History of Electric Induction Heating

This Chapter

Induction Heating
  1. Early work to Salesman
  2. Salesman to entrepreneur
  3. Vacuum furnaces
  4. Henry Rowan, Mars Rocket
  5. Cheston, Cragmet, IRS
  6. Visit Russia, Meet Vera
  7. Around the world, Meet the president
  8. Kramatorsk
  9. Consarc
  10. Consarc UK
  11. Carbon contract
  12. Russians in Scotland
  13. The Embargo is Coming
  14. Embargo and Aftermath
  15. BEPA
  16. After BEPA
  17. Fiber Materials Appeal
  18. Consarc Officials Deny Wrongdoing in Sales to Soviets
  19. Memos from Henry Rowan to Metcalf
  20. Rowland motor patent 1868
  21. Rowland reviews the bids for Niagara Falls power station
  22. Metcalf's father's poem, and Metcalf genealogy
  23. The Peace Treaty of Brest-Litovsk
  24. Problems of Russia's Policy With Respect to China and Japan
  25. History of Ajax Magnethermic
  26. The most important event for Inductotherm
  27. Fright Flight
  28. Black art of carbon production
  29. Polaris Missile
  30. Nuclear Airplane
  31. Nuclear Engine
  32. Molten metal eats through and explodes
  33. Cannon Muskegon Corporation
  34. Metcalf at General Motors Research from April 1955 to Oct 1955
  35. Metcalf pouring superalloy at GE from Oct 1955 to June 1956
  36. Metcalf at Waimet (later Howmet) from June 1956 to July 1957
  37. Black art of carbon production
  38. Project to test NASA hot hydrogen engine
  39. Special Metals Number 9
  40. Metcalf joins Inductotherm group
  41. Device to load materials into a furnace for melting
  42. Bank reneged on a commitment to finance a job in Russia
  43. Inductotherm private airport
  44. NERVA (Nuclear Engine for Rocket Vehicle Application) and all I know about carbon
  45. NERVA Engine Control Rods
  46. same as 383-Nuke.html
  47. Development of Polaris missle
  48. Ajax NASA
  49. Production of carbon fabrics and threads made from rayon
  50. George Houghton, Aerojet Inspector gives Metcalf Rocket history
  51. Rayon to carbon to graphite
  52. Metcalf buys the control division of the Pelton Water Wheel Company
  53. Rowan's account of firing Consarc President
  54. Kama Purchasing Commission, Ukraine
  55. Role of chromium in vacuum melters
  56. ASEA wins contract for isopress
  57. Induction heating to re-refile tank cannon
  58. Hoover-Ugine Company
  59. Letter to Henry Rowan at Inductotherm
  60. John Mortimer in Rancocas
  61. Consarc Board of Directors Meeting
  62. Consarc Board of Directors Meeting
  63. Hillbilly
  64. How to produce Calcarb
  65. Newsday, late 1987
  66. Embargo Regulations
  67. Seizure of Goods
  68. Minutes of Dept of Trade, London
  69. Minutes of ECGD Meeting
  70. Rowan Interview
  71. Bombshell looks like dud
  72. Letter to Hank Rowan
  73. Consarc Board Meeting
  74. Minutes of DTI Meeting, London
  75. Stansted Fluid Power
  76. Minutes of DTI Meeting, 3 Oct 85
  77. Letter to IHI Master Metals

Induction Heating

By James Farol Metcalf

Bank Reneged on a Commitment to Finance a Job in Russia

Once again, it was time for something new. But while our growing sales and work load dictated relocating to a larger facility, we couldn't do it without incurring greater risk and greater expense. The 90-acre parcel of land in Rancocas seemed excessive, in fact it was excessive, but I was determined that it would be our last move, that we wouldn't run out of land again. The acreage alone would cost $63,000. Building a plant, I had learned, would cost an additional $325,000, more money than we could put together and far more than we had ever spent at one swoop. So, no matter where we relocated, the greater space meant assuming a huge debt for the plant and the land. While our line of credit at Provident Trust Company was adequate, it would strain our resources and leave nothing in reserve.

It all gave me a queasy feeling. I hadn't forgotten our experience at the bank five years earlier, when Paul and I went looking for a $25,000 loan to build one single furnace, and we were turned down. Since then, of course, Inductotherm's circumstances had changed; we had lots of banks calling on us, inviting us to bank with them and borrow money from them. Maybe they thought Inductotherm didn't need the money.

But the fact was, we did. Roy's rental program was still a hit among customers who couldn't yet afford to buy a furnace, but we couldn't subsidize the rentals out of our own pocket. Provident National Bank had provided the financing to the tune of some $500,000. This is what the banks call a relationship; I still felt as if we were in hock.

But why was I so squeamish? What could go wrong? The rentals were as good as money in the bank, weren't they? And we had to grow. If we stopped growing, then we stopped competing, which was out of the question. So in August of 1960, 10 days after first seeing the Rancocas site from the air, I suppressed my misgivings and signed the agreement of sale, then went to work designing the new plant.

This time, I told myself, we would make allowances for growth; it would be nice to have some breathing room before having to start knocking down walls and expanding again. Thus, the plant I laid out would measure exactly twice the dimensions of the Delanco plant. It was a 33,OOO-square-foot building comprising a shop 250 feet long by 100 feet wide, and 8,000 square feet of office.

Only, things didn't work out quite as I'd planned. Eight months after acquiring the Rancocas site, with the girders rising into place, we (still in the old place, in Delanco) closed fiscal year 1961 with sales of $3.175 million, almost twice the preceding year's sales volume. And twice the production load. I no longer harbored doubts about moving; I couldn't wait to get into the new plant.

As construction proceeded, it was a thrill to drive past what was once an empty field and see Inductotherm's new home rise from the ground. As always, my former partner, Paul Foley, shared our pride in the company's growth. "Wow! This is going to be some place. Hank," he said as I drove him and his wife past the construction site during one of his frequent lunchtime visits. Already the walls were rising above the plant's steel girder skeleton.

"We're planning to put a landing strip in the field behind the plant," I told Paul. "Then I won't have to waste time travelling to the airport."

At times like this, part of me regretted the fact that Paul hadn't stuck with us. I owed much to my long-time friend, but now I owed far more to those others who'd walked away from more secure jobs with higher-paying salaries to join me; it was gratifying for me to see them grow as our company grew.

Dick Walker was now Vice President of Manufacturing, directing a 35-man work force, with Tom Kennedy as his shop supervisor. Roy Ruble was on his way to being named Vice President of Sales. Tom Pippitt, the future Vice President of Production, was invaluable on the purchasing side, and was keeping our costs well below the industry norm. Jess Cartlidge was no longer an unskilled shop worker; he was now a sales and service representative, and he was taking flying lessons in order to cover more ground. Ted Kennedy had always been more scientist than engineer, and he was now happily pursuing research and development in our so-called lab.

How many times now had this team bailed out the boss after I'd promised an impossible deadline, or promised to build something we hadn't yet figured out how to build? We had lost count, but the new building would be testimony to what could be achieved through mutual sacrifice and hard work, and we were all anticipating the exciting move into the new, spacious plant.

The need for the new facility was underscored over the next couple of years as the growing jet age put a huge demand on vacuum alloys. Following several 3,000 pounders, we jumped to a 5,000-pound system for Special Metals in Utica, New York, a leader in vacuum melting, run by Falih Darmara. Next was a series of vacuum furnaces for Allvac Metals Company in its challenge for leadership in the super-alloy industry.

Allvac was the brain child of none other than Jim Nisbet, the young GE Research metallurgist who had bought our first control panel back in 1954, just after Paul Foley had almost lost heart. Jim had become a good friend over the years. We'd supplied other induction equipment for his projects when he was with Universal Cyclops; he and I had discussed the virtues and tribulations of "business for yourself" over an occasional dinner. When Jim took the plunge and started Allvac, he ordered a 500-pound furnace for vacuum melting (small so he could afford the learning curve) and, for some years, I had the fun of serving as a director of his company.

A year later, when his people from the North Carolina countryside were trained, he jumped to a 3,000-pound vacuum furnace as his primary melter. Typical of Jim, he now wanted the world's biggest, and since his arch rival, Special Metals Company in Utica, New York, had just started up our 5,000-pound furnace, he insisted on 10,000 pounds capacity.

"Any problems building that?" he'd asked. "I don't want to be a research lab." "Oh, no," I had replied, "we'll power it with a 1,000 kW low-voltage tripler (which we had not yet built) so it's all pretty straightforward technology." Underneath this brave front, I had lots of concerns. It wasn't nearly as challenging as our first tripler, but it was going to be a big step, a daring one for Jim and a great opportunity for us. Once again, Jim Nisbet had given us a much needed boost.

Against this backdrop of frenetic growth, moving day finally arrived on August 20, 1961, and an air of excitement prevailed as the moving trucks pulled up outside the Delanco plant. Our workmen stopped what they were doing, helped load equipment and components they were building onto the trucks, and then followed the trucks to the new plant. As soon as the equipment and components were unloaded at the new site, the workmen wrestled their machinery and materials into place and resumed their projects where they had left off.

We had, it seemed, moved just in time; during the time it had taken to build the new plant our work force had increased from 46 to 60. The shop workers were almost giddy at the contrast between the Delanco plant and our new, spacious workplace in Rancocas, with its higher ceilings and overhead cranes for moving heavy loads from one work station to another.

We were now poised for greater productivity and growth than ever before. What ensued, however, was the opposite; the transition from Delanco to Rancocas proved costly in ways big and small. Executive and management time had been diverted from running the business to planning the building, overseeing construction, and planning the move. Once in, there was a new work flow to establish, new routines to be learned, and new personnel to train.

Consequently, sales in fiscal year 1962--the first to be observed in Inductotherm's new board room--declined from 1961's record of $3,I75 million to $2,517 million. It made me all the more determined to catch up to our previous pace.

This is the period that Ajax Magnethermic sold, with my help, a 3000 pound vacuum melting furnace to Firth Sterling and a 10,000 pound unit to Carpenter Steel. These would have been in the Inductotherm order book if they hired me in early 1961.

I made a point of touring the plant with shop foreman Tom Kennedy every morning. It was a rare day when I couldn't spot something that could be done more precisely or more efficiently. I hadn't forgotten the trauma of four years earlier, the consequence of trying to run everything myself rather than delegating responsibilities, but old habits die hard. And from time to time, I couldn't help pausing by a drill press operator to suggest proper speeds and feeds. Or showing a new shop worker how to build copper coils more efficiently.

My comments weren't always welcome; not by the new men on the floor, who found it unsettling to turn around and find the CEO looking over their shoulder, and not by the men they were working for, who sometimes complained that I was taking away the authority I had given them. But, darn it, Inductotherm workers weren't automatons. I wanted every man on the floor to use his head, to accept responsibility for his own job, not just follow orders blindly. And by and large, they seemed to share my attitude. They were good men who wanted to do things the best way possible (after all, weren't they sharing in the profits?), which generally meant the fastest way consistent with top quality. Sometimes finding the best methods took some trial and error outside the normal shop authority. I enjoyed, and even felt it vital to encourage, innovation. So, whether I called it training, innovation, or just plain coaching, I continued to interfere.

This didn't sit right with Roy Ruble, who agreed with Dick Walker and Tom Kennedy that I was undermining the authority of the managers. On one occasion, as soon as we were off the shop floor, Roy took me aside. "You can't do that, Hank. If you want your men to pay attention to your supervisors, you've got to deal with them through the chain of command, and build up the prestige of your supervisors."

I found myself agreeing in principle with him and my other managers again, but my daily tours of the shop continued.

If our management style was changing, our operating philosophy hadn't changed a bit; my search for breaking points continued. How else could we reach our potential, I reminded my managers, unless we knew where that breaking point lay--for men as well as machinery?

"Don't be afraid of mistakes or of breaking tools or straining machinery," I would tell Dick Walker, time and time again. "We can replace tools and we can rebuild machines. The important thing is to find out what our equipment can do. And what the men operating it can do."

Dick would shake his head. Through crisis we had grown strong, and if we were to grow, it would be through yet more crises.

Still, I hadn't suspected that, within a few short months, we would be struggling again, not for a share of the market, but for our very survival. This time, it wasn't the competition that was threatening us, but instead, a supposed ally. Our bank.

According to the letter from the bank, we owed them a half million dollars. They wanted their money, and they wanted it now!

I rushed out of my office to see Bob Hotchkin, whose office was now only a few steps from mine. He was winding down his independent CPA practice to join us full time as treasurer.

"There has to be some mistake," I told Hotch. "We're not delinquent. We've never missed a payment. Why would they loan us money, only to turn around, while we're using it, and say, 'Okay, now you have to give it back again'?"

"I don't know," said Hotch, shaking his head. "Banks don't usually treat their customers this way. Especially not a company that every other bank wants ad a customer."

It didn't make sense. We had always enjoyed cordial relations with Provident National and stuck with them, resisting the blandishments of several other banks that were eager to handle our account. There was no reason to suspect things would change after Provident National merged with Tradesman's, another regional bank, to become Provident Tradesman's. As a result of the merger, we learned, Inductotherm would now be dealing with a new bank officer. The new man wasn't familiar with Inductotherm, he admitted, when he came to visit us concerning the loan. But he was disturbed by our financing practices. Here we were, using short term loans for long-term leases.

"And?" I asked, casting a look at Hotch, who appeared no less perplexed than I.

"Well, short-term funds are supposed to be used for short-term purposes and cleared up at least once a year. You're using them for long-term purposes, and some of this money has been outstanding for two years or more."

"But the bank knew what we would be using the money for when we borrowed it," I told him. "If the bank didn't want us to use its money for leasing, why did it give us the money in the first place?" "I'm sure I have no idea," the banker replied. "I wasn't involved in the original transactions. If I had been, I wouldn't have permitted the use of short-term funds for long-term leases."

"You mean, if the bank had called this a long term-loan when we borrowed the money, there would be no problem?" I asked him.

"Well, there would have been limitations and restrictions and perhaps a higher interest rate, but it could have been arranged. Nonetheless, this money was loaned as a short-term loan. I don't know what understanding you had with the prior loan officer, but it's my job to clear up these outstanding accounts," the loan officer said punctiliously.

Hotch and I could see we were getting nowhere; there was no point arguing that, in Inductotherm, the bank had an eminently credit-worthy, productive account with a record of extraordinary growth. The new loan officer possessed the infuriating self-righteousness only the truly narrow-minded enjoy. I choked down the temptation to tell the loan officer what I thought of him and his pettiness and to question why any bank would employ him.

"All right," I told him, with a civility I felt he hardly deserved, "We'll pay you back every penny we owe you as soon as you want. We'd hate to be using short-term funds for long-term needs. How much time do we have?"

"Oh, I'll be reasonable," said the banker. "I'll give you ninety days."

I was furious as he walked out the door, and I was hardly mollified by Hotch's insistence that Provident Tradesman's new intransigency shouldn't pose any great problem. "Hank, every bank in Southern New Jersey has been after our business. We'll just change banks."

What Hotch said made sense. There were lots of banks that had seemed eager to loan us the money. But, in the course of the next few weeks, we were reminded again of the lesson we'd learned years earlier. Now that Inductotherm needed urgently to borrow money, the loan officers of the First Jersey National Bank, who had been begging us to take their money and bank with them a few months earlier, turned a deaf ear to our plight. "Maybe in a few months," was their answer. Others assured us cheerfully they'd be happy to handle our banking needs, "just as soon as you pay off that $500,000 debt."

With two months left on the deadline Provident Tradesman's had given us, Roy and I sat in my office. I was despondent. Every bank we approached had turned us down. Bob Hotchkin had arranged a $250,000 mortgage from an insurance company, using our new building as collateral, but that left us $250,000 short. I was no stranger to risk, but I'd always been careful to take risks within my own sphere of control. When I'd risked our little firm's reputation on a seemingly hare-brained demonstration at the U.S. Mint seven years earlier, I knew precisely what I was doing, and was confident of winning. When I promised to create a tripler-powered furnace based on a technology that we knew virtually nothing about, I was sure that somehow, between Ted Kennedy and myself, we would succeed. When we were building Allvac's huge, 10,000-pound vacuum furnace--the world's biggest vacuum furnace--failure seemed impossible. For that matter, every departure from conventional thinking represented a new risk, and it had been our success at innovating and risk-taking that had built Inductotherm.

But this was a different situation entirely. This had nothing to do with engineering, or technical progress; it was not I who had been the impetus, but somebody else. Financially, I had always husbanded my resources, careful never to overextend myself and always to maintain a reserve. It was disquieting to think that, unknowingly, we had become vulnerable. For the first time in my life, I found myself at the mercy of others, people who were perfectly within their legal, if not their ethical, rights to demand "Pay us the money, or else." It was a terrifying feeling, even though the "or else" was never clearly defined.

After the rejections from the banks, it seemed there was now only one source of funds left to us--our lease customers. "We've got to do it, Hank," said Roy. "We have to call them, and ask them to buy the furnaces they've been leasing from us.

I must have looked as if he had just twisted a dagger in my heart, and he knew what was going on in my head. "Look, I know you hate to ask for favors, but this isn't a favor. Look at it this way: economically, it's always more viable, long term, to buy rather than to lease. And I think most of our customers would welcome the chance to buy out of the lease contract and own their furnaces, now that they've seen how they can operate. Thanks to Inductotherm, foundries everywhere from New England to North Carolina and throughout the Midwest are operating more profitably and efficiently than they'd ever hoped. It's not just selling them a furnace; we're giving them the chance to own what they're already using. "Besides" he said, clinching the argument, "we have no choice."

And so saying, he picked up the phone, and began dialing the first of a dozen lease customers we would call in the next few days. Now that they'd had a chance to see what their new melt systems could do, were they interested in terminating the lease agreement, in favor of buying it?

Some of them were. So many, in fact, that, with one week left, Inductotherm had repaid $450,000 of the $500,000 bank loan, and we were zeroing in on the rest. But we didn't have to worry about the $50,000 worth of short-term loans; now that we'd proven that we didn't need their money, they were totally content to leave it with us. "We've, uh, decided you don't have to close out the rest of the loans," said the man from Provident Tradesman's, his previous arrogance now considerably subdued. "We've decided to let you carry these according to the original agreement."

I told him that was very understanding of him, and hung up the phone.

"Well, Hank," asked Roy, "should we switch banks now?"

I had to admit I was tempted to take our account elsewhere, after all the trouble they had caused us. On the other hand..."I don't think so," I decided. "With another bank, we'd be starting out with a fresh slate. Provident Tradesman's will have to go a long way to live this one down."

In 1980 this same bank reneged on a $17 million commitment to finance a job in Russia. This time it had a very happy ending.