The Iron Age 1933-04-13: Vol 131 Iss 15

r 45 wire less, f §1 The . by s of un- ring ars 2 of the to um, 10r- ).70 and 10n his wn, dit ing nce ind ppi ew Zo an ili- ter \n- lia ins ‘il- led as m- 00 4) nt ts it, d- er v- t- 1e t- le A- i- al a) ..THE IRON AGE.. ESTABLISHED 1855 APRIL 13, 1933 Vol. 131, No. 15 Training the Sales Telescope on Tomorrow's Markets The current article is the thirteenth in our general series devoted to Modern Merchandising and Marketing in the Metal-Working Industry. [wn story is told of a tramp who went to sleep one night on a haystack. During the night there was an earthquake of major proportions, but the weary sojourner, tired by the previous day’s peregrina- tions, cushioned by the hay and pos- sibly made somnolent by a pull or two upon a potent potion before re- tiring, slept peacefully through the disturbance. Next morning, waken- ing upon an altered world he rubbed his eyes in wonder. For a recently adjacent barn had completely disap- peared; where the sun had set last night behind a mountain there was now a valley; at his feet ran a river where before there had been a dry cornfield. “My,” exclaimed the peripatetic pilgrim, “how things have changed around here!” Earthquakes alter landscapes. Economic earthquakes are no excep- tion. If any of us had been so fortunate as to have slept undisturbed through the past three years and had awak- ened today, he or she would be amazed at the changes that have taken place in the economic landscape due to the series of jolts that have shaken us. Having experienced these changes gradually, we do not realize the dras- tic alterations that have taken place. These alterations have completely changed our economic landscape. They will affect the lives and actions of every one who makes, sells or buys in the years to come. They are of particular import to you who are here tonight, for you must find your Sales roads, or build new ones, upon and among the debris of altered or demolished markets. By JOHN H. VAN DEVENTER Editor, The Iron Age HE sweeping economic changes of the past three and one-half years have placed a pre- mium on adaptability. Old rules, old precepts, have gone into the discard. Industry must again get its bearings in an altered world. Its greatest task will be to perfect its distribution machinery. The new demands that merchandising will make upon the executive are outlined in this article, which is an abstract from an address be- fore the Cincinnati Association of Industrial Marketers on March 31. wvrTvv Let me introduce to you, to help the visualization, Mr. Rip Van Winkle, Jr., who went to sleep in September, 1929, and woke up a few weeks ago. Rip is, or was, a salesman. On the eve of his 34-year nap he had re- turned from a trip to his factory where he had gone to attempt to ex- pedite the delivery of orders for some of his customers. Not having been able to secure a lower berth or a com- partment or drawing room on two days’ notice on any one of the three sections of the Century, he had sat late in the smoking compartment, observing through the window, as the train sped past towns and cities, the myriad lights of the many fac- tories operating on night shifts. Lighting a Corona Corona, Rip placed his twenty dollar shoes upon the ad- jacent seat and comfortably smoothed the vest of his hundred dollar suit in the vicinity of a recent three dollar meal. The world was a pretty good place, reflected Rip, glancing at his order list, especially since the com- ing of the new prosperity era. Nowa- days, a good man could get what was coming to him. If not in one place, then in another. Witness the three offers he had in his pocket from com- peting firms who recognized a good man when they saw one. Rip arrived at the office next morn- ing in time to write and thank six customers who had mailed sizeable orders during his absence, and then argued the boss into giving him a thousand dollar raise on the strength of his offers from competitors. On the way home, he stopped and made a deposit on a new custom-de-luxe sport model coupé. Then he went home and went to sleep. Being a Van Winkle, he made a good job of it. He slept for three and a half years. When he awoke next morning, or at least it seemed to him to be next morning, Rip heard newsboys shout- ing on the street under his window. “President Roosevelt closes all banks in the United States.” “That news- boy must be crazy,” thought Rip, rub- bing his ears. “Teddy Roosevelt went out of office in 1909.” Determining to get a paper and see what it was all about, Rip jumped out of bed and hurriedly dressed. When he reached the street, he found that the newsboy had disappeared. Glancing at the window of the haber- dasher from whom he had bought his $100 suit the week before, he saw its replica on exhibition. On it was a placard with the words “$17.50, alter- ations $1 extra.” Next door was the restaurant where Rip was in the habit of breakfasting —or had been. Now it was a vacant place with a “to let” sign in the win- dow. As he wandered down the block, Rip noticed that fully half of the stores were vacant. “Strange,” he thought, “only a few days ago space in this locality was at a premium.” Losing all appetite for breakfast, Rip hurried downtown to the office building in which his company made its district headquarters. Here, too, he experienced a shock which made him doubt his own senses. Gone was the ornate gilt lettering which an- nounced that within was to be found the exclusive Eastern representation of the P. D. Q. Mfg. Corpn. Indeed, overnight, these letters had changed into “Cohen, Cohen, Cohen & Cohen, Attorneys, Collections a Specialty.” Rip and His Blue Chip Stocks Finding himself, overnight, so to speak, without a job did not bother Rip as much as it puzzled him. For he had been canny in business mat- ters. He had accumulated a respect- able bank account and some nice blue chip stocks. He should worry! What the newsboy had shouted that morning had slipped his mind. “Guess I'll go to the bank,” said Rip, “and get some cash.” So he beat it to the XYZ Trust Co. But the ornate bronze doors which heretofore had connoted the spirit of stability and safety were shut. And upon them was a little card announcing that the bank was in process of liquidation and in the hands of the State superintendent of banking. Inquiry at the adjoining cigar stand revealed the unannounced fact that the bank president and principal officers had recently become guests of the State prison warden. Somewhat staggered by develop- ments, our friend Rip turned, in last resort, to the blue chip nest egg. Quickly he took a newspaper from the newsstand and turned to the financial page. How could he believe his eyes? Here was New York Central, for which he had paid 237 a few days ago, now listed at 20. Here was United States Steel, which had closed last night at 256, now at 32%. And he had bought these stocks expecting to double what he had inside of six months. Stunned and shocked and in need of stimulation, Rip reached in his pocket for a Corona Corona. Last night he had filled his cigar case 574—The Iron Age, April 13, 1933 with them. But they did not look the same. Examining the labels, he ex- perienced the final shock. For the Coronas had turned to Cremos! Presently we will take leave of Rip, for he has served our purpose in portraying a few of the mighty changes that have come about. Suffice it to say that it is well for us, per- haps, that we have come into our present condition gradually; that we have had adversity thrust upon us not suddenly, but by degrees. The gradual process may have obscured the contrast between conditions then and now, but at least it has given us time to get acclimated. The Turnover in Industry lf Rip, an industrial marketer, had not jumped off a bridge on the afternoon of the day on which he wakened into a new and altered world, we might have accompanied him on a trip through his sales ter- ritory, provided he had found a job. What would have impressed him above all, on this first trip, would not have been the difficulty in making sales, or the fact that even “hand to mouth” buying had abdicated in favor of “chin to lip” purchasing. Nor that the nor- mal usage in credits and collections had been violently uprooted. Nor that the buyer set the seller’s price. Nor that the manufacturers seemed eager to forget all profit and in addi- tion to present the buyer with a few dollars drawn from surplus as a premium on purchases. Strange as these practices would have seemed, the strangest of all of his experiences would have been the great turnover in customer contacts. Familiar faces were gone—scattered, as it were, to the four winds, and in their places were strangers “who knew not Joseph.” Old companies which he had known and contacted for years were padlocked by business prohibition. Old timers who had known his sales story as well as he did, who knew the advantages and limitations of his product perhaps better than he had known them, were no longer at their accustomed desks in surviving plants. Their places had been taken by younger men who were primarily quotation takers, or their functions were taken over by higher executives whom Rip had never met. A big sales job to do all over again with perhaps 30 per cent of his pros- pects, due to turnover of personnel. And this, in addition to a vastly more difficult selling problem due to the radical turnover in thinking which had frozen the customers’ will to buy. A coat of armor surrounding buying influences and buying authority, in- visible but real, mental but as im- penetrable as hardened steel, built up, layer upon layer, by 42 months of retraction, retrenchment, reduction in never ceasing economy, retreat. And sellers, suffering from the same economy psychosis, pecking away at this new resistant barrier with sales tools of far less power and efficiency than were used in the easy times be- fore these barriers were built. Time to Take Off the Brakes and Step on the Gas The car of business has been going down a steep hill for three and a half years. Management has been putting on the brakes so long and so continu- ously that in many cases the wheels of organizations are locked. It was necessary to use the brakes, the economy brakes, on all four wheels to keep us from running into the ditch of deadly deficits. Also, in descend- ing this continuous decline, there was, apparently, nothing to be gained by feeding sales fuel to the motor. So the sales gas was turned off and pro- motion allowed to coast. Boards of directors, company offi- cers, executive committees, bankers interested in industry, set the econ- omy brakes. They ruled that there must be a minimum of expenditure, in other words of buying. Economy became the watchword and the slogan for appropriations became the famous French World War expression of Verdun. You remember it. “They shall not pass.” But every situation has two sides to it. In ruling that there should be a minimum of buying, the directing forces of industry and business auto- matically ruled that there should be a minimum of selling. Ruthless econ- omy, viewed from the rear, spells busi- ness suffocation. Of course, with characteristic American individuality, each organiza- tion expected to be the exception. It wanted to curtail buying but to keep on selling. But there were too many similarly minded individualists. And so rugged individualism became ragged collectivism—a collectivism of retreat. Nobody bought; hence, no- body sold. Now mind you, I do not question the use of the economy brakes in go- ing down hill. They were necessary. My point is this: Once the bottom of the hill has been reached, the brakes must be released and gas fed to the Sa ale ek ee as rr «ae lesks had were their gher met, gain oros- nnel, more the hich buy. ying , in- ; up, s of ‘tion reat. ame y at sales ency | be- Step oing half ting inu- eels was the s to itch ond- was, | by So pro- offi- Kers -on- ere ure, ymy gan ous of hey ides | be ing uto- be usi- stic iza- It eep any {nd yme | of ‘ion go- ry. of kes the motor if there is to be any hope of climbing the upgrade ahead. We are on the bottom now, there is no doubt about it. The one direction that we can go is up. The trouble that we are going to experience in getting sales moving again is that many of our prospective customers have kept the brakes on so long that they have forgotten how to release them. Many of them will wait, in vain, for President Roosevelt to come along with Uncle Sam’s ox team and pull them up the hill. “God helps those who help themselves” and the Government won’t help those who can and don’t. Our problem is not to condemn economy, for true economy will and should be the watchword for a long time to come. Our problem is to define true economy and to expose false economy. There is economy blindness as well as color blindness. An Example of False Economy The economy and_ retrenchment psychosis which has affected the mind of industry and business has lost its power of discrimination. There is no better example of this than in what has happened to the machine tool in- dustry. What would you think of the in- telligence of a community visited with a pestilence, which would refuse to pay the small fee required for a known and recognized anti-toxin which would provide immunization and _ relief? Unthinkably false economy, of course. But not more unthinkable than the actual experience of the machine tool industry. From 1900 to 1922 we increased our national wealth in the estimated amount of 232 billion dollars. Two and a half times as fast as our in- crease in population. How was this done? By hocus pocus, financial legerdemain, legislative wand waving or taking land from the Indians? Nonsense. Every dollar of that in- crease above and beyond the normal due to growing population came through the more efficient transforma- tion of nature’s raw materials into finished products for man’s consump- tion. How did we get more efficiency? Primarily through improved ma- chinery, through cost reduction, through making the buying dollar go further because of the progressive cost reduction of both agricultural and industrial products. Prosperity is not a hand-made product; it is machine made. And the machine tool is at the root of it. Yet in the light of this experience, what happened? During the past three and one half years, we have lost an estimated 80 billion dollars of na- tional wealth. Did our industries, to compensate for this, turn to the wealth-creating anti-toxin which would have counteracted the ravages of this wealth-devouring pestilence? Did it take advantage of the improved machinery which would have offset this loss through progressive cost re- duction? Ask the prostrate machine tool industry, now flat on its back with a sales deficit of more than 100 million dollars since the depression— an industry, which, if the industrial public differentiated between true and false economy, would now be working overtime providing the wealth-creat- ing means to make up our staggering losses. Truth and Simplicity We must get the brakes unlocked before we can start climbing the hill. The biggest and toughest sales job that we have ahead of us is not mere- ly to convince our prospects of the superiority and desirability of our products. Many of us have already done that and yet it does not result in sales. We cannot buck the univer- sal need for economy in these days of reduced corporate and individual incomes. What we can do and must do is, first, to become converts our- selves to the doctrine of true economy and then to become ardent and in- telligent missionaries who will carry this doctrine and belief to our pros- pects. The “buy now” and “buy more” campaigns failed, as they should, be- cause they did not discriminate be- tween true and false economy. Neither you nor I believe in them; they did not ring with truth. Truth is based upon knowledge. And knowledge changes with the times. If we are to be armed with the truth that will carry real con- viction to our customers today, we must all go to school again. We must forget many of the things that we thought we knew about selling, about our products, about our prospects, about our customers, about our com- petitors. For these things have changed, in themselves and in their relationships. We must catch up with them. Propaganda has no appeal today. Former prestige has largely lost its force, for the public has seen some of the mighty fall from their pedes- tals. The varnished and decorated fragment of truth which may have served as a sales message yesterday will be unheeded today and tomorrow. Complexity of thought and expression is in the discard. Our people are surfeited with deviousness and am- biguity. But they are hungry for truth and simplicity of expression. Witness the technique of that master salesman who is our new President. Let’s take a lesson from it to apply in our own businesses. High Wages and Prosperity While we are talking about false economy, let me say a word or two about wages. There has been much controversy on this subject. It seems to me that there is a common-sense way of looking at it. Most of us have favored the highest possible wage consistent with a living wage for invested capital, not merely from a humanitarian standpoint, but from the practical standpoint that wage earners comprise our largest collective market. If we are going to sell lots of automobiles or shoes or breakfast foods or what have you, we must look to the wage earners for our principal market. On the other hand, wages must bear a definite relationship to the obtain- able prices for the goods that the wage earner makes. It is futile for management to say, “we will pay not less than so much per day to our workers,” unless it also declares, “we will accept not less than so and so much from our customers in the way of price.” Suicidal prices must in- evitably mean starvation wages. But the wage question goes deeper than these obvious generalizations. As Lincoln said, “This nation can- not endure half in slavery and half free.” It is equally true that no economic equilibrium can be main- tained so long as the bricklayer, hod carrier or other member of an or- ganized trade can command through dictation a day’s pay of four or five times the amount paid to the farm laborer or other unorganized worker. Unjustified pay differentials, secured by mass pressure, restrict instead of broaden markets. Our future pros- perity lies in the buying power of the average consumer, not the exceptional and restricted classes. The new deal in the interest of the forgotten man must consider the interest and buying power of the man outside of the labor union as well as the man inside of it. Because you are vitally interested in marketing and because the wage earner will constitute, directly or in- directly, a major factor in your future markets, I want to dwell a bit longer on this matter of wages. You have heard many explanations as to the cause of the depression. Most of them ascribe it to over- (Continued on Advertising Page 16) The Iron Age, April 13, 1933—575 PONE age meh ee a Trend of Sh entirely mechanical mill for roll- ing sheets, one is immediately impressed by the efforts of mill own- ers during the past five years to over- come the handicaps imposed by the manually operated mill. The mech- anization of these mills has _ pro- gressed backwardly from the finish- ing end of the plant toward the roughing side. This, of course, is entirely reasonable and proper, since with the advent of the continuous mill (which has been most successful on the heavier gages of sheet) and also owing to the installation of three- high roughing mills, mill owners have been compelled to mechanize finishing equipment immediately to care for the heavy increase in ton- nage of roughed sheets. T undertaking this study of an Other mills which have not been fortunate enough to possess an adaptable plant layout, whereby, say a three-high rougher would reason- ably fit in, have changed their lay- outs and use two ordinary roughers to feed one mechanical finishing mill. This method has naturally increased tonnages, but has not been of max- imum advantage when considered from the angle of decreased costs. Likewise, the size of the available sheet bar has kept many mills in the manually operated class. The 8-in. wide bar was the natural outcome of the demand for a sheet bar readily portable, and when rolling finished sheets of 30-in. width and 8-ft. length the bars were readily and quickly passed about. In order, however, to comply with demand of the automo- tive industry the size of sheets has jumped considerably, till now the de- mand is for 36, 40 and even 42-in. widths. The lengths, too, have steadily increased from 8 to 10 ft. and even to 12 ft. And it is indeed a superman who can roll or catch such sizes and weights as a regular diet. Making Roughing Unit Mechanical With the advent of demands for large sheet sizes it has been found practicable in many cases to roll 10- in. sheet bar on the same mills which formerly rolled 8-in. bar, and in sev- eral instances bar 12 in. wide has been rolled on the same mills by the addition of a final stand or by using a larger drive motor. So with these thoughts in mind we are pushing onward to make a mechanical mill of the roughing unit; 576—The Iron Age, April 13, 1933 eet Mill Mechanization By J. FRANKLIN MILLER White Engineering Co., New York tearing it out of the old-style rough- ing, finishing, roughing rotation of the conventional two-high train; and of interposing continuous pack fur- naces between the two mill trains, and of installing a continuous bar fur- nace in front of the roughing mill. The description which follows re- counts the details of the way in which this general idea may be accom- plished. These ideas are in line with present trend to design a mill as wholly mechanical as possible, thus raising tonnages to new highs, to ac- cede to an enormously varied demand as to physical and chemical proper- ties, and to meet the strict specifica- tions prevailing in this day and age. In addition, this design aims to per- mit entire flexibility of size and gage requirements within its range; and will require a smaller mill crew, thus assuring economies of cost per ton of product. The design retains the simple two-high type of mill stands throughout, and the plan can readily accommodate items of existing equip- ment. A complete mill unit as indicated consists of two half-units of roughing equipment and four quarter-units of finishing equipment. Roughing A half roughing unit consists of one double-row continuous-type fur- nace for heating bars (on one con- veyor), and for heating matched packs of two, three or four bars (de- pending upon final gage) on the ad- jacent conveyor. The roughing stand is located on the outside and the run- over stand on the inside of the half unit. Between these stands is lo- cated a compound gear set which re- duces the speed of the roughing mill and also contains a set of pinions for driving the rolls of the roughing mills, thus making a balanced type mill. Behind the roughing mill back table is a mechanical matching table where- on the roughed bars are both side and end matched, and then removed to a conveyor and returned to the charging end of the furnace for re- heating. The runover mill is a jump-type mill of standard design and is fol- lowed by a mechanical doubler located directly in the line of tables. The front and back mill tables at both the roughing and runover mills are along the lines of the conventional swing type now generally in use on finishing mills, but with improve- ments for handling the short widths of bars. This type of table has been popularized by the Wean Engineering Co., which is credited with 30 instal- lations in use on finishing mills. Beyond the doubler, packs are moved over a castor bed to the charg- ing ends of the finishing furnaces. Finishing A quarter-unit of finishing equip- ment consists of a double-row con- tinuous-type pack heating furnace, followed by a driven-roller converg- ing table. The front and back mill tables are similar to those used at the roughing end except that they will accommodate longer packs. The finishing stand is a simple two- high stand of chilled rolls, and the four stands are driven by a centrally located unit. Following each finishing stand a cooling wheel is located, and each two cooling wheels discharge to a com- mon table followed by a roller level- er, and thence to a conveyor to the shear building. Range and Method of Rolling A sheet mill of this type will roll all gages from 10 to 30; and will roll lighter than 30 gage if a doubler and shear be installed together with a return conveyor behind each two finishing mills, for returning packs to the finishing furnaces for reheating. Widths are preferably 30, 36 and 42 in. Lengths 8, 10 and 12 ft. light not oO Ge than from ing fi In will heate insid nace, rate furn: inter quire bar eross chan end up table mill with auto mor bars z taki tabl the the tab! pie mil pro usu the req for anc - ’ mn 1 re- mill ; for hing type able ere- side »ved the re- ype fol- ated ; at nills ynal on OVe- iths een ‘ing tal- are irg- lip- on- ace, rg- nill at hey vO- the lly wo ym- rel- light gages (28 and 30) probably not over 10-ft. lengths. Generally speaking, sheets heavier than 18 gage may be run directly from the roughing stand to the finish- ing furnace without doubling. In general, the method of rolling will be as follows: Single bars are heated on the inclined fingers on the inside conveyor of the roughing fur- nace, the conveyor traveling at a slow rate so that a bar drops from the furnace at regular and predetermined intervals, dependent upon time re- quirements in the roughing mill. The bar from the furnace traverses the cross conveyor, and its direction is changed on a ball bed located at the end of this conveyor. Ball bed tips up and discharges bar to gravity table, and thus to the front roughing mill table. This table is equipped with side squaring guides and an automatic stop arranged to prevent more than the required number of bars being on the table at one time. The bar enters the mill and, after taking the pass, both front and back tables are raised and reversed and the piece is carried to front side of the mill over the top roll. The tables are lowered, and_ reversed, piece squared, and released to the mill for another pass. After the proper number of roughing passes, usually two, the piece is run out on the matching table. The total time required for these passes for bars forming one pack will be between 12 and 40 sec. Y After the second bar has received HE present trend in the sheet mill is along the lines of com- plete mechanization, and to that end the author offers the accom- panying study to show the most logical outcome of present inten- sive effort in that direction. The article is not devoted to the practice in any one plant at this time, but contains conclusions drawn from various studies over the past two years. To date none of the older plants has been com- pletely mechanized, although the finishing equipment of many has been so transformed. the proper number of passes it is run back to the matching table and under- neath the first piece. The third and fourth bars, as the case may be, are similarly ranged on the matching table, the last piece always beneath the piece preceding. When the pack is completed, and is end and side matched, it is then pushed by moving fingers to the return conveyor, and thence to the outside line of flights of the bar and runover furnace. The runover packs leave the fur- nace and proceed direct to the run- over stand, and receive two or three passes as required and consuming between 15 and 32 sec. The tables manipulate the packs similarly to those at the roughing mill. On this ELEVATION or BAR CONVEYOR mill, the front tables only are equip- ped with side-centering guards. Be- hind the back mill table is located a runout table for temporary storage to prevent clogging at the doubler. The doubler is of heavy construc- tion, such as would be capable of doubling a cold pack of maximum thickness. The platens of the doubler will be slotted for non-rising disk rollers, and with centering fingers for the packs. A ball castor bed is located in front of the finishing mill furnaces, over which the doubled packs are moved to the proper furnace conveyor. Finishing mill or pack furnaces discharge to a set of driven disk rol- lers, thence to a driven converging table, and so to the front finishing mill table. The front and back mill tables are similar to, but faster and longer than, those of the preceding stands. Three, four or five passes, as re- quired, are given in the finishing mill and the pack proceeds to a runout table in front of the cooling wheels. The time required for passes in this mill will be between 25 and 75 sec. Packs are passed back to the front side of mill by mechanical tables, as on the previous stands. Pass Requirements for Various | Gages The pass schedule for various gages will approximate the data in Table I. It will be preferable to use sheet bar of 10, 12 or 16 in. width. However, Compound sheet mill, roughing furnace, bar conveyor and furnace cross section. The Iron Age, April 13, 1933—577 ne re SHS tables and rollers can be for the use of 8-in. bar. designed For finished sheets 10 ft. long and 36 in. wide, the heaviest bar will weigh 133 lb., for 18-gage sheets. This would give an equivalent thick- ness of 1.26 in. for 10-in. wide bar, of 1.05 in. thick for 12-in. bar, and 0.79 in. thick for 16-in. wide bar. The lightest bar will weigh 34 lb., for 30-gage sheets, and this will be equivalent to thicknesses of 0.315 in. for 10-in. bar, 0.263 in. for 12-in. bar, and 0.1975 in. for 16-in. bar. Reduction in the Passes The average size bar will ap- proximate that used for 24-gage sheet, and will weigh 67.7 lb. For a final sheared length of 10 ft., a bar 12 in. wide will have a thickness of 0.535 in. The passes will approx- imate the figures shown in Table II. While the percentages of reduction on the two roughing passes may ap- pear abnormally high, it must be re- membered that the roughing mill is turning at a slow speed and that the rolls are probably of somewhat larger diameter than those of the ordinary mill, and also that both top and bot- tom rolls are driven through the pinion stand, so that the action on the bar becomes, in reality, more of a forging, rather than a rolling opera- tion. Since these heavy reductions take place at a heat well above the critical temperature of 1200 deg. F., the steel will lack the brittle hard- ness and elongated crystal structure which takes place in the metal at lower temperatures. In order to keep the steel well above the critical temperature at all times while rolling is in progress, it has not seemed advisable to undertake five or more passes on a single heat- ing. Therefore, two reheats have been indicated, and it is believed that with this method it will be easier to meet the rigid specifications now prevailing, and it should be pos- sible to eliminate annealing on a larger tonnage than has heretofore seemed practicable. Since the roughed bars will go back for reheating on high-speed conveyors and at a temperature ap- proximating the critical point, the runover heat really becomes merely a wash heat. As the roughing and TABLE I—Distribution and Number of Passes for Different Gages of Sheets No. Reheat Bars Rough for Gage Per Mill Run- No. Pack Passes Match overs 14 2 2's no no yes yes yes yes yes yes 2&1 yes mS wwthonwcw PRPudgneu robo conotronorntc—— at bo 0S BS fo Po ho rs bo * pote to t Double Weight Run- to 10 x 3 ft. over Packs Finish Total Sheared Passes of Passes Passes Pack, Lb. not none a’bl’d 3 5 187.5 not none d’bl'’d aq 6 225.0 2 4's 3 7 240.0 2 4's 3 7 180.0 3 6's 3 8 225.0 3 6's 4 9 180.0 3 8's 4 9 180.0 3 8's 5 10 150.0 3 10's 5 10 150.0 runover passes are given on separate stands the flow of material will be continuous, time cycles for each part balancing, and there will be little lost time involved for either stand. The runover stand will be equip- ped with 30-in. diameter rolls run- ning at 25 r.p.m., and the reductions indicated should be made without in- convenience, since the steel is again well above the critical temperature. It will be necessary to use a water spray roll-cooling system and to wipe the rolls so that the hot bars do not come into contact with excessive moisture. Estimated Tonnages for Various Gages Based on finished sheets 36 in. wide, and 10 ft. long, it is conservatively estimated that one complete mill unit will produce the following annual tonnages (800 shifts of 8 hr. each) :— 14-gage sheets..... 175,000 gross tons 16-gage sheets..... 160,000 gross tons 18-gage sheets..... 140,000 gross tons 20-gage sheets..... 120,000 gross tons 22-gage sheets..... 110,000 gross tons 24-gage sheets.....100,000 gross tons 26-gage sheets..... $0,000 gross tons 28-gage sheets..... 70,000 gross tons 30-gage sheets..... 55,000 gross tons Based on rolling 24-gage sheets:— shifts per day—800 shifts per year...100,000 gross tons 2 shifts per day—575 shifts per year... 75,000 gross tons 1 shift per day—300 shifts per year... 40,000 gross tons Mill Crew On a production basis of 24-gage sheets (3 x 10 ft.) the annual out- put will be 100,000 tons for one com- plete unit. For this output the crew TABLE II—Reductions and Temperatures of the Passes Thickness Pass of Piece, Per Cent Length No. In. Reduction In. Bar 0.535 eis 12. 1 0.2675 50.0 23.9 2 0.1472 45.0 43.3 Match 3's a sos Reheat cn 43.3 3 0.0943 36.0 67.4 4 0.0656 30.5 96.9 Double packs ai TT Reheat 48.2 5 0.0427 35.0 73.5 6 0.0320 25.0 98.0 7 0.0272 15.0 115.0 & 0.0245 10.0 128.0 578—The Iron Age, April 13, 1933 Pack Approx. Thickness, Draft, Bar Temp. In. In. Deg. F. eS ee 1650 0.2675 0.2675 1550 0.1472 0.1203 1500 C4616 i$ ~senwer 1109 S665 £#é eee me 1550 0.2829 0.1587 1475 0.1968 0.0861 1425 0.3936 jj; sees 1000 Schee> ©. ° eee 1450 0.2562 0.1374 1400 0.192 0.0642 1375 0.1632 0.0288 1325 0.1470 0.0162 1250 will consist of 40 men. Numbers in circles on the mill plan indicate the positions of these men. One hundred thousand tons in 800 shifts means 125 tons per shift, With 40 men in the crew, output is 3.125 tons per man per shift. Because of the fact that hereto- fore there has existed no entirely mechanical mill, there is no prece- dent for the basing of labor rates. Without doubt new ton rates will be effected in such a manner that, while the rate per ton will be decidedly lower, the workman’s wage will be largely increased over the present standard of compensation owing to the enormous jump in production per man. Several of the men of the mill crew are of low-grade labor, such as bar passers, bar and pack chargers, matcher, pack opener, doubler, and conveyor operator. These embrace a total 24 of the 40 men required. A higher grade of labor will be re- quired for screw man. This will cover eight more men of the crew. The high-grade labor consists of the eight rollers. It is estimated that for rolling 24-gage, 3 x 10 ft. sheets, the total labor cost will be: Roughing, $1.05 per ton; runover, $0.95; and finishing, $1.35 per ton, making a total of $3.85 per ton. Shearing labor has not been considered in this connection, since sheets will probably be handled in quantity on either a continuous sheet shear, or with tan- dem arranged shears of standard types. Design of the Furnaces Owing to the heavy tonnages han- dled it becomes necessary to put a greater tonnage through the fur- nace than could be accommodated by the conventional double-strand con- tinuous furnace, unless the furnace were built to an excessive length. For this reason a furnace has been designated which will have the es- sential features of the Flinn & Dref- fein type, but one in that the bars are not laid flat, but placed at an angle of about 60 deg. from the hor- izontal. Bars will be spaced at ap- proximately 7-in. centers, and by this method the tonnage is raised and the bars are allowed to heat for a longer a P n il t) I n 1 1 b I c an . eo tbe crew _ bar gers, and yrace e re- will ‘rew. ' the t for , the hing, and ga ring this ably or a tan- dard han- it a fur- 1 by con- nace gth. een es- ref- ars an hor- this the ier MECHANICAL TAGLES ena a —_ == - eee ee MECHANICAL =I TABLES bes BAR § RUNOVER FURNACES a6 * 600" CTT Tolelabeliahe 7, cs a PACK FURNACES a6" « 50'O" pannenall CONTROL (a i th 4 pa DnB nine ied @ i 1 500 1? MOTOR me , Ci — et +—> ot ti re ——rd oe - = 4 Oar aiid Et = a mere i — oo Co ee + areemenatall hf aD es — — ris @ Be =><<s mn or vy — > eee Eh - =H => if ete = : @ MEAVY GAUGE DIRECT FROM ROUGHING STAND TO PACK FURNACE (1) Bar passer. (2) Bar passer. (3) Bar charger. (4) Rumover charger. (5) Roller. (6) Roller. (7) Screw man. (8) Screw man. (9) Matcher. (10) Pack opener. (11) Doubler. (12) Pack charger. (13) Pack charger. (14) Pack charger. (15) Pack charger. (16) Roller. (17) Roller. (18) Screw man. (19) Screw man. (20) Conveyor operator. ilar to the standard type of finishing packs and so maintain a hotter bot- furnace now in use on the “combina- tom. There are approximately 130 ; tion system,” except that waste gases of these continuous furnaces now in will be drawn off from beneath the use, period than is now common practice. A sketch showing a bar conveyor of this type is here reproduced. The pack furnace is entirely sim- Stainless Clad Steel Milk Truck Has 3000-Gal. Capacity ISTRIBUTERS are now turn- 1) ing to stainless clad steel as a solution for their problems in transporting milk by truck. The re- quirements are that the inside sur- faces of the material used in tanks and all of the inside seams must be smooth so the tanks can be easily and thoroughly cleaned to prevent con- tamination. The material must also be resistant to wear and it must not crack, chip or corrode. Further it must leave no taste in the milk. Tanks meeting these specifications are being fabricated by the Alloy Products Corpn., Waukesha, Wis. The milk tank shown in the accompanying illustration is of 3000-gal. capacity, that is it will hold 15 tons of milk. It is elliptical in cross-section and measures 60 in. by 77% in. by 18 ft. 11 in. in length. The tank sheets are 10 gage, 20 per cent of the thickness being stainless steel which was polished before shipment to the fabri- cator. This tank was made of five sheets and two end pieces. To assemble these parts there were required six circum- ferential seams and one longitudinal seam, making in all 230 ft. of arc welding. Because of the requirement that the tank be smooth on the inside great care was taken in laying out, cutting and welding the various units. Each circumferential sheet was scratch awl marked at the points where the tank axes cut through the sheet. The longitudinal seam on each sheet was then welded and the sec- tions then were placed together, pre- paratory to welding the circumferen- tial seams. A strict requirement was that the awl scratches on adjacent sections should match within very close limits. The welder first tacked the seams on the inside and then welded from the inside with a 25-12 chrome nickel rod which was coated. The welding having been completed on the inside the welder, using the same composi- tion rod, welded the seams from the outside. Tests show that the weld is free of iron so that when the inside sur- faces of the welded seams are ground and polished only an unbroken stain- less steel surface can come in contact with the milk. (Concluded on Page 593) This stainless clad steel tank is being used to transport milk by truck. A load consists of 15 tons, or 3000 gal. of milk. The Iron Age, April 13, 1933—579 Standard Costs on the Instalment Plan HE last two or three years have tested the cost accounting sys- tems as well as other procedures and policies of industry. The futility and uselessness of “actual” cost sys- tems have become apparent to indus- trial concerns that may have been employing them during this period. The results from such cost methods are useless for purposes of pricing the product, as selling prices based on “actual” costs could not possibly create any sales in a competitive field; and to price inventories at “ac- tual” cost is simply to overstate the profit or understate the loss. The term “actual cost,” as used in the foregoing, applies to that type of cost which absorbs all overhead ex- pense and excess labor and material expenditures regardless of current commodity prices and volume of pro- duction. As opposed to “actual” cost systems the so-called standard cost systems have become widely adopted during the last decade or so, and when properly installed they have proved to be sound and of utmos' utility. Not only do they yield use- ful cost figures for establishing sell- ing prices and evaluating inventories, but they also point out inefficiencies, thereby making it possible to reduce losses. While some manufacturers have hurriedly converted their accounting systems to a standard cost basis, others have hesitated, either because they are not thoroughly familiar with the principles of standard costs or because they feel that the cost of installing a new system is prohibi- tive at the present time. Consider- able data must be collected, carefully analyzed and classified. Frequently, certain plant routines must be altered to obtain the necessary physical con- trol of inventories and _ production. To do all this preparatory work for a plant of any size takes considerable time and may involve expenditures for rearrangement of equipment, if not for the purchase of new equipment. The fundamental concept of stand- ard costs is not a complex one, al- though the procedures developed in any given case may be of a burden- some type if care is not exercised. The manufacturer of a limited num- ber of simple products, whether in large or small volume, should not find it costly to change his accounting sys- tem; and the manufacturer of a great variety of items may find it quite feasible to change his system on an instalment basis, thereby spreading the cost over as long a period of time as he desires. 580—The Iron Age, April 13, 1933 By WILLIAM V. LINDBLOM Assistant Treasurer, Walworth Co. It may be said that the funda- mental purpose of standard costs is properly to evaluate inventories and therefore correctly to prepare balance sheets and profit and loss statements by eliminating from production costs the variations from normal costs due to abnormal or subnormal manufac- turing operations, and by bringing to light deviations from predetermined procedures. The manufacturing op- erations comprise a series of stages in which materials are alternately in process of conversion or at rest. In a business which operates both foun- dries and machine shops these several stages may be as follows: 1 Raw materials—(at rest) 2—Making of castings—(conversion) Rough castings—(at rest) i—Machining castings—(conversion ) Finished parts—(at rest) 6—Assembling parts i Finished product (at rest) (conversion ) In those stages where the materials are at rest no change in value nor- mally takes place. It is in the con- version stages that increases in value take place through expenditures for the conversion operations. It is, therefore, in these conversion stages that production costs are determined and in which the elimination of vari- ations from predetermined standards must take place in a standard cost accounting system. There are two methods of determin- ing these variations. Each of the stages of manufacture enumerated above should be represented by an account on the books of the business. The accounts for the conversion stages are “in process” accounts, and for each of these accounts the follow- ing statement is true: The value of the inputs to these accounts plus the value of the opening inventory less the value of the production is equal to the value of the ending inventory if the values are all determined on the same basis. This statement may be expressed as a formula in the fol- lowing terms: I+ O:1— P Ei The determination of the variations consists in evaluating three of these terms at standard prices, the fourth term being evaluated at actual cost, and finding the difference between the two sides of the equation. At the time of installation of a standard cost system and each month thereafter the opening inventory is evaluated at standard cost. It is usually desirable to evaluate the production at standard costs, as it distributes the work throughout the month. Therefore, either the inputs to the process ac- counts or the ending inventory may be selected as the third term to be evaluated at standard cost before solving for the amount of the varia- tion. Frequently the evaluation of the ending inventory at standard costs represents the least work and should be the method most free from periodic profit and loss adjustments, particularly if the inventory is a physical one. This method will serve every need from a strictly general, or profit and loss, accounting view- point. For want of a better name it may be called the “Profit and Loss Accounting Method.” The profit and loss accounting method does not, however, yield as much data on the effective use of ma- terial, labor, and equipment as can be profitably used by the manage- ment. Therefore, the inputs are often selected as the third term of the equation to be evaluated at stand- ard costs before solving for the varia- CASTINGS IN PROCESS COST SHEET “CAST STEEL VALVES” Material Direct Total Elements of Cost Pounds Cost Labor Expense Cost Ds ND ok eens GW iw wr wa 18,281 $147.83 a nie $147.83 Molding and coremaking ..... coer, a ae a $175.50 7 175. 0 DPOUNy GEORMD 4xc a viecces% 5 $553.92 553.92 Net input at actual .......... 18,281 $147.83 $175.50 $553.92 $877.25 Opening inventory at standard 4,532 32.84 40.29 130.75 203.88 ns we een be heee es "22.813 $1 80 67 $215.79 $684.67 $1,081.13 Production at standard ....... 18,046 $138.37 $130.97 $284.49 $553.83 Ending inventory at standard 3,609 27.62 26.20 57.82 111.64 ME, wakathawedees bands 21,655 $165.99 $157.17 $342.31 $665.47 WORE © Cc ccccaken ses 1,158 $14.68 $58.62 $342.36 $415.66 ee Caen a sale pro! whi mat van cost whe be OpF tion inp’ cor tua of ma ciel fur mo tail for the ] bee fig’ ust sis pre ad sul int tio sta rec the ex! col thi pa lec aly gi" at B ue of s the less equal ntory ‘don may 2 fol- tions these ourth cost, ween t the | cost r the d at rable dard work fore, $ ac- may ‘0 be efore aria- n of dard and from ents, is a serve eral, riew- lame Loss iting d as ma- can lage- are n of and- aria- st 7.83 5.50 3.92 wea cr oo > sil ao “| a a “| we oi ac profit or understate the loss. AS cost systems are of little use during a depression, according to the author. Prices based on actual cost cannot possibly create sales in a competitive field, and inventories at actual cost overstate the The writer recommends the use of a standard cost system, under which variations in production costs that are due to abnormal or subnormal manufacturing operations are eliminated. This system also has the ad- vantage of providing a comparison between actual and standard conversion costs, thereby disclosing inefficiencies. The author outlines a method whereby the transition from an actual to a standard cost system may be made in instalments, thereby overcoming the objections of those who oppose a change of method at this time because of the expense involved. ww tion. In this method each element of input is priced at standard cost and compared with the corresponding ac- tual expenditure. Thus, excessive use of material, labor, and machine time may be determined daily and _ ineffi- ciencies disclosed in time to curtaii further losses. Such savings may more than pay for the additional de- tail work required to prepare the in- formation. This method may be called the “Efficiency Data Method.” In the foregoing paragraphs it has been assumed that one total variation figure only is to be determined. It is usually desirable to have some analy- sis of this figure, especially if the profit and loss accounting method is adopted. The first step may be the subdivision of the variation account into separate accounts for the varia- tion of actual material used from standard, the variation of actual di- rect labor used from standard, and the variation of the actual overhead expenses from standard. This is ac- complished simply by segregating these three elements in the working papers. Cost data should also be col- lected by departments so that the an- alysis of the variation account will give a general basis from which to attack the problem of cost reduction. Basis for the Installment Plan of Installation The manufacturer of a great va- riety of items no doubt has an ac- counting system now which shows production costs and inventory values by groups or classes of product. It is possible to develop standard cost procedures for these several groups or classes one at the time. Careful consideration of each classification will lead to the selection of the par- ticular one for which the standard cost accounting procedures should be developed first. This selection may be made on the basis of the class from which it is anticipated that the great- est benefits will be derived or on the basis of the ease and simplicity with which it is felt that the procedures can be developed. For instance, in the case of a full- line manufacturer of valves and fit- ings the classification of the product may be as follows: Cast iron screwed fittings Cast iron flanged fittings Iron body gate, globe and angle valves WwW Iron body lubricated plug valves Brass gate, globe and angle valves Brass fittings Cast steel valves Cast steel lubricated plug valves Cast steel fittings Nipples Malleable fittings One of the fittings