Asst. Naval Constructor P. G. Coburn, U. S. Navy.—Naval Constructor Westervelt seeks to diminish manufacturing costs by finding out detailed costs and by promoting competition between navy yards and between workmen in navy yards.
That a great deal can be done by the promotion of competition has been clearly proved to the naval service. The most common illustration of this is that of the improvement in gun fire, but cases in point may be found in navy yard work, as, for example, the reduced costs of paints, boats, ditty boxes, and other manufactured articles. In developing this competition, a peculiar phenomenon was disclosed; namely, that there was a remarkably wide variation between estimates and between costs as submitted by the different yards.
Variations in estimates, when they are particularly wide, may frequently be traced to incorrect apprehension of the scope of work to be done. If the various operations were standardized and put out in the form of schedules, the comparison of widely varying estimates would be facilitated, and so it would be practicable for the bureaus, in obtaining competitive bids, to reconcile widely varying estimates. This is a weighty consideration. I have in mind a case where a large and important item of work was assigned to a navy yard, when as a matter of fact another navy yard's bid would have been found considerably lower had the difference between the estimates been thus analyzed.
It is at present impossible to judge accurately all comparative costs submitted on the same kinds of articles by different yards, due to the fact that our accounting system does not yield correct total costs. It will be impossible to get all navy yards operating so that the management at the different yards will decide on the same ways of making charges. For example, at one yard the mill work of boats may be charged to the overhead and prorated, whereas in another yard the mill work may be charged direct to the boats. In the former yard, the direct labor cost of boats will thus be lower than in the latter yard. The material costs would be about the same, supposing that both charged all material direct. Therefore, to find out at which yard it would be cheaper for the government to build the boats, the total cost must be taken into consideration. This, however, cannot be done intelligently until there has been a change in the statute and a proper cost-keeping system installed to take the place of the present system, which, as is frankly stated in one of the bulletins by the Bureau of Supplies and Accounts, is rather a method of locating charges correctly against appropriations, according to statute, than a method of returning costs which can be considered correct in the commercial sense.
This paper is founded on the assumptions that the cost-keeping system is not to be changed, and that the day work system of payment for labor is to be adhered to, and that time study, that is, accurate time observations of work by the employment of a time recording instrument by the observer, is not to be permitted. Under these assumptions, the method proposed by Mr. Westervelt will result in a drift toward lower and more nearly correct costs.
However, it must be borne in mind that the results of competition are not all that can be desired. Suppose, for example, that two workmen, “ A ” and “ B,” are put in competition with each other. As soon as it has been decided that “A” is better than “ B,” or vice versa, the competition stops, and the men will go on at a standard rate which they both can comfortably maintain. For example, the Bureau of Construction and Repair has for several years been engaged in the effort to reduce the cost of wood-calking. It was found that at one navy yard work was being done from three to four times as fast as at some other navy yards. Some of the other navy yards were able to make considerable improvement; some of the other yards have not been able to make any improvement.
In order to get the best effort of the men and to get costs down to a proper basis, it must be made an object to the men to work hard and get the costs down, and the only object that will always work is a pecuniary one. In other words, to get thoroughly satisfactory results it will be necessary to determine, by careful time observations, what the cost ought to be, and pay for the work at that price.
This method, however, will be rather impracticable on a great deal of the work done in navy yards, especially repair work, and, regardless of that limitation, it will be a considerable time before such a method can be put into general practice. Therefore, the method proposed by Naval Constructor Westervelt appears to be one which will bring results and can be adopted under present conditions.
There are two considerations to be borne in mind in connection with this proposition—the first being, the cost of adopting it; and the second, the difficulty of adopting it.
In order to handle such a method, a large and well organized planning department, with abundant clerical assistance and proper filing facilities, must be provided. The cost of such an organization and such facilities will be high. The net result to the government, however, will be a saving. For example, it will be very easy for Naval Constructor Westervelt to show the money saving to the government resulting from the application of this method to reduce costs of manufacturing paint drums. The same method, generally applied in his shops, will bring corresponding reductions. The cost of bringing about these reductions will be small as compared with the savings effected. .Thus, while the cost of such a system will be high, the resultant cost of work will be low.
The difficulty of putting such a system into effect does not consist of a large essential difficulty, but of a great number of small detail difficulties. Essentially, the problem is easy; practically, however, the job is an enormous one.
Lieut. Commander W. T. Cluverius, U. S. Navy.—Mr. Westervelt’s paper was read with interest and relief: a relief from the epidemic of papers dealing at wholesale with what their authors recognized as rampant symptoms of navy yard extravagances.
Mr. Westervelt sticks to his subject—the reduction of cost of manufactured articles. Our old friends, the Glittering Generalities, are not dragged in for cure-alls as they usually are with the diagnoses of such virulent ills.
It is discouraging to the hundreds of intelligent persons of all corps and classes working hard in the navy yards to be constantly told that it is all wrong, with no available solution offered.
There are many, however, who do not believe that everything is wrong: they do little talking.
Mr. Westervelt says that costs of manufactured articles can be still further reduced, and they can. He offers one plan along certain lines. I think it unquestioned that the efficiency and economy in performing this repeat work is directly affected by the amount of systematic inquiry given it. Properly developed schedules and operations and a record of individual performances based thereon are essential to reduction of cost. An overrefinement of detailed operations is, I believe, quite as detrimental to economy as is the lack of all planning: the one increases the overhead; the other decreases the productive output. The result is the same.
This paper emphasizes the necessity of considering the individual. In a navy yard you must do the best you can with the men you have as well as with the tools you have. A big part of the planning consists in putting the individual on the work best suited to him and developing him to the utmost along that line. Even under best conditions the man has not yet gotten the maximum out of the machine, so great have been the improvements in the machine.
The policy of concentrating certain manufactured work at the navy yards which have excelled at that work Mr. Westervelt believes in. He urges against the concentration of the entire schedule in any one yard. He is right, for without competition the effective results of planning can be but indifferently realized.
Granted, then, that costs can be improved and the minimum approached in the manufacturing lines, this, after all, is not a drop in the bucket of activities at navy yards: who is there that can furnish a real working plan to reduce the cost of repair work? This is where the bulk of the money goes—and with what speed! When it comes to ships’ overhaul the easiest thing we do at navy yards is to exceed the statutory limit. What avails all the planning in the world if the ship does not arrive when there are men on the rolls to take up the work or if the ship departs unexpectedly when most of her items of work are underway? Is the enemy to enter into a scheme of planning to furnish a punctured hull at the proper moment of economic repair? And who can plan the arrival of a disabled vessel?
Some of the yards are continuing their attempts at detailed planning of repairs—presumably with the hope that something will come out of it. As yet, it has acted more as a deterrent in the actual beginning of the work, a handicap even in some cases. Certainly the ships do not appear to get away from the yards any sooner. At one yard not long ago the authorized change of location of a ship’s side ladder was being planned for several weeks. In the course of time the ship departed for a yard where planning of this nature did not obtain, and in a day or so her ladder was shifted.
What yard is able to meet, with well-digested plan and definite estimate, the military necessities constantly descending on a naval base? Who can anticipate exigencies?
The only plan that can be presented to meet the abnormal demands of ship repair is the exaction of an honest day’s labor from all employed, and this labor intelligently directed and zealously applied to the work.
Many days’ work are not an honest eight hours: there is loafing and malingering. Often enough, as well, honest days’ work is misdirected and expenditures mount up to extravagant figures.
These are the real problems confronting us in our industrial yards, and their solutions lie only in the direction of untiring and mutual endeavor on the part of superintendent, foreman, and mechanic.
We cannot control appropriations, but by keeping honestly on the job ourselves and making the other man do the same thing we can check the drain on these appropriations which results too often in justified criticism.
Call it planning if you will.
Lieut. Commander W. B. Tardy, U. S. Navy.—After reading this article one naturally attempts to classify the partial scheme of management therein outlined. It seems to fall somewhere in the borderland between Mr. Harrington Emerson’s “ Efficiency Management ” and Dr. Taylor’s “ Scientific Management.” If it be regarded as an academic discussion, the purpose of which is to add to the voluminous literature already existing, it may be accepted without comment. If, however, it is seriously put forward as a practical working proposition, it seems necessary that someone familiar with navy yard conditions should invite attention to facts that preclude the possibility of obtaining real results from the scheme outlined.
(a) Does the author believe that any valuable standards can be obtained by the methods suggested?
(b) Is it not a fact that it is necessary to make a thorough and detailed study of equipment, arrangement of tools, services and then conduct careful time study of various operations in order to procure standard times for elementary operations that are worthy of credence?
(c) With the present attitude of the individual laborer and of organized labor, is this possible of accomplishment?
(d) If organized labor is in a position, which it undoubtedly is, to prohibit the adoption of time studies and to limit the output of individual mechanics, can it be presumed that the method suggested in Naval Constructor Westervelt’s article of arriving at fairly approximate outputs or their converse “ Minimum Manufacturing Costs ” would be permitted if the mechanics felt anything of value was really being determined?
In this connection, attention is invited to the fact that in many navy yards there are already schedules setting forth piece work rates. It is a well-known fact that these rates are so high that practically all skilled, energetic men have to squander certain portions of the working day in order that their per diem earnings shall not become so large as to involve a reduction in piece work rates.
The method by which the author proposes to arrive at close approximation to possible output fails to take into account the ability and shrewdness, both of the individual workman and of organized labor. It seems to be an effort to slip up on the blind side of the mechanics to record clandestinely the shortest times in which good mechanics perform definite elementary operations, and then, by piecing together these several best times, evolve a schedule that will cover certain definite manufacturing activities. It is to be noted that a considerable amount of work of investigation, clerical work in recording times, making and issuing schedules, is involved, and it is believed that if all clerks’, draftsmen’s and supervisors’ times thus involved could be added to the cost of the work produced under the proposed schedule the total cost would equal, if not exceed, the cost previous to the development of the schedule. It would seem, therefore, that the superstructure of scientific management has been suspended in thin air without either the foundation or the building proper.
The author admits that his scheme is applicable only to certain manufacturing processes in the navy yards. The question arises then whether (assuming all he claims for his schedules to be correct) it is worthwhile to attempt the installation of quasi-scientific management. Personally, I am of the opinion that one had as well attempt the cure of cancer by paring the surface as to cure the ills of navy yard management by the introduction of a system of approximated “Minimum Navy Yard Manufacturing Costs.” Everyone familiar with navy yard conditions realizes that the yard is, in effect, a closed shop; that organized labor and laborers’ organizations dictate the wages (which are on the average higher than the wages of mechanics similarly employed in the immediate vicinity) and also effectively limit the output; that they, through local labor organizations operating in conjunction with local political organizations, thence through members of Congress and the Navy Department, exercise a very considerable influence on proposed disciplinary measures, on ratings and disratings, reductions and discharges. It is, further, an admitted fact that the method of rating, paying and disrating supervisors places a premium on the supervisors retaining a maximum number of men under their supervision. This is diametrically opposed to efficiency, since it is to the supervisor’s interest to nurse the job so that he may retain a sufficient number of men to prevent his own disrating.
In all commercial establishments, the supervisors’ tenure and rate of pay are dependent solely on excellence of work and quantity of output. They are part and parcel of the management. In the navy yard, by the very nature of the organization and the fact that navy yards are used as political assets, the supervisors are on the side of the workmen, opposed to the management.
The method of employing mechanics who must be taken in the order in which they appear on the registration lists is antiquated and inefficient. Starting with the force recruited to a maximum, as the volume of work decreases the poorest men are laid off. They immediately re-register. This method of consecutively laying off the men who can best be spared and having them re-register continues until the yard has reduced the force to the normal minimum. The volume of work again begins to increase; calls are issued for new employees. These must come from the top of the registration lists, which are composed of the most worthless men that were employed heretofore, as evidenced by the fact that they were first discharged and were, in consequence, the first to re-register. It is believed that if any real progress is to be made in the reduction of cost of work in navy yards, it will be necessary to establish a fixed policy that no new construction or manufacturing shall be done in the navy yards that cannot be done at a less book cost than the contract cost for such work would be.
In this connection, attention is invited to the fact that the private concerns who would bid either on new work or the manufacture of articles now manufactured in the navy yard take into account in their overhead charges the following costs which are not included in the navy yard book cost:
Interest on bonded indebtedness or interest on plant value and equipment.
Insurance.
Upkeep of plant equipment.
Engineering and drafting expenses.
Clerical expenses.
Salaries of general officers.
Dividends. (This is not a cost, but is a necessary item to the industrial manager if his business is to succeed.)
It is expected that to the employees of the navy yard shall accrue in shorter hours, higher pay, better working conditions and leave, all that would accrue to a private manufacturer in the way of dividends; but, with the great advantages in the matter of book cost shown above, it is a fact that navy yard book costs should be less than the costs of industrial concerns, and it is believed that the fixed policy of contracting for all work in the nature of shipbuilding or manufacturing where the navy yard bid is not less than that of a private bidder would operate to immediately reduce navy yard costs at least 40 per cent.
It is believed that the author is unjustified in his reflection on the zeal, ability and application, both of the officers of his own corps, who are constantly on navy yard duty, and of officers of the line, who are occasionally assigned to navy yard duty. It is the experience and observation of the writer that officers on duty at the navy yard, New York, give their undivided attention to securing high grade work at the lowest obtainable cost under present conditions. The conditions that prevent further reduction of cost of navy yard work are more deep seated than the absence of schedules or other mechanism and records.
It is believed that it would be well to disfranchise the navy yard employees during employment, so that there would be no incentive for local politicians or local Congressmen to use the yards as a political asset and for the Navy Department to treat openly with organized labor, along the line that since the Government expects no return in dividends, it is natural to suppose that working conditions, hours, pay and leave shall be all that a just Government could be expected to furnish; that the Government’s position precludes the necessity for interference by organized labor; that employees are to be treated simply as individuals, paid for what they actually do, and that the Government reserves to itself the right to determine by such means as are necessary what constitutes a fair output under given working conditions. Until we are willing to handle the navy yard labor question openly and discuss it on its merits without fear of any political effect, it is all but useless to attempt a palliative treatment.
Rear Admiral Caspar F. Goodrich, U. S. Navy.—The crux of the question raised by this exceedingly interesting and thoughtful article lies in these words :
“ Among the motives which actuate a workman and induce him to turn out the greatest amount of satisfactory work are the following: Hope of reward; fear of punishment; interest in the work on hand; desire to excel his fellow workmen; esprit de corps.”
The first motive “ hope of reward ” does not exist at present except in the nebulous desire to be retained when work slackens and superfluous hands are discharged. The average workman relies more upon “standing in with the boss” than upon his own skill and rapidity. The motive in question can only be supplied when a man is paid for what he does rather than for the time he spends in doing it. Introduce some form of piece work with a bonus for quickness and much of the difficulty will be obviated. This will, of course, be strenuously opposed by the labor unions. They will never willingly permit the abandonment of the daily wage with its premium on loafing.
The fear of punishment is not very active for good. The skilled workman is in no sense so skilled as in knowing how to appear industrious while, in reality, marking time or making little progress. This motive, while present, possibly, gives him no actual concern. He knows a dozen ways of beating the game.
The third motive “ interest in the work on hand ” is a slender reed to rely upon. The practical interest of the workman is to string out his job. “ Interest in the work on hand ” is conspicuous by its absence, as a rule, although it may, occasionally, be detected.
“ Desire to excel his fellow workman ” is not tolerated in the labor world and it is discouraged by a thousand devices peculiar to the unionist. The unwise man who manifests this ambition had better move on at once to a more healthy region.
"Esprit de corps" might be found in a body of mechanics who had not abdicated their individual manhood and accepted the tyranny of the labor union leaders, mostly, by the way, of foreign birth. As things are today the only esprit de corps which may be expected is for the union, with its levelling down of the good and its protecting the bad; its encouragement of shirking and stringing out the job.
Within the limitations imposed by this calamitous attitude of organized labor, much that is worthwhile may be accomplished in the manner proposed by Mr. Westervelt, but it is idle to look for results at all comparable with the money expended until our yards are put on a strictly business, up-to-date basis, with a planning department, time studies, piece work and bonus; until the universal rules are “ The Open Shop and No Politics” and “The Yard Exists for the Fleet, Not the Fleet for the Yard.”
It is only prudent to recognize, in this matter, a patent, undeniable and distressing fact that the average workman, while strictly honest in every other respect, has no compunctions about stealing his employers’ time. Careful and repeated observations show that he gives to his task only from 30% to 50% of the time for which he is paid. There is no possibility of achieving a really minimum cost so long as the daily wage is adhered to. Whatever of betterment is done should be based on the known characteristics of the average workman and not on the virtues of the exceptional faithful man. And we must make it to his personal interest to strive for economy and volume of production. If we ask him for what he considers undue exertions we should offer him a substantial recompense.
Our only hope lies in convincing the Department that the present system is archaic and wholly wrong, that modern methods must be adopted if only in self-defence. Yet we need not despair. What General Crozier did at Watertown with the backing of the Secretary of War is possible at any navy yard, given similar favorable conditions. Until then we should do what we can to lessen the cost of work and to bring essential facts to the attention of the authorities that they may act with intelligence and vigor. Mr. Westervelt’s article is a valuable contribution to the discussion of a subject of tremendous importance to the naval service.