Visit Russia, Meet Vera
Nixon was elected for a second term in November 1972 when Roy Ruble asked me to come up to his office (Inductotherm) to meet Stan Strauss from a company named Phillips Overseas. The owner of this company was the son of a Russian immigrant who came to New York in the wave of Russian Jews in 1888. This family of traders had ties to the Soviet trading company named Amtorg in New York. Strauss offered us an entry into what he said was a huge market for foundry equipment in the Soviet Bloc and his commission was only 10%. His pitch was that without their contacts we could not obtain the business. He reminded Ruble of the fact that Inductotherm had already lost a large order for induction furnaces for the Kama River truck factory. He had some specific business in his briefcase including a technical paper that describing the Latrobe 30-ton vacuum melting facility Inductotherm sold in 1961 through Stokes. (This facility was later copied at Kobe Steel in Japan.)
We did not agree to sign up Phillips Overseas but did agree to pay the commission on sales they brought to us. After the handshake Strauss told us that a meeting had been scheduled with the buyers from Metallurgimport at the Kama Purchasing Commission's office in Pittsburgh. We prepared a fifteen-ton model of the INCO facility to show the Russian buyers.
Cheston sold their twin engine Apache to a pilot at Red Lion airport for cash and 200 hours of piloted flight time in the plane. The twin engine was down for repairs so a single engine plane was used to get to Pittsburgh.
It was a wet, cold and windy night in November 1972, and the flight was very rough. We nearly crashed when the box containing the model bounced into the pilot.
Stan Strauss met the airplane at a small airport near Pittsburgh to find that the model was broken into several pieces. He helped put the thing back together but this caused us to be late for the scheduled six o'clock meeting and dinner at the Pitt Hotel. The men from Metallurgimport had no understanding of the process of the vacuum treatment of metals that had evolved by that time. The stated purpose of the facility they wanted to buy was for producing shafts for gas turbines and metal for turbine blades. I suggested that they should consider a VOD, Vacuum Oxygen Degassing, facility for the shafts and a 5-ton VIM for the superalloy production. buyers had the task of buying a furnace like Latrobe's and would not listen to the suggestion that they were trying to start too large and should buy a smaller furnace.
During dinner the President of Metallurgimport, Maximov, told me I could meet with his clients in Moscow only if they had a written proposal to study. This was not my method of selling but we found a compromise. They wrote a one-page specification and I wrote a one-page proposal.
Here is a good place for a little history of trade with Soviet Union.
I would just have to learn to operate in this bureaucratic system. After a few years of experience I learned how to work with, and more importantly, around, this system.
In early 1973 I traveled with Ruble to Cannon Muskegon to sell them a new facility for making vacuum melted master alloy. I was surprised to see that my Rube Goldberg modifications to the 500-pound furnace in 1957 were still working. I was more amused to see that they had copied this design in a 2000-pound facility they built for themselves a few years earlier.
George Cannon had plenty of money in his private estate that had grown from the real estate valued around a lake that was formed due to the continuos digging of foundry sand for seventy years. His metal company was still struggling and he told us he was short of funds and could only spend $300,000 on the new 500-pound facility he wanted to buy. Ruble suggested to me that we could take this contract as partners at this price and split the profits.
On the flight back to Rancocas we discussed the possibility of the job in Russia. I told him that a new wave of vacuum furnaces for master alloy was coming at that this job might be pie in the sky. I reminded him that all my trips abroad had been money losers. He told me to fight to get it and if another partnership was required we could do it. He reminded me that export sales were at reduced income tax levels. I told Ruble that the new wave of interest in master alloy and vacuum arc furnaces made it again desirable for a Consarc link up. Ruble told me to stay calm because an explosion was going to occur at the blue building and I should be ready to pick up the pieces. We also discussed the fact that Cheston was not making too much progress into the field of Induction heating.
Cheston was Inductotherm's largest customer and while Ruble took every fiscal advantage of the situation we became very good friends over the years. When conflicts over costs incurred by our people due to faulty design or workmanship we would stack all the papers on his desk and find solutions. Many times we would reach impasses and flip a coin. Ruble was very concerned that Rowan was grooming Jess Cartlidge to take over Rowan's position when he retired.
Another "fly in the ointment" was that Ruble did not want Jessie to capture the Soviet Block market for England. They were already fighting over the markets in Europe and Jess was looking toward India and China.
Bob Klingerman traveled with me to Moscow on Pan Am in early February 1973. A scale model of the INCO furnace that we planned to assist in the sale was damaged. Moscow was cold, and it looked cold. The old Moscow air terminal was cold and dirty. My first impression was one of a police state, because the immigration people were young army men in uniform. They seemed to take forever to look over the passport and visa documents. Actually, these young soldiers were just out of basic training and were taught to be very careful. The real reason for the delays was to hold back the people until the baggage was delivered to the customs area. The customs area at the old airport was always jammed. At least two hours was needed to clear the place.
Soviet citizens returning from a trip brought all the consumer goods they could when they returned. The customs agents looked at every piece of their luggage to collect customs duty. Our bags were not opened, but they did look through our briefcases. They examined every paper including the newspaper looking for propaganda and pornography.
The hotel rooms were prearranged by the Intourist agency at the old Moscow airport. The paperwork system for reservations was all handwritten, which meant we had another wait while they located our rooms. I did not understand a word of Russian, so the whole event was strange to me. We were driven by car downtown to the hotel.
The first sight of Red Square in the snow, with all its bright lights, is something that leaves a lasting impression. Our hotel was in the center of the city, so the driver had to drive down Gorky Street, Moscow's Fifth Avenue, that ends at Revolution Square, just across from the Kremlin.
When we drove through the center of the city we had a full view of Red Square and Saint Basel Cathedral. The falling snow through the lights was breathtaking. Our rooms were in the Metropole Hotel in the center of the city, across from the Bolshoie Theater. My room was a deluxe one, with old antique furniture and very colorful curtains.
One floor below our rooms was the office of Chase Manhattan Bank where there were no tellers or safes because no money was changing hands. The elderly gentleman running the bank did not have a secretary on a full time basis.
For the indoctrination, the system joined us to a group of American businessmen that had no relationship. There was one possible tie, Airco Temescal was attempting to sell the used furnace they installed years earlier to make nickel free stainless steel. Our first meeting with the customers was held in one of the high buildings on Kalinen Prospect. This group met with their management and specialists. The tone of the meeting was a welcome to the USSR with a little speech on the value of the socialist system.
Upon departure from the building, the buyer saw that we were not dressed for the cold weather. I had no hat, no scarf, no gloves, and a light coat. He hailed a taxi in a no stopping lane. The street policeman gave him a hard time, but he saw a man about to freeze to death, so he allowed the dumb Americans to use the taxi.
Lack of meeting rooms in Moscow meant that we used my hotel room for the sales meetings. Klingerman repaired the model and, along with pictures, we began our selling task. The concept was wrong for their end use. We tried to convince them that thirty ton of steel for making a shaft should not be produced by this method. The leading metallurgist, Volkov, worked in a laboratory in Moscow where he operated a small research furnace. He fell in love with the model and began his plans around it.
After the long working days we would stop in the dollar bar (Soviet currency not accepted) on the first floor for a little vodka and social get-together. My casual comment that Khrushchev was a fool did not make me friends with the Russians at that time. Soviet people that met with Americans at that time were died in the wool Communist and the comment was in bad taste. That was the last political comment I made during the visit.
The buyers had a major complaint. We had no written proposal. He showed us German and Japanese proposals to show us. These offers were thick and well documented. I asked him a simple question. If he wanted a woman for the night and outside this hotel stood three women, two with signs giving all their sizes and specifications, a third one without a sign, but the most attractive, which one would he select? His answer was, "I will take the pretty one but first I want to be sure she does not have a social sickness. So write, Jimmy."
The day before Klingerman departed, the buyers allowed us a day of culture. The translators they were using were two young Jewish girls from the Intourist agency. They arrived early in the morning with an old but very comfortable limousine. We toured the city for three hours before we suggested lunch. The temptation was something they could not refuse. They had never had the chance to eat at the Oragvie, a famous Georgian restaurant, because table space was always short. This restaurant was wide open for dollar customers. These girls let us peek under the veil of Communism, as they were eating what must have been a feast for them. The food was tasty. They had two requests. The first was for cheap American dictionaries because they were learning that the King's English was not American. The second was for plastic shopping bags with store names on them, which they understood American women threw in the garbage.
That evening Klingerman and I walked from the Metropole to the National Hotel, a place where Lenin and Hammer had hung out in the old days, to have dinner. We sat with some engineers that were supervising the start-up of automatic hot dog producing machines. They told us that up to this time all of this type of meat was hand packed.
Just before I fell asleep Klingerman asked me to quickly come to his room because he thought he was seeing the start of a riot. The situation was this: As a car would enter the area below his window, a mob of people would rush to it. I was to understand much later that this activity was criminal and very capitalist. The cars were owned by the state but operated for a profit after the taxi service was closed. The people were just trying to get home and outbidding each other for the service.
I remained alone in Moscow to write a fifty-page document. My proposal was written on the right half of the page to allow Russian text on the left. Simple words and double spacing was used to make it look long.
The young buyer was ordered to take me on a sightseeing tour to an old monastery about sixty miles north of Moscow. He drove one of the trading house's new Volga and pretended it was his. He did not want to go, but his task was made easier because he took his cutest translator to assist him. The monastery was an active one, with lots of old and beautiful buildings.
A man was sitting on a bench with a card in English. The card stated the system suppressed religion and the church needed cash, so please give. The buyer scolded me for giving the man a ruble. He told me that the man was probably richer than an American capitalist. He did not like that situation and used it during our final negotiations. We stopped at a restaurant north of Moscow that served very tasty wild meats of deer, bear, rabbit, and the like. This town is very near the site of the so-called carbon-carbon project.
My new document satisfied the buyers, so my first visit to Russia came to an end. Moscow had been an interesting new place for me, but the hotel and restaurant service was miserable. I did not understand any of the written or spoken words. All the women were bundled up in the same dark coats and there were no children in the streets.
I departed Moscow with most of my previous visions of a police state confirmed. I had mistaken police uniforms for army uniforms. All the people from the Ministry of Defense wore uniforms in those days. Retired soldiers were wearing old army overcoats with their medals on them. It had been a fairy tale for me, and I wanted to come back for the business.
There was an explosion at Consarc on February 26, 1973 while I was in Moscow.
Haubenstein led a Consarc crew that included Roberts and two engineers to a very important sales presentation to Bethlehem Steel on that faithful day. It was to be the largest order in Consarc history. The management team had an idea what was going down and they were somewhat prepared. Wooding placed an emergency call to Haubenstein that he excepted because his wife was terminally ill. Wooding fired him on the spot. The next morning he was informed that the building was going to be shut down and the whole operation was to be moved up the street. John had no intentions of moving away from a building that was designed and had an experienced crew to build the type of equipment that he could sell. Some Consarc service men were also not pleased at being kept in the dark. He started to raise the money to set up a small business to sell crucibles and other items.
Rowan calmed things down when he told the employees that only officers would lose their jobs and they could stay in their blue building. Ruble told me the story but suggested that it was not the right time for me to talk with Rowan because many legal things had to be worked out and that he was very upset.
Haubenstein had a sales trip planned to Brazil. Electrometal was ready to purchase a vacuum arc melting facility and J Wooding was already in Brazil seeking the business. John put on his best selling hat and flew home with the business. The owner of this business was a very interesting man that I would do business with after my retirement.
In June 1973 I returned to Moscow to make the technical presentation a little better prepared. Our New York agency sent a young Russian immigrant as the translator. He was one of the first Jewish immigrants to return to Moscow as an American with green card status. This time the streets were brighter, flowers were blooming, and young ladies were in mini-skirts. The military were now in civilian clothes and policemen were in their summer uniforms. We stayed at the Rossia Hotel that overlooks Red Square.
The buyer's engineers had used my original document, which they translated into Russian, added to and modified, and then translated back to English. The English in the new document could not be understood. The task was to write the English so we could read it, and then have their translators make sure the Russian said the same thing.
I met Vera the first time on this trip.
The technical document was signed Friday morning. A seat on Pan American was like being back in America. The international issue of the Herald Tribune was on the seat and the food was American. Moscow was behind me with the possibility of a large order.
When I returned to my office the next morning a man was waiting. He introduced himself as an agent from the CIA. He knew about my trip and the general idea of the proposed sale. He gave me a written document on plain paper that was unsigned and undated. This document asked me to become a technical spy for the CIA. It stated that all Soviet visitors to the States were spies and that my efforts could counterbalance that. The CIA does not have the right to approach American citizens. This activity stopped after the Watergate hearings. He told me they were recruiting the press and some tourists to assist in their intelligence efforts.
I agreed to report anything major, but he insisted that even the smallest detail was useful and it was my patriotic duty. I asked this man to give me an official document requesting my services. He said that would be impossible, so he left without my promise. The FBI also interviewed me, but their interest was in my Russian contacts that visited New Jersey.
With this spy, counterspy stuff behind me, it was time to get serious about the Russian market. I hired a private secretary who had studied Russian in college to handle my paperwork and teach me Russian. Lona as the Secretary took the records of the directors and shareholders in June 1973. They noted that it had not been a good year but things were looking promising for future sales. Rowan, Ruble, Raufer, and Hill were directors. Rowan congratulated me on establishing a possible market in Russia.
We were again invited to Moscow in August 1973 to do the commercial part of the contract. This time our business agent traveled with me. We stayed at the Intourist hotel on Gorky Street.
This was a very busy time for me. The buyers had again rewritten the specifications. It was necessary to rewrite the whole thing again to avoid costly problems and guarantees. Typing in Moscow was a major problem. We found a typist who was the wife of an American military attachŽ. The changes were major, but by using the Xerox and white ink we were able to keep ahead of the task. Price was the major problem. The buyer was offering very little for our equipment.
The document still required some revisions to remove some unessential items so as to improve costs. We worked in my room until two in the morning. The buyer refused to drink the vodka or eat any of the cold cuts that we ordered late in the evening. One of his comments made me very angry. He said that a capitalist would sell his grandmother for twenty percent.
My agent was worried but agreed to have the typist prepare the final document the way we wanted it with regard to scope of supply and guarantees. We had our last meeting that lasted about five minutes. The users had been sent away, as only price remained. They were a million dollars low. I told the buyer that he could not afford me this time. In the elevator he asked me to call his boss if he had mistreated me. He asked for the typed document because we had all the copies and drafts. When we arrived at the hotel, a senior buyer called and raised his offer by three-quarters of a million. At our face to face meeting he offered to split the remaining quarter of a million difference. I took his offer as a new one and offered to split the split, or a sixty thousand dollars reduction from my final asking price, but with the document written the way I wanted it, plus a reduction in agent's commission.
The price was still too low for a reasonable profit and the concept was wrong. I returned to the States for the formal signing of the contract in New York with the President of Metallurgimport. Rowan and Hill were invited to attend the dinner given by the New York agent after the signing. Seating at the table was by rank. When I first met Metallurgimport I was the firm's President. The Russians could not understand how a man could lose his position just after signing a major contract. Metallurgimport's president told a joke about the Moscow elephant that accepted the position of a rabbit as long as the zoo's operator remembered that he had the appetite of an elephant. I was not moved down the table because of rank.
We hired a Russian immigrant as the main translator. Ala was a Jewish author and journalist from Leningrad with a great deal of spunk.
On July 30 1973 Halderman told the Senate Watergate committee that the Nixon tapes reveled that there was no cover up concerning the break in. One month later Henry Kissinger became secretary of state. The Soviets would not allow their children to watch Sesame Street because the popular puppets taught imperialist ideas.
Shortly after Cragmet was formed in Utica Reese DeHaven and Vince Flynn left Temescal to form a business. Reese had a problem betting the ponies and by mid 1974 Flynn was left with a bankrupt company and his house backing a small business loan. I was pleased to be able to hire him because Sid was gone and Klingerman was going to be tied up with the Soviet job.
The Metallurgimport contract provided that we return to Moscow in sixty days to present layouts for approval. We arrived in Moscow to find the room reservations were mixed up but they found us a hotel on the outskirts of Moscow. The buying house found us rooms again at the Metropole. Klingerman had a poorly lighted room, but somehow, he was able to produce the layouts in good form. We received approval so construction could start. The brick refractories were questioned, which gave me the next reason to be in Moscow.
Our agent arranged to escort Roy Ruble, the President of Inductotherm, to Moscow on a separate project. He was attempting to sell a cast iron holding furnace to the Zel truck factory in Moscow. The Kama truck factory was having some difficulty with their Ajax furnaces and Ruble saw an opening for a large sale to that plant. Metallurgimport saw no reason for me to attend this meeting so they did not support my visa request. There were refractory problems to be worked out with Volkov so I went through the back door and obtained a tourist visa in order to travel with Ruble.
Let us read a small portion of Rowan's book: "The Fire Within" copyrighted 1995.
"Outside the plant, though, there were far more complex issues emerging, caused by the changing nature of our business and our products. These weren't questions or matters of "corporate culture," but of national security.
All the while that Inductotherm had been expanding into overseas markets, I had longstanding misgivings about selling our equipment to buyers in countries with a history of enmity to the United States. My chief concern was the possibility of providing them with equipment that could provide an economic or industrial edge over the United States.
The Soviet Union was one of these. Oh, sure, the State Department and the Department of Commerce were encouraging trade with the Soviet Union as a means of easing the tension between the two countries. Yet, there was a difference between sending them Coca-Cola, blue jeans and wheat, and selling them our technology. I had never forgotten what happened when Ajax shared its induction furnace expertise with Japan and Germany, prior to World War II".
I can understand that Rowan believed what he is saying but never once did he take an action to stop selling his products to the world market where laws allowed him to sell.
On the home front Jody was immersed in charity work that kept her mind alert enough to cope with the children. She was spending more money than I was earning, and my borrowing against my stock were steadily increasing. I was not helping things when I stopped at the bar after work each day for drinks with Hill. He was in trouble with his marriage and was preparing for a divorce.