The Iron Age 1927-11-24: Vol 120 Iss 21

EIRON AGE New York, November 24, 1927 ESTABLISHED 1855 VOL. 120, No. 21 Cleaning Room Merits Study Various Classes of Foundry Work Call for Different Kinds of Cleaning Equipment—Handling of Pieces to Be Cleaned Important Consideration BY L. D. PEIK* progress from the makeshifts that were common 15 years ago. Founders have learned that there is real economy in improving their cleaning methods and in eliminating dust, but some of them still hesitate to invest in cleaning equipment because of the uncer- tainty of their production, which fluctuates consider- ably with the seasons and market conditions. More- over because of divergencies in production methods, in the routing of work and in costs, the same job or the same class of work cannot be handled in precisely the same way in different foundries. Despite the large variety of cleaning equipment and dust collecting systems now on the market, the specific needs of a given foundry frequently call for installa- tions that differ, at least slightly, from anything built before. While standard equipment should be adapted to the purchaser’s requirements so far as possible, the founder buying equipment should first study his problem in co- operation with an engineer. Such a joint survey will tend to prevent subsequent complications and will make additional investments in equipment economical. On the other hand, the improper use of a piece of equip- ment means a rapid decline in its serviceability, with a resultant loss of confidence between buyer and seller. Classes of Work That May Be Cleaned by Sand Blast In the metal industry there are several classes of work that can be satisfactorily cleaned by sand blast. In each of the groups in the table are listed a number of commonly known commercial pieces, including forgings and rolled products as well as castings. It will be noted that the products listed call for widely different finishes, as well as methods of handling. Pieces in Group 1 can usually be conveyed by traveling crane to an industrial car which runs on rails into a sand blast room. The overhead crane is also employed to turn the pieces over. In Group 2, parts, such as boiler sections, can be conveyed through a sand blast room by monorail trolley. Sanitary ware, including bathtubs and lavatories, can be handled economically on a turntable entirely inside a sand blast room or on a turntable that projects half way out of the room, as shown in the illustration. In Group 3, cylinder blocks, radiators, crankcases and journal boxes are often put through a tumbling barrel, but in a number of foundries a sand blast room served by roller conveyors has been used to advantage. Parts having irregular surfaces like rear axle housings may be economically handled on a turntable. Pieces listed in Group 4 are best cleaned in a sand blast barrel. | ae DRY cleaning room equipment has made real *Chief engineer, engineering department, American Foun- dry Equipment Co., Mishawaka, Ind. Parts in Group 5 may be too frail in some instances to withstand the tumbling action of a sand blast barrel. These pieces can be best cleaned on a rotating table fully housed and equipped with sand blast guns, which is commonly known as an automatic rotary table. Cer- tain classes of building hardware, forgings and gears, however, can be easily cleaned in a sand blast barrel. Rolled steel pieces included in Group 6 require spe- cial cleaning equipment. A variety of sand blast ma- chines for cleaning bar stock, pipe, flat stock and struct- ural shapes is on the market. Some progress has been made also in developing methods of cleaning sheet metal and bands. This equipment, in many cases, is necessarily of a custom built character. Group 7 embraces a wide range of parts. The selec- tion of cleaning equipment depends to a large extent oetvucunernvasneneagugunevevemnsonmmungnt esta sucsn: sox surtoeesnyecvencsenanenceagasts ¢ocnacDregnnamnercanneneneae/64sUPHLARDNSLABONOEO TENNER ELLE oteeQotte4H (451) EORMETGAREORABA RANEY CONOR PuLORL ruaEtY Ba Groups of Commercial Pieces Requiring Cleaning Locomotive frames Car castings Steam shovel castings Industrial crane frames Engine beds Pump castings - Gear rims Boiler sections | Sanitary ware ‘ di -weig , ces. Table tops 2. Medium-weight bulky piece | Aecmieranen: geatiens 1. Heavy frame-type castings; weighing 500 Ib. and over | Piano frame plates Heaters , Cylinder blocks Crankcases Rear axle housings Radiators Switch boxes Journal boxes { Pistons Car couplers Car knuckles Gears 4. Round and semi-round ma Carbureters 3. Medium-weight polygonal ~< shapes Hub castings Differential housings | Bearings { Drop forgings Resistance grids Meter boxes Building hardware Forgings Gears Stove plates Small, light flat castings and pressed steel work Alloy sheet steel . Bar stock for bands and 6. Flat sheets and structura tire rims steel Structural shapes (rusted) Bar stock and pipe (rusted) J Line materials Electrical equipment Hardware and tools Gas burners and stove legs Farm implements Drop forgings Pulleys Plumbing goods Light miscellaneous pieces 1433 on the production and finish required. Ordinarily good results are obtained by cleaning these parts in a sand blast barrel. Efficiency in Loading and Unloading Sand Blast Equipment Important Among the most important factors in the cleaning problem are the handling and transportation of the material, particularly the loading and unloading of sand blast equipment. A lack of loading facilities, as well as slowness in cleaning, has resulted in some instances in a replace- ment of the ordinary tumbling barrel by the sand blast. There has been considerable improvement, how- ever, in tumbling barrel practice. In a number of foundries the barrels have been suspended through an opening in an upper floor so that castings can be dis- charged into them from a dump truck or wheelbar- THE Blast Sand Room Operator Has Access to Five Sides of the Work and Can Play the Stream of His Gun from Almost Any An- gle. When a room is equipped with a table, the l ‘ \ operator cleans fa — ———————————— p i eces on the half of the table / inside while the Table half outside is being loaded lable .... v Partition row. After tumbling, the contents of the barrels are unloaded into a chute which deposits the castings on a series of grate bars for sorting and inspection. The stars are returned to the barrels by means of an elevator, the boot of which is located beneath the grate bars. The tumbling action, however, has a tendency to round off all sharp edges on the outside of a casting and sometimes fails to clean recesses or deep cores thoroughly. Tumbling, therefore, is not adapted to cleaning some kinds of castings. In foundries making radiator sections, for example, the specifications call for certain streamline beads and other ornamentations which, of course, must be preserved. Tumbling partly destroys these and fills the cores with stars, the re- moval of which means additional labor. Sand blasting, on the other hand, preserves the outer edges of the castings but is said to cost more than tumbling. The extra expense is due to the fact that the sand blast operation does not remove the cores in the radiator sections, necessitating an additional op- eration. It is believed, nevertheless, that a continuous production arrangement could be made to reduce the cost of sand blasting radiation. Sand Blast Room and Humane Cabinet Compared Among the various forms of sand blasting equip- ment, the sand blast room is adaptable to a large range of work and confines operations within a ventilated in- closure, retaining the good abrasive for reuse. The sand blast room lends itself to the use of various forms of material-handling equipment, including monorail trolleys, industrial trucks, turntables and grated or apron conveyors. The humane cabinet equipped with a turntable pro- jecting half way out of it is well suited for work not difficult to clean and with no inaccessible cores. In using this equipment an operator cleans the castings while a helper loads the table. Periodically the table is rotated to discharge cleaned work and to supply the operator with the next charge. The sand blast room has an advantage over the humane cabinet in that the operator in the room has access to at least five sides of the work and is able 1434—November 24, 1927, The Iron Age to play the stream from his gun from almost any angle to obtain maximum production. The objectionable fea- ture of the sand blast room is that the operator must wear a helmet as a protection from the abrasive and dust. On the other hand, the operator cf a humane cabinet stands outside, but he is handicapped to some extent by restricted vision and slight interference from the curtain through which the blast is projected. On flat work, such as sanitary fittings, these difficulties do not seriously affect operations. Automatic Rotary Table Effective in Handling Frail and Flat Pieces The automatic rotary table is very effective in han- dling work that is frail and flat, as well as pressed metal articles. In this type of machine the table, after being loaded, passes under a battery of guns in an inclosure and discharges the finished work in one rota- tion. The operator loads and unloads at the same time in some cases, and in other instances, where two oper- ators can be used conveniently, the loading is done by one man and the unloading by the other. Some classes of work must be turned over and passed through the inclosure a second time. All operations are automatic except loading and unloading. As the table rotates there is a steady flow from the guns. These are fed from a hopper above, which is continuously filled with abrasive. This machine, of course, has many mechan- ical parts, and its maintenance is somewhat more expensive than that of any other type of sand blast equipment with the possible exception of the sand blast barrel. Sand Blast Barrel Well Adapted for Round or Semi- Round Work The sand blast barrel, if properly equipped with loading devices and efficient guns, is particularly well adapted for round or semi-round work or for medium- sized polygonal pieces. Connecting rods, piston rings, pistons, wrist pins, stove legs and tops and plumbing fixtures are particularly well suited for the sand blast barrel. Gas and steam engine parts weighing less than Inclosure with . Vision Screen Rubber Curtain “wy sq * Proper Height Table \ Y Partition \ \ The Operator of a Humane Cabinet Stands Outside and Need Not Wear a Helmet as a Protection from Abrasive and Dust. He is handicapped to some extent by restricted vision and interference from the curtain through which the blast is projected 60 lb. each, and some classes of steel forgings, steel and gray iron castings, can be economically cleaned in this machine. Special attention should be given to the routing of work to and from the barrels and to the loading and unloading devices so that operations may be rendered as continuous as possible. Sand blast bar- rels can be operated by the ordinary class of help found in the foundry, and operations can be made as ideal from the standpoint of working conditions as running a machine in a machine shop. Compressed Air Should Be Dry and Air Lines Should Be of Ample Size Next in importance to the selection of the type of sand blast equipment is the compressed air supply. Air must be delivered to the sand blast guns as dry as pos- sible, and the air lines must be of ample size to pre- vent undue friction losses. It is often found that air is less efficient under high than under low pressure because of friction losses in the pipes at or near the guns. Compressed air is much cheaper than labor on the basis of actual work performed. If more air will shorten the time of cleaning by 10 min., a reduction is effected not only in labor time but in air flow time as well. Another important consideration in the cleaning room is the collection of dust. This should be done effi- ciently, especially in a tumbling mill or a sand blast barrel. The removal of all fine sand and dust during operations eliminates a cushion effect in the abrasion of the work. Dust removal from a sand blast room or a humane cabinet is necessary for clearing the atmosphere to permit vision. Dust should be removed from abrasive before its reuse because dusty abrasive is less efficient than clean, sharp sand. The velocities in the dust pipes must be sufficient to carry away all of the very fine sand but not small bits of iron, as they would destroy the screens in the col- lector. A cleaning room should be well maintained and well lighted, and should have good floors. A concrete floor around a sand blast unit is a good investment. Extra parts should be kept in stock for sand blast equipment subject to abrasion and wear. Such parts include gun nozzles, hose and fittings, sand valves and liners. Transverse Fissure Still a Mystery Cannot Be Traced to Composition of Rail, Says Report—Fissure Detector Proves Effective HERE is no inherent reason for attaching respon- sibility for the display of transverse fissures in rails to manufacturing conditions, either in the making or rolling of the steel, according to conclusions reached by the bureau of safety, Interstate Commerce Commis- sion, on the basis of investigations it has conducted. In the bureau’s report of an accident that occurred on the St. Louis-San Francisco Railway near Victoria, Miss., on Oct. 27, 1925, which was the most serious accident due to a transverse fissure since this type of fracture was first brought to general notice 16 years ago, the outlook for overcoming the formation of trans- verse fissures is described as not promising. Intense study has not yet detected any specific cause for their prevalence in one heat of rails and their absence in another of similar composition, nor why from a metal- lurgical point of view one rail should display a trans- verse fissure after a very brief interval of time in the track and another endure for a long period. It is logical to assume, says the report, that phenom- ena of this kind depend upon something else than a con- sideration of the initial physical properties of the rails themselves. The factors to be given consideration are the strains and stresses to which the rails are exposed. If proof attaches the causes of fracture to conditions of service, no other consideration is necessary to ex- plain the reason for the prevalence of fractured rails. It seems, however, that a means of detecting fissures in the track has been found, constituting the greatest accomplishment yet heralded, the report adds. Ref- erence is made to an electrical resistance device of Elmer A. Sperry, which is said to be capable of locat- ing fissures in different stages of development from those in area less than 2 per cent the area of the rail head, up to those that have separated the major part of its cross-section. The detector differentiates the in- terior fissures according to their sizes. The report concludes with certain suggestions to the end that the serviceability of rails may be improved: 1. Steel rails would be improved against the display of certain common types of fracture by the elimination of both internal and external seaminess. Internal streaks or seaminess in the head and external seaminess at the lower surface of the base are two critical parts in the cross- section of a rail. Improvements at these two places would prolong the lives of certain rails, Generically split heads and base fractures belong to the same type of rupture. Each results from the influence of a lateral force and each has its origin at a longitudinal seam or streak. Impinging wheel pressures set up simultaneous strains in two directions in the top of the head. One component tends to form transverse fissures, the other to form split heads. When lateral flow of the metal of the head encounters a slag or silicate streak, opportunity is presented for the formation of a split head. In the metal of the base crosswise service stresses in the flanges lead to longitudinal fractures which originate at seams or laps. After the same fashion that longitudinal cracks in the base are diverted and form crescent-shaped fragments, horizontal split heads are diverted from their courses and form compound transverse fissures. Vertical split-head fractures lead to the separation of the head from the web. These two causes of rail fractures, internal and external seaminess, furnish problems for the steel mills to overcome or minimize. Shrinkage cracks, in the heads and bases of rails, when and under what conditions they reach a maximum and rupture ensues, essentially constitute a research problem. 2. The railroads occupy a favorable position to acquire data upon the longevity of rails in respect to the display of transverse fissures. Material is at hand for comparing the properties of rails which have displayed transverse fissures at widely differing ages. The problem is to ascertain whether any physical, structural, or chemical factor is re- sponsible for the variable behavior of rails in the track or whether differences in longevity are due to undefined track stresses, 3. Research problems specifically referring to steel rails, or in fact to steels in general, are somewhat numerous. Basically, steel can be used for rails, because it is capable of acquiring and retaining internal strains. They are necessarily both of tension and compression. Of what does this common property consist? Can the presence of a strain, positive or negative, be recognized in any other manner than by permitting its release? Exhaustion of toughness may be reached with or with- out distortion of the grains. By what means can exhaustion of the ability to permanently elongate be recognized with- out subjecting the steel to its limit of ultimate resistance? When changes in density occur, what are the interrela- tions of the microconstituents? These and kindred queries present themselves in studying the mutual relations, causes and effects, of wheels and rails. Information upon these basic features would be a contribution to the physics of steels in whatever situation this important metal is used. In October, 1920, the Stearns-Stafford Roller Bear- ing Co., Lawton, Mich., equipped a Michigan Central Railroad freight car with roller bearings. The super- intendent of rolling stock selected the arch bar type of trucks as affording the most severe test. The car has been operated continuously and with the exception of three inner raceways which, on an inspection made Feb. 21, 1923, showed hair line cracks due to the heavy pressure used at that time in getting them on the journals, there have been no replacements. Orders for 1265 steel boilers aggregating 925,422 sq. ft. of heating surface are reported for October by the Department of Commerce. This compares with 1312 boilers of 1,152,265 sq. ft. in September and is consid- erably the lowest output for any month this year. For the ten months the total was 13,652, of 13,696,778 sq. ft. The Iron Age, November 24, 1927—1435 Price-Cutting Which a Buyer Curbed A Leaf from the Book of Trade Emphasizes the Consumer’s Interest in a Stabilized Market — Selling Methods That Bring Demoralization BY SAUNDERS NORVELL* Y careful, _ honest, straight thinking and the elimination of de- tails and side issues, almost every business situation can be boiled down to its essen- tial facts. Then the problem, which at first appeared com- plicated, is usually found to be a simple one. As we all know, on ac- count of the fierce compe- tition that now exists in this country, the reduction in profits and the continued high cost of doing business, many concerns are not espe- cially enjoying this era of profitless prosperity. These conditions lead to situations, particularly between competitors, that call for very straight thinking. It may be interesting for me to tell some of the cases that have come under my observation. They are actual business situations that I know have existed and are existing. One Cut Leads to Another In a certain industry that sells raw material almost entirely to manufacturers, one large producer, by a secret cut in price, took a very valuable account away from one of his competitors. Of course, when this manufacturer stopped buying from his original source of supply, they realized what had happened. As this concern was not any too strong financially, in order to keep their business going they very naturally offered a cut price to another manufacturer, this cut price being less than the cost of production. They secured a large order. This order would at least keep them going for a year, even if they did not make any profit. With this producer it was not a question of making profits—it had become a question of existence; a ques- tion of not shutting down the factory and going into the hands of a receiver. A third producer in the same line of business, learning of these cuts, issued a cir- cular in a spirit of retaliation in which he cut the price to the entire trade of the country—big and little. Now we have the situation where this entire in- dustry is on a price basis of less than the actual cost of producing the goods. In this situation, these several producers, in turn, with their cut prices each went after the business of a manufacturer who uses a large quan- tity of their goods. One would suppose that this manu- facturer would have been delighted at the opportunity to buy his goods at a lower price. Here was an oppor- tunity for him to obtain a raw material at a figure that would lead to a reduction in his manufacturing costs and, hence, if he maintained his own prices, to his making a larger and more satisfactory profit. It Was the Buyer Who Saw the Light However, imagine the surprise of these three pro- ducers when this manufacturer told them flat-footed that he did not wish a lower price. He told them, in fact, that, with conditions as they existed just at pres- ent, all of them were using exceedingly bad judgment to cut prices. This manufacturer said to them: “If you cut prices on your raw material, logically it will only *President Remington Arms Co., Inc., New York 1436—November 24, 1927, The Iron Age be a question of time until this price-cutting will travel to the manufactured product. Just now, we are making only a small profit on the manufactured goods and we cannot stand a cut in price. As manufacturers, what we desire more than anything else is a stabilization of the market. If you cut your prices and if we cut our prices, this cutting of prices will automatically lead to a curtailment of business because everyone knows that the general trade never buy freely on a declining market. “Now, gentlemen,” said this manufacturer, who evi- dently had his nerve with him, “stop and think this thing over. Do not quote us any cut prices. Go home and withdraw the cut prices you have already made. Do your level best to fix up the situation. We our- selves will not be parties to any plan to demoralize our line of goods, and the first step is to stop the people from whom we buy our raw material from starting the demoralization.” How the Buyer Reasoned Naturally, the position taken by this manufacturer, judged by common standards, was a rather original one In discussing the subject with him, I asked him to go a little deeper into his view of the situation. “Well,” said this manufacturer to me, “we are one of the largest users of this product in this country. Naturally, we have always enjoyed an inside price on account of the quantity of the goods we buy. We have never used this inside price in our sales price. We have set it aside as an extra profit and it has helped us in developing our business and in giving better service to the trade. “But don’t you see, if all these producers in this line sell their goods at cost or at less than cost, they are not in a position to do anything, either for them- selves or anybody else? When a market is demoralized and goods strike cost, the price is usually the same to everybody and even large and intelligent buyers can not obtain any special inside prices. Therefore it does not take much intelligence to see that it is not to the interests of a large buyer to see the market on any of the goods he uses go into a demoralized condition. Unfortunately,” said my friend, “there are a number of buyers who buy for large institutions who have not thought deeply enough into the subject to see the truth of this principle.” Under present conditions, I think there are a good many jobbers and manufacturers who should think over the above conclusion of my far-sighted friend, who is one of the most successful manufacturers in the United States—a man who, in good times and bad, has always managed his business so as to come out with a profit. It is curious, however, to see a large buyer who under present conditions was not waiting to accept a cut price, but who on the contrary recommended to the sellers that they come to their senses and stabilize the mar- ket on their goods. Receivership Competition Not Welcomed Here is another interesting case that has recently come under my observation: In a certain industry, there is a very powerful seller who, by reason of almost un- limited capital and a great variety of products, has, by cutting the prices in one department of his field, practically eliminated all of his competitors. There are only three or four manufacturers left in this field in the United States. None of these manufacturers is making any money. This powerful manufacturer an- nounced on a certain date that he proposed again to cut the price. One of his weaker competitors, who carries a large burden on his business in the form of bonds, went to this powerful rival and said: “Now, let us lay our cards on the table. Let us talk straight. You now sell a very large proportion of the goods in this line. You are selling these goods without any profit because you make profits on other goods that you manufacture in other lines. Just what is your object? Do you expect to kill off all of your competitors in this line and be the sole manufacturer of this line in the United States?” “No,” replied the powerful manufacturer. “Natur- ally, that situation would not appeal to me. Naturally I must have a certain amount of competition.” “All right!” said this weaker manufacturer. “Which would you rather compete with—a concern like ours in our present condition or a concern like ours in the hands of a receiver? There is no question whatever that if this competition continues as it has been, we are going into the hands of a receiver. If we do go into the hands of a receiver, I will probably be the receiver myself. Naturally, as a receiver for the business, I will be relieved of the obligation of paying interest on bonds and I can also escape from many other obliga- tions under which we now labor. In other words, don’t you see that as a receiver I could be a much harder competitor for you than I am at present?” Now, the curious point in this situation is that this powerful manufacturer never seemed to have thought of this. He was so busy with his other affairs that he had not thought exactly what would happen in the future if he continued selling this line on a destructive basis. Selling Policies Call for Hard Thinking Higher Up “But,” said I to my friend who was telling me these interesting things about American business today and who also told me that these cases were not uncommon; that, no doubt, there were many of them in the trade in all of the various lines, “isn’t it the object of these manufacturers today who are taking advantage of their strong financial position, to freeze out weaker competi- tors, to get the entire market in their hands and to be afterward in a position to advance prices?” To this inquiry he made the most surprising answer. “No,” said he. “I do not think that is true. What I do think is true in many industries is that the leading men—the men who have the capital invested—the real owners of the enterprise, when their businesses are in a prosperous condition have practically turned over the selling end to sales managers who are interested chiefly in making sales records. I am of the opinion that many of these sales managers in the United States today are doing things in the way of authorizing cut prices without thought of what it all means, and the heads of these businesses, in many cases, are not pay- ing close attention to the business. They take the re- ports of the sales managers. This merchant told me that in one industry he took occasion to call the attention of the head men in the business to some of the things their sales managers were doing. This led to an investigation of conditions upon the part of the heads of several large enterprises. These proprietors, who are older, who are mellower and who are not stirred up by the selling battle and all of the animosities and jealousies that arise in the selling of goods, got together quietly and talked over what their sales managers were doing. The result of this meeting was that the sales man- agers received the surprise of their lives in some of the instructions that came to them direct from head- quarters. Human nature is always human nature. All of us are very apt to be more generous on an expense account with someone else’s money than we are when we are traveling and paying the bills out of our own pocket. All of us, being human, are more inclined to cut prices when the loss of profits as a result of the cut comes out of the pocket of some one else! “In other words,” said my friend, “in my opinion, in the present selling situation in the United States, it is right up to the proprietors of the business to make a very thorough investigation of what their own selling or- ganization is doing.” The Preferential Buyer May Be a Source of Demoralization These reflections have all led me to think of buying and price-cutting. Some buyers with a 22-short men- tality, when they secure a special concession, delight in telling all the salesmen who call upon them about the cut price. This puffs up their vanity. How foolish they are. I know of buyers who, when a salesman calls, will tell him that his prices are no good; that he had better write home and get lower figures so he will be in the game. What happens after a foolish talk of this kind? The salesman does write home. He does influence his house to give him lower prices. Then he calls on the competitor of our buyer and sells the com- petitor at these lower prices. In other words, by the loose wagging of his tongue our Smart Aleck buyer is simply helping his competitor buy his goods 5 to 10 per cent cheaper! How well I remember that it was the policy of the Simmons Hardware Co. under I. W. Morton, that great buyer of the house, always to protect the seller on his prices. How well I remember when this house was en- joying a special rebate from a factory and other sales- men called, attempting to get the business, that they were told, not that their prices were too high; only that the house at that time just happened not to be needing any of the goods or had made other arrange- ments. In other words, it is one of the first duties of a good buyer to soothe the visiting salesman with the idea that his prices are entirely right and that other reasons besides prices led to the placing of the business elsewhere. How many buyers have ever thought this out? How well I remember, in one case where Mr. Morton was enjoying an especially satisfactory arrangement with a certain manufacturer, that, instead of buying all of his goods from that manufacturer, he bought the same goods in smaller quantities from other manu- facturers as well, the object of this buying being to cover up the fact that a special price was being received. Give Thought to the Welfare of the Industry Summing up the reflections in this article, it would seem that we should have a broader vision on the part of those in charge of sales and on the part of those in charge of buying than exists at present in many cases. All of us, in times like these, should think very seri- ously about the general welfare of the industry in which we are engaged. Paradoxical as it may appear, the manufacturer who comes around to the buyer with a cut price is not always the best friend of this buyer. This manufacturer is often an enemy to the welfare of the industry. All of us should get the principle in our minds that it is not always the low price that we receive which is the most advantageous. Low prices frequently lead to the demoralization of an entire in- dustry. In every phase of this industry, from raw materials through the manufacturer, to the jobber, to the retail merchant, progress only can be made on those lines of goods where manufacturers, jobbers and re- tailers are making a fair and reasonable profit. Progress can never be made when goods are sold at cost or at less than cost. The salesman who calls on you with a cut price is giving that cut price to your competitor. Often—in fact, usually—your competitor will use this cut price to reduce his prices. A cut price to you is generally followed by lowered profits. Let me repeat: It may be a paradoxical situation, but in many cases wise buyers, when a salesman offers them cut prices today, should ask: “Why the cut price? Are you giving it to every- body? What will be the net result of this cut price— not to us—but to our industry?” I think some of our selling friends will have difficulty in answering this question. The Bourne-Fuller Co., Cleveland, has issued a pamphlet containing revised lists and packing schedules for bolts and nuts, effective April 1 and July 1, 1927. The Iron Age, November 24, 1927—1437 Profits from Changed Methods Business Put on Paying Basis by Thorough Study of All Fac- tors, and Methodical Corrective Program—Policies Enlist Active Cooperation of Employees BY JAMFS W. HOOK Nov. 17 and 18, some of the proceedings of which are reported elsewhere in this issue, was \ N outstanding contribution to the third New England Conference, held in Springfield, Mass., an address on “Revitalizing a Business,” by James W. Hook, president Geometric Tool Co., New Haven. The methods pursued in putting his company on a profit-earning basis, as outlined by Mr. Hook, are given in part in the following paragraphs: HAVE been persuaded to tell you the story of the revival of a small New England metal-working concern. The company is one of those fine old New England concerns which started on a shoe-string many years ago and grew to health and vigor long before the World War began. Then it rather ran off its races and, in the confusion of the times, laid the foundation for a period of serious depression following the war. Its troubles were many and varied, perhaps not unlike those experienced by thousands of other plants at that time. The principal difficulty was, in fact, that the company was not making money and, therefore, was not successful. It might be interesting, before going into the story itself, to show how the new manager approached his problem and what were his basic thoughts on the sub- ject of solving it. He believed that the success of any business could be resolved into a simple formula in which earnings equal sales volume less all expenses. By the token, he believed and still believes that a success formula can be presupposed for any unsuccessful business. If a business is not successful, then the first thing to do to make it so is to predetermine a success formula for it, and set about at once to bring fundamental factors into line with the presupposed values. Profit, permis- sible in any business, always has a fixed minimum rep- resented by the smallest amount of money required to pay dividends and replenish surplus. Profits equal sales volume less expenses: therefore, to increase profits, one must either increase sales or decrease ex- penses, or do both. By expenses is meant both labor and material cost, as well as all fixed expenses. When the bare success formula is developed, it is then necessary to observe and record all important factors which will contribute to an increase in sales— such, for instance, as increase of prices, increase of consuming customers, increase of product sold, etc. It is also necessary to analyze expenses, list what the actual expenses are and start a determined drive to reduce them. One must always keep an eye on the final results to be attained. Sometimes judicious reduction in selling prices will increase volume of sales sufficiently to increase profits substantially; sometimes an increase in one direction will bring about a larger reduction in another. An increase in selling expenses may reflect itself in a sales- volume increase sufficient to warrant the expense. The careful balancing of these figures, the judgment used in placing values on different items, and above all, the ability to make each item of expense produce some- thing worth while, determines whether or not the pre- supposed success formula will be met. Once a manager knows just what profit he must have, and what sales volume and expenses can be al- lotted to produce those profits, he will usually find some way to bring them into proper relationship. How often do we see the “would-be” manager paw around over a broad-topped desk, slicing some expenses here, increas- ing a selling price there, firing this one and that, and thinking he is putting his business on its feet. Dis- gruntled, distracted and insane boards of directors often do the same thing. Success in reviving a sick business 1438—November 24, 1927, The Iron Age is not accomplished that way. When a business is sick it must be treated as a sick thing, and its trouble diag- nosed and scientifically and methodically treated. Reduction in Stockable Sizes of Cutters Doubles Inventory Turnover In the business I have been asked to tell about, the new manager found some ridiculous conditions pre- vailing. Not only did he find a sick business, but a sick industry as well. In the first place, he found a bad competitive situation. In the second place, he found every competitor attempting to carry almost every conceivable type of cutter in stock. He found that his own company had made 55,000 different kinds of cutters in the past few years, 53,000 of which represented only 20 per cent of the sales volume. Of the 2000 cutters which represented 80 per cent of the sales volume, he found that about 400 sizes represented 90 per cent of the 80 per cent. In other words, of the 55,000 different sizes manufactured dur- ing a few years previous, 400 sizes represented 72 per cent of the sales volume. More amazing still, the unit selling price, size for size, was no different on the 54,600 sizes than on the 400. When this amazing situation was submitted to all manufacturers in the industry, it was confirmed pro- portionately by all of them. From here it was not a long step to the Division of Simplified Practice of the Department of Commerce, which cooperated with the industry to the end that stockable sizes were reduced to even less than 400—about 200, in fact—and the re- maining sizes placed on a special non-stockable extra- price basis that made them yield some profit. The effect of this move upon the company in ques- tion was to reduce the total inventory, including fin- ished goods, raw material and work in process, to less than one-half of what it had been, thus admitting of about four and one-half inventory turnovers a year in- stead of approximately two. The money released was used to retire more than one-half of the company’s out- standing preferred stock, with a corresponding notable reduction of fixed expenses. During the negotiations, the undesirable competi- tive practice of trading out competitive tools was done away with. Perpetual Inventory System Improved These two things alone were sufficient to put the business on a paying basis. Still more, however, was done. The company had maintained an elaborate per- petual inventory system. With 55,000 different kinds of items, to say nothing of the changing quantities of each, it had, indeed, to be elaborate. But it was not used for what a perpetual inventory should be used for. When asked the question, the head auditor replied that it was maintained so that the books of the com- pany might be closed monthly, and a balance sheet prepared. He did not realize that the more important value of a perpetual inventory is to show currently what the sales are of each kind and size of product. Today that perpetual] inventory enables the com- pany to manufacture inventory on a six weeks’ basis. In other words, new orders for goods to replenish in- ventory are based on a six-weeks’ supply. This means that the total finished inventory is turned over prac- tically every 11 weeks during the year. There is not much danger of getting obsolete stock in any inventory run on that basis. And when one eliminates obsolete stock, one eliminates a great item of expense. Because the simplified practice policy enormously reduced the number of items formerly carried in stock, the cost of maintaining the perpetual inventory was likewise greatly reduced. Adoption of Closer Tolerances Had Comprehensive Effect Another order which went into force almost at the outset of the company’s revival was what became known around the plant as the “ten thousandth of an inch idea,” as compared with the “thousandth of an inch idea” which had theretofore prevailed. To some this seemed a little contradictory, i.e., suggestive of small- ness, or narrow-mindedness, when the opposite was meant. But the shop did not look at it that way. To the shop it meant harder work and better product. Starting a plant to operate on a ten-thousandth of an inch basis, when for years it has been operating on more liberal tolerances, in itself introduces many problems. In this plant it meant better machines, bet- ter jigs, dies, tools, fixtures, more and better inspection tools and methods, better and more skilful workmen. Most important and difficult of ail, it meant a different plant psychology. When the plant saw that it must not only make its product better, but that it must also make it quicker, to compensate for reduction in inventory, and give satis- factory service to customers, some of the old-timers threw up their hands in despair. But when the word went around that no department would be denied equip- ment which, in the judgment of the engineering depart- ment, was necessary to meet the new and more strin- gent requirements, the situation eased a bit. Soon it was whispered about the plant that a man’s failure to meet the new tolerances would be a personal failure. How could it be otherwise, when no strings were tied on the equipment he would be given, once it was shown that new equipment was necessary? At the same time, every man knew that he had to “sell” the engineering department his reasons for asking for new equipment, and that new equipment, once ordered, must do the trick or else reflect against the department head who requested it. The results were, of course, that old and worn-out machinery, jigs, tools, etc., quickly passed into the discard, and new and up-to-date equipment was in- stalled in their places. Some of this new equipment so increased manufacturing efficiency, as well as accuracy, that one new machine in one instance replaced six old ones, and in another place one machine replaced four others. It was amazing to the old employees of the plant to see how badly the new equipment was needed. Significant Savings from New Equipment The immediate result of installing new equipment was a reduction of almost 15 per cent in the number of men in the plant, and a large reduction in manu- facturing floor space required. The reduction in floor space was so great that it was possible to put all sec- ond floor manufacturing (about 15,000 sq. ft.) on the first floor, and to group it around the inspection depart- ment in a way to permit progressive manufacture throughout the entire plant. This allowed the manu- facturing processes to start with the raw material at one point and move from department to department in a direct line to the shipping floor. It was heartening to note the new interest which began to show itself throughout the plant when the new policies began to bring results. Ideas came from al- most everyone. Some of the finest improvements in jigs and fixtures were suggested by workmen and fore- men. And improvements are still coming in. Only recently the engineering department hit a snag on the design of an important tool which the company wished to add to its line. Someone spoke about it in the shop. In less than two weeks one of the foremen brought a finished tool in working order to the chief engineer. It was just what the company wanted and, best of all, it was basically different from anything on the market and, therefore, patentable. Needless to say, that man was handsomely rewarded, as others have been who have devised practicable means to better the company’s product, or reduce cost of manufacture. Materials Testing Laboratory Installed Skill alone will not make a good product, the ma- terial going into a product being equally important. Almost at the beginning the new management estab- lished a laboratory to test materials before accepting them. Today, every bar of steel which goes into the plant is placed in quarantine, as the plant calls it, until an end can be sawed off and tested. If it passes the test the bar is accepted. Likewise, every tool used on the manufacturing floor is inspected for accuracy before it is accepted. Vigi- lance in these directions, together with the new and more accurate equipment and the feeling that rapidly grew. on the men that they could do better work, has tended to cut spoiled work costs by almost one-half. Here again was a big reduction in expense. The immediate effect of demanding closer toler- ances on work was to reduce man-hour output. The management paid little attention to this until the shop was fully sold on its ability to live up to the new limits of accuracy. When that moment came the effort was made to speed up the work. Piecework was installed at rates which were attractive, and the output per man went up, as it always does when piecework on a proper plan is introduced. Active in Sales and Engineering Development Work While all the above was going on a powerful cam- paign to increase sales was in progress. New salesmen and service men (with emphasis on the “service”) were put into the field. Others were put into the shop for training. New tools were designed and old designs were improved. In the last four years the company has put an entirely new and improved line of product on the market. The new line represented basically new Witt i YALU 4S QULANLENAUGBRNEOATONELL UH VEUTUNUAGULELAC ANH cUAERARSUAROGUUEAAORTOROMG SUH QULNEUG AULA 1304040004410 0 ASEAN AMES WILLIAM HOOK was graduated in engineering from the lowa State College. In 1916 he became identified with the Allied Machin- ery Co. of America, which he served in turn as vice-president and presi- dent and through which he became prominently identified with the war activities of the American International Corporation, particularly in supplying the Allies with machine tools during the World War. he became president of the Geometric Tool Co., New Haven, Conn., maker of precision threading tools. papers and in 1919 was the author of a notable paper read before the Foreign Trade Council at its Chicago meeting. HIM ANN TPN AAEM AN ES AENEAN EEA OURS NEUNTLE NSS HA NG LOMN BEIT He has contributed to various business In 1923 01 BUDE UUQUTRON POETS S2ASMUGATE LS ELON eT TEER DORE NOPE ND The Iron Age, November 24, 1927—1439 features which were popular and patentable. The re- sult was that the company’s sales substantially in- creased. I cannot run over this accomplishment of the com- pany without paying a tribute to the ergineering pro- fession. A company nowadays cannot possibly remain up-to-date without good engineers whose entire duties are to design and try new things, and watch the ad- vance of the art all along the line. One of the greatest achievements in the metal-working field in the last four years, I believe, has been the development of manufacturing to gage accuracy on a production basis. In the company I am talking about the tolerances allowed today are, in many instances, less than one- third of what they were three years ago. Thousandths of an inch are, indeed, rapidly giving way to tenths of thousandths of an inch, without increase in cost to the user, or much increase in labor cost of the product itself. But a product made to such accuracy works well when it is sent into the field. This is attested, in the business I am telling about, by the great reduction in returned goods and in service expense. The curves of these last two items, even during the last 12 months, have fallen almost to the base line. Here is an ex- ample of where some added expense in the factory re- sulted in a greater reduction in expense in selling and servicing. Today the mental attitude of the whole organiza- tion is different. It feels that it has accomplished re- sults. It is proud of its ability to work to close limits and, what is better, it knows it can do it. Only recently the management passed out word that a limit on one particularly important operation was too great and that it must be cut down. The men thought it would be difficult to do this and that closer limits would greatly increase rejections and cost. Be- fore giving final orders it was decided to record the limits on the operation for a week, just to see how many pieces would not come within the proposed limits. Imagine the amazement of the workmen when it was found that approximately 98 per cent of the pieces were within the proposed limits anyway. This fact greatly pleased the men and ma