speech on this score was made by Fred A. Geier resulting in a motion, seconded by Edward D. Welles, for the appointment of a committee for tech- nical research. A part of the discussion revolved round the need of a standard respecting the material handled by a machine tool, and E. P. Bullard, Jr., told how in the Bullard shops a given material was com- pared with a standard which was a material which October Ti, 1923 could be penetrated to a distance of 1 in. in 40 see. by definitely weighted drill. A material would be hard o; soft according to whether the penetration took a longe, or less time than the standara. The report on the code of ethics was made by) H. M. Lucas as the chairman of the committee, o{ which the other members are F. L. Eberhardt, pres dent Gould & Eberhardt, Irvington, Newark, N. J., and A. H. Tuechter, president Cincinnati Bickford Too! Co., Oakley, Cincinnati. The committee was requested to consider the subject further and submit its revision at a later meeting. The report of the committee covering the confer ence with dealers was made by Chairman J. Wallace Carrel, vice-president and general manager Lodge & Shipley Machine Tool Co., Cincinnati. A map of the United States sub-divided in respect to the ideal terri tories is to be supplied to the members. The division was offered particularly as likely to be helpful in form- ing new connections or in revamping old territories whenever the desirability or opportunity may arise. As to the splitting of commissions, the meeting took an almost unanimous stand that 50 per cent ought to be sufficient in the average case for the dealer in the territory where the order originates and 50 per cent for the dealer in the territory of destination. Following are extracts from the address of Presi- dent Kearney and report of General Manager Du Brul. Transportation—The Master Key to Progress* BY EDWARD J. KEARNEY Retiring president, before the National Machine Tool Builders’ Association [pte tools are called, and rightly so, the “Mas- ter Tools of Industry;” but they are not a primary product, creating their own demand, or connected, ex- cept very indirectly, with individual consumption. They are the instruments necessary to the creation of ma- chines that themselves reach the final consumer, such, for example, as carpet-sweepers, automobiles, and radio outfits, and also for the creation of machines that are many times removed from the ultimate consumer, such, for example, as the steel mills that make the rails, that carry the locomotives, that draw the cars, that deliver to the consumer the carpet-sweeper, the automobile, and the radio outfit. So it turns out that new develop- ments to which we look to give impetus to our industry are not of our creating. When a new machine, or a more highly developed old one, presents a demand, either for greater precision of manufacture or increased production at less cost, we meet that demand and in that way make our contribution to progress. During the last 60 years there have been many new developments that were of such magnitude and which came forward with such a rush, that they, to- gether with production already established, created a peak demand for machine tools. Every one of these forward movements left the industry on a higher level than before. Among the developments that have given this added impetus to the industry that may be men- tioned as examples are the sewing machine, the electric generator and motor, the bicycle, and the automobile. Reaction After Post-War Boom The reaction following the artificial stimulus of the war and the post-war boom, when machine tools were in uncompromismg demand, has not yet left us. Our suffering has been long and intense. The statistics which we began to gather in 1920 show that as com- pared with the first quarter of that year, the business of the third quarter of 1921 was only 10 per cent, due to both reduced prices and reduced volume. The grad- ual improvement that has been made since shows that *In his address Mr, Kearney told in some detail of a tour of inspection and interviews with railroad officials and work- men and described at length what the railroads are doing to keep pace with demands, such as improvements on loco- motives our factories, taken as a whole, are now working at only about one-third of their capacity. Under such conditions, it is not surprising that many of our mem- bers have been forced into receiverships, and the strongest have seen their surpluses diminish, and, in many cases, their capital impaired. There are no fig- ures on which to base the assertion, but it is my belief that a combined financial statement of the industry made now, as compared with three years ago, would show a shrinkage or net loss of at least 25 per cent in the total net value of the industry. When we met in annual convention three years ago, we had on our mem- bership roll 209. Today, it is reduced to 135. It is not known among business men generally that the machine tool industry suffers during the downward swing of the business cycle to a far greater extent than ordinary manufacturing lines, for the reason that our product is bought mainly during periods of expansion. The carpet sweeper manufacturer, when his business shrinks 5 per cent, buys no more machine tools, so that our business, as far as he is concerned, falls 100 per cent. The example could be extended almost indefinitely. If we were sufficiently numerous to be of importance in our national elections, attempts would long ago have been made to capitalize our distress at the polls. Is it therefore any wonder that we are asking one another whenever we get together by two’s and three’s, “What is the next development that will sustain the machine tool industry?” Every one has an answer. I have mine. It is general, mechanical, industrial, and agri- cultural development and prosperity, with transporta- tion the master key to progress. Unfortunately there are certain elements in our political life that would throw the key into the well and prevent entrance into that temple of well-being—“universal prosperity.” Future progress depends on adequate transporta- tion facilities. So important is this that it should be a matter of the most serious concern to every business man and citizen. It is this view that leads me to pre- sent an outline of the case and show where we can do something for ourselves and in the public interest. There are few people not actively connected with railways or who have not made a study of their growth, who have any idea as to the enormous extent to which transportation in this country has grown, or to where October 11, 1923 it will lead with the present rate of growth continued. This is why we should be concerned. Demands on Transportation Systems In 1880 the per capita travel was approximately 100 miles, which has continued to grow steadily during each decade until it is now about 400. These figures show their true comparison when it is recollected that the population of the United States in 1880 was only 50,- 000,000, meaning that the number of passenger miles traveled at the present time is over eight times what it was in 1880. When we come to the study of the subject of freight, we find a similar condition with the difference that the rate of increase is much more rapid. The per capita ton miles rising steadily during the period, multiplied itself about six to one. In 1880 the number of tons of freight hauled one mile was 32 billion; while it is estimated that for the year 1923 it will be beyond 415 billion. Keeping the Equipment in Service One of the greatest economies in railway operation is to keep the equipment in use the greatest possible amount of time. In our own business we recognize the value in reduced overhead when our equipment can be used full time, or better still with more than one shift. The same is true of railway equipment. In order to bring this about, there must be facilities for taking INCE our last convention there has been some further recession in orders. At our last meeting we wondered if the slacking off in April was merely a temporary fluctuation. It now looks as though it would be wise to consider the signs, to see if demand is likely to pick up to the March level, which was itself considerably below capacity. The business cycles have been running from 382 to 44 months, from top to top, or from bottom to bottom. January, 1920, was the recognized peak of the post- war boom—38 months. Later, March, 1923, was a peak. In 1920 it was several months after the peak had passed before men were willing to face the fact that a slump was on. We have now passed 44 months since the January, 1920, peak, so unless previous history reverses itself, due to causes not now evident, we can fairly believe that business is on a normal down swing at this time. The machine tool business, compared with some others, got but little action during this period. From signs now apparent it seems to be prudent to prepare for a decidedly lower scale of demand from now on, and therefore to beware of expanding inventories. at this time. Hand to mouth schedules are not easy to operate, nor are they pleasant to contemplate, but they seem to be the safest schedules to work to for some months to come. As nearly as we can estimate from the units shipped by the firms reporting units in certain groups, ship- ments have been running somewhere around 60 per cent of the 1913 monthly average for the last few months. Taking the war peak as a basis of compari- son this means somewhere about 26 per cent of capac- ity. Of course the war peak was reached by overtime, night shifts and other such supernormal utilization of plant, but in face of plant additions the present shipments are certainly still far below capacity, measured on a one-shift basis. When the indexes seem to point quite markedly to some recession, should we not be hopeful pessimists rather than reckless optimists? We always have time in this industry, after a decided upturn in general busi- ness, to prepare for an oncoming demand for machines. This industry has to worry more about getting over- loaded with inventories just before a slump than it *From the general manager’s report for the annual con- vention of the National Machine Tool Builders’ Association. Status of the Machine Tool Industry* BY ERNEST F. DU BRUL THE IRON AGE 959 care of locomotives at the terminals so that they will be the least possible time out of service. This means better and larger roundhouse facilities, sanding and coaling devices, boiler washing equipment, and last, but certainly not least, modern machine tools for both the roundhouse shop where temporary and emergency repairs are made, and for the general shop where thor- ough overhauling is done. Mechanically the railroads are on the way to handle the ever-increasing volume of traffic and to do it so much more economically as to give promise of ultimate freight rate reductions. Our opportunity is in using our influence with those in authority to promote and maintain a Government policy favorable to the develop- ment of transportation, the master key to progress. Vital to mechanical progress by the railway is the in- vestment of vast capital. Underlying such investment is confidence in the stability of railway income. Be- hind this in turn is stability of Government policy. Efforts are being made to repeal the act or so as to amend it that the revival of railroad credit will be im- possible and public interest suffer irreparable damage. The immediate objective is a further trial of the traus- portation act without experimental amendments. In future years the objective is so to guide the progress of perfecting the law that always embedded in it will remain the principle of net income adequate for the attraction of investment capital. does about not having goods enough to supply legiti- mate purchases on a rise. Even though some seasonal rising movement should develop this fall; it would not be in accord with previous experience for it to continue very long. Studies of Sales Ratios Dozens of special services have been rendered to individual members in the past few months, covering about all the subjects listed on our activities chart from accounting to traffic. This is a very gratifying development of the association’s work—most of it being of a highly confidential nature. During the summer the members were asked to join in a study of the ratios of sales to merchandise, sales to fixed assets, and sales to net worth. Twenty- six reports were received from member companies. They are of such different size and manufacture such a variety of product as to be fairly representative of the industry. Averaging these ratios gives some in- teresting side lights on the financial problems of the industry. A most significant condition is shown by these ratios; a great change seems to have occurred in the rate of turn-over of merchandise, compared to the turn-over of fixed assets. This is strikingly shown on the charts of the results of tls study. In the years 1911, 1912, and 1913, the yearly turn- over of merchandise was about 250 per cent, while the turn-over of fixed assets was about 150 per cent. Dur- ing the war years these ratios came together so that in the years 1919-1922 the inventory turn-over was at just about the rate of turn-over of fixed assets. Does this mean that costs have climbed faster than prices, or has the industry been injudicious in expanding in- ventory out of proportion to sales possibilities? What- ever the cause of this radical change, it deserves con- sideration. A ratio of turn-over lower than before the war shows that the inventory must now be higher in propor- tion to sales than it was before the war. Each execu- tive should study his own condition to see whether he has too much stock on hand in proportion to his sales. He has little hope of reducing the cost factor of the inventory units. If he cannot reduce the quantity car- ried, improvement in the ratio can then be realized only by selling more units at the same price, or by getting higher prices per unit sold. But when the quantity sold lies very largely outside of his control, ihe ciel eee re ee ee oe bie a, Vee 960 THE IRON AGE October 11, 1922 he can only look to the price factor for improvement. Here he is limited by competition. This very limited ratio study has in itself proved the need of much more consideration of finance being given by the executives of the industry. Naturally slow turn-over of fixed assets and inventory requires a relatively high rate of profit to yield an adequate return on investment. Besides a slow rate of turn- over, our industry is subject to long periods of de- pression. It can make its profit and accumulate its reserves only in short spurts of activity. To this uncontrollable condition add the fact that the tax laws make no allowance for losses in years of depression to offset the gains during the active years. On top of all this throw demands for excessive service to some customers that more reasonable users do not require. Throw on also the complaints that machine tools are too expensive, even though they often save their cost in four, and six months. Add a number of oth