(See No. 143.)
ASSISTANT NAVAL CONSTRUCTOR C. A. HARRINGTON, U. S. Navy.—In the September issue of the PROCEEDINGS, Assistant Naval Constructor Otterson has contributed some novel ideas relative to navy yards. It is not understood that the author of "Navy Yard Problems" intended to treat all the problems involved in navy yards, because to do so would require many issues of the PROCEEDINGS rather than some twenty pages of-one issue, and would probably take all the rest of Mr. Otterson's life (the latter statement being in no wise intended as a reflection on his ability). He, therefore, perhaps intentionally treated some problems" academically" and ignored others entirely, for which he has been rather harshly criticised. In the minds of some, the chief fault with Mr. Otterson's essay seems to be that he forgot to mention that "navy yards exist for the fleet," a statement which, of course, is quite necessary in any discussion of our navy yards. As the criticisms contained under" Discussion" in PROCEEDINGS No. 543 failed to bring out what appears to the writer to be misstatements and false logic in Mr. Otterson's essay, and as it does not seem quite right that these points should be allowed to pass unchallenged, the following ideas are submitted:
The navy yard problems which are discussed by Mr. Otterson are: (1) a proposed method of treating alterations; (2) the number of navy yards; (3) competition in manufacture among navy yards.
Alterations: The routine suggested by Mr. Otterson is considered advisable for important alterations. If the alteration requested by a single ship is considered of sufficient importance in the discretion of the divisional commander, the matter could be referred to ships of a division and then to ships of the fleet, the result being that if really important, general authority for the change would be issued by the bureau concerned or the department. In this manner, data for future designs would also be on file. It is, however, noteworthy that fully 40 percent of the items on page 863, these being the most important items also, are alterations which have been authorized in general letters from the bureau concerned. A good many alterations requested by ships are either insignificant in character or of a local nature, which statement is also borne out by a review of the items tabulated on page 863. From these two facts, therefore, it would seem that the items listed by the author fall practically into two classes, namely: (1) those of sufficient importance that the need for the alteration is recognized by the bureau concerned, and general authority is accordingly issued; (2) alterations of local nature or unimportant in character. The routine suggested by Mr. Otterson would, therefore, be necessary on exceptional occasions.
Number of navy yards: Mr. Otterson has ably pointed out the disadvantages of consolidation of navy yards. A single navy yard is operated on the basis that whenever economical and military policies clash, the military policy is retained. The consideration of "sound strategy" and the "pork barrel" and the hunt of the office for the man or vice versa should not be introduced to be fog a principle which we use so often these days. One navy yard on the Atlantic Coast would undoubtedly be more economical than five, but as it is obviously an unmilitary policy, as Mr. Otterson proves beyond the shadow of a doubt, why do we advocate it? The policy of carrying "all our eggs in one basket" is not quite as serious as the author makes out, as in time of war repairs to our ships could be effected by private ship yards in addition to our one supposed navy yard. If the repairs to our ships required docking, however, as they probably would, the situation is exactly the one that Mr. Otterson describes, as private yards in this case cannot help us, as only one of the private shipyards on this coast possesses a dry dock.
As an industrial undertaking, the founding of one large yard to do the work of our present yards on the Atlantic Coast is not what might be called a difficult problem in the light of modern engineering. It is easy to conceive that, with our present knowledge, one large plant might be built which would in a comparatively short time pay for itself, provided a proper location were secured. One of the requirements of a proper location is Close proximity to a labor market which offers mechanics of all the varied trades. This requirement positively means the establishment of such a navy yard on this coast in the vicinity of New York, Philadelphia, or Boston. Manufacturing plants frequently build up a city because they offer steady employment. This is not the case with navy yard work, and good mechanics would not build homes and locate their families any place on the shores of Narragansett Bay with the prospect of fluctuating work in a large nearby navy yard. Much more might be said against the establishment of one large navy yard on the Atlantic Coast, but no stronger arguments are needed than those which Mr. Otterson has brought forth.
Distribution of work to our navy yards: The proposal which Mr. Otterson offers bears a striking resemblance to a protective tariff protecting the infant industries. As a matter of fact, Mr. Otterson is pleading for the old method whereby each yard manufactured various articles of equipage in quantities proportional to the demand at that yard, this demand being of course dependent on the number of ships assigned to the yard for repairs, which is the condition recommended by the author (see top of page 872) for determining the factor assignable to each yard to be used in distributing manufacture work. For example, before the manufacture of hammocks was concentrated at certain yards, the New York yard probably manufactured all the hammocks required by ships domiciling at that yard; in the proposed distribution of hammock manufacture, New York would get say 40 per cent of the work on account of the number of ships assigned to the New York yard. There is accordingly nothing new in the proposition.
It does not seem that the author presents any arguments tending to disqualify competition among navy yards in the manufacture of certain articles of equipage; as a matter of fact, it would seem that he has at times jumped to conclusions which are not justified even by assumed premises, namely, when he states at the top of page 871,"so it appears … at a critical time." Such conclusion does not appear to be justified by the statements immediately preceding it.
As to the method or basis of making competitive awards (see page 871), it is understood by the writer that awards are not made wholly on the basis of competitive bids, but that past performances (comparison of returned costs by the bureau involved) are also very largely considered. The writer does not believe that excessively low estimates are intentionally submitted, as each yard knows, if the contract be secured, that it must make good or stand a chance of losing the business.
On pages 872 and 873, the author gives an example of the working of his proposed system and also a hypothetical case of competition. Publishing bulletins containing comparison of returned cost of manufacture and directing investigations would not standardize the efficiencies of the various yards, as there would always be "a least efficient" yard. Some yards have better machinery than others, are better equipped with dies and other expensive labor saving devices. For example, in making drop forgings, would all yards be provided with a set of dies as good as those at Norfolk, or would Norfolk lead in the manufacture of drop forgings and the other yards trail along as best they could?
The competitive system of bidding for manufacturing work has now been in actual practice some time, and up to date no yard has secured a monopoly of any line of manufacture. The practical result has been that manufacturing work has been distributed, one yard making ditty boxes, another yard boat chests, a third yard boat hooks, etc. Actual conditions, therefore, are quite different from Mr. Otterson's theoretical conditions. There is a great stimulus to this sort of competition, because if a manager at one yard sees, for example, that other yards are getting most of the wood work manufacturing, he knows that there is something wrong with his joiner shop and will proceed to investigate it very thoroughly. The object of every efficient manager is to secure the manufacture of certain articles of equipage which will help hint in maintaining his force when there is not sufficient ship repair work. Unfortunately there is not sufficient manufacture work at present so that a steady force can be given employment. There is, however, enough manufacturing at some yards so that the best mechanics may be retained when there is a dearth of ship repair work.
On page 872, Mr. Otterson says that in comparing costs, direct labor is "the true basis of comparison."' The true basis of comparison should be the total cost, consisting of labor, indirect, and material. If any other method is used in comparing costs of different yards, a false conclusion is likely to result on account of the following reasons:
(1) Owing to the looseness of the present accounting system, labor which at some yards is charged on the job as "direct labor" is charged at other yards as "indirect." At some yards, for instance, mill work on boats is charged to shop expense and enters into the cost of the boat as "indirect." Therefore, if direct labor only were considered in comparing the costs of boats made at different yards, those yards which charge mill work as indirect would appear to advantage.
(2) The indirect should be considered for the reason given under (1). Also, a number of shops have shop planners whose labor is charged in the overhead expense of the shop. Planning tends to lower the direct labor cost and to increase the "indirect." If "indirect" is not considered, a shop with a large number of planners would undoubtedly show less direct labor cost on a given article than would a shop with a less number of planners.
(3) "Material" cost should be considered because, as Mr. Otterson says, we desire only the "necessary" quality. Some yards would, for example, use a higher grade of pine than was necessary in the manufacture of certain parts of furniture, some yards make breaker stands of ash while others would make them of cheaper beech, birch or maple. Is it fair that a manager who can reduce costs in such a way should fail to receive any reward simply because a comparison of "direct labor" only is to be made? If such were the case, the temptation would be to use only the very best material, as it is a well-known fact that good material reduces direct labor cost.
Comparison of costs on the basis of direct labor would, to say the least, be elusive, as would be also the comparison of estimates based upon direct labor only.
Severe exception may be taken to the author's logic exhibited in the last paragraph on page 878, as there is not the slightest analogy between the best ship at target practice and the best shop at manufacturing. This the author admits, when he says, "It is no more logical to award the work to our navy yards on the competitive basis than to award the allowance of ammunition to our ships on the basis of which made the most hits at the last target practice." The author then proceeds to make the absurd statement that "the ship that makes the most hits this year will do all the firing next year," with the intention, I presume, to have the careless reader think that it is equally absurd that "the shop that does the cheapest work this year will do all the work next year." Suppose we assume a certain similarity between the ship and the shop and endeavor to make a rational statement about the former and apply this statement analogously to the latter. We would then say, "The ship that makes the most 6-pdr. hits this year will be excused from firing 6-prds. next year." "The shop that makes the best and cheapest ditty boxes this year will be excused from making ditty boxes next year." The foregoing analogy is certainly as sound as Mr. Otterson's, but both of course are absurd.
Competition among navy yards in manufacturing has resulted in a considerable saving of money on account of the fact that the cost is very greatly decreased. This competition may be greatly extended, so that competition will exist not only among navy yards, but between navy yards and private contractors. The amount of money that can be saved to the government yearly by competition alone is considerable. This will be apparent to any one who investigates the cost of various articles in the custody of the General Storekeeper which have been purchased from outside contractors. We have made a little headway in manufacturing in our navy yards due to competition, but the field is yet practically unexplored. We need fear no loss in efficiency such as Mr. Otterson has described due to competition. From observations of a personal nature, I am of the opinion that what little competition we have had has resulted in increased efficiency in some yards, increased stimulation on the part of those in charge, better designs, and better quality of articles manufactured. In certain lines of manufacture, it is found cheaper to keep machines and mills operating, even though the product is sold at a loss, rather than to shut down entirely. In the navy, we do the opposite thing; that is, we shut down a shop or, practically the same thing, run it on very much reduced capacity at the slightest provocation. Why? The answer partly is that we have not yet made a den tin navy yard manufacturing. The subject of navy yard manufacturing and competition therein is worthy of minute and exhaustive study.