The Iron Age 1927-04-28: Vol 119 Iss 17

THE IRON New York, April ESTABLISHED 1855 28, 1927 VOL. 119, No. Colorado Steel Mill Electrification New Power Plant, Motor Drives, Powdered Fuel Plant and Electrical Cleaning Blast Furnace Gas ANY steel plants, abandoning steam engine drives with their isolated boiler plants, low steam pressures, high labor and maintenance cost and poor efficiency, are installing electric motor drives for the mills, supplied with power from cen- tralized power plant. The Colorado Fuel Iron Co. has followed this trend installing power plant and electric drives for the mills its Minnequa Steel Works Pueblo, Colo. This change has made possible great savings the cost producing Seventy-five boilers five boiler plants have been eliminated date and, when the electrification program has been fully extended, total 118 boilers will have been abandoned. Minnequa Steel Works equipped for the complete process steel making, from iron ore the finished steel. manufactures large tange steel products, from railroad rails variety wire products, which requires large amount power for the rolling and finishing operations. The new power plant complete unit consisting power house, boiler house, powdered coal plant and gas-cleaning plant. operated separate de- Material for this article was prepared, under the Girection Weitzel, vice-president Colorado Fuel Iron Co., Neblett, chief engineer for Wilfred Sykes, Chicago, who handled work involved the design and the changes consulting engineer, supervised the ae ribe d. construction Generators partment, with complete organization, including test- ing, combustion and engineers, and complete equipment laboratory testing and operating instru- ments. its relation with the other departments the steel plant operated utility, purchasing its fuel—blast furnace gas coal—and selling elec- tric power, steam, blast air and water. The power plant located adjacent the blast furnaces, per- mitting the gas delivered easily the boiler house. Power House main turbo-generator units are installed the power house (which 270 ft.) and third course erection. These units are 10,000 kw. (12,500 kva.) 6600 volt, phase, cycle. The gener- ators are cooled air circulating closed system: the heated air passes over water-cooled pipe coils and returned the generators. Thermostatically con- trolled doors open and admit fresh air from the power house, case the temperature the circulated air becomes excessive, due failure the cooling sys- tem. The generators are connected main 6600-volt bus, which connected the main power feeders the mills and tie line the Southern Colorado Power Co. for the exchange power. This tie line also “Ash x. Coa/ Hanne r = the New Power Plant Equipment, the East the Row Blast Furnaces Four blowing three generators the power house are supplemented later one more The electrical precipitators, west blast furnaces and are already being increased number 1205 ; 7 ’ | | q 7 . Blowers a 7 acts emergency supply for auxiliary equipment case generator trouble. Four turbo-blowers (Ingersoll-Rand) supply air the blast furnaces, and are connected the cold blast lines leading the hot blast stoves that any blower can connected any one three furnaces. These blowers are rated 55,000 cu. ft. air per min. lb. pressure, for the altitude which they are installed, 4800 ft. This corresponds rating 60,000 cu. ft. sea level. oil purifying system the power house main- tains supply pure oil the main unit bearings. YPICAL Cross Section Through Boiler House and Through One Boiler, Showing the Dual Firing Equip- ment—Blast Furnace Gas Below and Powdered Coal Above. The great volume combustion space below the banks tubes notable a the reservoir each unit. this way supply cleaned oil maintained. Feed water for the boilers supplying steam for the power house consists the from the turbo-blowers and necessary make-up, the raw water condenser has duplicate hot-well pumps driven volt d.c. motors. The hot-well pumps deliver the con- densate reserve feed water storage From this tank delivered de-aerator nected with the evaporators for treating the raw make- water. The evaporators remove scale-forming mat- Each fan Each turbo-generator and turbo-blower has its indi- vidual oil circulating system and reservoir, which integral part the unit. Oil from the reservoir circulated over the bearings the unit, pumps driven either from the shaft the unit steam. addition, the reservoirs each unit are connected storage tank 1000 gal. capacity the basement. Used oil can drawn from any reservoir the units and discharged gravity into this storage tank. From the tank the oil passed through centrifugal oil purifier which removes dirt and moisture. The cleaned oil then pumped into clean oil storage tank 1000 gal. capacity located near the ceiling the power house. pipe line from this tank connects 28, 1927, The Iron Age ter from the raw water and deliver the de-aerator, where the oxygen content the entire boiler feed water brought below 0.05 per liter. From the evaporator and de-aerator equipment pure boiler feed water delivered the boiler feed pumps mately 205 deg. Fahr. The evaporator and de-aerator equipment (Griscom-Russell Co.) has capacity 350,000 lb. boiler feed water per hour. There installed also Graver Corporation lime hot-water softening plant 125,000 per hour capacity, for supplying feed water the boilers, which supply steam 150 pressure for general use the steel plant. Steam for the two boiler-feed water-treating plants supplied the — Stack 7 Gas + y + at vi M O 44 [ } na | Ash Ash 7 Large the New Power House: Four Fore- ground and Three Turbo-Generators Beyond Them. The generators are rated at 10,- 000 kw. each (12,500 kva.) 6600 volts. Each blower can fur- nish 55,000 cu. for blast furnace se, pressure exhaust from the boiler-feed pump turbines, the steam- driven exciter, and the turbines two dual-drive sets. Water Supply ATER for condensing purposes provided unusual manner. The steel plant located section Colorado where the average annual less. Practically all water available this locality from the snow banks the Rocky Moun- tains, the nearest range which about miles west Pueblo. Very strict legislation pertaining water rights exists this section, account the limited supply. The water supply system the Colorado Fuel Iron Co. necessarily extensive and complicated. insure constant supply, the company maintains large storage reservoirs the mountains and near the steel plant, with necessary canals and pipe lines. The total water supply for the steel plant, about 32,000,000 gal. ~ a q 4 per day, delivered gravity Ib. through pipe lines from storage reservoirs located some five miles away. All the water for the main steel plant used for condensing purposes, first passing through the condensers the turbo-blowers and turbo-generators the power house, which discharge into the water mains the steel plant. Water used around the blast furnaces collected pump the power house, from which pumped back into the system ahead the condensers, thus utilizing this additional water for condensing purposes. case failure shortage water from the main water supply, emergency supply can taken from irrigation canal which runs through the plant. Water from this canal taken through settling basins and pumped into the water mains ahead the con- pressure densers. insure sufficient cooling water all times for Floor Boiler House, with Pow- dered Coal Fir- ing Equipment Foreground. There are eight burners, each vith its own feed and draw- ing fuel from The burn- throw the fuel downward nto large combustion cham- ber, shown drawing fo r pers, >. The Age, April 28, 2 : 4 q 7 = 1 > a “et the condensers, spray pond 125 520 ft., with capacity 27,000 gal. per min., provided. Water for the initial spray pond supply and for make-up replenish evaporation can either taken from the main water system from auxiliary storage reser- voir located about one mile from the plant. The con- densers the power house are arranged that any one, all, can connected either the main water system the spray pond, which located eleva- tion that permits the cooled water flow through the condensers gravity. The discharge from the con- densers, when operating the spray pond, taken two 12,000-gal. per min. motor-driven pumps and delivered the nozzles the spray pond. account the relatively low humidity Pueblo, this spray pond gives very effective cooling. Boiler House OCATED adjacent to, and line with, the power house, the boiler house measures 286 ft. Seven 1200-hp. Stirling type watertube boilers, without econo- mizers, are installed, designed for operation 330 steam pressure and 200 deg. Fahr. superheat. Until all the present steam consuming units are replaced with electric drive, one, and sometimes two, these boilers will operated 150 lb. This low-pressure steam delivered from the boiler house into lines connecting the low-pressure units the steel plant, such mill engines, hydraulic pumps, etc. When the demand for this low-pressure steam has been eliminated, all boilers will operated 330 steam pressure. This change can made without change equipment, all boilers, valves, steam lines and auxiliaries are designed for operation the higher pressure. Dual Fuel Supply Blast furnace gas and powdered coal are used for fuel. Two boilers are equipped for burning blast fur- nace gas only, and five for burning both blast furnace gas and powdered coal. Each boiler has four horizontal gas burners the aspirating type, which the air for combustion mixed with the gas. These burners have capacity 2,000,000 cu. ft. gas per hour for each boiler. The gas supply delivered the boiler room through main ft. in. diameter, which con- nects through water seal gas box front each boiler. each box are located four valves for controlling the gas the burners. Blast furnace gas, stitutes the main fuel, delivered the average temperature 375 deg. Fahr. retains sensible heat and ideal condition for Powdered coal used only when there gas, during blast furnace casts. Powdered coal delivered each boiler eight burners located near the top the chamber and ft. above the gas burners. The fired vertically downward, thus allowing flame travel and complete combustion before reaching the boiler tubes. Powdered coal fed the burn screw feeders driven adjustable-speed controlled from the operating floor, allowing easy regu- lation the quantity coal fired. Approximately per cent the air required for combustion delivered under pressure through the burners with the coal. The additional air supply admitted the combustion chamber through three rows air doors the front wall the boiler setting. Each row doors independently operated, allow for proper adjustment air. powdered coal bin tons capacity provided each boiler, the coal being delivered gravity from the bins the screw feeders. much tons coal per hour can fired each boiler, giving boiler rating over 300 per cent. re. Minimum Trouble from Ashes very small amount ash deposited the boiler settings, the majority passing out the stack with the flue gases. The ashes, removed once week through cleanout doors the bottom the combustion chamber, are loaded into small car which discharges into skip hoist, and delivered storage bin outside the boiler house. water screens are required, the combus- tion chambers are designed that the bottom suffi- ciently cool prevent slagging. Short individual stacks are installed, one for each boiler. The draft maintained induced draft fan each boiler, driven adjustable speed motor. The present average load the high-pressure boil- ers 300,000 steam per hr., with peaks 000 per hr., average 60,000 per hr. per boiler. The low-pressure steam load averages 50, 000 per hr. per boiler. Growing Use Steel Shelving for Storage Purposes RECENT investigation conducted among mill supply houses the United States revealed the fact that them used both steel and wood shelving. The gross amount used represented length 58,279 ft., height 10% ft. and depth in. this total only 1350 ft. was steel. According Guy Irwin, Sheet Steel Trade Extension Committee, Pitts- burgh, who conducted the survey, this percentage steel wood can taken fairly general through- out mill supply houses and warehouses the country. Whipple, president Hibbard, Spencer, Bartlett Co., Chicago, which said have the most exten- sive installation shelving the hardware trade. speaks that company’s wide use steel shelving: “It more flexible. easily kept clean. promotes cleanliness and fire-resis- tive. Careful calculation convinced that storage equipment costs more steel. When took into account the present high cost other materials, which could used for storage purpose, the price labor necessary put them together, and the increased space occupied this makeshift equipment, found the cost, anything, higher than that 28, 1927, The Iron Age 7 Fire Steel Shelving Offers Resistance Manganese and Preparedness Cleveland Meeting Stresses Importance Adequate Ore Supplies Both for National Emergency and for Future Needs Steel Industry Two sessions were the key mineral any program national industrial preparedness was brought forcibly the attention the country meeting Cleveland April 19. eld under the auspices the Ohio Section and the Iron and Steel Committee the neic American titute Mining and Metallurgical Engineers, and about 125 institute members and other representa- tives mining and consuming interests were attendance. manganese supplies for the steel industry the United States come for such serious discussion. Both the political and metallurgical aspects the subject were canvassed. Not since the war has the question Naturally some refer- ence was made the tariff—on the one hand from the standpoint the interest and the other hand from that the owners the meager deposits domestic ore that can utilized the manufacture ferromanganese. But the tariff phase was only incidental. What was emphasized men whose opinion this subject the highest competence that steps should taken the Government insure the accumulation supply high-grade manganese ore the United States against national emergency, also that for the maintenance our steel in- importance. dustry the development foreign manganese deposits under American auspices matter first The metallurgical side the problem was well presented the meeting, was the increasing draft the steel industry making upon the country’s manganiferous iron ore deposits, view the higher content manganese our basic pig iron production which has been significant developmen recent years. Political Phases the Manganese Problem and afternoon sessions were held the Cleveland and the program and all meeting arrangements spoke well for the planning the Ohio Section and the Iron and Steel Committee the insti- tute. Dr. Leith, professor geology, University Wisconsin, presided the morning session, and Reynders that the afternoon. Dr. Leith opened with thoughtful address which dwelt discrim- way the political aspects the world man- ganese situation. Only outline possible here: Nearly per cent the world’s production man- used the United States, England, Germany and France; and roughly third the total used the United States alone. the other hand, over per cent the world’s production comes from Brazil, Russia, India, the Gold Coast Africa and the Sinai peninsula. Only per cent the needs the United were met from local sources under the high prices war time, and under our recent tariff only per cent. The steel industry uses over per cent all the manganese mined and acquiring control rts all the principal fields—the Germans Niko- pol, the English India and Gold Coast, and the Amer- ans Georgia, India, Gold Coast and Brazil. Pos- monopoly are being carefully watched. Re- ports that the Germans have secured this, the English and the Americans another supply bring our certain implications national political ad- a ac. art ary Exploitation Foreign Deposits manganese situation well illustrates the out- commercial and political thrust the North At- countries against the rest the world the mineral resources. The countries pos- manganese have felt and will continue feel pressure and must yield it, whether they like L should understood that nature’s dis- along present lines. The movement cannot requires the open door and some meas- ure requires the overriding national self-determina- tion. Sooner later our country should formulate policy which discriminates necessary from unnecessary exploitation. The public has not been adequately informed about the facts manganese even our country’s vital need for it. The reports manganese commit- tees the Mining and Metallurgical Society Amer- ica and the American Institute Mining and Metal- lurgical Engineers are great value, but yet they are scarcely more than early gropings and have not been carried far enough give firm basis for sound publie opinion. The Futile Tariff Referring the tariff phases the question, the speaker said that when manganese export tariffs are made too high, was done recently Brazil, other sources are drawn upon. the case our own im- port tariff, seeing that its purpose not primarily produce revenue and since our supplies manganese are too limited play any large part the industry and should conserved for times national emer- gency, the tariff becomes merely nuisance the con- suming industry and hastens the already too early date Four Possible Solutions the war aspect the manganese prob- lem, the speaker referred four possible solutions for the North Atlantic countries: First, development do- mestic supplies. However, the United States these Second, substitutions for man- ganese. the present state science these are not practical any great scale. Third, storage. the year preceding the war Germany imported over twice its normal consumption manganese, but still had acute shortage. Since the war France has imported sev- eral times the manganese needed for the has produced that time. make the United States in- dependent for war long the last one would re- quire storing immense tonnage, the withdrawal which from the market would materially affect normal are quite insufficient. The Iron Age, April 28, 1927—1209 7 7 | supply and demand and hence prices. best, for long continued war storage only partial and tem- porary expedient. Fourth, the really adequate solu- tion control channels flow from the sources, which means control sea routes. Obviously com- bination with the British Empire would better assure the safeguarding our far-reaching supply routes than any other method. Together these countries con- trol commercially over per cent the world’s pro- duction minerals. peace times their combined action could insure more orderly development the world’s minerals fairer methods than are now some places vogue. Tariff Stand Allen Oglebay, Norton Co., Cleveland, chairman the committee program for the meet- ing, commenting its purpose said that stand the question manganese tariff was taken. The importance the manganese problem its national and international aspects was not generally appreciated and one purpose the meeting was discuss the policy adopted the United States meet the situation. The studies thus far made have been largely under the auspices the two societies mining engineers, and yet the Government had policy designed secure adequate and continuous supplies this essential mineral. American Experience Repeats Great Britain’s Hewett, United States Geological Survey, found parallel between the discussions now going the United States supplies essential minerals and those which were common Great Britain after the Napoleonic wars. 1820-30, per cent the world’s known copper deposits were England. The peak British lead production was reached the eighteen-fifties. one time Great Britain had over one-half the world’s iron production. The position the United States now, respect certain minerals, what Great Britain’s position was 50, and years ago. the speaker’s opinion the United States likely pass through the peak domestic pro- duction the principal metals the next years and must face the question depending foreign sources for some these supplies. Development One Virginia Deposit Sharshall Grasty, geological engineer, Charlottes- ville, Va., considered the main question before the meeting political one spite disavowals. the tonnage manganese ore the United States, there agreement that the conclusions the Sub-Committee Manganese are correct. had investigated the occurrence manganese ores Vir- ginia and knew detail very large deposit north- west Woodstock that had been developed the Hygrade Manganese Co. the past eight years ore body 300,000 tons had been blocked out and concentration the ore under way. had been estimated that the deposit contained additional 700,- 000 tons per cent ore. Referring this last statement Mr. Grasty, member observed that had never seen replacement deposit concerning which was possible know foot ahead workings what amount ore would found. Dr. Leith reminded the meeting that foreign ex- ploitation was reality the main question connection with manganese. The trouble has been that there recognition the public press the necessity for exploiting foreign supplies. While there have been disclaimers exploitation the United States, the fact that that the prime consideration connec- tion with any discussion industrial preparedness. Work Engineers’ Committees Col. Arthur Dwight commented the impor- tance united effort safeguard supplies man- ganese and other strategic minerals. was gratify- ing note the importance atttached Washington the report the institute’s committee man- ganese, also the way which the mining engineers had responded the call the Assistant Secretary War connection with the industrial preparedness movement. The Mining and Metallurgical Society was 28, 1927, The Iron Age larly with reference peace times, tute’s committee devoted its efforts way meeting situation that might arise time war However, was agreed between the two socicties that they should work entire harmony. +) . the insti- Needs the Steel Industry Bolyston, professor metallurgy, Case School Applied Science, gave synopsis paper, “The Importance Manganese the dustry.” computed theoretical needs equivalent 453,935 gross tons per cent ferromanganese 1925. The statistics showed consumption about 100,000 tons less than this that year. Some the difference was accounted for the growing practice using pig iron high manganese, also the em- ployment substitutes such the brief discussion following the paper, the sug- gestion was made that would desirable have more information concerning the increased consump- tion manganese the iron and steel foundries the country. David McLain stated that higher man- ganese was being specified connection with the man- ufacture semi-steel and other high-test castings. estimated that the average manganese content foundry pig iron had increased from 0.40 per cent 0.65 per cent the past few years. Leonard Miller referred various additions the supply manganese ore from domestic sources, which had resulted from the encouragement the present tariff. gave some details the Bradley leaching process for ferruginous manganese ores. Ope- rations under the process have been carried Min- nesota and.in the Batesville district, Ark. this method beneficiating oxides and carbonates ore had been secured, one case running 76.48 per cent iron and manganese, largely manganese monoxide. 5 Price the Deciding Factor concluding comment some the points de- veloped the morning’s discussion, Hewett said that statement domestic manganese reserves had any value unless also specified what price the sup- ply would come out. fact, the only thing worth talking about connection with manganese ore price and the quantity that will come out certain price. should not overlooked that war time prices ranged from 80c. and high $1.10 per unit manganese. One feature the report the Sub-Committee Manganese was its forecast manganese ore tonnages that would come out ous price levels. The schedule constituted effect manganese index scheme, and tonnages were set down corresponding $10, $25, and $50 per ton. The American Mining Congress had contended that the tariff adopted 1922 would bring out from domestic sources one-half the needed supply manganese ore. The speaker and others the Geological Survey doubted that any such amount could produced the United States, and cited production figures for the last four years, showing how closely they compared with the estimates the Geological Survey. Silicomanganese Substitute for “Ferro” Joseph, superintendent and metallurgist the Bureau Mines experiment station Minneapolis, presented paper “Minnesota Manganiferous Iron Ores Relation the Iron and Industry.” its preparation Barrett and Wood were associated with him. the period 1911-1926 form ferromanganese and spiegel was used ton steel produced. While there had been fold increase the years the consumption manganiferous iron ores, chiefly produce basic iron, there had been decrease the pounds ganese required per ton steel. The average manganese requirements the steel industry next years will about 375,000 tons. The niferous ores Minnesota were discussed and stated that Minnesota can supply the needs for manganese pig iron for years. Manganes desirable basic iron because sulphur tion, better quality steel, saving — 7 slags the open-hearth, less lime and fluor- faster working heats and increased tonnage. Sev- methods designed produce ferromanganese from manganiferous iron ores are being the Bureau Mines cooperation with the Minnesota School Mines Experiment Station. The associated separated magnetically after the iron have been metallized converted into mag- view the large domestic deposits silicious ese ore, the possibilities using manganese- alloys place ferromanganese and ferro- should considered. While silicomanganese substituted for ferromanganese and ferro- silicon all cases, would well determine how far can rely upon silicomanganese times national emergency. silicomanganese can sold prices about equal those ferromanganese there fair chance creating market normal times. Manganiferous Ore Supply Match That Lake Iron Ores Carl Zapffe, Brainerd, Minn., manager the iron ore properties the Northern Pacific Railway Co., had prepared paper for the meeting, dealing with the “Reserves Lake Superior Manganiferous Iron Ores,” but was not present read it. The needs and probable supply manganiferous ores Lake Superior ranges were discussed length. Lake iron ores shipped 1902 were 26,000,000 tons; 1926 they were 60,000,000 the same period there was rise the use manganiferous iron ores from 269,000 tons about 2,500,000 tons. 1902 manganiferous ores were per cent all ores produced; now they are per cent. Since 1902 shipments such ores have been 28,266,562 tons. Taking the assured iron ore Lake Superior 1,200,000,000 tons (with probably 1,368,000,000 tons more available) the author figured that satisfy ron ore shipments 1,200,000,000 tons the next years there would needed, the per cent asis, total 48,000,000 tons manganiferous iron ores. This requirement, concludes, can easily met, competent estimates putting the Cuyuna reserves 44,000,000 tons, Mesabi 2,000,000 tons and Gogebic and Menominee 20,844,880 tons—a total 66,844,880 tor + ( } Sharp Passage Over the Manganese Ore Tariff somewhat heated discussion followed paper “Manganese Resources Relation Domestic Con- sumption” Reynders, New York. Liberal ‘xcerpts from this paper were given the last issue THE AGE, will suffice here mention nly its thesis. Mr. Reynders believes that present tariff should removed since tent develop American supply manganese, fact, the very little high grade ore exists. likely produce the rapid exhaustion ich moderate supplies are known. Betts and Miller both pointed out that Reynders’ analysis depended upon the present efinition manganese ore. Any innovation the allurgy ferromanganese spiegeleisen would tirely alter the statistics, would the development economical methods for the low grade anganiferous deposits now known. They favored the 4 Mr. resent tariff because responsible for high value manganese, which turn encouraged periments the lower grade deposits, and enabled sell its product price which ild pay for operations. Adkerson also warmly challenged the accuracy the atistics American reserves, saying that the prices due the tariff had encouraged out important tonnages high grade both Montana and Virginia. One pronounced result four years the present reduce imports manufactured ferroman- about one quarter the former amounts, lage, Manganese Non-Ferrous Alloys Corson’s (New York) paper this subject Dr. Zay Jeffries, Cleveland. noted that the pure metal manganese has com- mercial use. Little known about its properties. The high affinity for oxygen which makes valuable the steel industry, responsible for its use scavenger copper and brass castings. The minimum amount must used when treating pure copper, for residue 0.01 per cent manganese reduces the electrical conductivity 2.2 per cent. “Man- ganese bronzes” are frequently exploited for particular purposes; usually they are 60:40 brasses, having been treated with little manganese, sometimes little that none remains the finished alloy, and containing sizeable amounts other elements such aluminum, tin, iron nickel. Copper with per cent manganese makes alloy called “Manganin,” useful for coils scientific instruments, since its electrical characteristics are practically independent temperature. Manganese added the hardened aluminum alloys the duralumin family (0.75 per cent) and hard aluminum sheet for domestic utensils (1% per cent). Non-tarnishing silver alloys also contain man- ganese. Manganese Not Quantitative Factor Doctor Jeffries noted that while these special alloys require manganese metal, the percentage all them quite low, and the total consumption relatively insignificant. Cost the metal not the ruling factor; the known useful alloys simply require minimum amount manganese. Some alloy sys- tems have recently been studied far per cent manganese, and interesting properties developed which apparently destine them for future For instance, known that manganese restores the corrosion resistance magnesium, after alloying with aluminum increase its physical properties. Low Carbon Manganese Steels voluminous paper Sir Robert Hadfield was presented abstract Read. The studies covered the range from 0.6 83.0 per cent manganese, all with carbon less than 0.1 per cent. Some portions this system had been explored before. Hadfield worked series lb. ingots, and determined physical and electrical outstanding qualities were found which indicate any immediate commercial importance any these alloys. The principal gain clearer insight into the function carbon the present commercial man- ranese steel per cent carbon; per cent ordinary steels; increases the tenacity, responsible for the work-hardening phenomenon, and causes the changes heat treatment. Actual experiment, there- fore, has verified the conclusions reached theoretical met tallurgy. Alloys With 0.25 Per Cent Carbon John Howe Hall expressed the hope that the next systematic research would alloys containing about 0.25 per cent carbon. the present such steel containing about per cent manganese growing importance competitor with low- nickel, low-carbon steels for heat treatment, and would not strange higher manganese steels would equally useful. Social Features The meeting was followed dinner Tuesday eve- ning with attendance upward 125. The principal speaker was Brig. Gen. Dwight Aultman, United States Army. Prof. Boylston, Case School Applied Science, presided, and Homer Cleveland attorney, acted toastmaster. The Cleve- land committee gave luncheon Tuesday noon, which all who attended the meeting were guests. Wednes- day visits were Cleveland docks and number iron and steel plants. The General Electric Co., Schenectady, re- ceived orders during the first quarter amounting $77,580,581, compared with corre- sponding quarter last year. Net profits available for dividends during the 1927. period $11,671,- io The Iron Age, April 28, = Cuyuna ores are too closely | netite. 7 q 79 j Pension Plans Call for Careful Study Survey Metal Trades Association Shows Need Sound Financing and Actuarial Analysis* SURVEY conducted the National Metal Trades Association and series studies made its department industrial relations, covering nearly 500 its member shops all sizes its branches, indicates that approximately per cent its members have formal plans for the pensioning old employees. the shops with less than 100 employees, less than per cent operate formal pension systems; the shops with 100 300 employees, slightly more than per cent have pen- sion those with 300 1000 employees, more than per cent have pension systems; those with more than 1000 employees, approximately per cent have pension systems. Members not having formal pension plans are di- vided, almost equally, into three classes, regardless the number employees: Those who provide financial aid, where needed, the merits the individual case. Those who limit their assistance old employees pro- viding easy jobs such watchman, doorkeeper, etc. Those who have yet made effort toward providing for superannuated employees. That these members not have formal pension plans not proof that they have not studied the prob- lem. number are known have made careful studies and expended considerable money collecting facts before they decided not assume the burden any the older types pension plans, preferring wait until some better method for caring for superannuated employees was devised which the difficulties and un- certainties the older systems were eliminated greatly diminished. 9 Existing Types Pension Plans the present time, pension plans may consid- ered four general types—the informal, formal, actuarial, and underwriters’. Older plans are generally the first two types: INFORMAL PLANS The informal, benevolent gratuitous plan, under which the employee retired the discretion, and amount commensurate with the social status and previous earnings. Such pension plan may accepted through inference the basis precedents. FORMAL The plan, under which all legal obligations the employer may denied, but which lays down fixed rules for the retirement the employee. Sometimes, however, the employer guarantees, for the life the pensioner, any such pensions as may be granted to a particular em- ployee. The intent such cases make the act awarding the pension particular employee the con- tract, rather than the original announcement the plan. The cost this type pension plan usually borne part the active payroll. Another form plan this same general type that under which the employee contributes portion his salary (generally matched the em- ployer) toward the building retirement fund, which may part the financial structure the employing company may handled separately. very general criticism this form pension plan that there actuarial relationship between the amount the con- tributions and the schedule benefits. Modern pension plans are usually the following types: ACTUARIAL PLANS The actuarial plan, which, effect, sort self-insurance, which may financed entirely the em- ployer jointly with the employee. Under this plan with the guidance actuary, attempt made set adequate reserve meet liabilities they accrue. Often the funds are entrusted agency divorced from the company itself, either through board trustees trust company. Under this plan, the em- ployer alone, employee and ployer jointly, take the responsibility for administration and carry such mutual *Abstract report read convention National Metal Trades Association Detroit, April and 26. based study the committee industrial relations, assisted Odom, director department industrial relations. The committee composed Jacob Cox, Jr., Cleveland Twist Drill Cleveland, chairman: Coleman, Bucyrus Co., South Milwaukee, Wis., and Robert New- Worthington Pump Machinery Corporation, Holyoke, MASS. 1212 28, 1927, The Iron Age longevity, security principal, and interest invested funds. PLANS The underwriters’ plans, under which insurance companies sell “annuities.” Several varieties thege plans are offered, one being that under which the em- ployer purchases annuity for each employee the end every service year, the cumulative effect these an- nuities constituting the pensioner’s income. Ordinarily, the accumulation annuities continues until the in- dividual employee becomes eligible for pension, where- upon pension payments begin. If, for any reason, such death termination employment, the employee fails become eligible for pension, payments made toward the purchase annuities revert the employer. (When the employee also contributes the pension plan, such con- tributions revert that employee his estate.) Under another plan, the employer, employer and employee jointly, purchase small annuities outright and deliver them the employee concerned the completion each year’s service. Annuities purchased this basis are the property the employee and are payable when reaches the pension age, regardless when his peri employment terminated. Under this plan, payments are made case death. criticism the underwriters’ plans that they make provision for employees who have already completed 15, years service. meet this criticism, the in- surance companies sell annunities cover back service, which may paid for lump sum funded over period years. number other varieties underwriters’ plans includ death and total disability benefits addition benefits, but since such plans are merely combinations group life insurance and group annuities, for the sake clarity they will not discussed here. Financing Each the various plans mentioned above has its individual advantages and disadvantages, and the choice one preference the others largely matter judgment the part the employer. The merits various plans, the objections each, the value employees’ contributions, the schedule benefits, the retirement age, and similar points, are all important, but secondary the financing the plan. Funds must provided some way another meet pension obligations. This cost, any case, equal the pay- ments pensioners, plus the expense administra- tion, less such income received from interest invested funds. PAYMENTS PENSIONERS OFTEN EQUAL PER CENT PAY ROLL Irrespective how the pension fund financed, when payments pensioners begin they increase, rapidly, for two reasons. the first place, vious that the payments pensions granted each year must added the amount still being paid pensions granted previous years. there has growth the organization, and therefore the number and amount pensions granted each year approximately the same, the time will come when deaths among all active pensioners equals the number and amount the new pensions granted. that time the total pension payments will cease Assuming deaths occur accordance with tality tables used life insurance companies and the amount the pension paid each individual approximately the same, the pension curve will rising and the total pension payments become after the plan has been effect about years, total annual payments the end that period being slightly over times great the amount first year’s payments. This statement applies cerns which there has been growth, and therefore, the number persons arriving status each year might presumed remain fairly constant. The disturbing factor the situation that most successful industries have, during the Actuaries claim that pension status ordinarily lovment, not reached until after least years a & certain fairly constant percentage 100 men 1895 reach the pension status 1920, constituting the force 1900 will arrive status 1925, and that further payroll 100 men between 1900 and 1905 will result further increase per cent the number igible for pension 1930. These additions one the other, and wholly change the the curves total annual pension pay- Since requires period least years for attain maximum proportions when only the number persons employed the time the pension plan adopted considered, and any increase the number employees will followed years later increase number pensions, the reason clear for the statement frequently made that total an- pension payments increase with the persons employed and continue increase for more after the growth the business has and the number employees become constant. view this fact, not surprising that many pension plans instituted without sound actuarial advice have proved far more costly than was originally an- ticipated. Even plans with modest scale bene- fits, payments pensioners may easily equivalent per cent the current payroll, and there are re- corded cases which current pension payments have amounted per cent current payroll. What may happen inadequately financed pension ystems vividly illustrated rather tragic inci- dent which 1923. This occurrence was the lissolution the pension fund Morris Co., packers, FAILURE MORRIS CO. PENSION SYSTEM This fund, established January, 1909, was the contributory type. Officers and employees contributed per cent their salaries, the company contributing $25,000 each year until the fund reached the sum $500,000. Participation the fund was voluntary with respect old but compulsory with respect new employees. the event dismissal, the em- ployee was entitled withdraw such amounts had contributed the fund with per cent interest, compounded semi-annually. the event resigna- the employee could withdraw the equivalent his contributions, but without interest. Pension benefits per cent final salary for service were payable for life officers and employees who had completed years service and who had reached the age years, and, addi- one-half regular pension benefits were payable widow deceased pensioner until her death remarriage. maximum pension amounts were established. The fund was administered committee five, whom were appointed the company and three hom were elected the employees. This commit- was given the power amend the rules governing pension fund, but neither the committee nor pen- sioner had any right draw upon the funds Morris Co., all pension money being paid out the pension The company not only met the obligations cited above, but also contributed $980,000 addition, while the company personally subscribed 1923, the business Morris Co. was sold Co., whereupon the pension fund committee ‘istributed the funds, returning contributors their contributions, with interest, and announcing that pen- would paid for months and then cease for funds.” Suit was brought pensioners acting for them- others similarly situated. After trial the issues, the Circuit Court Cook County, 1925, dismissed the complaint for ant equity. This judgment was later affirmed Court Appeals. th the EXPENSE ADMINISTRATION PER Assuming that the payments pensioners the same under one plan under another, other two factors which affect the ultimate cost pension system are the expense administration and the interest return invested funds. The rates charged one large insurance company contemplate administrative cost per cent pension pay- ments (including cost acquisition), and guar- anteed that this cost will not exceeded. case the administrative costs are less, such savings are ef- fected revert the employer virtue the partici- pating clause the contract. The other item governing costs the pension plan the income received from interest invested funds, which course varies with the type plan used. instances where pensions are paid part the cur- rent payroll, interest has effect upon the actual cost the pension, there investment for strictly pension purposes. Under this method, the retirement employee years old who has completed years service and who receives pension $400 per year would, the average, cost the employer slightly more than $4,800. (The life expectancy man years approximately years.) instances where the pension purchased from insurance company the form annuity, com- pound interest reduces the cost. single premium annuity bought for employee pay such em- ployee $400 per year for the rest his life costs ap- proximately $3,800. Setting aside $3,800 for each employee who reaches the age paying $400 per year such em- ployees for the rest their lives may well become almost impossible burden any employer. There method, however, creating reserve through sinking fund which spreads the cost over period years and takes full advantage compound interest, which naturally reduces the pension burden. the case the employee considered above, the pension obligation could met setting aside $38.45 each year during the 40-year period employment. The cash outlay this instance $1,538, but com- pound interest (at per cent) operates for period years, that the age reserve has been built which will pay the pensioner $400 per year for the rest his life. The ultimate cost pension system lowered, however, the effect two factors, labor turnover and mortality. Funds accumulated for the pension employee who leaves the service the company for any cause ordinarily revert the employer, thus re- ducing subsequent deposits premiums. When pension plan first inaugurated, certain excess cost encountered providing reserves take care pensions for employees who have already com- pleted number years service. This extra cost called the accrued liability, and failure recognize and make proper provisions meet perhaps the most frequent cause for the change complete breakdown pension plans after they have been operation for some time. How Determine Eligibility and Amount Pensions Who shall eligible for pensions under existing plans seems largely matter judgment the part the employer, the usual requirements being certain length service and given age. Retire- ment ages range from years, being preferred. Usually there provision for minimum and maxi- mum age, retirement being voluntary the minimum age but compulsory the age. few instances, these limits may varied suit the indi- vidual needs the employee and the company, and effected mutual agreements. Obviously, when the retirement age not definitely established, the varying age pensioners the time retirement bound affect either costs amounts pensions. normal retirement age, therefore, seems prefer- able, with adjustments pension amounts made for earlier later retirement. Some employers operating pension plans require also that new employees, eligible, must hired below fixed age. This maxi- mum hiring age varies from years, being preferred. Length service required varies from years, the majority ranging from years. minimum years seems the most common requirement. There seem fixed ideas minimum and The Iron Age, April 28, — 7 — maximum amounts pensions. plans based pension amounts upon percentage the salary earned during the last few years service, but expe- rience has shown that accurate forecasts what scale salaries may attain years come cannot made. Since impossible set aside today definite re- serve which will meet indefinite obligation maturing years hence, modern pension plans seek mathemati- cally certain relationship between current deposits and future pensions. This accomplished basing pensions upon em- ployees’ earnings during the entire service period establishing fixed pension amount for each employee. this basis, the actual reserve set aside each year that determines the amount pension payable upon retirement. Employee Contributions Recommended would appear that recognition the value employee contributions from psychological well financial standpoint being brought about. The pres- ent tendency seems toward the contributory type pension plan with minimum pension all em- ployees and greater pension employees who volun- tarily subscribe the plan. Under plan this type imperative that the deposits the employer and those the employee kept separate and also entire- divorced from the finances the employer, thus assuring each employee that his individual deposits will used only for his own pension benefits, may withdrawn intact. Two incomes are provided pen- sioner under the contributory plan, one “service an- nuity” provided the deposits the employer, and the other “income annuity” provided his own deposits. The average life pensioner can predicted actuary, using the normal retirement age base, thus making possible the establishment ade- quate reserve. Such predictions are based upon mass experience, and there possibility that the actual experience small group will not what ex- pected. The larger the group concerned the greater the probability that its experience will conform the average. Labor Turnover Uncertain Factor impossible determine the exact number men working today who will remain the service until they reach the pension age; therefore the ulti- mate effect labor turnover pension plan costs cannot predicted. satisfactory treatment this situation for the employer provide cash reserve with respect each employee and release the re- serve when such employee leaves the service. This not always practical when employees with compara- tively short service periods are considered, and therefore desirable that reserves created for such employees they complete definite service period say five years, for example. Under contributory plans any employee, regardless his length service, may choose take advantage the plan and deposit his individual contributions. Under sound accounting theory, the employer should, course, make his de- posits annually, the liabilities are incurred, but practically, the high rate labor turnover among new employees often makes preferable that the beginning the employer’s deposits deferred for several years. When this done, the employer’s deposits will rela- tively greater, but the total number transactions involved will minimized. other words, contrib- utory pension plan with 20-year service requirement may involve contributions the employee over the entire 20-year period; whereas the employer’s