Payette enterprise. (Payette, Canyon Co., Idaho) 1909-1935, 1917-05-03
TO BUILD SHIPS
AT COST PRICE
Bethlehem Steel VIII Make Of
for to Uncle Sam.
BIDS ON is INCH NAVY SHELLS


Ne Chance For Profit In Thorn Under
Present Tests, Grace Says-Possibls
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 4 peculiar sense Bethlehem Steel
serves the American people
For example, though 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-
elder fair.
Our ordnance plants are at the dis
posal Of the nation at fair operating
cost, plus a small margin, thus saving
the Government investment and de-
probation.
One of the special needs OF the new
navy is sixteen-inch guns--guns sixty
feet long and capable Of hurtling
1000 pound shell with such power and
accuracy as to hit a so foot square tar
get fifteen miles away.
We have undertaken voluntarily to
construct, at cost Of $4,500,000, .
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
upon the fact that British manufac-
turer recently bid less than American
manufacturers for sixteen and four
teen inch shells for the navy.
1 am unable to state the basis upon
which the English bid was made. II
should be remembered, however. that
this bid was for a specific SHE'LL sam
pies of which are being sent over for
tsst-a test not yet made.
Two years ago we took an order for
24OO fourteen-inch armor-piercing shells
ut 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 a certain size and must pierce
armor-piate al certain velocity on In
pact. 1t is impossible to foretell the
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
sene 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 projectie-mak-
ing through which 1t is possible to pro-
duce I'm quantities shells which will
conform to the requirements.
The result is that up to now on that
contract of $76S, 900, we have put into
actual operating expense SAT $751;. and
have been penalized for non-delivery
1895, 744, a total Of S943. 625., with no
receipts whatever.
Such was the experience In the light
Of which we were called upon recent
" to bid for sixteen-inch shells.
We bid on these shells at approx
nately the same rate per pound az
that Of a fourteen-inch shell contract
OF one year ago upon which the Gov
eminent 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 1t would be possible for US to
deliver a shell to meet the test.
For officers In the Navy to assume
that any bid made under such condi.
lions 10 "exorbitant" Is utterly unfair.
We bid on the new battle-cruisers
sums which Navy department experts.
after examination of our books. found
would yield a profit Of less than ten
per cent. We agreed to assume risks
for increased costs Of materials and Ia
Dor, that made 1t possible that these
contracts might yield no profit what
ever.
The costs run beyond the amount ap-
propriated by Congress on the basis of
the cost estimates made year ago.
And because shipbuilders could not
alter the memorable cost facts and re-
duce bids to early estimates Of the
Navy Department. the prices are called
"exorbitant."
It would be real advantage to b
Believed Of this naval construction. The
profit from 1t cannot possibly amount
IN much and the respOnsibility In enOr-