The Oakley herald. [volume] (Oakley, Idaho) 1908-1961, 1917-02-02

No Chance For Profit In Them Under
Present Tests, Grace Says-Possibie
Explanation of the Prices Made by an
English Firm Which Bids Under All
American Manufacturers.
Speaking recently before the Terra
pin Club Of Philadelphia, Eugene G.
Grace, President OF the Bethlehem
Steel Company, said in part:
In \ peculiar sense Bethlehem Steel
serves the American people.
For example, sthough we have been
able to obtain in Europe almost any
price, we have adhered, in our charges
to the United States Government to
the basis Of prices established before
the war began.
We agreed-if the Government would
abandon its plans for Federal plant
to make armor for our Navy at any
price the Government itself might con-
slider fair.
Our ordnance plants are at the dis
pOsal of the nation at fair operating
cost, plus small margin, thus saving
the Government investment and de-
preciat ton.
One OF the special needs OF the new
navy is sixteen-inch guns-guns sixty
feet long and capable Of hurtling a
1000 pound shell with such power and
accuracy as to hit so foot square tar
get fifteen miles away.
We have undertaken voluntarily to
construct, at cost of $4.5OO0OO.
plant fitted to build sixteen-inch guns.
Under no conceivable circumstances
can orders which we may receive for
this plant pay even a fair return on
the investment.
Considerable comment has been made
/ unpn CHE taat athntsayB British smaunfacsss
turer recently bid less than American
manufacturers for sixteen and four
teen-inch shells for the navy.
am unable to state the basis upon
which the English bid was made. 1t
should be remembered. however, that
this bid was for specific shell, sam
Piles of which are being sent over for
tesla test not yet made.
Two years ago we took an order for
24OO fourteen-inch armor- piercing shells
at a contract price Of $76S,oOO, to be
delivered within a certain time or we
had to pay large penalty.
The only specifications for making
these shells are that they shall be
Of certain size and must pierce
armor-plate at certain velocity on i'm
l.. .rtl 70 tnH th.a
exact conditions of the tests.
We had made large quantities OF shells
in the past which had been accepted
But in placing this particular order the
Department altered the angle at which
the tested shells must pierce armor-
plate The result, however, has been
, absolute inability on our part to pro
duce in any quantity. shells which will
meet these novel tests. In fact. we
know of no process Of projectile-mak-
, ing through which 1t is possible to pro-
duce in quantities shells which will
conform to the requirements.
The result is that up to now on that
: contract of S76S, 900. we have put into
actual operating expense $447 $751;, and
have been penalized for non-delivery
s495. IA. a total Of $943, ,625.. with NO
, receipts whatever.
Such was the experience In the light
Of which we were called upon recent
ly to bid for sixteen-Inch shells.
We bid on these shells at approx
mately the same rate per pound as
that OF a fourteen-inch shell contract
: Of one year ago upon which the Gov.
:, ernment awarded contracts.
We have not the slightest idea what
profit there will be in the making OF
these shells. We do not know that
there will be any. There is no certain
ty that it would be possible for US te
deliver a shell to meet the test.
For officers In the Navy to assume
u that any bid made under such condi
y lions is "exorbitant" Is utterly unfair.
We bid on the new battle-crusers
sums which Navy department experts
after examination OF our BOOKS, found
would yield a profit Of less than ter
Z per cent. We agreed to assume risk
q for increased costs of materials and la
r Dor. that made it possible that thes,
> contracts might yield no profit what
5 ever.
The costs run beyond the amount ap
propriated by Congress on the basis 0
the cost estimates made year ago
70 And because shipbuil3ers could no
g alter the inexorable cost facts and re
y duce bids to early estimates of tn
r Navy Department, the prices are calle
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