History of Electric Induction Heating

Table of Contents

This Chapter

By James Farol Metcalf

Rowan's book is hardcover. It is red with gold lettering. The cover of the first edition has a color picture of cast iron being poured from an Inductotherm coreless furnace in to a ladle. The flaps on the cover is a short story about Rowan and a small amount of information on the professional writer that assisted him.

The price shown on this flap is $24.95 and can be purchased at the Library of Rowan College at Glassboro, New Jersey. Rowan has a supply of these books that he gives a gifts to special persons of his choice.

Some books have shown up on the used market. I have a small stock and can sell or loan to those who would like to read this book.

The inside page is a color photograph:

A 25-Ton Inductotherm Coreless Induction Furnace Pouring Steel at National Roll Co. in Avonmore, Pennsylvania

The title page:

The Fire Within

The story of Inductotherm Industries, Inc

and the man who built it.

Henry M. Rowan


John Calhoun Smith

The copyright page

Inductotherm Industries, Inc. is a New Jersey Corporation headquartered in Rancocas, New Jersey, 08073.

THE FIRE WITHIN. Copyright 1995 by Henry M. Rowan with John Calhoun Smith. All rights reserved.

Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information, address Penton Publishing, 1100 Superior Ave., Cleveland, Ohio 44114.

Penton Publishing books may be purchased for educational, business, or sales promotional use. For information please write: Penton Custom publishing Group. Penton Publishing, 1100 Superior Ave., Cleveland, Ohio 44114.

First Edition, 1995

To my wife, Betty, for her steadfast

encouragement and faith without

which Inductotherm might never

have been launched.

And to the men and women who joined

us in building this unique company.


1 Hot Metal

2 A Quest Begins

3 MIT on a Shoestring

4 The Liar of the Dragon

5 No Retreat

6 Escape

7 "How Would You Like to Build a Furnace?"

8 Dashed Hopes

9 Flying Solo

10 Controlling Crisis

11 "How Fast Can You Get Here?"

12 A New Beginning

13 Twisting the Dragon's Tail

14 A Proposition from the Competition

15 New Talents

16 The Tri-Line

17 Rancocas

18 "All That Glitters..."

19 Spreading Our Wings

20 60-Cycle

21 "You're Ready For Me Now"

22 Solid -State

23 A sorrowful Flight North24 Going Global

25 An Award From the Queen

26 Shazaam!

27 Exorcism

28 Roy

29 Expansion

30 Inductotherm Japan

31 And David Too

32 Passage to India

33 Foreign Entanglements

34 The Persian Gulf

35 A Small Gift

36 A College Endowed

Epilogue: A New Purpose

Chapter 1

Hot Metal

When metal melts, there's a smell in the air that sends a shudder down your spine and raises goose bumps on your flesh. It's an unworldly aroma, strangely acrid yet sweet; our planet may have smelled much this way a billion or so years ago, before the earth's crust cooled. That tell-tale odor is, in part, the impurities in the mix being vaporized, and, in part, the furnace lining being consumed by the molten mass it contains. It's a constant reminder that molten metal is voracious, like an animal capable of eating its way out of its own cage.

It can be exhilarating, too; foundrymen say it gets into their blood, and I know what they mean. But that one afternoon in the winter of 1955, the air was thick from the smell of nickel alloy, liquefied at 2,800 degrees Fahrenheit, and I was scared.

I was standing in the melting room of the original U.S. Mint on Spring Garden Street in Philadelphia. It was a cavernous, cement-floored chamber, about 60 feet wide by 150 feet long. In front of one wall stood six melting furnaces, an intense orange yellow glow at the brim of each, casting a weird light over those nearby. The penetrating hum of 1,000-cycle electrical generators resonated throughout the room.

On most days there would be a handful of workers going about their business in the room, but today was different. There was a crowd of maybe fifty men--foundrymen, metallurgists, electricians, mechanics, melters, and Mint administrators-gathered expectantly around the Mint's six new induction furnaces, all of them watching me intently. Doc Leland Myer, the gray-haired Mint melting superintendent, stood next to me with a stopwatch in one hand and his pipe in the other as I removed my coat, picked up a long, angular wrench, and stepped up to one of the furnaces.

"Ready, Hank?" he asked. "On the count, we'll turn the water off." At this, some of the bystanders shook their heads, as if in warning, but nobody in that room needed to be reminded what that meant. The only thing that was keeping the liquefied nickel alloy from eating through the furnace that contained it was the refractory, a crucible formed of a clay-graphite compound, a high temperature insulating material backed with silica sand. A copper coil was wrapped around the crucible like an amorous python. The purpose of the hollow coil was two-fold: it heated via the tremendous current induced into the metal from the magnetic field produced by thousands of amperes of electrical current running through the copper, and it cooled by means of the water coursing through its middle, carrying off the heat from the refractory.

Once that water was turned off, though, the molten metal would start consuming whatever it touched. Given enough time, it would eat through the refractory, through the walls of the furnace, and then, through anything else it touched. I felt the heat of the furnace against my face as Doc Myer counted. "Four. Three. Two. One. Go. Okay, Hank. The water's off. It's all yours."

He stepped back as I inserted the curiously shaped wrench into the trunnion, the hollow, 6-inch-diameter bearing around which the furnace tilted for pouring, and began probing for the terminals on the power cables that carried both electricity and water into the furnace. Within a few seconds I had the wrench locked around the first terminal nut and began torquing it free as fast as I could. So for, so good. But as I removed the first lead I imagined some of the onlookers laying odds on the outcome. One know-it-all voice kept telling bystanders, "Rowan's a headstrong fool. He knows he's wrong, but he'd sooner kill himself than admit it."

I gritted my teeth. He was right on the first count and maybe on the last, but he was wrong on the second. I knew I wasn't wrong. I wasn't, because I couldn't afford to be. Yet to prove it, I had, once again, talked myself into a predicament that I would now have to fight my way out of. And for a fleeting moment, I wondered why I so often did this to myself. To be sure, there were safer ways of making my point, but it was too late now, and I could only plunge forward.

I located the second lead and twisted it off with a vengeance. I was determined to do what the Mint's "experts" had said was impossible. Then, they would have to agree that the performance gains we had obtained with our new design concepts would not be offset by higher maintenance costs.

It had begun when Doc Myer called me to talk about the six new melting furnaces the Philadelphia Mint was operating. I was pleased to talk about them since I was, at the ripe old age of thirty-one, the chief executive officer of Inductotherm Corp. in Glenolden, Pennsylvania, the company that had designed and manufactured those furnaces.

These weren't the kind of furnaces most people learn about in social studies at school, the huge Bessemer furnaces or arc furnaces used in making ferrous metals such as iron and steel. These were induction furnaces. Like the older furnaces they replaced at the Mint, they were designed to melt nonferrous metals: nickel, copper, silver, or gold--by subjecting the metal to an intense, alternating, electromagnetic field.

Inductotherm had been in business some six months when the Mint invited us to bid on replacing the melting units they'd been using--furnaces built by a company called Ajax Electrothermic-with new furnaces and controls. We were ecstatic to get this order. Up to this point, our little company had been subsisting by selling refractories and manufacturing coils and other furnace components. Here was the chance to show what we could do.

We began by taking a whole new approach to what the furnaces were supposed to do--not just to melt metal, but to do it faster, more efficiently, and more economically. It was a thrill to put ideas down on paper and then see them take shape under our hands. Six weeks later, this order, so critical to our survival, was delivered.

Previously, the Mint had been using its three 1,000-cycle, 350 kW motor-generator sets to power a total of nine 120 kW, 450-poundfurnaces. Like other induction furnaces of that time, the old furnaces were connected to the generator and the water supply system via 12-foot-long cables draped in deep pits behind the furnaces.

Our approach was to utilize the same motor generators to power six, 175 kW, 600-pound melting units; two per generator. The Inductotherm furnaces weren't just larger and higher powered. They featured unusually short power cables that entered the furnace via the tilting trunnion, thus doing away with the need for pits behind each furnace. In place of Ajax's lightweight, water-cooled, hollow bus bars, we'd installed heavy copper bars measuring l/4 inch by 4 inches in cross section; four per furnace, to carry 1,500 amperes each. As a result, power losses were so low that water cooling of the bus bar itself wasn't necessary.

Once the people at the Mint saw what the furnaces could do, I told myself, they would have to agree that the new furnaces may have been unconventional, but they certainly were more efficient. The six Inductotherm furnaces inherently lost less heat to the atmosphere than the nine Ajax furnaces. The new, shorter cables produced lower power losses. By using the solid, more costly bus bar, the power went into the melt, not into the cooling system. Nobody needed a doctorate in electrical engineering to predict what the end result would be--greater productivity.

Using the nine 450-pound furnaces from Ajax, the Mint could expect a theoretical, or optimum, production of some 6,000 pounds of silver coin alloy per hour, given no downtime for charging, metallurgy, repair, or pouring. Assuming 70% utilization, that became 4,200 pounds per hour actual production.

Now, with their new Inductotherm furnaces, the Mint's theoretical production rose to 7,200 pounds per hour. At that same 70% utilization factor, that became 5,000 pounds per hour. In other words, our fledgling company had just helped the Philadelphia Mint increase production by almost 20%. At the same time, by using six furnaces instead of nine, the Mint could cut their melting manpower costs one-third, while saving $40,000 per year in electricity.

I was proud as punch of these new furnaces, so I was a little disappointed to hear what Doc Myer had to say. No, I wasn't just disappointed, I was furious. Not everybody at the Mint, it appeared, appreciated all the hard work and engineering that had gone into the new melt units. "The maintenance men don't like them, Hank," said the melting superintendent.

The maintenance men? I felt my own temperature rising as I asked Doc Myer what he meant. "The chief of maintenance says the new furnaces are a lot more work for his men. It now takes them hours to replace a furnace."

Generally, furnaces were replaced when the refractory had worn thin after 150 melts or so, at which time a replacement furnace assembly with a new refractory lining would be moved into place. The job involved disconnecting the power cables from one melting unit, then lifting it out with a crane and setting the replacement in the stanchions and reconnecting the leads to the unit going "on line."

The problem, according to Doc Myer, was the way the power cables were configured. Even with the special wrenches Inductotherm had provided for reaching inside the tilting trunnion and removing and attaching the electrical leads, he reported, "Changing the cables now takes four hours."

"Four hours" I erupted, in spite of myself. "That's nonsense. Those leads can be changed in minutes."

"That's not what the maintenance crew tells me," said Doc Myer. "We can't afford to have a furnace down that long. That four hours could cost us several tons of metal every time we change a furnace. We have to keep pouring, rolling and minting, even if it means you have to redesign your furnaces to match the old configuration."

I felt like I was ready to explode. Here I'd poured my heart and soul into designing a more efficient melting system. We'd all worked long into the night for weeks to manufacture the furnaces. We'd increased our customer's productivity, saved them thousands of dollars worth of electricity and cut their labor costs. But all that seemed to mean nothing, as long as the maintenance crews thought it was too much work to change the furnace.

It was infuriating and frustrating. Couldn't people at the Mint recognize improved technology when they saw it? I asked myself. Or maybe they did, but they just didn't give a hoot about such concepts as "productivity" and simply doing a better job. Maybe I was naive--I'd been called that more than once--but before progress is possible, people first have to care.

But even if replacing the furnaces did mean more work for the maintenance crews, it occurred to me, so what? The Mint replaced melting furnaces maybe 300 times a year. By eliminating three furnaces, we'd cut out three one-man melt crews per shift. With two shifts per workday, that meant a reduction of 12,000 man-hours per year.

So if saving 12,000 hours of melters' time meant adding 1,200 more hours of maintenance time, it was a trade-off worth celebrating.

Particularly exasperating was the recognition that everything would have been fine if I'd simply copied the old, conventional designs. Same sizes, same flimsy bus bar, same long, dangling, inefficient electrical leads.

I hadn't gone into business to do things the way everybody else did them, though; I wanted to do them better. Every job, every concept and detail represented the challenge to do something that had never been done before. Something inside me burned with the desire to come that much closer to perfection.

I'd learned, too, that not everyone shared my compulsion for perfection. More than once, it had gotten me into hot water. In fact, that's just what had happened, not too many years earlier, at Ajax.

I'd gone to work for Ajax Electrothermic right after graduating from Massachusetts Institute of Technology in May of 1947. Ajax was hardly a household name like General Electric or Westinghouse, and was not even close to the Fortune 500, but in the induction melting industry, it was a giant. It had monopolized the field ever since 1915, when the process was invented by Dr. Edwin E Northrup of Princeton University at the request of Dr. Guilliam H. Clamer, president and owner of the Ajax Metal Company. Ajax Metal subsequently formed Ajax Electrothermic to pursue commercial uses for the new technology.

On the face of it, Ajax seemed the ideal opportunity for me upon graduation from college. I was a real "eager beaver," an electrical engineer straight out of MIT, and it didn't take long for me to recognize that the company was ripe for new ideas. What I didn't realize was, they didn't seem to want them.

Somewhere along the way, Ajax Electrothermic had lost that pioneering zeal, that resolve to be at the cutting edge of technology, and had gotten a bit fat and complacent. Oh, it was a pleasant enough place to work, but I wasn't the type to take it easy and not rock the boat by trying something new.

Ironically, I'd first proposed some of the concepts seen on the Mint's new furnaces--the shorter leads and heavier bus bar, for instance--while still working for the Ajax company. In fact, I had tried to incorporate these ideas into the Ajax product line, but without success. To that company's management, new technology would have required new ways of thinking ...new ways of doing things ...new ways of working.

And why bother? Competition was virtually nonexistent. For decades, Ajax had been the sole manufacturer of induction furnaces in this country; consequently, customers were accustomed to accommodating Ajax, rather than the other way around.

Improved melt rates, lower electricity costs, greater quality control ...these weren't as important to Ajax. "We've been doing things this way for years," the president of the company had chided me. "It's too expensive to change." What he meant was, it was too much trouble. In all fairness to Ajax, however, it sometimes seemed these considerations weren't too important to its customers, either. Or perhaps the customer just didn't realize they were attainable.

But they were important to me. Innovation, creative problem solving, and making a product that was more advanced than anything else on the market was more than a matter of principle with me; it also was a matter of ego. My departure from Ajax was inevitable, although, when I left, I never imagined I would some day be competing with them.

But now, Doc Myer's suggestion that I turn my furnaces back into something more like what Ajax might build was the ultimate insult. More to the point, what future did our company have, if customers didn't value what we wanted to bring onto the market?

A half hour after getting Doc Myer's phone call, I arrived at the Mint to try to resolve this problem one way or the other. "You can tell your maintenance men that that's a lot of...that they don't know what they're talking about," I began, as tactfully as I could. "There's no way it should take four hours; why, changing furnaces shouldn't take longer than ten minutes."

And then I felt a sudden chill, like a foreboding of where this was leading me.

"Ten minutes for each lead?" Doc Myer asked, skeptically. "Are you sure about that? That's a lot faster than anybody says it can be done right now." He was giving me a way out, we both knew, but I wasn't taking it.

"No, not ten minutes for each lead . . ." Now I felt myself climbing out on a limb, felt myself swaying precariously in thin air, yet I was powerless to stop. "Ten minutes for the entire job. Disconnecting and connecting all four electrical leads. In fact, all make you a wager. If I can't do the job in ten minutes, then we'll redesign the furnaces so you can go back to using the same old kind your maintenance crews are used to. But if I succeed, then I want you to agree that it's your maintenance men that should be changed, not my furnaces. Do we have a deal?"

"On a full and hot furnace?" Doc Myer asked.

Full and hot? I hesitated for a moment. That wasn't exactly what I'd had in mind; after all, nobody changes a furnace when it's full and hot. Normally, they'd wait until all the metal had been emptied, and the lining had cooled some. Still, if I pulled it off, if I could change the leads under the most demanding conditions possible, it would put an end to the complaints. To say the least, it would certainly be the most dramatic demonstration they'd seen at the Mint in a long time, whether or not I succeeded.

"Full and hot. Loaded with molten nickel, if you like," I offered confidently, though I couldn't help thinking what could happen with the cooling water disconnected. It would be like removing the bars separating me from a hungry lion--one with a body temperature of almost 3,000 degrees Fahrenheit.

Doc Myer rose, and stood by the window, puffing reflectively on his pipe while looking down at the traffic on the street below. I liked and respected Doc; he possessed both professional expertise and personal integrity in abundance, and had become a good friend. Still, I could only imagine what kind of bureaucratic influences he had to deal with at the Mint. He was rooting for me. That much I could tell, but it was clear he thought I was going to come out on the losing end. Finally, he broke his silence. "Okay, if that's what you want, that's what we'll do," he agreed, somewhat reluctantly, and we shook hands on the deal.

The next thing to do was to tell the rest of Inductotherm's personnel about the wager I'd entered into. They deserved to know; they'd all worked as hard as they could to make our first furnaces a success.

Paul Foley, the proprietor of Harcast Co., Inc., an investment casting company, was also our vice president and I was lucky to have him as a partner. A former Navy commander, he was given to old tweed jackets and a laconic way of speaking. In many ways, he was the perfect complement to me; where I was sometimes irascible and quick to fly off the handle, Paul was even-tempered, always the gentleman, and his optimism and confidence in me rarely lapsed. Sometimes, I suspected he thought I was a lot smarter than I really was; from time to time he'd drop hints about moving our company into atomic research. I'd remind him that we still had a long way to go in the induction furnace business first, and while atomic research sounded both exotic and appealing, there was a lot to be said for sticking with what we knew. Too many companies had gone broke chasing rainbows.

Paul's role at Inductotherm was a combination of salesman, purchasing agent, metal fabricator, and all-around shop worker. He was mechanically adept, but when it came to engineering, he deferred to me.

More than that, Paul seemed to recognize and appreciate what I was driving for. He knew I was a loner, and that it wasn't going to be easy, being my partner.

The third member of the team was an 18-year-old named Jess Cartlidge. Back then, just having a job was a roaring success for Jess. He hadn't had the benefit of a college education, but he was an ambitious kid, a willing worker and, once you got past that first layer of stubbornness, a quick learner. What Jess learned, he didn't forget. He was like a sponge soaking up knowledge and expertise as he encountered it--a little bit about winding coils and metallurgy here, a little bit about electrical engineering and running a lathe there.

For all the disparity in their ages and skills, both Jess and Paul were two of the finest men anyone could hope to work with. Still, life didn't always run smoothly at the office.

I was the original "Angry Young Man." I was angry that the induction melting industry didn't care enough to demand Inductotherm furnaces. I fumed about our suppliers not getting materials to us as soon as I wanted, at the mistakes they made, and at the things they shipped us that just plain didn't work. Most of all, I was angry at myself for not being able to make it all happen at once. Maybe it was more impatience than anger.

It was hardest on the third member of our corporate team; the others could leave the office at the end of the day and get away from me. Our corporate secretary couldn't; she was my wife, Betty.

Betty knew me better than anyone; we'd been friends since we were 12-year-old kids growing up in Ridgewood, New Jersey. Even then, I was impatient to get things done and reluctant to waste time or, for that matter, my own hard-earned money.

We'd married while I was in the Army Air Corps flight school. She's just graduated from Randolph Macon College, and she and her parents had planned a big wedding back in New Jersey. It didn't turn out that way, though, since I couldn't get leave to return home. Instead of the wedding she'd hoped for with family and friends in attendance, we were married by the chaplain on May 31, 1945, at Hobbs Air Force Base in New Mexico.

In retrospect, this was an appropriate beginning for our life together, and it wouldn't be the last time Betty had to alter her plans--and her expectations-to accommodate my reaction--and sometimes my overreaction--to events beyond my control.

Now, here I was, years later, taking on Ajax, the induction giant, and up to my neck in problems. Not that the management at Ajax Electrothermic was losing much sleep over us. It wasn't just that the older company had dominated the market for so long; Ajax was the prodigy of a major metallurgical firm, the corporate equivalent of a "trust fund baby," carefully nurtured through its infancy.

Inductotherm didn't have so much as a home of its own; for that matter, neither did the Rowans any longer. Gone was the home that had sheltered us for the past five years, an attractive, 2,000-square-foot rancher we built ourselves, surrounded by Over two acres of lawn and trees we'd carefully planted in a suburb of Trenton.

Ultimately, it represented more than home; it was also equity--equity we desperately needed if we were to found a new corporation. And so, in June 1954, Betty and I had sold the home we built in Trenton and moved with our two young sons and daughter into a small rental house in Sharon Hill, a mile from the Harcast facility. Things would be better, I promised my wife, once we got the company on its feet.

The Mint contract had come at a time when crisis and despair were close to destroying our little company. The order for six furnaces and the electrical systems to go with them was worth $25,000 and promised to put us on the industrial map as real players in the induction melting field.

Now, as I broke the news about my challenge with Doc Myer, the mood was grim. Could it be that the job that had pulled us through would now be the instrument of our destruction? It wasn't just the cost of rebuilding the six furnaces If our new ideas weren't acceptable, indeed, if Inductotherm was expected to make a product that was just like anybody else's, what was the point in staying in business any longer?

I was grateful when Paul spoke up He had wanted to cash in our chips a short time earlier, but now mustered the support to say, "I hope you can pull it off. I think you can do it."

I hoped I could, too. I had to.

Disconnecting the four lead cables had been easy. Almost too easy. Now I had to reconnect them, a process that involved blindly catching the threads on special compression fittings and then quickly tightening them so the critically important cooling flow of water could be turned back on.

The problem was, as Doc Myer and I knew, I would have to finish the job in a lot less than the ten minutes allotted to me. I was abruptly reminded of just why people never try to change hot furnaces when a jet of warm water suddenly spurted out at my fingers, forced out by the steam deep within the bowels of the coils. Then another, hotter than the last. How long did I have before the watery spray would feel like red hot needles stabbing at my hands?

I saw Doc Myer looking on with alarm. Once the furnace began shooting steam from the cable fittings, the refractory wouldn't last long. Then, the hot metal would begin consuming the furnace walls. The closest of the spectators began edging back from the furnaces. They may have wanted a front row seat to watch me fall flat on my face, but they didn't want to be standing too close if the molten nickel alloy burned through to the coil.

Once that happened . . . well, it was hard to say what might happen next. At the very worst, if the hot metal were to melt through the coil that somehow still contained water, there would be an explosion. The odds were against that happening, but you never knew. Or the glowing hot metal might melt the walls of its cage and escape onto the floor, lapping at the feet of panic-stricken bystanders. Most likely, though, before that took place, one of us in the room would frantically "dump" the metal into a mold, by which time the furnace would be ruined anyway, and it would all be over.

The intermittent spurts of water became constant jets raking my hands as I fastened the first three cables, for today I hadn't worn gloves, which would have interfered with my sense of feel. Still, that fourth cable wouldn't catch. My blood pounded against my temples, as my anger mounted.

I was angry at the skeptics who didn't appreciate what I had accomplished with these furnaces. At the Mint officials for not standing up for me. At myself for ever entering into this wager. Why did I put myself in such jeopardy? Why was I doing this to my own family?

Inside the trunnion, the water had gotten even hotter; it was beginning to sting. But what was this, next to the pain that my own two sons lived with every day? After the doctors told us what was wrong, I had thrown myself into my work even more intensely, as if I could change things--anything--by sheer force of will.

Some things, though, I couldn't change. Some things I simply had to accept.

Maybe what was happening today was one of them. I looked for Doc Myer to tell him to dump the furnace, when ...

Somewhere within that pressure cooker of a trunnion, I felt the thread on that final cable catch. "Turn on the water!" I yelled as I wrenched the electrical lead tight.

I heard water r

ushing down through the leads, into the furnace, and down around the coils, cracking like, muffled gunfire as it first vaporized, then became liquid again, washing away the beat. It was the sound of redemption; the furnace was saved, and with it, my company, and--most important--my pride.

Doc Myer stepped up to me, wiping his own brow in relief. "Hank, do you have any idea how close we came to a meltdown? I've got to admit for a while there I didn't think you could do it."

"Why, Doc, I can't imagine what you were worried about," I answered. "I never had any doubts at all."

I don't know how confident I could have looked: I was drenched in sweat and shaking inside and my hands were red as lobsters. True, I had won my wager. Doc Myer and I both knew there would be no tampering with the design of my furnaces now. But I knew it wasn't over; the stakes were just getting bigger. I had just laid everything--my company, my reputation, and my future--on the line, gambling that I could do what everybody said couldn't be done.

This time, I had won. But what was going to happen the next time?

Chapter 2

A Quest Begins

The village of Ridgewood, New Jersey, lay barely a dozen miles from Manhattan, but it was another world completely. For the affluent executives and professionals who commuted to work in the city, Ridgewood was a haven from the steel and-concrete canyons, the noisy hustle and bustle of New York. The town clung tenaciously to its image--however anachronistic it may have been--and to its official designation as a "village." There were few reminders of modern industry--almost no factories and few office buildings--in Ridgewood; only a rustic main street lined with shops, gracious, well-shaded neighborhoods with large private homes and neatly tended lawns. Farther beyond lay the woods of the Ramapo mountains. It was the kind of place where kids sold lemonade from stands, went to Saturday afternoon matinees, and attended dancing classes; just like they used to do in the old Andy Hardy movies. This was my childhood home, Small Town America, idealized.

I was born on December 4, 1923, the third of four children and the first son of Dr. Henry M. Rowan, Sr., and Margaret Frances Boyd Rowan. My father had come from a poor family in Virginia's Shenandoah Valley-"dirt farmers," my grandmother Boyd called her in-laws--to become one of the most prominent physicians in the state.

Dad wasn't a general practitioner, as were most M.D.'s of that time, but was one of the first in this country to specialize in the field of obstetrics. It was he, in fact, who delivered all four of us. He was totally committed to his work, and driven not only to succeed, but also to advance the body of knowledge and expertise in his field. A few years following his graduation from the University of Pennsylvania, he studied at the Wertheim Clinic in Vienna, then St. John's Hospital in Budapest and later at the Edinburgh Maternity Hospital in Scotland. My earliest memories include impressions of the ocean crossing we made when I was three years old. My father packed up all of us--my mother, two sisters, and me--for the eight-month stay in Europe because, as Dad put it, "Bodies (for research) are cheaper there." In 1927 my father established a landmark in American medicine when he founded one of the first obstetrics clinics in the country at Mercer Hospital in Trenton, now Mercer Medical Center.

Still, it was hard to say how I felt about my father. Our relationship was unaccountably severed one day in 1930 when I was six years old. My sisters Margaret and Miriam, my younger brother Bill, and I had been out of the country for some three months, visiting France with Mother and with Grandmother and Grandfather Boyd, who later had us enrolled in a school in that country for reasons I couldn't fathom. Now that we were back, my brother and sisters and I couldn't wait to see our Daddy again. But we weren't really "home" yet. We hadn't yet moved to Ridgewood; home had been in Morrisville, Pennsylvania. So why we had returned to another house in Tenafly was beyond me.

Mother was there, but where was Daddy? At first, she didn't offer an answer. Instead, she summoned the four of us into the living room of the new home. Her face was drawn and serious, and she had something important to tell us. Our father wouldn't be home that day. Or the next. Or ever again.

"Your father has left us," she said. That was all. She offered no explanation of where he had gone, or why.

But it was true: Daddy had gone. It didn't make it any easier to understand--or to bear--when I learned they had divorced. To me, "divorce" was just a word; back then, it wasn't something people did. Certainly, it wasn't the sort of thing your own parents did. But why had they divorced? Where was he? Why could we never see him again? What had we done that he would just leave?

In the years that followed, I never stopped asking "Why?" I could be sitting in a second grade classroom, or out sailing on Lake George, or standing on the flight line in Texas, and the same questions still haunted me. I never resigned myself to not knowing.

With Dad gone, my mother threw herself into the void he had left. Now, she seemed to feel, it was up to her to be both mother and father, and she was determined to play both roles with a vengeance. She was, in many ways, a remarkable woman, a strong believer in the virtues of discipline, work and self-reliance. A graduate of Wellesley College, she returned to school while we were growing up to earn a master's degree in botany and zoology to prepare herself to support her family, in case her money ran out.

And she truly worried about that, having seen what had happened to her own family's fortune. She was the daughter of multimillionaire William Boyd, whose modest beginning in business belied his later success. As a young man, my grandfather spent several years as the district manager for the Philadelphia YMCA before launching a far more lucrative career selling advertising for the Philadelphia-based Curtis Publishing Company, publishers of America's leading magazines, including Country Gentleman, Ladies' Home Journal, and The Saturday Evening Post. Grand father Boyd's skills as a salesman were eclipsed, however, by his phenomenal success as an investor. For years he invested every penny he could spare from his salary and commissions checks in Curtis Publishing stock, reinvesting the dividends into even more stock.

By the late l920's he'd become one of the company's biggest shareholders, with millions of dollars worth of stock in Curtis, and he and my Grandmother, Corabell Tarr Boyd, lived in a baronial mansion at 250 West Tulpehocken Street in Germantown, then the most fashionable section of Philadelphia. There, Mother made the acquaintance of one of the most powerful publishers in the world, old Mr. Curtis himself, while she was still a child. Despite the Boyds' wealth, they weren't given to the excesses and ostentation common to Philadelphia's fancy set; my maternal grandparents were strict Methodists, and neither smoked nor drank. Even playing cards was considered sinful.

Their conservatism would serve them well in the wake of the stock market crash of 1929. Curtis stock dropped from $150 a share to about $4 and with it went most of Grandfather Boyd's wealth. While at six years old I had no understanding of "The Crash," it was the ill wind that blew me more good than any other single event in my life. With my grandfather no longer in a position to provide our financial security, my mother seemed to take her parents' penchant for frugality a step further; she preached a doctrine of thrift and self-reliance which I readily absorbed. After all, if my own father could so quickly disappear from our lives, what could any of us take for granted? It only made sense to prepare for every possible eventuality.

On my ninth birthday my gifts included a ledger book, in which I was to account for every penny of my 25 cents per week allowance as well as money earned from doing chores. Of my income, 5 cents was earmarked for Sunday School and 5 cents for deposit in a savings bank. The remaining 15 cents had to tally before I could receive another cent of allowance.

My rudimentary accounting served me well when, at the age of nine, I became an entrepreneur, entering the chicken and egg business. The way I saw it, I had a captive market--Mother. My plan was to raise chickens and sell her the eggs they produced; but she wouldn't pay more than the top wholesale price published in the New York Herald Tribune, which hovered around 25 cents per dozen. I had a hard time meeting that price, due to my high operating costs; most importantly, the price of feed. As with so many start-up enterprises, I was undercapitalized; I could only scrape together enough money to buy a 10-pound bag of feed. In this small volume, feed cost 5 cents per pound, or 50 cents. And, as I soon learned, with 50 cents worth of feed, my chickens produced only 45 cents worth of eggs. It was, in a way, a classic business dilemma: I wouldn't be able to make a profit until I'd saved up enough money to buy in bulk and pay 2.5 cents per pound for the 100-pound bag. But the more eggs I sold, the more money I lost. It appeared I was, like many a neophyte before me, headed for an early Chapter 11 bankruptcy.

The cycle was broken when, for my tenth birthday, my mother gave me the present I wanted more than anything else in the world--a l00-pound bag of chicken feed. With the infusion of this new capital, my egg business began turning a profit. I was, in my juvenile eyes, a success.

I was learning more than economics from Mother, however. She felt that the broader our experiences, the better equipped we were to deal with the world at large. Our training began with books--the Bible, Ivanhoe, Black Beauty, Moby Dick. She took us to concerts and museums of art (which I found boring) and of history and science (which I found fascinating). At Lake George in upstate New York, where we summered every year, she took us for long walks through the woods; along the way, we were expected to name the genus of the trees, insects, shrubs, birds, and flowers around us.

She insisted that we see the world. I was in eighth grade when Mother took my younger brother Bill and me out of school for a month to take a cruise with her to Peru. We would learn more on this trip than we ever could in a month of school, she contended. She was right; it was no luxury liner that carried us to South America, but a Grace Lines banana boat. We explored the engine room and learned how the engines worked. We saw how the seamen lived. We learned how a boat is run, and traveled through the locks of the Panama Canal, which was especially fascinating to this future engineer. In Peru we explored the ruins of lost civilizations; by cog-rail, we scaled the Andes as high as 15,000 feet and met the modern-day descendants of the ancient Incas. How could we ever have experienced so much in a classroom?

Her view of the world, if wary, was tempered by a genuine sense of humanity and responsibility to others. During the influenza epidemic of 1917-1918, Mother worked with the sick and dying as a volunteer practical nurse. It was during this time that she met my father, then a fledgling intern. A dozen years after the epidemic, when the Depression hit Ridgewood and hard times drained the finances of a neighboring family their eight-year-old son moved in with us and stayed two years until his widowed mother could care for him again. Later, when we children were grown, Mother put her academic training to good use as a volunteer clinician, performing disease culture analysis for a local hospital.

When we weren't traveling. I kept myself busy with my own projects--making radio sets seeing, to my beehives, or tending my chickens. I was small and skinny, and not inclined to pursue activities at which I couldn't excel. So while the other boys were out playing baseball or football. I was usually busy in my chicken house. If there was one sport at which I showed some talent, it was sailing. I'd taken up sailing at Lake George when I was 13, and the following summer I felt I was ready to navigate more challenging waters. Together with two friends my own age, we planned to sail my boat, an old 16-foot Cape Cod Knockabout with an open cockpit and centerhoard, up the 100-mile length of Lake Champlain to Canada and back, a five day trip, all on our own.

Mother was quite naturally torn with misgivings over my proposed odyssey, but characteristically, she overcame her own anxiety and gave her approval, reluctant to stifle my sense of independence and self-reliance. It would be, she seemed to conclude, a learning experience, if I survived it.

Once underway, it wasn't long before the outcome--and the wisdom--of our cruise was in doubt. We encountered storms, endured seasickness, and learned what it was like to be tossed about by the wind and blinded by driving rain with lightning striking all around; for a trio of fourteen-year-old novice sailors, there were moments of sheer terror. Between storms we were often becalmed, drifting helplessly for what seemed like eons. Sometimes we had to blame ourselves for our adversity: the boat was tippy and prone to capsize, and we used all of our rudimentary sailing skills to prevent such a catastrophe. Five days after our departure, however, were back at Lake George, none the worse for our sometimes harrowing experiences. Once hack though. I began wondering: What had I been trying to prove?

On my 15th birthday, my mother presented me with a challenge of a different sort. Once she found herself a single parent, she made of learning the ins and outs of machinery and hardware, the better to maintain the household without relying on local tradesmen. It was only reasonable that she would expect the same adeptness from her older son; this she encouraged by means of my birthday present that year--a 1923 Dodge which she'd bought for $10. She'd offered $l5, but as the former owner explained, it wasn't worth that much. He could only accept $10, as it no longer ran. Mother bought it anyway, on the condition that I take it apart, rebuild the engine, and get it running. At the end of the next summer, I had it rebuilt and running like the proverbial top.

By that time, I was enrolled at Deerfield Academy in Massachusetts. Mother's decision to send me to an all-male boarding school was prompted by her concern that I was growing in a household headed by three women--herself and my two up older sisters. It was high time, she concluded, for me to become acquainted with male role models, as well as to get a better education than the local high school could offer.

During my two years at Deerfield, I changed in ways the school could hardly have foreseen or intended. The demanding schedule of academics and athletics, all of which were intended to promote a sense of discipline in Deerfield's student body, didn't faze me in the least. After Mother's tutelage, discipline came second nature to me. Academically, I held my own, but enjoyed little success at team sports like soccer or ice hockey, though I enjoyed tennis, probably because it was an individual, rather than a team sport.

But while my outlook hadn't changed much, I had. When I entered Deerfield as a sophomore, I was still small and skinny, not much bigger than the 5-foot-tall, 88-pound runt I had been in junior high school. Then, during my junior year, I began to grow. In June 194l, on the day I accepted my diploma from Deerfield's headmaster, I stood 6-foot, 1-inch tall. I couldn't help wondering what my father would have thought had be been there that day.

That following fall I entered Williams College, not far from Deerfield, intending to pursue the "3-2" program, a cooperative curriculum between Williams and the Massachusetts Institute of Technology. The "3-2" plan required three years at Williams and two at MIT and led to dual degrees, Bachelor of Arts and Master of Science. It was, in a way, an extension of Mother's philosophy of the well-rounded individual, as conversant in art and the humanities as in a professional expertise.

But this orderly, genteel metamorphosis was interrupted when, on December 7, 1941--the "Day of Infamy"--the Japanese bombed Pearl Harbor, and the United States went to war. There was no agonizing in those days about the morality of this war. Pearl Harbor had filled Americans with a sense of outrage; naturally, I was outraged at the Japanese for their vicious sneak attack. But I was also outraged at our own government for rendering American men, women, ships, and planes so vulnerable, for massing so many ships in the harbor at one time, for not being better prepared or alert. I found it hard to believe that our military and diplomatic intelligence services were so ineffective, so poorly prepared. The result was a profligate waste of American lives.

For all my anger about our government's tragic lack of preparedness in the South Pacific, I also felt compelled to take part in the struggle that ensued. As I finished my sophomore year at Williams, I decided to enlist in the Army Air Corps as an aviation cadet. I was then 19, and--considering my far-flung travels, boyhood adventures, and experience at college--I was confident that I'd seen much of life. Still, none of this fully prepared me for life in the military.

In June 1943, I reported for basic military training in Jefferson Barracks, Missouri. After six weeks of physical training and drill, our class was assigned to Wittenberg College in Ohio, where we spent three months undergoing the mandatory elementary college training required for all prospective aviators. At the time of my enlistment, I was reminded I would be joining the "creme de la creme" of American manhood, young men who were highly motivated. Honorable. Intelligent. Officers and gentlemen. But my fellow recruits struck me as an unlikely elite. There were many highly gifted young men like my old schoolmate from Deerfield, Gordon MacRae, who later became famous as an actor. There were also gas station attendants and social butterflies, shoe salesmen and farmhands. There were, too, a few whose vocabulary was constantly punctuated by obscenities, and some who could beat their barracks mates out of their paychecks in ten minutes with a deck of cards.

There were some, also, to whom I took an immediate dislike; they lacked the refinement I'd come to expect from a gentleman. Over the course of time, I had to conclude that these were sometimes "diamonds in the rough"--as honorable and decent as anybody I'd met at Deerfield or MIT. It was a lesson about making snap judgments about others, just because they didn't meet my own preconceived notions of what a gentleman was supposed to look like. I began to wonder if, my wide-ranging travels and education to the contrary, I had actually led too-sheltered a life.

After Wittenberg we reported to San Antonio for pilot classification and to await assignment to a training base. There, I threw myself into army life the same way I had once immersed myself in my bees and chickens. Contrary to the "Never volunteer for anything" philosophy that prevailed throughout the ranks, I volunteered for everything, partly because the routine was so humdrum that whatever I was volunteering for turned out to be far more interesting and challenging and sometimes, fun.

That was how I wound up with three other cadets on the "bedspring detail," responsible for repairing the flat bedsprings in barracks throughout the base. Each barrack typically held 50 beds, 25 downstairs and 25 on a second floor, each with end springs and side springs and links. In the first barrack, the job of straightening and tightening the bed springs took almost the entire day, thereby establishing our "production standard" from then on, said the NCO in charge of us, we would work on our own, and were expected to complete one barrack per day.

The next day, it became clear to me that, given the size of the job, it would behoove us to take a more analytical approach to the task, to streamline our work. "Why don't we specialize?" I suggested to my co-cadets. "What do you mean?" they asked. "Well, if we continue to work independently, each of us doing a bed at a time, we'll be here all day. Like yesterday. But not if we each concentrate on one aspect of the job," I explained. And so we became specialists--one cadet concentrated on changing the side springs, another the end springs, the other the middle links, while the fourth man worked on unfolding the bedding to afford easier access. We made up special tools out of bed posts and other implements, and within a few days we'd streamlined the operation to the point where we could complete an entire barrack in about half an hour.

From an efficiency standpoint, the bedspring detail was a roaring success, a first-hand lesson in the benefits of specialization. In terms of accomplishment, however. It's hard to say how much we achieved; while we could have completed 10 barracks a day, we adhered to the one-barrack-per-day quota, a shameful attitude as I look back on it. But the sight of 5,000 cadets parading aimlessly around the dusty Texas landscape seemed to justify our disgraceful pace.

Once pilot classification got underway, I learned that my new size was going to work against me. Ironically, where I was once too small and skinny for football, basketball, or baseball, at 6'1" I was deemed too big to pilot fighter planes, for which the Air Corps preferred men between 5'6' and 5'10". But there was still a need for bomber pilots, and the Air Corps was less fussy about the dimensions of candidates for bomber pilot training.

Flight training--with the exception of the flight instructors constantly breathing or yelling down their students' necks--was everything I had hoped it would be, and gradually we fledgling pilots became adept at Immelman turns, barrel rolls, slow rolls, and instrument flying. Fourteen months after reporting to basic training, I not only had won my wings as an aviator, but also had achieved my goal of winning a commission as a second lieutenant, as opposed to the lower grade of flight officer."

In February 1945, I felt as if I had stepped up to the big leagues of flying when I reported to Hobbs Air Base in New Mexico for the next phase of my training. After a long series of trainers, from single-engine Fairchild PT19 primary trainers to BT13 Vultees to Cessna UC78's to Twin Beech AT7's, I finally found myself at the controls of the B-17 Flying Fortress. Today, the B-17 would be dwarfed by such airborne leviathans as the Boeing 747's and Lockheed L-l011's, but back then, the B-17 took your breath away. It was powered by four Pratt & Whitney 1,250-horsepower engines, and carried a 5,000-pound bomb load as well as twin .50 caliber machine guns at its nose, tail, belly, top, and waist.

It was noisy, unpressurized, and uncomfortable, with bare aluminum seats--though cushioning would have been redundant, as pilot and copilot sat on parachutes. And when the four engines fired up and the aircraft roared to life, it sent your heart beating in your throat to go rolling down the runway, rattling like a boxcar, then lift up, seemingly weightless, into the sky.

If life in the air was exhilarating for the fliers, life on the ground was monotonous for the airmen's wives, whose numbers now included my new bride, Betty. She'd arrived at Hobbs after a four-day train ride, much of it spent sitting on her suitcase in the crowded train car. After a one-week honeymoon at a dude ranch in Santa Fe, we returned to Hobbs. For Betty, her new life as a junior officer's wife was a big change from Ridgewood. Hobbs was an old oil refining center, and the town reeked of oil that was sprayed on the dusty streets in lieu of paving. As my new bride was to learn, just like any other community, there was a pecking order based on the most arbitrary of criteria. In this case the permanent station personnel and their dependents were at the upper end, and transient personnel like Betty and me were at the other. Still, Betty never complained, preferring, instead to laugh at the pettiness and boredom of life as a cadet dependent. Fortunately, she didn't spend much time at Hobbs.

Shortly after I qualified in B-17's in May 1945, the news came of Germany's surrender. Like everyone else in America, I was grateful to see the war in Europe come to an end. Yet at the same time, like so many newly anointed pilots who'd competed for the right to fly, I felt cheated out of what we saw as the ultimate challenge-combat flying. We'd prepared for it, we were ready for it, now we would never experience this objective, in B-17's at least.

A few days after Betty and I had returned from our honeymoon came a new challenge: the Eighth Air Force command was asking for volunteers for an unexplained mission dubbed the White Project. Once again, I volunteered, in the expectation that whatever it was, it would prove more challenging than continued drill for a conflict that was over.

The White Project proved a thrilling experience for this 21-yearold pilot. The volunteers were assigned to ferry duty, flying returning B-17's from Bradley Air Field in Connecticut to Lubbock, Texas. Our orders were simple: take the aircraft from Point A to point B. We couldn't take off until a half hour after sunrise, and we had to land at least a half hour before sunset, with a maximum of five hours in the air per day and no flying by instruments. Otherwise, we could fly and land anywhere we wished in the eastern half of the United States, with no particular deadline, due to the vicissitudes of weather. For anyone who enjoyed flying, it was an idyllic assignment.

The flight from Bradley Air Field to Lubbock usually took two or three days through balmy summer weather. Besides the sheer thrill of flying, this assignment also gave me an opportunity relatively few people had ever known--to survey our country from 8,000 feet aloft. From this vantage point, I was awed at the immensity of the United States and the diversity of the terrain below. To think that settlers once set out across this continent in wagon trains! At the same time, compared to traveling 150 mph in a B-17, even the speediest of cars on the ground seemed to be crawling. "Why would anybody drive, when they could fly?" I asked myself. Years later, I would ask myself the same question.

I spent a month chasing the sun westward and ferrying bombers before reassignment to Roswell, New Mexico, to begin training in B-29's, the bomber being flown against Japan. The B-29 was larger than the B-17, and pressurized. If a crew member had to move from the cockpit to the waist of the plane, he did so via a tube, 18 inches in diameter and about 15 feet in length, that ran through the unpressurized bomb bay. This, we were advised, would be unwise to do during combat or bomb runs, as a hit at either end of the plane was likely to result in a sudden drop in pressure at one end of the tube, and whoever was inside could come shooting out like a pea through a straw.

Our morning training flights took off at 5 a.m., preceded by 4 a.m. briefings, which required rising at 3 a.m. Betty invariably woke with me to make breakfast, then rode with me to the base, where she would wait for me at the officers' club for the duration of the 7hour flight. Afternoon training-mission flights lifted off at noon, returning at 7 p.m.

On August 6, 1945, I had just left the controls of a B-29 to the alternate crew in training and was riding in back with my copilot when we heard news over the radio that stunned us; the entire city of Hiroshima had been wiped out by a weapon none of us had ever heard of--the atom bomb. It was hard to grasp the enormity of what had happened, but it seemed clear that the war wouldn't last much longer. On August 9, I was again in the air on a training flight when word of Nagasaki's destruction came over the radio.

Six days later, on August 15, 1945, my chances of flying in combat--in this war, at least--disappeared when Japan surrendered unconditionally. As hostilities ceased, so did our training flights. All that remained now was to be mustered out of the service, back into civilian duty. Meanwhile, the standing order of the day was to "relax." Some of the short-timers passed their time playing pool, cards, or volleyball; others sat around talking about what they would do once they got back into "civvies" for good. With demobilization underway, the calls for volunteers became a thing of the past.

But, as I explained to Betty, I wanted to do something. It could be another two months before I was discharged, and I wanted to make good use of that time. Though the Air Corps wasn't doing much flying at that time, they still had people to pay, I reckoned. Although years before I had run my egg business back home in Ridgewood, I had never met a payroll. Here was my chance to learn how--and with Uncle Sam's money!

I marched myself over to the finance office and asked for a job. At first, the finance officer was dumbstruck. This had never happened before, but he relented and put me to work. I spent the final two months of my Air Corps career calculating the payroll for the personnel at Roswell Air Force Base.

Our B-29 training resumed after I had committed myself to the finance office, which meant spending the mornings in the air and afternoons in the finance office, or the other way around, until I had qualified on the big bomber.

As my discharge date--October l6, 1945--approached, Betty and I prepared to return home in my typically frugal style. While other veterans made reservations on planes and trains, we mapped out the route we would take home in our "new" car--actually a 1929 Chevy Coupe with a truck body built into the rumble seat in back. I'd bought it a few months earlier, partly to spare us the 25-cent bus fare between the town of Roswell and the base, for the grand sum of $175. It was a bargain, considering that no new cars had rolled off the assembly lines for years, and good used cars were at a premium. What's more, it was running on four good tires-when it ran, that is. Its crankshaft had been worn far out of round, and it clattered and banged. It came down to a choice between this vehicle or another used car with a better engine but suspect tires; having rebuilt my old Dodge truck five years earlier, I was confident I could keep the car running. But new tires simply weren't available during the war, and there's no way you can fix a worn-out tire.

Finally, the long-awaited day came, and Betty and I headed East, our suitcases strapped high atop the truck body behind us Aerodynamics weren't a factor, as the car wouldn't run any faster than 28 miles an hour; faster than that, the engine bearings rattled ominously, gradually loosened by the old oval crankshaft.

Nine days later, after having stopped to repair and retighten the engine bearings five times, we arrived back in Ridgewood. "What is that?'' demanded Betty's father, as we rolled into his driveway. There was little time to visit with friends and relatives, however. The following day we would leave for MIT to enroll for the fall semester and resume the life of a student. While waiting to be called into the Air Corps, I'd enrolled in the electrical engineering course at MIT where I'd spent a semester before reporting for duty. The ideal of the well-rounded scholar notwithstanding, I couldn't resist the challenges of engineering--there were so many problems to solve, so much science to learn.

Betty was especially happy to be back. For a half year she'd been following me from one cramped apartment to another. Finally, it appeared, our lives could return to normal. Whatever "normal" was.

With the war and my military service over, perhaps I would find out. For 14 years I had been on a quest, trying to prove things to myself and to others. But I was no longer the scared, skinny little runt who had arrived at Deerfield. I'd married the girl of my dreams; I had the confidence of a veteran pilot; in the service and in the air, I'd learned things about the world and about people I never could have known had I remained in school.

I'd also confronted the fear that had haunted me ever since I was six. Months earlier, I had returned to Ridgewood on leave from the Air Corps, still expecting to be shipped to Germany, resolving to find my father. If I were to be shot down in combat ...well, I wasn't going to die before I got some answers.

Why had he gone? What had gone wrong between him and my mother? What kind of man was he?

I found him at his home in Yardley, Pennsylvania, where he'd moved after the divorce. He was tall and lean and intense-looking. But most important, he was happy to see me. He had missed us, he said, but he'd been legally constrained from seeing any of his own children, he said, bitterly.

He was never good enough for Grandmother Boyd, it seemed. To her, no matter what her son-in-law accomplished in the realm of medicine, he and the rest of the Rowans were still dirt farmers, second-class citizens. It was Grandmother Boyd who had orchestrated the divorce, he explained, and it was she who obtained a court order forbidding him from making any contact with his children.

His success in obstetrics had continued, but he still clung to the memory of my mother. As we talked, it became increasingly clear why they had divorced; each possessed a strong, competitive nature; each was fiercely independent, determined to have the upper hand. How, I asked myself, had they remained married long enough to produce four children?

Now that I was an adult, things could be different. Finding him could never make up for 14 years of emptiness, but it was the next best thing--it was the answer to my questions. Yes, he wanted see his children. He wanted to see us, to know us, and to help us. As I drove away from his farm in Yardley, it felt as if an enormous weight had been lifted from my shoulders.

For years, I'd been driven by uncertainly, proving myself to father who wasn't there. Now that uncertainly was gone, but my quest was not over. I still had a lot to prove to myself.

Chapter 3

MIT On a Shoestring

So it was that within twenty-four hours of our return from

New Mexico to Ridgewood, Betty and I packed up and headed north to Cambridge, Massachusetts. We had our old truck-body flivver and $2,200 in savings in defense bonds, determined to make both the car and the money last until I graduated from MIT, some twenty months hence. It was going to be a struggle, but I was no longer a schoolboy, dependent on money from home. More important, perhaps, the thought of relying on the Boyd money was abhorrent to me.

I'd been saving since I was a recruit, putting aside $20 of my $50 monthly paycheck; as a pilot in Roswell I was earning $321 a month, a comparative fortune, but Betty and I still economized by eating free on the base; our biggest single expenditure had been $11 a week for our one-room apartment in town. Most of my monthly paycheck went into the bank.

As my discharge date neared, I tallied up how much our life at Cambridge was going to cost. I figured how much money we could afford to spend on food, housing and gas. The $90 per month from the GI Bill would pay for books and lab materials, as well as a percentage of our monthly rent.

There was one thing I hadn't counted on: Betty was pregnant. All right, we agreed, having a child was going to make things tougher, but it was an even greater incentive to make the most of every single penny.

For the first six months, that cramped apartment was our home. Betty often fell asleep on the bed next to my desk while I worked with a lab partner late into the night. The next spring, with the baby due, we moved into a prefab duplex built for students returning from the war. There was more room--two bedrooms, a cramped living room, kitchen, and a tiny yard in back--but it was a luxury we could ill afford, and overnight our rent jumped 30%, from $65 a month to $85 a month. There were a few compensations: we turned the yard in back into a garden, growing peas, beans, lettuce, and tomatoes, from which we made our own tomato juice and ketchup. I organized a cooperative food buying group among our neighbors to cut our food costs even more. By buying in bulk from the Boston Farmers Market--I hadn't forgotten the lesson I'd learned as a nine-year-old--we could buy sacks of potatoes for mere pennies a pound. When we found it, we ate horse meat--at 20 cents a pound, it was one fifth the cost of beef. Even after moving to the new apartment, Betty and I were able to reduce our living costs to $135 a month.

On May 20, 1946, our first child, Virginia Lynn, was born. She was a $200 baby, I told Betty; $100 for the doctor and another $100 for the 10-day stay in the hospital. We didn't waste money by buying baby furniture like playpens; instead, we built them ourselves. Eleven months later, on April 16, 1947, our apartment became more crowded, and our budget tighter, when our second child, James Edward, was born.

Supporting a wife and two children on $135 a month wasn't the only struggle I had on my hands; MIT was tough. By comparison, my two years at Williams College had been a snap. There, I earned mostly A's and B's with no more than 23 hours of work per week, including classes, homework, labs, and reports. The only course that gave me trouble was political science, which I had to repeat, perhaps because my capitalistic mind simply couldn't grasp what Marx and Lenin were driving at.

MIT wasn't anything like Williams, or other top rank universities. The professors didn't spoon-feed US knowledge; instead, they leapfrogged ahead of us constantly assigning work far beyond what they had covered in the classroom. In the course of an average week, we would be expected to solve several such problems, requiring us to spend hours on our own, looking for the technical principles involved before we could even begin looking for a solution. My academic workload almost quadrupled; I found myself spending 90 hours a week in the classroom, the library, laboratory, or studying at home.

Still, I loved it. After two and a half years of military rote an rhetoric, I welcomed the sheer intellectual stimulation. Every day brought with it a round of new problems, new challenges. I enjoyed, too, having my classmates turn to me for assistance with their studies; it was the kind of recognition I had rarely experienced as a boy, when popularity was measured in different terms.

In the years to come, I began to understand why MIT produces so many entrepreneurs; our Professors not only taught us technology, they showed us what we were capable of. Once aware of one's own potential, and knowing what can be achieved, it's hard to settle for achieving less, because of corporate constraints or lower standards. But this understanding, as I said, came later.

MIT wasn't all theory; our training included hard-minded, practical engineering too. One of my instructors was Professor Dawes, a man with a gift for bringing technology down to earth. One day he showed up in class with a basket of light bulbs. Some of the students laughed, since nobody enrolled at MIT to study light bulbs, but as he demonstrated, even a device as humble as a light bulb was an engineering challenge. He showed us the relationship between bulb cost, bulb life, lumen hours, and the cost of electricity. Nobody laughed as he showed how a "short life" bulb produces much more light per dollar than a "long life" bulb. In another class, Professor Dawes presented the problem of a "wind" generating farm. Given average wind velocity and frequency, efficiency of the blades and generators, and cost of buying electricity from fossil fuel generating plants, should we build the wind farm or buy electricity? No more profound than the light bulb problem perhaps, but these are lessons that are ignored every day by people launching capital intensive programs and even entire start-up companies without any real hope of return on investment.

Three months before graduation I began making the rounds of the corporate recruiters who appeared at MIT each spring with the predictability of the geese overhead returning North. Jobs were plentiful, but after several interviews I hadn't found the right match. I was intrigued, however, by the scrap of paper I saw pinned to the "placement" bulletin board one day: "Wanted, Electrical Engineer with a Mechanical Bent,'' it said. That described me to a "T."

The company was Ajax Electrothermic Corporation of Trenton, New Jersey. As I learned at my subsequent job interview, Ajax was the world's premier manufacturer of induction melting furnaces. Its technology was the greatest advance in the foundry industry in 5,000 years.

Ever since the beginning of the Bronze Age, man had been melting metal by using heat; first, heat derived from fire from various sources, then, a few millennia lacer, heat via carbon electrodes. The carbon arc furnaces were technological dragons, roaring and spewing forth flames and smoke as they turned scrap or ore into liquid.

Dr. Northrup, with his "fireless, wireless furnace," had unlocked the secret to melting via electromagnetic fields, by which process the metal itself becomes its own heat source. If the old processes were awe-inspiring, induction was mystifying, an invisible dragon. A man could place his hand inside an electromagnetic field, and feel no discomfort whatsoever, unless he was wearing a ring or watch, which, if left in the field, would rapidly heat up and melt off, perhaps along with a finger or a wrist.

It wasn't just the technology that appealed to me, but also the company's size. It was small enough for me to make a difference, to make a contribution, and to move up without waiting for years, moving through layers of management. Then, too, there was the location. It was right across the Delaware River from my father's farm in Yardley. Dad and I had a lot of lost time to make up for.

In May 1947, I graduated from MIT with a Bachelor of Science degree in Electrical Engineering, with straight A's in all my technical subjects. I had been recommended for membership in Phi Beta Kappa, but they turned me down on grounds I wasn't as "well-rounded" as they would have liked. Pistol shooting or dinghy sailing or debating would have helped, but flying B-29's and supporting a wife and two children wasn't sufficiently challenging, it seemed. Instead, I settled for the most prestigious honorary society in the world of electrical engineering, Eta Kappa Nu. What's more, we'd made the $2,200 savings last all the way through, and still had $500 left.

The day after graduation, I entered the lair of the dragon.

Chapter 4

The Lair of the Dragon

My enthusiasm was boundless, that first day at Ajax. It was my first real job in my chosen field, and I couldn't wait to show what I could do. Only what Ajax wanted me to do, it seemed, was the one thing I couldn't do. I had never been one to duck a challenge; even since the time I was a child, I'd gone out of my way to test myself. Only a few years previous, I'd hoped for combat as a bomber pilot. But what Ajax expected of me went against my nature; it felt like a violation of everything the Rowans stood for.

They wanted me to sell.

I hadn't gone to MIT to be a salesman. I hadn't spent thousands of hours poring over advanced mathematics, physics and electrical theory to go around slapping customers on the back, shoving my foot in the door, taking people to lunch, telling jokes, or doing all the things I imagined salesmen did.

If there was anything I never wanted to be, it was a salesman. From what I had seen, salesmen were always intruding on people's privacy. They were garrulous, slick, fast-talking. I was the opposite. I was a loner. Introspective. Blunt. I'd never cultivated popularity for its own sake, and I so coveted my own privacy that I abhorred the idea of invading the privacy of others.

Fortunately, selling was only half my job; I was also expected to service Ajax's equipment. And while initially I hated selling, I got a thrill out of servicing the equipment. It was the difference between banging on a door and asking to be let in, and finding a red carpet laid out for you. Starting up a new melt system, I felt like--and was treated like--a sorcerer calling forth invisible powers to change metal from solid to liquid, and then teaching my audience of willing apprentices how they could do it. More than one big, burly melter who'd spent his days lighting coke fires to melt brass looked into the mysterious cauldron where metal seemed to heat itself and asked, hopefully without appearing too ignorant, "Mr. Rowan, where does the heat come from?"

Troubleshooting was even more exciting. A foundry would be cold, shut down because there was no metal to pour. The workers' very livelihoods were in jeopardy because of a failed capacitor or a loose connection nobody could find. Now I was the "Knight in Shining Armor," called upon to tame the dragon, and make it do my bidding.

As the months went by, I got to know what the people in the foundry business were like. They weren't interested in glad-handers or backslappers. What they wanted was technical help, and I was more than pleased to give it to them. I found myself looking forward to visiting potential customers who had asked to see me. I enjoyed working with the people in the foundry business--the melt crews, the engineers, the metallurgists, and the entrepreneurs. They were predominantly honest, hardworking, down-to-earth people, who were eager to incorporate the new technology. Induction melting wasn't just newer and different from older methods of melting metal, it also offered a wide variety of advantages over arc furnaces, fossil fuel-fired brass melters, or cupolas.

Unlike arc furnaces, there was no contact with--and thereby no contamination from--electrodes. For users of fossil-fuel furnaces, induction heating represented a means of melting with far less metal loss, thereby increasing yield and revenues by several percentage points. Induction furnaces were also cleaner than any melting technology that had ever been used. By using electromagnetic field--a "cool" power source--in place of flames or electric arcs to heat the charge in a furnace, foundries no longer required smokestacks. Furthermore, as the heat was induced directly into the metal, there were no "hot spots" in the melt, resulting in a more-consistent, higher-quality yield.

Ajax had been making money from induction melting ever since Dr. Northrup developed the technology in 1915, and now the demand was accelerating. For the past decade, the American foundry industry, even the "Mom and Pop" operations--if they could afford it--had begun the transition from arc, fossil fuel, and cupola furnaces to induction melting.

Still, I couldn't shake the feeling that, for all its technology, Ajax Electrothermic was squandering its lead. The company had enjoyed a complete monopoly in the United States for 32 years, and it seemed it should have been ten times what it had become, dominating the worldwide melting field with divisions in heat treating equipment, forge heating equipment, and in radio frequency induction for applications involving higher frequencies.

Instead, although Ajax proclaimed itself the leader in the industry, it was a relatively small company with about 70 employees doing about $3 million a year in business while the company's licensees in this field were quietly outstripping it, both in terms of technology and market share.

The Ohio Crankshaft Company (TOCCO) dominated the heat treating and forge heating equipment markets and enjoyed two to three times Ajax's volume of business.

RCA had taken a license to degas the metal elements in vacuum tubes, a process vital to the growth of the radio industry. Out of this same induction technology grew such firms as Induction Heating Corporation, Lepel High Frequency Labs and a company called ECCO. Each of these companies approached Ajax in size, and all were moving into alloy melting on a smaller scale.

Overseas, too, the induction melting industry was evolving fast-faster than Ajax could have envisioned when, in response to the heightened demand for the new furnaces from European and Asian foundries, it simply licensed its technologies to foreign manufacturers. England's Berlic, Japan's Mitsubishi, and Germany's Junker were just a few of the companies that, by the onset of the 1940s, had outgrown Ajax in its own field. Once the anointed heir to the burgeoning age of induction melting technology, Ajax, like Esau in the Old Testament, had sold its birthright for a mess of potage.

At the outbreak of World War II, contractual niceties disappeared, and the Germans and Japanese, who now possessed whatever expertise Ajax formerly controlled, employed induction melting techniques wherever appropriate for their own industries, particularly for armament and naval artillery.

With the war now over, and the Axis industrial machine flattened, Ajax seemed to feel it was back in the driver's seat. To be sure, as I would learn, the company could boast some highly talented engineers. There was Assistant Chief Engineer Ted Kennedy, a wizard in the field of electro-magnetics with dozens of patents to his credit, and Jim Hoff, the chief engineer at Ajax Engineering, the parent company's "channel" or "core-type" furnace producer. Nonetheless, the attitude that seemed to prevail among the company's management was that what was good for Ajax was good for its customers. Once the proud dragon of industry, Ajax Electrothermic had lost its fire.

When sales inquiries arrived at our four-man "sales and service" department, it was the sales manager's policy to make prospects wait until we had received more inquiries from the same territory, the better to cover several customers with one train fare. Efficient perhaps, but hardly appropriate when selling expensive capital equipment.

Some executives were short sighted, I thought, putting their own near-term profits ahead of their customer's interests--something I learned after quoting a customer on a 700 kW, 1,000-cycle, one-ton melting unit driven by a 1,000 HP motor. The customer had asked for a synchronous motor to help correct his plant power factor. Synchronous motors were expensive, but they were available with a 0.8 leading power factor and did provide one means of improving the load characteristics in a plant where heavy reactive loads prevailed.

After quoting the synchronous motor, I also quoted a price of $10,000 less using an induction motor which was also available. Why not save the $10,000, I suggested, and correct the power factor with 200 kVA of capacitors that could be installed for another $1,500? It was only good engineering, the application of economics to science, I thought; Professor Dawes would have been proud of me.

But not the men who ran Ajax. What business did I have trying to save the customer money, the sales manager sputtered: I had just cost the company a $10,000 sale. This was followed by a run-in with the vice president of production. I'd returned from New England with an order from the Engelhardt Corporation for $800 worth of machined graphite crucibles, which the customer used in melting gold. I was especially pleased with this order, since the graphite electrodes from which the crucibles were machined cost only a small fraction of the crucible price and the job was very profitable. Further, if Engelhardt could get its crucibles in the two weeks I'd promised, then it would be able to meet commitments to its own customers, correspondingly.

Back at the office, though, I hit a stone wall. The company's vice president of operations, a man named Dean Meyer, didn't want to make the crucibles in two weeks. He planned to wait for more orders for graphite crucibles before running my order. "Making graphite crucibles is a dirty job," he reminded me. That was true; the process spewed powdered black graphite into the working area. But it was also a part of the business that Ajax was in. And furthermore, didn't the customer's needs come first?

Not to Meyer. "You go back and tell Engelhardt they'll have to wait six weeks," he ordered. "Maybe then we'll run those crucibles for them."

I was steaming! So what if it was a small order; it was one the customer was depending on. What's more, I'd already made a commitment, and I wasn't going to take "No" for an answer.

Out in the plant, when the V. P. was out of sight, I persuaded the shop superintendent to make the crucibles for me. A few days later, well within the promised deadline, I delivered the crucibles to Engelhardt. As I'd foreseen, the purchasing agent was appropriately grateful, and Ajax had itself--for the time being, at least--a happy customer.

I came to enjoy working with my clients, and I took pride in helping them increase productivity. At Indiana Steel Foundry, where they made alnico magnets. I was able to step up productivity 20% to 30% simply by readjusting the GE controls to full voltage and then retraining the operators in the basics of production: keep the furnace charged, have the ladle in place at the furnace when it is time to pour, avoid lost time between heats, and have the new charge ready to he loaded into the furnace immediately after pouring the old.

At the same time, I was learning how the systems worked in real life. What the foundries' needs were. What their constraints were. It occurred to me, too, during a visit to a customer in Pennsylvania, that I was beginning to enjoy selling and was perhaps even getting good at it.

The afternoon began as a routine sales call. A small investment casting company had written for information on a 17-pound melting unit, and I decided to drive out that afternoon. It was a stroke of luck, since a salesman from the Lepel High Frequency Company was already there and was about to close a sale with the proprietor, Paul Foley.

Foley's company, Harcast Investment Casting Company of Glenolden, was one of dozens of shops that had sprung up around the country after the war, based on a revival of the ancient "Lost Wax" process. This method of casting produced small complex parts with almost the dimensional precision of machining, but at a fraction of the cost. Wax patterns, the shape of the finished casting, are made by injecting the wax into a metal mold. The patterns are then fused to a center stem or "gate" to form an array of dozens of wax parts protruding from the stem like the leaves of a tree. In fact, it is called a "tree." The entire assembly is then set in a flask the size of a one-gallon juice can which is filled with a ceramic slurry-the "investment." When the wax is melted out in an oven, multiple cavities the exact size and shape of the desired parts are left to be filled with molten metal.

Nobody could tell me whether this process owed its name to the fact that the wax was lost when it was melted out or because the process, which had been used centuries before for making gold jewelry and even gold teeth, had been lost and then rediscovered.

Hardly suspecting how the revival of this ancient process would influence my career and the lives of several thousands more, I waited outside the door to Foley's office and observed the goings on. Harcast was then using a small, 10 kW, quench-gap inverter built by Lepel itself, and Harcast was considering replacing this unit with a larger one in order to double capacity.

As I saw it, Foley had two choices: Ajax's single mercury hydrogen spark-gap inverter, which produced frequencies in the 20 kilocycle range, or Lepel's larger 30 kW, multiple quench-gap inverter which operated at 450 kilocycles, a frequency which I thought was much too high for effective and efficient melting in the volumes required by Harcast.

The Lepel salesman had made his pitch and was on his way out of Foley's office when an idea struck me. "Maybe the gentleman from Lepel would like to stay and listen to what I have to say about Ajax's equipment," I offered. "This way, if he disagrees with any of the technical points I raise, he can have his say."

Foley looked at the Lepel salesman, who seemed reluctant to participate in this exercise, but he agreed to stay and listen. With my competitor there in the same room, the rest was easy. I talked about indisputable advantages: the stirring action and melting homogeneity; the single, mercury hydrogen spark gap with no adjustment required; better melt rates and higher production. I didn't leave until I had Harcast's order for a new Ajax melt unit in my pocket.

In the weeks ahead, while I oversaw Harcast's start-up and training on the new melt unit, I got to know Paul Foley quite well, and came to admire both his entrepreneurship and his courage. Prior to founding Harcast he'd had no experience in investment casting, but after reading an article on the process he decided to plunge ahead into the business. It wasn't every day you met a man with that kind of energy and determination.

Once Harcast's new system was up and running, I said goodbye and good luck to Foley and his company. It would be years before I saw the dauntless entrepreneur again. The next time he would be the one making the sales pitch.

While I no longer dreaded selling, I was still an engineer at heart, and I wanted to engineer. There was so much I could do for the company, so many improvements I could make.

Ajax didn't really build the larger induction equipment; it put together a box furnace hut purchased all of the electrical parts. The customer had to build a room the size of an average living room to house the motor-generator (M-G) set used to change the frequency to either 1,000 or 3,000 cycles required for the larger furnaces of the day.

This room also housed the starter for the motor and the control panel for the generator, both built by either General Electric or Westinghouse, depending on whose generator was used. The control panel was mounted in the front wall of the room, accessible to the furnace operator. An interlocked wooden door concealed a massive barrel-switch built by another supplier, Pringle Electric, to switch power between alternate furnaces. Behind the switches stood the capacitor bank, a simple rack containing 30 or so capacitors, each the size of a large briefcase, connected to the bus bars. These led to the switches and, in turn, through a trench to one of two or more furnaces. The capacitors served to resonate the furnace coil, supplying the reactive current that subsequently produced the huge alternating magnetic field.

Typically, when power was applied, thousands of amperes-enough to light 5,000 light bulbs--had to travel from the capacitor bank, through the copper bus, through the switches through a set of bus bars leading to the furnace, and finally through a set of flexible leads to the coil. The bus consisted of only a set of water-cooled copper tubes, the water serving to carry away the waste heat and energy that the M-G set generated. The customer had to pay for this energy, but it was energy that would never reach the metal in the furnace.

It was the kind of room Rube Goldberg might have felt at home in, but not an electrical engineer from MIT. I was convinced I could improve not only the melting system's efficiency, but also Ajax's profitability, while increasing the user's productivity and cutting the costs of electricity. It was nothing profound, just sound, basic engineering with an eye towards perfection. The way I saw it, we were capable of building a better control panel at a fraction of the cost of the purchased controls. Even more critical was a power transmission system with enough copper in the bus to minimize the losses from the huge current loads and configured to reduce the bus's reactive voltage drop to more efficient levels. By doing so, we could direct all the magnetic field and all the power into the furnace coil, to melt more metal, more productively, and more economically. It all seemed so obvious.

But first I had to be transferred to the Engineering Department, a point I expressed to the company's president and chief engineer, Bob Blakesley. I'd been in sales three years; how much longer would I have to wait to join the engineering staff? Blakesley protested; my customers loved working with me, he said, referring to the letters he'd received frequently, commending my work. But yes, he'd move me to engineering sometime, maybe in three or four years.

Three or four years? I was already 26 years old; I'd already delayed my engineering career by going into the Army, and I didn't want to wait another month, much less three or four years, to begin changing things. Wasn't this why I had joined a small company in the first place? To move up the ladder, and show what I could do as an engineer? My first impulse was to say the first two words that had come to my mind-" I quit!"-but I choked them back. I liked Bob Blakesley; he never had a cross word for anybody and was willing to discuss these things, but he resisted change and could say "No" with the tenacity of a bulldog.

I resigned myself to waiting a little longer. After all, my job was secure, and this was no time to make a rash move. Financially, I was over-extended with another engineering project: Betty and I were building our new house. We had been involved in every phase of the construction. We'd helped clear the land; dig the foundation; mix the mortar; pour concrete; install plumbing; connect the wiring. It wasn't just the economics of it all that appealed to us, it was the adventure.

We broke ground for the project in the summer of 1949. While construction was underway, we stayed with my father at his farm in Yardley, across the Delaware River. The house we decided to build was cast concrete, unusual around New Jersey, but our architect, an old MIT friend, Geb Rockerman, had already built several of them in lumber-poor Florida. The 2,000-square-foot design included three bedrooms, one bath, a kitchen, dining room, living room with picture windows, fireplace, and a basement,

I'd budgeted $10,000 for the job, which Geb assured me would be enough. After putting in a full day at the office or on the road, I'd join Betty, Geb, and the various workmen on the site. One day I noticed a young boy watching curiously from the edge of the clearing and waved him over.

"What's your name, son?" I asked.

"Mickey," he said, shyly. "Mickey Cartlidge."

"Well, Mickey, I'm Hank Rowan, and I'm the one who's building this house. I suppose we're building it on your former playground?"

He allowed, a little sheepishly, that I was right. I suspected that my young acquaintance was also the one who had torn down the batter boards when we were locating the foundation, but I didn't call him on it, he looked so forlorn.

He looked around the site, as if summoning up his courage before asking, shyly, "Can I help? I need a job."

"Well, maybe you can, I answered him. "How old are you, young man?"

"I'm thirteen," he said, with a determined look on his face, as if he were ready to prove himself old enough to handle any task if he were just given a chance. I knew there were child labor laws that were probably good For the country as a whole, but not so good for some young individuals who wanted nothing more than an opportunity to work, and learn, and achieve on their own. Mickey struck me as that kind of boy.

So that's how Mickey Cartlidge, later known to entrepreneurs and executives around the world as Jess Cartlidge, went to work for me pulling nails out of form lumber and carrying cinder block for 25 cents an hour.

Summer dragged into winter, and though our house still wasn't finished, our budget was. Worse, we were already $2,000 over budget, at the limit of our mortgage, and we were broke. The cinder block shell was in place, but the walls weren't plastered, there was no plumbing or wiring, and the doors and windows hadn't been installed. Friend or no friend, I had to let Geb and his men go. Geb protested; he'd come this far, how did we expect to finish the house? Betty and I would do it ourselves, I said, at whatever pace we can finance.

That winter, while we contracted with professional plasterers to finish the walls. Betty and I installed the plumbing, hung the doors and windows, and wired the house.

Once the wiring was in place, the Rowans--all four of us - moved in, and Betty and I continued to work, landscaping the grounds, building a stone fireplace in the living room, and porches outside.

By the spring of 1950, the house was completed, and our teenage helper had become part of the Rowan household. When not working for me, he'd drop over for dinner, or for help with his algebra.

He was also learning things he couldn't have found in a high school text; among these, the value of time. After the house was completed, there were still odd projects. To one of these I added an incentive program for my eager assistant. The project was simple-digging an 18-cubic-yard storage area under a back porch. I made him a deal. If he could move one-half cubic yard per hour, it would take him 36 hours to do the job, for which I would pay him $9.00. But I would also pay him 25 cents for every hour under 36 hours. He managed to beat the standard by nine hours, making an extra $2.25 in the process.

Our son Jimmy enjoyed having Jess over, and our new young friend frequently baby sat for both children when we went out. I was reluctant to leave Jimmy with just anybody; he was three years old, a bright boy, but he sometimes seemed to have difficulty walking.

Betty had noticed it too. When we took Jimmy to the pediatrician, though, the doctor dismissed our concerns. Kids all develop differently, at different stages, he said. We shouldn't worry about it. Betty and I tried not to.

Chapter 5

No Retreat

To this day, I can't recall where I was, or what I was doing when I first became aware of the fate that awaited our family. The knowledge of this impending tragedy had come in such innocent, everyday form, in an article in the June 1951 Reader's Digest.

I had turned to one of the magazine's regular features, entitled "The Most Unforgettable Character I Have Ever Met." This time, the subject was a newspaperman who had apparently suffered from polio, a disease which, until the discovery of the Salk vaccine, wreaked havoc among children around the world. Thank God that our children didn't suffer from polio, I thought to myself. That was one of the first things the doctors had checked for.

As I read further, however, I felt a growing sense of dread. It wasn't polio that afflicted the young man who was the subject of the article; instead, it was a then-little-known disease called Duchenne muscular dystrophy, and it was far more devastating than polio. Unlike polio, which could cripple its victim but then stabilize, Duchenne muscular dystrophy never ceases destroying the muscles of the body until they lose all function. For its victims, there was no hope, no retreat.

I put the magazine down, and felt the world spinning around me.

Was this what the future held in store for Jimmy?

In the weeks ahead, Betty and I visited doctor after doctor, trying to learn whatever we could about muscular dystrophy, but little research had been done. What the doctors could tell us, however, was that by early childhood, its victims would first be crippled and require braces and crutches. By adolescence, they would be confined to wheelchairs, to endure years of helplessness, unable to feed themselves or clothe themselves, until the respiratory muscles failed. Then, and only then, could they escape the prison of their bodies.

Betty was inconsolable. Was she to blame for what was happening to Jimmy? What had she done to bestow this horrible affliction on her own son? And what should she do now? It was no longer just Jimmy she had to worry about. She was now several months pregnant with our third child. If it was to be a boy, would he be born just to endure a shortened lifetime of suffering?

Later that year, on October 5, 1950, the child was born. We named him David. All we could do now, the doctors told us, was watch, and wait, and pray.

Chapter 6


My hours at Ajax got later and later; in a way, work was an escape. At home I was confronted daily with the reality of my helplessness to help my sons. On the job, I was in control. I understood machinery and electronics; I could create things, and I could change things. If something didn't work, I could make it better. As for the fire that burned inside me, I suppressed it, sealing it off the way one does with a charge of molten metal.

About a year after my talk with Bob Blakesley, I got what I had been asking for, though not in the way I'd expected or wished. Bob died suddenly of a massive heart attack, and his job was divided between two men--Dean Meyer became president, and former Assistant Chief Engineer Ted Kennedy was named Chief Engineer. And finally I was transferred from the ranks of the salesmen and officially named an engineer.

I went to work under Kennedy, whose former position remained vacant, one I openly coveted. "When you think I'm ready, I'd like the Assistant Chief Engineer job," I told our treasurer and acting personnel manager, Frank Chestnut, hoping he'd carry the message to the new president. Frank seemed to hesitate, so I tried to make myself clear. "Let me put it this way, Frank," I said. "If that job is filled, that will be my cue to leave, because my opportunities for advancement would be limited."

Frank just looked the other way and didn't say anything; maybe he knew something I didn't.

Or, maybe he'd heard about my run-in with the new president, Dean Meyer, a few years back. It had been Meyer, then vice president of production, who'd refused to run the graphite crucibles for my customer.

I had been dismayed, even apprehensive, about the future of the company when Meyer was named company president. His attitude towards our customers, it seemed, was the antithesis of mine. Where I saw each job as a challenge to provide our customers with new operating efficiencies, new capabilities, and even new savings in the cost of equipment itself, Meyer appeared to be obsessed with profits. True, I wasn't carrying the burden of keeping the company going and meeting the payroll, but at times his preoccupation with profits struck me as downright indifference to the people and the industries we were supposed to be serving. Why else had the company's response to calls for service and sales inquiries continued to lag? It seemed that "good enough," rather than perfection, was the standard to which Meyer's company aspired. And why not? There was no real competition. Was this to be a lesson in how companies die?

Yet, Meyer was less disinclined towards innovation than his predecessor, Bob Blakesley. He didn't prevent chief engineer Ted Kennedy, a highly conceptual thinker, and me from making some sweeping, much needed changes. First, we designed and built our own panel to control and monitor both the M-G set and the furnace, thereby reducing costs and improving profitability. This earned Meyer's approval. We also substituted a high-frequency transformer for the awkward tapped-coil system that had prevailed for 35 years, since the inception of induction melting. This improved operation and saved the customer a significant amount on installation, but typically, Meyer didn't like it because it cost Ajax a little more to build.

Where Ajax once used antiquated, household-type, capacitor-selector switches, we designed and substituted modern rotary control switches.

The most revolutionary change of all came when I talked Ted into letting me design a new transmission system for a major project, a 700 kW, one-ton melter at Curtiss Wright in Buffalo, New York. Dean went along with our idea because he didn't know how much more it would cost him. Today the job would be facilitated by computer modeling, but in the early 1950s, it meant spending days, nights, and weekends, doing brute-force calculations and testing various configurations at various frequencies to verify the theoretical calculations.

Ultimately, the final design--and the end result at the customer's installation--was influenced not only by my calculations, but also by Dean Meyer's stubbornness.

For years the one-ton coil on a 700 kW, 960-cycle system had been standardized at 7-l/2 turns, but, with reduced bus inductance, my figures indicated eight turns for the coil.

Meyer wouldn't hear of it; his chart showed 7-1/2 turns, so 7-1/2 it would be. I knew this was wrong, but I didn't have either the confidence or the guts to stand up to him and push for what my own calculations said we had to do. The discrepancy showed up right away, at start-up. With the lower voltage drop in the bus system, we were l2 capacitors short for balancing the reactive current, and there was no room in the rack for more capacitors. Faced with the choice of building a new capacitor rack or rebuilding the two furnace coils with the required eight turns, he quite correctly chose the latter--a $4,000 job--as being cheaper.

Even so, most CEO's would have viewed the cost as negligible, in view of the breakthrough we'd just achieved in terms of productivity and reduced power costs. Curtiss Wright cut its melting time from 55 to 45 minutes worth 300 extra tons per year, or a savings of $6,000 off its electricity bill. Ted and I were ecstatic, but Meyer, mindful of the $4,000 he'd just spent for new coils and service time, was adamant. From then on, he decreed, Ajax was producing nothing but "standard" systems.

Meyer didn't realize it then, but he was doing me the biggest favor I could ever have asked for.

Relations between the company's CEO and me didn't improve from that point, but I ignored Meyer's antipathy towards me. I had more important things on my mind.

One was the Assistant Chief Engineer's job, which remained open. By rights--I was convinced--it belonged to me. I had earned it. Nights and weekends when I should have been home with my family, I was still at the office testing, engineering, or coming back from servicing equipment, or on the road starting up a new installation. It was then, with time becoming so precious, that I decided it made more sense to fly and put down on a field near the customer's site, than to drive. I'd been poking around the local airport and had my eye on a used Ercoupe I could have for $1,300. I rationalized that, at its alleged 110 mph top speed, I could cover a 500-mile trip much faster than by train or car, and almost as fast as commercial airlines, with waiting time factored in. Meyer should be happy to ante up the equivalent train fare or the 6 cents per mile normally allowed for car expense, and I could absorb the difference without suffering too badly,

Friday, August 20, 1952, I kissed Betty goodbye, and told her I might be late for dinner, as I planned to go negotiate for the Ercoupe later that day. But it was not to be, not this time. I was walking through the Ajax plant when I encountered Frank Chestnut; he was showing a new employee around the plant whom he introduced to me simply as Billy Thomas. I asked Thomas what he'd been doing. His credentials sounded impressive; he had some 20 years experience in electrical engineering, most recently as the high-frequency design engineer for General Electric. In fact, his background sounded ideal for the Assistant Chief Engineer spot, the job I had been hoping for. The job I had earned. My job. As we talked, I felt the strength ebb out of me. So this is how it ends, I thought.

A few hours later, I found Chestnut alone in his office and I sauntered in, with as casual an attitude as I could muster. "Well, Frank, is this my cue?" I asked.

He hemmed and hawed and asked what I meant, so I reminded him of our conversation the previous February. Little by little, it became clear that the company had gone outside for its new Assistant Chief Engineer.

It's not that I argued with the decision; Thomas was a seasoned engineer, 20 years my senior. But while it may have been the right choice for Ajax, it wasn't the right choice for me. My path for advancement was closed, and it could be years more before I would have another opportunity like the one that now had been denied me.

Besides, I had boxed myself into a corner. Having given Frank an ultimatum some months earlier with that wisecrack about "my cue to leave,'' I would either have to eat a lot of crow or follow through. My pride left me no choice.

"When is Billy Thomas going to start?" I asked Frank.

"September 1st," he said, looking at me like he might at somebody who was going to jump off a bridge on a dare.

"Then I'll be leaving on August 31st, Frank." I turned and walked out before he could tell me not to act so rashly, to think things over, to think of my future, and so on. I was in no mood for platitudes. I felt like I had been swept up and tossed by so many emotions, I had trouble sorting them out. I felt hurt; I had done my best for Ajax, and somehow, I had failed. Why else would they give the job to another man? At the same time, I felt righteous. If Ajax could not recognize what I had to offer, then they deserved to lose me. I also felt a sense of loss; I had made friends at Ajax; my job there was secure, and in time . . . well, who knew? But I also felt a rush of adrenaline, not unlike the first time I lifted off the runway and felt the ground fall away beneath me. Yes, it was time to try something new.

Back home, Betty met me with her constant word of enthusiasm or everything I wanted to do. Did you buy the plane?" she asked.

"No, I quit my job instead."

If she felt shock, or concern, she didn't show it. There were no recriminations or disapproval. Just the total, ever-present, uncompromising support from which have always found my strength.

Chapter 7

"How Would You Like to Build a Furnace?"

I don't believe in Destiny, the notion that we all have an unalterable role in history awaiting us. From what I've seen, the most significant turning points in our lives are functions of pure chance and circumstance; success or failure depends on how we deal with both.

It was chance that brought me to Ajax. Nobody had sought me out to enter the field of induction melting, and I hadn't planned a career in the field. It happened the way it did because of that scrap of paper on a bulletin board that had caught my eye. Five years and some months later, it was circumstance that prompted me to resign from Ajax. And if there was a Grand Design awaiting me, it certainly didn't become apparent during the weeks following my resignation. Though I would soon be unemployed, I anticipated with considerable excitement the new challenges and new technologies that lay ahead. But I wasn't prepared for that intermediate step that lay in between.

Selling furnaces and explaining technical advantages had been one thing; in fact, it had become kind of fun, and sometimes, even an exciting challenge. But selling myself was another. While I had enjoyed talking about products and equipment, and what new engineering developments could do for customers, I didn't especially enjoy sitting there, telling prospective employers what Hank Rowan could do for them.

After three weeks, the closest I'd come to a job was an offer from the Lock Joint Pipe Company, which offered me a starting salary of $8,500, or $2,000 more than I'd been making at Ajax. But while the money sounded good, the work--planning electrical systems for temporary concrete pipe casting sites--sounded dull; I wanted more challenging work, so I turned it down.

Later, I began having second thoughts; first, about leaving Ajax at all, and next, about turning down the Lock Joint Pipe job. During my final weeks in the Air Corps, I couldn't stand not working even when I was being paid for it. Not working, and not getting paid was, for me, sheer hell.

Several times I found myself thinking the unthinkable--calling Frank Chestnut at Ajax and asking them to take me back--but again, my pride wouldn't permit it. I'd stayed in touch with my old friends from the company, and, from what they told me, the engineering department and Ted Kennedy missed me. Perhaps they would call me, I thought to myself. If they offered me a few dollars more per month, then I could return without losing face. People can be driven by pride, but not companies. They are an unemotional abstraction. But the call never came, and in spite of myself, I missed the place.

Of the dozens of letters and resumes I'd sent out, one went to a new induction heating--as opposed to melting--company called Magnethermic, of Youngstown, Ohio. When I didn't receive an answer to my letter, and since my pride didn't permit me to follow up with a phone call, it seemed I was out of the induction business for good. Years later, as I sought out the most aggressive men to join me, I would look back on this exasperating passivity on my part and wonder if I would have hired me.

My prospects were looking pretty bleak when I landed an interview with the Baldwin Hill Company, a rock wool insulation manufacturer in Trenton. My degree from MIT and engineering credentials notwithstanding, I was asked to take a standard aptitude test. I must have passed, because shortly thereafter, Baldwin Hill offered me a job as project engineer at its rock-wool plant, and I accepted.

After becoming disillusioned, primarily with Dean Meyer at Ajax Electrothermic, it was refreshing to work for a man like Bill Hill, president of the Baldwin Hill company. He was a genuine, down-to-earth sort of person, a true entrepreneur who had built a once-crude company into a highly successful manufacturing concern, one that made a significant contribution to the Trenton economy.

The work, too, was a departure from the induction business. Baldwin Hill made rock wool by blowing molten slag into long fibers with steam, then letting the fibers settle onto a moving belt where it would cool and be sliced into pads of insulation.

The company's production techniques were interesting in concept, but--in contrast to Ajax, where I saw the need for improvement at every turn--my new employer's methods were well-developed and mature. In short, while I was happy to be working again, there weren't enough problems. I saw little opportunity to upgrade Baldwin Hill's practices and products that were already in place when I got there.

Thus, I was elated to receive an unexpected telegram from John Logan, the president of Magnethermic, the company I'd written to several weeks earlier. He'd just returned from Europe, found my letter unopened, and he had a job for me, the telegram said.

I was eager to take the job, but unlike Ajax, Baldwin Hill wasn't ready to let me go. If the rock wool plant wasn't right for me, asked Bill Hill, what did I want?

I wanted challenges, I told him. I didn't want to just keep things running, I wanted to develop new ideas, find new solutions.

"Okay," said Mr. Hill. He went on to explain that he had just the company--a subsidiary in New Brunswick named Marine Manufacturing and Supply Company--which he had acquired about a year before hiring me. Along with the new job, I'd get a $1,000 raise, and a new title--"Methods Manager." The title sounded contrived, probably to appeal to my ego, but I agreed to visit New Brunswick before giving Magnethermic my answer.

One look at Marine Manufacturing and I was hooked. I wrote back to John Logan, thanking him for the offer, but I told him I was staying in New Jersey. I'd always been interested in production, and besides, Marine Manufacturing looked like fun.

Throughout most of this century the company had been producing electric capstans and winches for cargo ships. Now, with the Korean War raging and American troops requiring logistical support halfway around the world, the American shipping industry was booming. Yet, while Marine Manufacturing had a strong market, its manufacturing techniques were outmoded and badly in need of new engineering, particularly production engineering. Though this was a field I knew nothing about, I was eager to learn. And what a place to learn!

One look at the factory was all it took to convince me that the place was crying out for change. Marine Manufacturing was an old company, founded in 1850 to supply hardware to the sailing ships of that day, and its production equipment appeared to be hardly any less venerable. It looked as if it had been accumulating antiquated and redundant equipment and material since the day it opened its doors for business. Old capstans, winches, cable drums, and propellers were everywhere, making the plant look more like an attic than a work floor.

The clutter was almost a point of pride to the company's CEO,

Phil Dye. Dye was a former junk dealer, a natural horse trader who was better at accumulating things than putting them to use. "That last winch job needed a diesel engine so I bought one. But the vendor threw this one in as part of the deal," he'd tell me with pride, by way of explaining what a mammoth diesel engine with no use at all to us was doing taking up valuable space in the middle of the plant.

Dye enjoyed wheeling and dealing, but efficiency wasn't his strong suit, and neither was economics. Earlier that year he had landed an order for 40 sets of ship's steering gear. At $1,400 each, the steering assemblies were reasonably priced and should have produced a handsome profit. But Marine's production methods were as outdated and inefficient as its equipment, and each of the $1,400 units cost $2,500 to manufacture, resulting in a loss of $44,000.

I had no sooner gone to work for Dye when he advised me that, undaunted by his previous experience making steering gears, he had committed Marine Manufacturing to producing another 90 steering systems, this time, at $1,200 each. Simple mathematics indicated that if these were made the same way, and at the same cost, as the first 40 were, the company stood to lose another $117,000. Obviously, things had to change.

Not everybody agreed; most of the men at Marine Manufacturing had been doing things the same way for years, and they were resistant to change. These were men in their forties and fifties; they'd been operating lathes and mills since their teens and they resented the idea of the parent company sending them a "Whiz Kid" from MIT to tell them how to do their jobs.

All right, I told myself, the classroom and the plant were two different worlds, but if my training at MIT had taught me one thing, it was never to accept limits imposed by others. If I had a lot to learn about the practicalities of machining, welding, and fabrication, well, then, I would learn. Fortunately for me, Tom Pippitt, the company's materials manager and purchasing agent, was a former machinist's apprentice from Throps in Trenton. Tom was a few years older than I, and, as I later learned, he'd come there looking for much the same thing I had--a challenge. Tom took this inexperienced "Methods Manager" under his wing, showing me how to get the most out of the plant's equipment.

It was a lot easier than getting the most out of our work force; at times, I despaired of ever realizing my goals there, given the personnel I was working with. "If we really want to turn this place around," I complained to a senior Baldwin Hill executive named Bill Humes one day, "you should fire 75% of the people here and start over again."

Humes laughed at my youthful exasperation. "You can't do that, and that's your first lesson. These are good men and a typical cross section. If you change the work force, you'll find you'll have the same frustrations and the same problems, so you might as well work with the people you've got. It's up to you to train them and motivate them and show them what they're capable of doing."

Humes was right; the wisdom of what he was saying became clear to me when I recalled those first weeks in basic training in the Air Corps, when I'd seen drill instructors take young men who were lackadaisical, overweight, or puny, or who lacked confidence, and give them a sense of purpose and pride while shaping them up physically and making airmen out of them.

Obviously, the parameters at Marine Manufacturing were different, but the challenge was similar. The majority of the shop personnel, I found out, had never had any training, nor had anyone bothered to challenge the work force's own sense of pride or encourage them to find out for themselves what they were capable of achieving. Before I could gain their attention and respect, it seemed, I would first have to prove that, in spite of their experience, they could be working a lot more skillfully and productively.

With this in mind I instituted a training program. At night, Tom Pippitt and I would stay late in the plant testing equipment speeds, feeds, and limitations. We found that many of the lathes had been turning at half speed for years; by tightening the bearings and otherwise tuning them up, we got them finally running at full speed without chatter. We learned we could then step up feed rates from two to ten times while increasing the depth of cut several-fold. The result was twice, then four times, then eight times, then 20 times the former metal removal, which was generally the breakage point for the carbide cutters of those days. Then, we'd back off to 16 times the metal removal, and we could cut all day.

It wasn't enough to upgrade the equipment and devise more efficient methods, though. Tom and I had to instill a whole new mind set within the work force.

"By doubling the cutting depth, you're immediately doing twice the work," I'd start telling a group of machinists, fully knowing that one of them would invariably interrupt to point out something this rookie had overlooked: "That's all well and good, Hank, and it might work on paper. But if we do that, we're going to be breaking a lot of tools," one veteran would point out, while his friends would smile smugly, expecting me to turn red with embarrassment. I didn't, though.

"So what?" I answered. "How do you know what the equipment will do until you've increased the speeds and feeds and depth of cut all the way to the breaking point? The only way to learn the limitations of any tool, to find the point of maximum performance, is to break a tool or two.

"This isn't a museum. We're not here to safeguard tools, or even this old equipment; we're here to use them. Nobody in this plant will be criticized because we have to repair machinery or replace a tool, as long as he's striving for maximum production. Remember, it's not the tools that are important, it's what we do with them."

Every time I gave this little speech, I could see eyes widen in surprise. Gradually, morale improved as the shop personnel slowly came to understand their roles and began seeing the results of what we were preaching. In one case, a 4-inch-diameter precision hole on the critical 90-unit steerer job that formerly took four hours to bore and machine now took 20 minutes. They saw, too, that we were subjecting our operating procedures to the same scrutiny. In some cases, intricate parts that had been painstakingly fabricated and machined were now cast.

Within three months, production in some product lines doubled; in a few, it had nearly tripled. As for those 90 steering gears, Marine Manufacturing was able to produce them at a cost of $900 instead of $2,500 each, resulting in a manufacturing profit of $27,000, rather than a $117,000 loss. Consequently, Marine Manufacturing, which had been running at a loss ever since it had been acquired by Baldwin Hill, turned its first profit. By this time, I was no longer "Methods Manager" I'd been promoted to plant manager and I was having the time of my life.

Still, as I was about to learn, the company I'd turned down earlier that year, Magnethermic of Ohio, wasn't going to take my "No" for an answer.

"We really want you to join us, Hank," said Magnethermic's president, John Logan, leaning over his desk towards me. It was all very flattering. Logan had called again in December, 1952, some three months after I'd turned down his first job offer, to say he still wanted me to come work for Magnethermic. A few days later, the company flew Betty and me to Youngstown, where we were wined and dined by Logan, his two founding partners and their wives.

The partners were Logan, John Taylor, formerly of Lombard Engineering, and Bruce MacArthur, an ex-Alcoa engineer. Their company, which manufactured induction heating equipment for aluminum billets, had been founded seven years previous, based on R&D Alcoa had performed in 60-cycle induction heating for the extrusion field. An outsider might have wondered how Ajax had missed this entire segment of its industry, but having worked there, I was well acquainted with the older company's aversion to change and to exploring new applications. "What a shame," I thought to myself as I observed the bustling business the trio in Youngstown had made of this segment of the industry.

As for Magnethermic's offer, well, it was tempting. And if I hadn't been having so much fun at Marine Manufacturing, I might have leaped at the opportunity to work for Magnethermic. Or would I have? Even as I sat there in Logan's office, I found myself sparring over the details of a job I was sure I wanted, yet at the same time couldn't commit to. Was I playing a hand, trying to maneuver Logan into sweetening his offer? Or was there something else, something I didn't recognize myself, holding me back?

That I had a lot to offer Logan and his partners I had no doubt; with this in mind, I had asked about stock ownership in the company. Obviously, if my efforts carried Magnethermic into induction melting, there would be substantial growth opportunities, and I wanted to share in them.

"You bet," said a grinning John Logan. "We offer stock to our employees in Magnethermic Manufacturing, a subsidiary of Magnethermic Corporation. As Magnethermic grows, so will the manufacturing arm."

I thought this over a moment, before observing, "But John, you and your two partners can totally control the prices Magnethermic Corp. pays to Magnethermic Manufacturing. You can pay them as much or as little as you wish. The less you pay to Magnethermic Manufacturing, the more profit you and your three partners make, and the less profit your subsidiary enjoys. How is that fair to your employees?"

Logan was taken aback by my suggestion that this relationship wasn't fair, but instead of protesting angrily, he just looked at me sheepishly, and by the time we said goodbye a chill had settled over our negotiations. As Betty and I flew back home to New Jersey, I wondered: what if Bill Hill hadn't given me the opportunity at Marine Manufacturing? Could I have silenced my misgivings, and gone to work for Logan? Two days later I got a letter from Magnethermic's president suggesting that I wouldn't want the job after all. Logan wasn't my kind of guy, and apparently, I wasn't his either. But we hadn't seen the last of each other.

I returned to my work at Marine Manufacturing with renewed enthusiasm. There was still much more to do before our production output reached the goals I'd set for us, and my brush with Magnethermic had given me a heightened appreciation for the people I was working for--and with--in New Brunswick.

Still, in between testing for the ultimate productivity of a lathe, or pushing for greater savings in the production of a capstan, I sometimes wondered how things would have turned out if I'd stayed in the induction melting business. If I'd had the chance to try out my theories, and turn them into practice. If I'd been able to prove to Ajax that they had been wrong in putting me in a position where leaving seemed my only course of action.

I'd probably never have had a chance to find out, if not for a phone call I received in April, 1953, about four months after returning from Ohio.

"Is this the Hank Rowan from Ajax?"

"It's the Hank Rowan who used to be," I said.

"It's Paul Foley, from Harcast. Do you remember me?"

Of course I did; how could I forget how I'd sold him that 20 kW spark gap inverter, while my competition stood there looking on?

"Good," said Foley. He was never one to waste time with small talk. "I have a proposal for you. How would you like to go into the induction business?

"I wouldn't," I told him. "I've got a fine job and I'm having a ball."

"Well, can we get together and talk about it?" was his reply. Paul was hard to put off.

An hour or so later, my former customer was sitting in my living room, brimming with enthusiasm over the idea of entering a business he knew next to nothing about. But somehow, like a true entrepreneur, he had an instinct for opportunity. As the former Navy commander explained, he'd remained in the Reserve following World War II; during the ongoing Korean Conflict, his duties required him to inspect Navy purchases, among them, 400cycle motor generator sets from Bogue Electric of Paterson, New Jersey. The Navy required 400-cycle, instead of 60-cycle M-G sets for shipboard use wherever possible. Space was at a premium, and the higher frequency motor-generators and electrical components were one quarter the size of lower frequency units. Along the way, Paul Foley had come to know Paul Shinman, president and chief stockholder of Bogue Electric rather well.

Shinman's and Foley's interests converged in the matter of induction melting. Harcast, Foley's investment casting firm, had prospered using the Ajax spark gap unit I'd sold him years earlier. Now, he was hankering to move up to a 50 kW, 3,000-cycle M-G powered melting unit, capable of four times the output of the less efficient but rugged spark gap. Shinman, meanwhile, was interested in building high frequency motor generator sets for the induction furnace business, and was willing to build the M-G set Paul required at an experimental bargain price. Now all Paul needed was someone to design the furnace, power system, and controls.

It was an appealing idea, and I felt my pulse racing as Paul outlined his plan. I'd always wanted to go into my own business, ever since I was a nine-year-old struggling to buy feed for my chickens. Being an entrepreneur . . . running my own business . . . controlling my own fortunes . . . it all sounded good to me. If ever destiny was going to come knocking at my door, here it was. Still . . .

I turned him down. (So much for destiny!) I was already my own boss, I explained. Bill Hill and the folks at Baldwin Hill were pleased with our work at Marine Manufacturing, and pretty much left us alone. What's more, business was booming, and every day was a new challenge.

Foley was still not to be put off, however; if I didn't like his first proposal, he had another. He had a chance to land a large order for beryllium copper castings. He could handle the production end, if he could only mate his existing 20 kW spark gap unit to a new, 60-pound furnace. Could I build that furnace for him? It wouldn't take long for a man of my skills, he wheedled, and he would pay $500.

I thought it over. The idea of "moonlighting," working for somebody else during my time away from the office, didn't seem quite right. Sure, I was putting in 60 hours a week on the job, but I felt I should be thinking about the plant the rest of the time; anything less wouldn't be fair to Marine.

On the other hand, I reflected, designing and building a furnace from scratch ...I had never done that before. It was a challenge, and one I found irresistible. Then, too, I rationalized, I might devise a technique or two that could be applied in the plant on behalf of Marine Manufacturing. So I agreed to do it. That was to say, just the furnace, and nothing more. And only on the weekends, with no promises on delivery.

That was fine with Foley, who made one further suggestion: as long as I was going to build his furnace, why not incorporate a company to buy materials at Original Equipment Manufacturers (OEM) prices; it would keep my production costs to a minimum.

It seemed like a good idea, but hardly worth the cost and the effort. "It's just going to be one job, Paul," I reminded him. "One single furnace, and that will be the end of it."

"Don't worry about the cost of incorporating," Paul smiled. "My dad's a lawyer, and he'll be glad to handle the paperwork for no charge."

The following weekend, Betty, Paul Foley, and I sat with Paul's father around the table in the kitchen of our home in Trenton. My new partner generously suggested that I be president of our "corporation," since the engineer was the man who would do the most critical work. Paul wasn't ordinarily a manipulative sort of person, but at that very moment I was being manipulated, and we both knew it. He must have known what I was thinking: "Hank Rowan, CEO." I liked the way it sounded. So far as a name for our endeavor, Paul suggested "Rowan Furnaces Inc.," but this time I didn't bite; my modesty and marketing sense overrode my ego.

"How about a name that carries a message?" I countered. Somewhere in the back of my mind, part of my brain must have been working on the name for the new company. "The name should connote a purpose. Something to do with both induction and heat," I insisted. "How about something like . . . Inductotherm?"

Thus, in May, 1953, Inductotherm was born. It had a CEO, a vice president, and one $500 order. Soon, promised Paul, the company would even have its own official stationery. Now all I had to do was build the furnace. Paul suggested we use Harcast's facilities, but Glenolden was too far away for me to work there in my spare time, especially when I had an appropriate work site much closer to home in my own garage. Further, as Betty pointed out, that way she could help.

Between the two of us, we set out to make Inductotherm's very first furnace the most advanced 60-pound induction furnace anybody had ever built. For instance, I'd always wanted to bring the leads into the furnace through the hollow tilting trunnion at the point of rotation, an approach Ajax had always rejected as impractical and expensive. It would keep the leads short and shortened leads meant less energy loss and greater efficiency. This required patterns for casting the custom-built trunnions, which Paul then arranged to have cast in an aluminum sand foundry.

The bottom structure of the furnace itself, too, was going to be unique, comprised solely of reinforced, cast-refractory concrete. This was a departure from Ajax furnaces, which employed massive metal ribs across the bottom to support and control the stresses of expansion due to temperature. As these supports were well within the coil's heavy magnetic field, they absorbed power while robbing heat from the melt. I was well acquainted with the characteristics and capabilities of steel-reinforced concrete; I'd studied such structures at MIT and had to calculate a typical concrete bridge span to pass the New Jersey professional engineers exam. What's more, I'd helped build an entire house of concrete; working with my architect classmate Geb Rockerman (who'd written his thesis on concrete beams) had shown me the massive loads a short-span, reinforced-concrete beam would withstand. I decided to apply the same engineering to Inductotherm's furnace, giving it the kind of structure that would be self-supportive, without the use of energy draining metal ribs.

The coil was the tough part. Spark gap inverters are most efficient with as many turns as can be crammed into the space allowed. The crucible Paul wanted to use dictated dimensions of 10.5 inches in diameter by 11 inches long. A configuration of 44 turns in about 11 inches was about right; any fewer turns would begin to rob the metal of power and cause it to melt more slowly. Any more would be too crowded and leave no room for electrical spacing or water flow in the tubing.

Three-eighths OD tubing had to be flattened to about 0.20 inches, leaving 0.13 inches for interior water flow and 0.05 inches between turns. After Betty and I flattened the copper on our homemade "cookie cutter" flattening roll (so-called because the used rolls I had bought had animal-cracker-type impressions on the surface which had to be machined off), we had to wind it into a coil. The design called for winding it the hard way--edgewise--which can't be done by hand, so I bought an Atlas lathe for my cellar (everybody should have a lathe in his cellar) and built a motor driven rig to edge-wind the coil. In time value, I'd already spent the $500 our little company would receive for the furnace, but my spare time was free, and only cash flow counted.

After the coil was wound, it had to be annealed; when copper is worked, it hardens and becomes springy. Usually, this is done in atmosphere-controlled annealing furnaces with the temperature set at 1,200 E degrees, but fortunately, the exact temperatures aren't critical, so Betty and I built a bonfire in the back yard, put a spit over it, and annealed the copper coil in the flames.

Six weeks later, in July, the job was finished, and with it, so was Inductotherm. If our little company's life span was brief, it had produced something of gem-like character--one 60-pound furnace. I called Paul Foley and told him his furnace was ready. He came right over.

The next day, Foley called me from Harcast. The furnace worked! It not only worked, it was humming like a new watch, melting beryllium copper faster than expected.

Good, I thought. Now that Inductotherm was over with, I could focus my full attention on my job at Marine Manufacturing. Yet somewhere out there was still an idea burning that I couldn't shake. An idea called Inductotherm. Was I going to let it die, or would I pursue it? Was it a piece of hardware Betty and I had sculpted over a bonfire, or the shape of the future?

The following year, I found out. The induction business was calling to me once more. Again, it was Foley's voice. "How are things at Marine Manufacturing, Hank?" he began. I'll bet the Marine hardware business is pretty slow." It was April, 1954. The Korean Conflict had ended with the signing of an armistice on July 17, 1953, and the demand for nautical hardware was near zero. Paul was picking up right where he'd left off, a year before, while sitting in my living room. What do you say to going into the induction business full time? Your furnace works great, and there's a big market out there."

This time, he didn't mean weekends and a few hours in the evening. What Foley was proposing was that I leave a steady, rewarding job with prestige and promise and gamble my future-and my family'--on starting up a new company, with no outside capitalization, to compete against the world's leader in the business, a company that had a 40-year head start.

On the other hand, I was confident--probably overconfident--that somehow we could make a go of it. What's more, though my job at Marine Manufacturing offered security, and though I liked and respected Bill Hill, there really wasn't much more for me to accomplish with his company. All the outstanding contracts were finished, and it was just a matter of time before the company would be downsized, and my job, which was to maximize production, would become far less challenging, Not to mention far less necessary.

Then, too, I could recall what it felt like when we saw Inductotherm's sole furnace take shape. I felt my competitive juices stirring. It was up to me to seize the moment.

I told Betty what I had in mind. Again, I found the total support she had always provided unstintingly. That night I could barely sleep, as I tried to envision the adventures that now lay ahead of me as an entrepreneur. Whatever I might have imagined that night, it probably would have paled next to the reality of things.

The next morning I told Marine Manufacturing I would be resigning to head my own company. Six weeks later--they'd asked me to remain that long--on June 6, 1954, I returned to the induction business, this time as CEO, chief engineer, and half owner of Inductotherm.

There were significant differences between the Inductotherm of 1954 and the company I headed a year earlier. As a part-time job--one I'd taken on as a whim, really--we had, at least, an order. Now, that whim had grown into a full-time job, one that would have to provide a livelihood for Betty, the children, and me. Only there were no orders.

Paul and I agreed to capitalize the company in increments of $500 from each of us. There was only one way I could raise my end of the bargain, by selling our home in Trenton. I put the money from the house--$18,000, less the mortgage--in the bank, while we moved into the rental house in Sharon Hill, close to Glenolden. How long would we be there? I didn't know. For all our enthusiasm, neither Paul nor knew how long it would take for Inductotherm to turn a profit. For that matter, there was no market research to tap, no business plan, and we didn't even know how big the induction business was. But we would find out.

Paul provided Inductotherm with a corner of the Harcast plant, with the understanding that I would provide Harcast with expertise in induction in return for the space.

Our initial capitalization was a grand total of $1,000 for equipment and office furniture. A full one percent of these funds went for a rickety old filing cabinet we'd paid $10 for at a used furniture store. It looked neglected in the corner of the dingy office. There was an old oak desk, its veneer peeling off, and flies were everywhere. We dispatched these with a fly swatter, which was a lot cheaper than window screens.

Dust from the investment castings coated everything with a filthy film of dull gray, but it was home. Home, to the company and the dream we'd called Inductotherm.

Once moved in, I would walk around our corner of the plant, imagining it bustling with activity, the phone ringing with calls from customers, the filing cabinet overflowing with sales orders. Was this what they called vision? Or wishful thinking? It was impossible to remain objective; one moment I would feel myself crushed by doubt, by the awesome responsibilities to my wife and children. The next moment, I was soaring, uplifted by the limitless possibilities that lay ahead, the sense that we could build a really solid company. Maybe, even, a great one.

Whether my mood was downcast or euphoric, Paul remained a stabilizing force, steady-going and amiable. One trait we shared, though, was frugality. "Never spend anything you don't have to, and do everything yourself" was his watchword, and the formula had served him well. Since I'd first met him, Paul had built the 16,000 square-foot plant pretty much by himself, and Harcast's payroll had increased some 600%, from five employees to about 30.

Inductotherm's manufacturing equipment, which represented 50% of our initial investment, stood as monuments to these rules. We had an old 20 inch lathe we'd rebuilt for machining transite hand-furnace shells, a used, reciprocating hack saw for cutting furnace frames, a 19th-century vertical drill that was originally shaft-driven but was now fitted with its own motor, and a reconditioned Sears Roebuck welder. Later that first month, we gained our first salaried employee, Jess Cartlidge. He knew little about machinery and even less about the principles of induction melting, but, as he had proved five years earlier, he was eager to learn.

Humble as our surroundings were, Inductotherm was a demanding customer. From the outset, we were as concerned with buying as we were with selling. We had to learn which suppliers we could count on to meet deadlines and specifications, and who possessed the expertise to do custom work for us, on demand.

Where possible, we bought in bulk, looking ahead to the day when our little shop would bustle with activity, as the Inductotherm work force transformed copper tubing, angle iron, and capacitors into state-of-the-art induction furnaces.

By state-of-the-art, Paul and I didn't mean the existing art. We planned to create a new art---new designs and better, more efficient furnaces. As soon as we had our equipment in place, we launched Inductotherm's R&D. We began by building a prototype 50 kW melting system with which to work out design concepts, and to provide demonstration melts for prospective customers.

This project was followed by the construction of an experimental spark-gap inverter which operated at half the voltage used by the conventional units Ajax was building --4,000 volts instead of 8,000. Our objective was to retain at least the same efficiency available with the higher voltage, but simplify the insulation system and extend the lining life, which usually ended when the 8,000 volts punctured through to the molten metal. We couldn't wait for the industry to learn what Inductotherm was creating.

But we did wait. Our aspirations far outstripped the reality of the induction business. Prospective customers were skeptical. Who had ever heard of Inductotherm? How many furnaces had we installed? How long had we been in business?

It was, for us, a paradox. Here we were, thinking we were ready to revolutionize the induction business at our small plant, but were only subsisting by serving its most mundane needs. We sold coils, crucibles, and replacement parts, while preaching the virtues of induction melting in general, and the capabilities of Inductotherm in particular. Why weren't we an instant success?

One of our first major sales prospects was only a couple of miles from our plant--a company in Darby, Pennsylvania, called Sorenson Industries. Sorenson was a sizable family firm, still melting in old-fashioned, oil-fired furnaces. We knew that if we could convince them to switch to induction melting, this could launch us into the major leagues of the furnace business. The system they required would be worth tens of thousands of dollars.

Sorenson was also a conservative firm, a company run by the four brothers who had founded the business some 10 years earlier. They made centrifugal castings which they then machined to finished cylinders, generating tons of brass chips. It was expensive to melt these in their oil-fired infernos because the metal loss thru oxidation was so high, and the melts we made with our little 50 kW, 100-pound "demonstrator" showed huge savings. Still, there was no decision. It was only a matter of time, we told ourselves. Only how much longer could we hang on, supporting, our little company with bits and pieces? Two, three, four months passed without a single equipment sale to show for our work and our investment.

There were encouraging moments that kept our spirits up. Stokes Machine Company made vacuum pumps, a product line that led it into building vacuum melting systems In July 1954, they ordered a 30-pound furnace to operate from a Tocco electrical system they'd already supplied to one of their customers. We wouldn't get rich on this job--I'd quoted only $300, but it was still a landmark event of sorts. This would be our first product to bear the Inductotherm name since embarking, full-time, into the induction business.

We didn't waste time; we got the order on a Friday and went out and bought the copper tubing and other materials that same day. That weekend I built the coil while Paul constructed the furnace frame. We congratulated ourselves as we drove to the Stokes plant the following Monday with the little jewel of a furnace in the trunk.

The Stokes engineer, Charlie Starbuck, looked like the cat who'd swallowed the canary, we noticed, as he admired the furnace we'd delivered. Charlie told us why, as we were getting back in the car. "You know," he chuckled, "Tocco quoted $1,000 for that furnace." On the way back to Glenolden, Paul and I wondered; had we made $300, or lost $700?

We were still anxiously awaiting word from Sorenson. Every time the phone rang, I'd jump to answer, thinking maybe this would be the call that would put us on the map. Then, in August 1954, we received our second furnace order, this one from Dick Tibbetts of Wollaston Brass and Aluminum Foundry in Massachusetts, later known as Wollaston Alloys. After years of operating as a nonferrous foundry with 100 kW induction melting systems, Tibbetts wanted to expand into higher temperature nickel and stainless steel alloys. To do this, however, they needed a special furnace tailored to stainless steel--a 300-pound furnace operating in conjunction with their existing 100 kW power system. We agreed to build it for Wollaston for $1,000.

Although a 300-pound furnace is small by most standards, for Inductotherm it meant a whole new and different set of challenges. I'd had little direct experience in welding, but J quickly gained hands-on expertise in copper brazing techniques as I spent days learning how to fabricate leak-proof copper coils.

Besides standard fittings and components, the furnace we designed for Wollaston demanded new, made-to-order pieces such as fabricated tilting yokes and stanchions. For the spout and tilting trunnion castings, we designed special patterns and had them cast at a custom foundry.

Once Inductotherm's new furnace was completed and in place, Wollaston entered a new era of metallurgical technologies. It moved away from lower-price non-ferrous alloys and into the far more lucrative arena of ferrous metals, mostly stainless steel and nickel castings for Electric Boat, makers of nonmagnetic atomic submarines.

The furnace was a tremendous success for the foundry. Surely the word would get around that Inductotherm had "built a better mousetrap." Soon, we told ourselves, that phone would begin ringing off the hook with orders. Any day now.

The days stretched into weeks, and the weeks into months. While our two furnaces were functioning without so much as a hiccup, Inductotherm went back to subsisting on service work, as there were no more orders. Then, when business had come to a virtual standstill, we got our long-awaited phone call from Sorenson. Finally, we thought, our missionary work was going to pay off. I had forgotten what often happened to missionaries.

Chapter 8

Dashed Hopes

When I arrived at Sorenson Industries, Max Sorenson, the company's president, invited me into his office. "Hank," he began, "I want to thank you for running the test melts and showing us what induction melting can do. My brothers and I appreciate having the chance to look at the results. You've helped us learn a lot about induction melting, and we're impressed. We've also been impressed by you and Paul, and by what Inductotherm has accomplished in what has been a relatively short period of time."

This was all nice to hear, but something here didn't fit. An awkward silence filled the room, as Max paced around his desk. He had lost one leg to diabetes, and his wooden leg thumped as he went, his gaze fixed on the floor, scuffed and splotched by years of foundrymen's work boots. Why the long speech? I asked myself. Something simple like, "Congratulations, you got the job," would have sufficed. But he had obviously practiced what he was going to say, and he wasn't done yet. "I want you to know, we all feel that you and Paul deserve this job," he said, as I fidgeted. Why didn't he just come to the point, and give us the order? What was he leading up to?

Finally, he spoke again. "Hank, you have to remember, Sorenson's entire future would be riding on this one furnace. It's going to be our sole source of metal, and you've never built anything this big. We can't stake the future of our company on your ability to do what you say you can do. We're going to have to give the job to Ajax."

Ajax? I felt my temples beating like a kettle drum, as his words sank in. I could have never imagined such an infuriating turn of events. Inductotherm leads them by the hand into the world of induction melting, instructs them in the new technology, shows them the huge saving in metal loss on their chip melting, and the prize goes to Ajax?

I felt like a furnace going into meltdown; my insides were churning. How could they award a job to our competitor, merely because they were older, bigger, more experienced? Didn't they believe Inductotherm could make a superior product? After all, you can't make progress without taking some risk.

The fight had gone out of me by the time I returned to Glenolden and gave Paul the bad news. Our dust-covered office had never looked as dreary, as forlorn, as it did in the next few days. This was a new low in a series of low points. We'd been struggling to stay solvent between tiny furnace orders, and even those we'd sold--two, in three months, for a total of $1,300--had barely kept us alive, spiritually and financially. The Sorenson job wasn't merely a potentially lucrative contract, it was one we'd been counting on to keep us in business. Or rather, to put us into business.

My sense of imminent failure mounted still further the next day when I walked into our office. "I have some bad news for you, Hank," Paul began. "I've had a chat with Jess and he's gone. I felt that we had no choice but to let him go, at least until we can get some more work."

At these words, I exploded. Here we had been in business barely four months, and we were already cutting back? It hurt, too, on a deeper, personal level. I knew how much Jess looked up to me; I was more than his employer, I'd become his mentor, his advisor. When I told him I was starting up my own company, he'd jumped at the opportunity to be in on the ground floor. How could Inductotherm help but be a smash success? After all, in Jess's young eyes, the company's CEO had succeeded at everything else he'd attempted--he'd flown bombers, graduated with honors from MIT, even built his own house. Well, what must Jess Cartlidge think of his hero now? I wondered.

"How could you do something like that, without even consulting me?" I raged at Paul. "We're partners, aren't we?"

Paul understood the depth of my frustration. "Hank, discussing it with you wouldn't have changed anything. I'm sure you feel it was your place to tell Jess our situation, but I felt it might be easier for both of us if I did it, and got it over with. You don't have to worry about Jess, he'll have no trouble finding another job, and probably at twice what he was earning here. Let's face it: if you'd asked him, he probably would have stayed on and kept working for nothing. But, is that fair to Jess?

"For that matter, if Inductotherm doesn't get some work soon, we're not being fair to ourselves, either, by prolonging the inevitable."

I slumped into a chair, and said nothing. I couldn't dispute what my partner had said, or done. From a business standpoint, he was probably right about letting Jess go. But what did he mean by "prolonging the inevitable?" I didn't want to find out, but a few weeks later, I did.

By September of our first year in business, the prospects that we would somehow land that one big contract, the one that would enable us to demonstrate our expertise, while simultaneously providing us with the desperately needed cash flow, hadn't changed. Such prospects, in fact, appeared nonexistent.

I was confident, nonetheless, that things would turn around somehow and soon; they had to. Wasn't it just a matter of time before word would circulate about the furnaces we'd built for Stokes and Wollaston? "That's the best advertising we could possibly get," I reminded Paul, who responded, with a dourness uncharacteristic of him, that Inductotherm couldn't afford any other kind.

Well, I thought to myself, at least things can't get any worse. But I was wrong. Three weeks had passed since I'd returned with the bitter news from Max Sorenson, and the corporate finances were running low; it was time for the two partners to come up with another $500 each, to keep things going. I didn't enjoy reminding Paul how tight things were, but I never expected the response I got. "Hank, we've been at this for going on four months now, and we don't seem to be getting anywhere," he demurred, when I asked him to write out another check.

Not getting anywhere? That didn't sound like Paul. What did he mean?

"I mean I don't think there's any point in kidding ourselves any longer," he continued. "Sure, starting Inductotherm was a great idea, but sometimes, even the best ideas don't work out."

The pen in my hand fell to the floor, as his words sunk in. "Paul, what are you saying? This isn't an idea; it's a commitment. That's why I've invested all of my time, and a good part of my savings."

That was what he meant. "That's just the point, Hank. We've both invested $1,500 so far, and it's clear that we're getting nowhere. It's about time to cut our losses."

Cut our losses? I could have understood this from a stranger. But from my own partner? My friend? Hadn't Inductotherm been his idea in the first place? By now, I was slowly coming to grips with the idea that Paul was serious about giving up. But, I wasn't willing to accept it. "Paul, I can't believe you're ready to quit so soon. But then, you haven't made the commitment that I have. It's not just four months of time and $1,500. I've quit my job and sold my house. I have no choice but to make a go of this company. You've really made no commitment at all. You can always fall back on Harcast for a living. Maybe that's the problem. Maybe if you'd sold Harcast you'd be able to concentrate on your new business. We can't quit now."

Paul looked away without answering. Another minute or so passed before he reached for his checkbook, and without another word, wrote out a check for $500.

It's always darkest before the dawn, and it was only a few days later that the darkness we were suffering was broken with a beam of light that would mark the turning point for our floundering company. Inductotherm received an order for a 100 kW vacuum-furnace control panel. It was a much smaller project than the Sorenson job would have been, but at $5,350, it was a substantial contract nonetheless, worth more than our total sales since we'd founded the company. No less significant than the size of the job was the stature of the customer--General Electric. It was for the GE Research Lab, to power a vacuum-melting project headed by a young research engineer, Jim Nisbet. Little did we guess then what role he would play in our future, or us in his.

Paul was overjoyed about having General Electric on our customer list. "Do you know what this means, Hank?" he exulted. "If we can sell to General Electric, we can sell to anybody."

He was right, although the contract was a drop in the bucket to General Electric. In fact, when I had quoted our price to the company's purchasing agent, he shrugged and said, "We couldn't even do the engineering for that."

For us, the contract not only covered engineering and production, it also, almost in itself, justified rehiring Jess. As Paul had predicted, the prestige of supplying General Electric was instrumental in landing our very next order, the contract for the six furnaces and control panels from the Mint. Now, rehiring Jess became essential.

Yet neither job meant that Inductotherm was an overnight success. In fact, as we'd heard through the grapevine, executives at Ajax were smug when they heard that its upstart rival had won the job at the U.S. Mint for $25,000, a full $15,000 less than their $40,000 bid. At prices like that, they sneered, Foley and Rowan were going to lose their shirts.

Contrary to Ajax's expectations, we didn't lose money on the mint contract; after deducting the cost of materials and the wages paid to Jess, our sole paid employee, we had made a profit. Not a big profit, but as I reminded Paul, a profit was a profit.

Now, our recent triumphs were about to launch our little company headlong into another risky venture. This time, though, it wasn't just Inductotherm's future that was at stake, but also our customer's.

In January 1955, a few days after winning my wager with Doc Myer at the Mint, Paul and I received the phone call from the prospect we'd long since written off. "Hank, this is Max Sorenson. We've been thinking a lot about Inductotherm, and the good work you've done for the Mint and GE."

I held my breath. After putting aside my previous, exasperating visit with Max, I'd made sure to let him know about both jobs, hoping that, if we were big enough for the Department of the Treasury and GE, maybe he and his brothers would decide Inductotherm was big enough for Sorenson Industries. Perhaps I'd made my point.

"We haven't awarded the contract for that new furnace yet, Hank," said the foundryman. "We'd like you to bid on it again. Would you be interested?"

Would we be interested? It was the job we'd set our sights on months before; the hopes of landing it had kept us working late into the night. Yes, I told him, we were still interested in bidding on the job.

The initial excitement I felt at Max Sorenson's phone call began to evaporate, however, as I reflected on the materials and components the job would require: a 250 kW motor generator with its expensive starter, and a custom cabinet to house the transformer, capacitors, controls, and switches. The motor generator alone would cost $20,000, and the starter would cost another $4,000; altogether, to make a profit on this job, Inductotherm would have to charge $40,000 for this one system. More critically, we'd have to spend more for parts and material on this one job than we'd spent over our preceding eight months in business. In short, we'd be risking everything on this one job. "What if something goes wrong?" asked Paul.

If something went wrong, well, Inductotherm would be history. I was still weighing the pro's and con's of this venture when I delivered our bid to Sorenson. A few days later, the foundry's president asked me to come by his office. As I walked in, he stood up and shook hands with me; "Congratulations," he said. "You've got the job."

I was elated. Our first complete melting system. It was a tremendous opportunity. If we made a success of this, our company was on its way. Yet my ebullient mood was tempered by a strange sense of dread, dull and distant, like a toothache on its way, and it would stay with me for the three or four months it would take to complete this job.

The more immediate problem was financing. Like most start-up companies, we were severely undercapitalized. We had $25,000 worth of equipment to buy just to get started and our bank account was hovering around the $700 mark.

Considering this circumstance, Paul and I congratulated ourselves on having enjoyed an excellent relationship with our bank, the Provident Bank and Trust Company. Surely they'd be amenable to giving us a loan for the job; wasn't that what banks were for? After all, we had a firm order from a sound company and we'd proved our success with the GE control unit and the Mint furnaces.

But, when Paul and I explained what we needed, and why, the bank responded as if we were proposing to sell them a $40,000 furnace to install in their lobby. "Put yourselves in our place," the loan manager advised us. "You're a young company, with a limited track record. You have minimal equity. You've never even built one of these . . . whatever it is you're asking us to finance. No, in view of these circumstance, I'm afraid you don't qualify for a business loan. The best we can do is assist you in finding venture capital."

Venture capital? Paul and I looked at each other. "You mean a backer?" I asked, and the banker nodded. "In other words," I continued, "the best you can do for us is to help us find another partner." He nodded again.

Paul and I rose from our chairs, and bid the loan officer good day. Neither of us had launched our company, and then worked this long, just to wind up sharing Inductotherm with a silent partner. "Well, Paul," I reminded my partner, "it proves what some say about banks. They're always ready to loan you money, as long as you can prove you don't need it."

There was a corollary to this old adage, though I didn't know it then; once a bank has loaned you money, they'll insist you pay it back when you're least prepared to. It would be another six years before I learned this, and it would almost cost me the company.

Once back at Glenolden, Paul and I sat down and reviewed our meager finances for the tenth or twentieth time. It appeared that we might be able to acquire the materials for the furnace, if we could obtain the motor-generator, the starter, and the capacitors--the system's most costly components--on credit.

Desperate, I approached General Electric, who agreed to provide us with these components as long as Betty and I personally guaranteed payment. It didn't seem to matter that everything the Rowans owned was already tied up in the company.

With GE committed to providing us with the essential electrical components, I went to work designing the total system. My mind raced as I considered the seemingly endless ways there were to optimize Sorenson's efficiency and output. Of course, some of these concepts hadn't been tried yet, but there was no point thinking about failure. Still, it was difficult to suppress my own mounting concerns about the goals we'd set for ourselves on this project. The battle between perfection and pragmatism plagued me constantly.

There was another alternative; we could always play it safe. Provide standard configurations. Forget the new refinements. Would Max and his brothers even notice the improvements we envisioned, if we succeeded in delivering them? After all, there was something to be said for sticking with the tried and true; they'd been doing it for years at Ajax.

For Inductotherm, a new company with new technology, the stakes were higher. If Sorenson's new furnace didn't work perfectly because of some glitch, nobody would say, "The principle is promising," or, "Conceptually it's sound." No, they'd just say, "Inductotherm's furnace didn't work." Both Sorensen and we would be gone.

The prototype 50 kW system we'd built with the Bogue generator was already an improvement over what others offered, but I wanted to incorporate other new features, as well. Some of them I'd tried to introduce to the industry two and a half years earlier. And so, as with the furnaces at the U.S. Mint, I decided to depart from the ordinary.

Up to this point, for instance, it was necessary for foundries using induction furnaces to construct a separate room to house electrical components and instrumentation. I intended to change all that; one of the new features I wanted to develop for Sorenson was a single, compact cabinet to house all of the electrical components and controls, including the capacitors, transformer, furnace selector switches-everything, in fact, but the massive M-G set and the starter. This would represent tremendous savings in terms of both dollars and space, and the resultant compactness would eliminate power losses and afford greater efficiency.

For the electrical leads, we followed the concept we'd introduced at the Mint; it had been successful there, so there was no reason why it wouldn't work as well for Sorenson. Only, I found myself sitting upright in the middle of the night in a cold sweat, worrying about whether or not the switches would connect. Whether our new capacitor contactors would hold up. Whether wires would carry the current from one point to another. There were so many more components, so much more current, in this system. I checked my calculations, then checked them all over again. I had a million foolish doubts, and they wouldn't go away.

Finally, the following March, after three months of solid work and worry, Inductotherm's new $40,000 furnace was installed in place, and the day of reckoning was at hand. The four Sorenson brothers stood by with their melt crew, watching anxiously as I walked over to the power switch. Once again, I felt that awesome responsibility weighing on me. I looked around at the Sorensons and their employees, men who trusted me and who had placed their fate in my hands. I tried to look confident, but I was nervous, too, and wondered if my audience could tell. This would be like the maiden flight in a new aircraft: if the pilot hits a pothole on take off, if a critical rivet is faulty, if a cable has been attached incorrectly, nobody says, "Well, it would have worked fine, except . . ."

I looked over to Max, whose expression wavered between desperation and optimism, and felt a sudden wave of appreciation for the gamble he was taking. Max could have played it safe; he could have given the contract to Ajax, and would probably have been satisfied with the gains that induction alone represented over the former technology.

Instead, he chose to risk his company's future on the ability of two young entrepreneurs to deliver what we said we could. We couldn't disappoint him.

I threw the switch, and slowly, the room was filled with the hum of the motor-generator coming up to speed. So far, so good. Next, I applied field current to the generator, all the while watching the needle on the voltage meter sweep to 200 volts . . . 400 . . . 600 . . . finally, up to 880, the red-lined voltage at the rated field current. GE had done its job well.

Finally, we loaded the furnace with scrap, and the Sorensons and their workers looked on, amazed, as the solid metal began to change state, and melt faster than they had ever seen metal melt before. They were all like kids with a new toy. As I left Max and his brothers that day, the melt crew was busy screening floor sweepings to charge into the furnace, to recover valuable metal that had previously been lost. It was a success.

The successful installation enabled us not only to pay General Electric for its components, but also to establish a line of credit with GE for future equipment. It was hard to say if Ajax was still convinced we were on our way to losing our shirts; we'd just taken a $40,000 bite out of the dragon's hide.

We had another reason for celebrating: Inductotherm was about to observe its first anniversary. A few days after starting up the new furnace for Sorenson Industries, Paul and I met at Harcast with our accountant Bob Hotchkin and Betty, the other two members of our board. Bob, a former competition speed skater, was our CPA and advisor and had set up our books, with Paul carrying out the day to-day details. My partner's other company, Harcast, had been Bob's client for years, but that gave no hint of the role he would play with Inductotherm, not only in establishing financial practices and operating policies, but in shaping the company's philosophy as well as my own.

We closed that first fiscal year on April 30, 1955, with $71,000 worth of sales, enough to warrant adding two more full-time employees--a second shop mechanic and a full-time secretary. When all the numbers were in and counted, Bob Hotchkin reported that we'd actually made a profit of $500.

We divided the earnings four ways, paying a $200 bonus to Jess Cartlidge, $100 to the new mechanic, $100 to the new secretary, and reinvesting the remaining $100 back into our company to grow on. "It's the best investment I know of, Paul," I told my partner, expecting him to share my buoyant mood. "We're profitable, we're a success, and we're growing."

Paul didn't say anything; he just nodded absently and puffed on his pipe, reflectively. He could see, as well as I, what seemed to lie ahead for us. But why did he seem so indifferent to it? Didn't he want us to grow, to become a major company in our field? Or maybe I already suspected the truth, but couldn't admit it to myself.

Chapter 10

Controlling Crisis

Those early years in Delanco were a time of innovation and growth, and Inductotherm enjoyed the kind of success I had dreamed of since the day Paul and I went into business in earnest. Nonetheless, the prevailing mood around the plant and in the office was anything but serene.

Without Paul Foley's mitigating influence and easy-going presence in the office, Inductotherm careened from crisis to crisis, meeting commitments any other company would have dismissed as unrealistic. Where no crisis existed, I created one, to keep us from becoming used to a status quo. Such, at least, was my rationalization. I wanted to instill a sense of urgency, of mission, in every member of our team. Other furnace makers might let existing technology, or market conditions, or their customers define what was acceptable, but we weren't like other companies. For Inductotherm to achieve its potential, we had to do more than produce a better product; we had to raise the expectation level of an entire industry.

Prospective customers had become accustomed to doing business the old way, and it was a never-ending battle trying to convince them that we were really different. The Ajax name was a byword in the industry, synonymous with induction melting, and few would believe that they'd really produce more metal with less power using equipment from this new upstart. Better service, faster melting, higher efficiency sounded like typical sales hype and every job became an opportunity to demonstrate that there was a real difference between the way things had been and the way they could be.

It was only a few days after Paul's resignation and departure that I got a phone call at home from an old friend and a prospective customer, Mitch Silverstein of Specialloy in Chicago. A fire had just destroyed the Ajax control panel on the furnace system that I had sold to Mitch six years earlier, and without a control panel, Specialloy was out of business. It was early Sunday morning.

"How fast do you need a new control panel?" I asked him, knowing what the answer would be.

"Yesterday," was the desperate answer from the man from Specialloy.

I hesitated for a moment, reflecting on the magnitude of the job--the parts we had in stock and the material we'd have to buy. "All right," I then told him rashly. "Plan to melt again on Friday."

"This coming Friday?" he asked incredulously. "How are you going to do that? We've been told it would take six weeks to build a control panel."

"I don't know who told you that, Mitch," I countered knowing full well who he'd been talking to. "But let us show you what we can do. You can count on Friday."

Darn! I'd done it again. Why? What drove me to these impetuous challenges? Could we do it? Was there really a chance? There was no time now to waste in second guessing myself. As soon as Mitch hung up, I called Sam Michaels, our steel fabricator, at home. He ran a small fabricating shop and had won our business with the brand of service and attention we liked to give our customers, and which we demanded from all of our suppliers. If we couldn't get the steel cubicle, there was no hope of making Friday. "Sam, we need a new cubicle, and fast."

"How fast?" he asked. There was a note of apprehension in his voice since he had learned that when Rowan said "fast," he meant FAST. "If we push, we might be able to make it in a week," he told me, upon hearing what the job was. That would have been reasonable, in most cases. The welded fabrication itself--the empty cabinet--would be 40" by 60" by 80" high, and constructed of 10gauge steel with access openings closed with lift-out panels. In all, it would comprise over 800 pounds of fabricated sheet steel.

But this time a week wasn't good enough. "It has to be here tomorrow," I answered.

There was a sigh of resignation on the other end of the phone and Sam promised to round up the men he needed and start the cubicle Sunday morning. I knew we could count on him.

Next, I called our shop superintendent, Dick Walker, and asked him to round up his troops for a crash program on a 175 kW control cabinet--guys like Jess Cartlidge, Tom Kennedy, and Jack Agnew, a new, skilled, and enterprising mechanic--and meet me at the plant in an hour.

When they were gathered at the plant, their Sunday plans abandoned, I told them of Specialloy's problem and what I had committed Inductotherm to do about it.

"We're going to start building a 175 kW control cubicle," I told them, "and we're going to have it done in four days."

Dick Walker protested. "Four days? That's impossible," he argued. "Four weeks would be more like it. Even for us, two weeks is the least we'll need for a job like that." The more experienced men nodded in agreement, but I wasn't having any of it. "All you're saying is that nobody's ever done it that fast before. Here's our chance to be the first."

With that, we went to work. The shop began fabricating capacitor supports and bus bars, preparing templates and patterns for cutouts, building transformer and capacitor switches, pulling some components from stock and swiping others from jobs in progress.

It was past midnight when the work force left the shop that night. All but Jess Cartlidge, who worked even later and slept in his car to save time. It was not long after dawn when we returned Monday morning, to pick up where we left off. The cycle repeated itself that night, and again the next day.

Late Monday afternoon, the fabricated steel cubicle arrived right on schedule. Sam Michaels had come through. Within minutes our guys had it unloaded and had begun making the needed cut-outs for meters and switches, and welding in racks and support brackets. By Tuesday morning, the cutting and welding had been completed, and the guys went to work spray painting the bare steel, a job that, with drying time, continued late into the night.

By Wednesday, the panel components were mounted and by the next day, the entire control panel was wired and tested. The entire crew was exhausted, having gone three nights with hardly any sleep. But the new control panel was completed, and the unit had begun its 20-hour trip to Specialloy. I sure was proud of our guys. What a team!

As the truck carrying the control panel disappeared down the road, I congratulated the guys that had made it happen and chided them a bit. "Do you see what you've accomplished? It proves one thing; we never know what we're capable of doing until we do it. Now go get some sleep. And, by the way, fellas, thanks."

But proud as Dick Walker was of what we had just accomplished, he seemed apprehensive about my penchant for making rash promises, for pushing the company to the edge. "Hank, one of these days you're going to promise to supply a piece of equipment that doesn't even exist. Then you're going to have to concoct something, and we're going to have to bail you out again."

The rest of the crew laughed at this idea, but Dick insisted he was serious. A few years later, Dick's prediction came true--in spades!

We expanded wildly that second year in Delanco, knocking out the old walls and building new ones to enlarge our plant from 5,500 to 13,500 square feet. Thanks in part to sales of vacuum furnaces and smaller melt units for investment casting operations, our revenues were climbing rapidly, on their way from $239,700 in fiscal 1956 to $845,000 in fiscal 1957. The work load was increasing, too, and I found myself missing Paul in more ways than one. To be sure, I was elated to be moving the company along at such a rapid clip, but I also missed my former partner's support, his companionship, and his expertise at those in-house chores which he took upon himself. Most of all, I missed the stability he lent to life.

With Paul gone, I felt compelled to serve as chief cook and bottle-washer. Besides serving as CEO, chief engineer, and designer, I struggled to supervise the company's one draftsman, handle a full sales load, install, start-up, and service an increasing number of furnaces, and--Dick Walker's protestations to the contrary--spent as much time as possible in the shop. I enjoyed, more than anything, looking on as the jobs were completed.

As sales increased, our purchasing requirements became increasingly critical. As long as Inductotherm had remained a small shop operation, it had sufficed for Paul and me to handle these responsibilities on an ad hoc basis. Now, given the growing volume and complexity of our purchasing requirements, purchasing represented a full-time job. But I wasn't content to consign this job to a garden variety purchasing agent; I wanted somebody out of the ordinary--somebody who knew not only machinery, materials, and prices, but who understood value--and how to get it, every time. Moreover, it had to be a person who thrived on challenge. I had an idea where I might find somebody like that.

One afternoon in the summer of 1956, I got into my car and drove to New Brunswick, where Tom Pippitt, my former colleague from Marine Manufacturing, lived. Tom wasn't surprised to see me; I'd been in touch with him the previous year. Inductotherm was bound to grow, I had told him, and I wanted him to grow with it. Of course, we couldn't afford him that earlier year, and couldn't guarantee his salary until the company earned its way to a more solid footing.

Tom had appreciated my interest, but he had three children to feed, and though Marine Manufacturing had shut down some two years earlier, he then (in 1955) had a good job in purchasing at the Raritan Arsenal. I hadn't been put off by his answer. We were still running the company on a shoestring, I admitted, but maybe we'd talk again in a year.

Now that year had passed, and Tom's circumstances had changed, as had ours. While his job at the arsenal paid well, the hours were convenient and the work not very demanding, Tom had become disillusioned with the atmosphere of indifference and the lack of challenge. A few weeks before my car rolled up in front of his house, he'd resigned in disgust. The timing was perfect. He was job hunting with lots of opportunities. But, I asked him, would they offer the same opportunity? The same challenge?

Tom and I had always been on the same wavelength, and, after outlining our needs, I knew he was hooked. In July 1956, Tom Pippitt cast his lot with me, Kennedy, Walker, and the rest of our team.

Tom arrived on the day our walls were being torn down; it was tangible evidence of the growth I'd told him about. "Hank," he asked me, as he watched our plant more than double in size, "how big do you think this company can get?"

I'd thought about that, and I had no idea. "We have nothing to say about that, Tom. It isn't me but our customers who will decide how big we get. All we can do is keep plugging away."

Walker, Wollaston, Kennedy, and Pippitt were typical of the newcomers to our ranks; they were seasoned professionals, qualified to make a contribution from their first days on the job.

By contrast, it was hard to tell what we could expect from one individual who joined us in Delanco--Roy Ruble. There was scarcely a clue to the leadership role he would someday play in our company, and in the industry.

Roy was an Annapolis graduate, a former lieutenant commander whose promising career had been cut short by a shipboard accident that cost him the sight of one eye and full range of motion of one shoulder. After 14 years of service, he'd returned to civilian life as a salesman for a Cleveland-based metal cabinet maker. It was a comfortable living, but, as Ruble had confided to his neighbor, Inductotherm's sales manager Jerry Wollaston, he was looking for something more challenging.

Wollaston had an idea where the ex-naval officer could find that challenge; in June, 1957, he brought the former navy officer around to see our company and to meet me. From that first meeting, there was something about Roy Ruble that impressed me. He wasn't a physically imposing fellow; he was short and heavyset and wore thick glasses, but he carried himself with a dignity and authority that bespoke his experience as a military commander.

A few days after meeting Ruble, I offered him a job as a salesman, partly on a hunch. "I can start you at a guaranteed salary of $400 a month," I added, magnanimously. This was pretty generous, I thought, considering he knew nothing about the induction industry.

He turned me down. "Sorry, Hank, I'm already making more than three times that salary," he told me. I was disappointed; others had taken financial risks to come to work for my company, betting that their salaries would increase as the company grew and that they'd do far better in the long run. I didn't want to curtail our growth, but Inductotherm simply couldn't afford to promise the kind of salaries the men we wanted were used to earning. It was a constant dilemma. Such promises and guarantees could put us under, if things slowed down, as we had no reserve to fall back on. So, instead of promises, we offered opportunity--the opportunity to be part of a fast-growing company, to make a contribution and profit from it. It wasn't the kind of offer the average man would find attractive, but I didn't want the average man. I wanted men with enough confidence in themselves to take risks, make commitments, and reap the rewards. I had hoped Roy Ruble was that sort of man, but maybe I was mistaken.

"Look Roy, I can't promise to pay you what you're making. If you'd like to join us, fine. Just tell me what you need to live on, and if I can, that's what I'll commit to. But I'll make you one promise: before I take a cent of salary out of this company, I'll get you back to at least your former income level."

He seemed to think it over. "I'd sure like to join you," he said, half wistfully. As a cabinet salesman, he'd made the rounds of our competition. Ajax was still Number One, but TOCCO had moved into the induction melting business from its powerful position in induction heating, and was making significant inroads. Roy had seen the equipment these two companies built and the standards to which they aspired.

He'd also seen the kind of product Inductotherm was building: A self-contained unit we'd dubbed the Integral unit, with M-G set, starter, control panel, capacitors, transformer, and furnace selector switches all in one compact package.

Doubtless, too, he'd heard from Wollaston what we expected from every member of our team. He could see, also, that while Inductotherm was the country's smallest induction company, that was bound to change, and change soon. He gave me his answer by advising me, "Hank, I think I can get by for the time being on $500 a month."

And so Roy joined us. Whatever Roy Ruble might become in the future, for the time being he had a lot to learn. He set about this task in an ingenious fashion, by simply stationing himself in my office, watching what I did, and listening to what I told prospects over the phone about melt rates, power costs, and competitive equipment. I wasn't used to such constant scrutiny, and frankly, it wasn't long before it got on my nerves. Three months after hiring him, I was beginning to have second thoughts; so far I'd paid him $1,500 in salary, and he still hadn't budged out of the office. Sometimes, it seemed as if my new employee was studying how to replace me in my own company.

What's more, he occasionally presumed to tell me how to run my company. Roy was Navy through and through, with the typical military fondness for organization. One day he came to me with the advice, "You know what you need, Hank? An organizational chart."

Organizational chart? Why on earth did Inductotherm need an organizational chart?

"So your employees know what their responsibilities are, and who reports to whom," he answered.

That sounded like the last thing we needed, I told him. At Inductotherm, people didn't ask what their jobs were. Nobody ever said that something wasn't his job. Everybody pitched in and cooperated on whatever job was at hand; a rigid organization would be counterproductive.

Later, I reflected on what Roy had said, and concluded the difference between us was the difference between commanding a ship and commanding an aircraft. A naval officer handed down orders from the bridge, through a chain of command. A pilot left nothing up to anybody else. He was responsible the plane; he walked around checking everything, from wheelchocks to rivets.

For us to go as far, and as fast as I wanted, we had to operate like an aircraft, not a battleship.

I was beginning to wonder why I had ever hired Ruble when, after listening to me negotiate a price with a customer over the phone, he said something that indicated what he was going to mean to our company. The customer had asked for a price on a standard coil for a 1,000-pound furnace, and I told him $500.

As soon as I hung up, Roy called my attention to the price I'd just quoted. According to him, Inductotherm's price structure was all wrong. "Hank, you should be getting much more for those coils," he insisted.

I didn't take to this very kindly. First he spends months sitting in my office, then tells me how to organize my company, and now tells me how much to charge for my products? "Listen, Roy," I began, as calmly as I could. "I think I know how to charge for coils. We're making a profit on each sale."

"Are you sure? Our competition prices their 1,000-pound furnace coils at $1,500, three times your price," he argued. "Are they selling better coils?"

Now I was mad. "Of course they aren't better coils." After all the time he'd been with us, he should have known why Inductotherm could make a profit while charging less. Whereas other furnace makers assigned a draftsman to sit down and spend several days at a drafting board to draw up a coil, we didn't have the time or the personnel for that. Instead, we'd devised a universal drawing to cover almost every permutation on coil shape, size, and turn configuration. I would simply insert the variables for each coil and give the prints to our shop crew, who were skilled enough to work from the crude drawings. Consequently, instead of 10 man-days for a coil, we could build it in three. This meant both a faster turnaround for the customer and lower cost to us, and if we were selling at one-third what our competition charged, we were still earning a profit. How could anybody argue with that?

Roy shrugged off my explanation, insisting that our lower manufacturing cost shouldn't determine the selling price. "You're forgetting, Hank, that, while you control your costs, the marketplace and your competition set your selling price. The difference between cost and price is your profit. And the degree of your profit is a measure of how much better you are than your competition.

"If your coils are worth as much as the competition's, you should be charging as much for them. Otherwise, you're selling based on cost alone--and only shop cost at that. You're selling yourself short. Your customers will never recognize the value of your products until you charge what they're worth.

"Besides," he continued, "the cost of a coil is not just the material and labor that go into it, plus a little manufacturing overhead thrown in. What about the sales cost? The visitations with customers, the studies of his melt practices and type of charge? What about the R&D that went into perfecting coils for maximum melt rates? All these things cost money, and you aren't getting paid for them."

And then the clincher. "Besides," he added cautiously, "the sooner you get your prices up, the sooner I'll get back to my old salary."

He had a point, and grudgingly, I agreed to raise our coil prices to match the market. As Roy had predicted, the new prices didn't cost us sales. In the years to come, this lesson became ingrained in our corporate culture: Never let cost determine the selling price.

It was a lesson we would learn--and relearn--over and over again, on five continents.

But all that lay far in the future. For now, it sufficed that I was gaining a new perspective on what business was all about. At the same time, my doubts about this overweight ex-navy commander subsided. Maybe he was going to be a real asset after all.

It was an unusual group of men who had gravitated to the little induction furnace company in Delanco. Virtually every member of our work force had given up secure, higher paying jobs to join me in what was nothing less than an adventure.

As with every adventure, however, the greater risk would have to lead to greater reward. As had been the case with Dick Walker, Tom Pippitt, and Tom Kennedy, Roy had been with us only a few months before I was able to restore him to his previous salary level. An eventual year-end bonus would enhance all of their incomes further. But I wanted to provide these and the rest of my coworkers with something above and beyond wages and bonuses, something that might underscore and acknowledge the fact that we were, in fact as well as in spirit, a team.

What else is a company, after all, I reckoned, but a group of people working towards a common goal. Yet, all too often, it appeared, companies became polarized along lines of ownership and employees, management and labor, executives and workers. I didn't want to see that happen to my company. At Inductotherm, we all worked.

What we needed, I figured, was some mechanism to directly link the efforts of our work force to the success of the company. It was Bob Hotchkin who came up with the answer, and the concept he introduced in January, 1957, became a cornerstone of Inductotherm's culture, tangible evidence to our employees that Inductotherm was different from any other company they may have ever worked for.

Hotch was always thinking way ahead. If there was one word to describe him, it was integrity. He was then in his forties, a stocky man and former speed skater who had graduated from the University of Illinois before earning his Masters degree in accounting from the University of Chicago. Following World War II, he taught accounting at the University of Pennsylvania's Wharton School, while serving as an independent CPA specializing in manufacturing companies and utilities.

Hotch had an Old Testament attitude toward the "perks" which some companies lavished on their executives. Country club memberships, fancy cars, corporate boxes at the baseball stadium, or corporate tables at black-tie balls--these were what some executives elsewhere understood as "image." After all, they contended with a wink, "it's all tax deductible."

This, according to Hotch, was either a convenient way of rationalizing the most outlandish expenditures or an exercise in self-deception. "In the final analysis," he preached, "these tax deductible luxuries all add to prices and cut into profits and the strength of the corporation. It makes far more sense to pay every penny of taxes due and reinvest profits back into the company."

On the facing page is a photo of Bob Hotchkin.

Or, as he outlined to me one day, a percentage of these profits could be directed into a profit sharing trust.

"A what?" I'd never heard of a profit sharing trust.

"I'm not surprised,'' chuckled Hotch. "It's pretty new. So new in fact, that the Internal Revenue Service hasn't even established comprehensive guidelines for it yet."

What the trust would do, Hotch continued, was to serve the dual purpose of providing an incentive and a retirement program for employees. "For example, out of its profits Inductotherm could pay an amount equal to 15% of an employee's pay into the trust, free of taxes, and the trust could grow, tax free, through investment. After ten years, that employee would be fully vested in the fund and could withdraw the full amount upon leaving the company. They could also withdraw all or part of their funds in case of certain emergencies--unusual medical expenses, that sort of thing, or to help defray the cost of a college education for their children.

"The longer an employee works for Inductotherm, the greater his share in the fund," he concluded.

It sounded interesting, but I was concerned about the effect the trust might have on some employees. "Won't that tempt some of our employees to leave, knowing they could cash in, and get that much money the day they quit?"

"They might," Hotch answered. "You can't fight human nature."

Still, the more I examined the idea, the more it appealed to me. I liked the idea of my employees becoming financially independent, and not having to cling to a job in their later years, just to make ends meet.

No less appealing was the idea that the fund would give my employees--many of them now old friends--a continued sense of sharing in the company's profits and successes. Further, under the conditions of the profit sharing trust, Inductotherm would be obligated to contribute to the fund only as long as we were a profit. Seen in this light, it demonstrated the principle that the interests of our work force were no different from those of management.

It would be nice to say that everybody responded unanimously and enthusiastically to the news of this unprecedented benefit, but such was not the case. To some, it seemed almost too good. "What's the catch" went the buzz on the plant floor.

Others argued that they needed money now, and if we could afford to invest profits for them, why not just pay them the money as a bonus?

If the profit sharing trust was met with some initial skepticism, this would change in the years ahead, as the fund amassed small fortunes for some workers and educated dozens of children who without it might have missed out on college. In particularly good years, the growth of a veteran worker's portfolio would exceed his annual wages.

Today, hundreds of major corporations around the country have adopted a version of the profit sharing trust we helped pioneer. As for anybody who would ever suggest to the Inductotherm work force that we do away with the profit sharing trust . . .

Well, it's unlikely he'd have many takers.

Chapter 11

"How Fast Can You get Here?"

Foundrymen call it a "run-out" and it's their worst nightmare. It occurs when molten metal eats through the refractory to the coil where it short circuits the copper tubing and arcs. In the "worst case" scenario, the furnace will explode as arc and the hot metal burn through the coils to the water inside, changing its state from liquid to steam, shooting liquid metal everywhere.

On February 14, 1957, Crucible Steel company in Syracuse, New York, called to tell me they'd suffered a run-out on the division's production furnace, a 2,000-pound vacuum unit built by Stokes in Philadelphia in cooperation with the Consolidated Vacuum Company in Rochester, and the National Research Company in Boston. "I've never seen anything like it," said Chris Houghton, manager of Crucible's vacuum melting section. The scratchy phone connection did nothing to disguise the shock in his voice. "There's metal everywhere. The furnace is shot and we're out of business. Hank, we need help desperately."

As he described what had happened the day before, I couldn't help recalling that day at the Mint, when I was courting a similar catastrophe.

Crucible hadn't been so lucky; its production furnace had run out and exploded, sending lumps of molten alloy smashing like dumdums against the walls of the vacuum chamber that contained it.

If there was a positive note to the episode, it was that the vacuum chamber contained the explosion when it happened; otherwise, the consequences could have been far worse. As it was, the company was in dire straits. Crucible Steel used this particular furnace to make aircraft-quality super-alloys, worth about $10 a pound. Each time the company tapped a heat from that 2,000pound furnace, it produced $20,000 worth of ingots. With four melts per day, the furnace could generate $80,000 in revenue.

Conversely, every day Crucible was out of business, it lost $80,000 worth of production, and, with fixed costs continuing, most of that $80,000 was red ink.

"We've got to get a new furnace in here, and we want to get Inductotherm involved," said Crucible's CEO. "How fast can you get here?"

"Oh, how about this afternoon," I said, as casually as I could.

"This afternoon?" he sputtered. "How do you plan to get here, fly?" he asked incredulously. Houghton knew how far Syracuse was from Delanco, and as it was then close to noon, he knew it would be impossible for anyone to cover the four hundred miles of road in time to get there that afternoon. But when he said "fly," commercial flights weren't what he had in mind; airline schedules and connections between southern New Jersey and upstate New York were few and far between. No, what his tone of voice said was, did I plan to grow wings and fly?

"That's exactly what I plan to do," I advised him.

"I'm going to fly." This was a day I'd been looking forward to for years; this was the day Inductotherm earned its wings. I'd bought my plane, an old Ercoupe that had caught my eye at the Moorestown Airport, the previous month, and I received my private pilot's license the day before getting Crucible's phone call.

I couldn't help feeling I was overdue in buying this plane. It was a sibling to the single-engine two-seater I'd hoped to buy four and a half years earlier, but had quit my job with Ajax Electrothermic instead. I still loved the freedom and the feeling of flight and the fact that flying could take me where I wanted to go faster than any other mode of travel. I was also keenly aware of the fact that flying could give Inductotherm a big advantage over our competition.

The metal melting industry isn't like many other businesses-textiles, advertising, or the garment trade--with multiple companies clustering together to form a district. Instead, the majority of our customers were dispersed around the East and Midwest, often 100 miles or so apart. These included companies like Curtiss Wright in Buffalo, New York; GE in Cleveland, Ohio; and now Crucible Steel in Syracuse, New York. By car--even if he left at the crack of dawn--a salesman would have had a tough time getting from Inductotherm to Syracuse and back in one day. But, as I had observed a decade earlier from the cockpit of a B-17, it would be a cinch to cover the circuit by plane.

Typically, however, acquiring that first plane was a gamble. "There's only one problem with flying, Hank," said Bob Hotchkin, the day I advised him of my plan.

"What's that, Hotch?" I asked.

"Corporate planes are an extravagance that a growing company like Inductotherm can ill afford," he complained. "It sends the wrong message to your employees, especially with you preaching the gospel of frugality, and it can be misinterpreted by your customers."

I sighed, resignedly, to myself. I understood what he meant, but at the same time, I felt Hotch was dead wrong. The issue he raised was one of perception and, like most people, Hotch didn't yet appreciate what flying could do for us. Still, there was a logic to what he said, and I was unwilling to ignore his advice, which had always been so right, and so valuable, in the past.

That didn't mean I was willing to abandon the corporate strategy I'd envisioned, in which flying would play a pivotal role. Inductotherm had reached that point in our development where time--especially the CEO's time--was precious, and personal mobility, invaluable. So much so that I couldn't afford not to fly, or so I rationalized. Thus, to appease Bob on the one hand, while still gratifying my yearning to fly on the other hand, I dug into what was left of my money from the sale of our home in Trenton, and for $1,600,I became the proud owner of a second-hand Ercoupe.

It wasn't a tremendous amount of money, and the plane, with a top speed of no more than 90 miles an hour, was a pretty poor excuse for a corporate aircraft. To look at it, nobody would have suspected that, on its first flight, that humble little Ercoupe was going to launch Inductotherm into the thick of the burgeoning jet aviation field.

Nobody had heard of jet aircraft until the previous decade, but the Cold War and then the Korean Conflict and the need for jet fighters and bombers had spurred military R&D, resulting in aircraft like the F-86 and B-52.

On the civilian side, commercial airlines were replacing piston engine aircraft with larger, faster, and more comfortable jetliners--DC-8's and 707's--as fast as Douglas and Boeing could move them down the assembly lines. The Sunday rotogravures spoke eagerly of a time when people would travel by air as routinely as they traveled by train.

On this page is Rowan sitting in his airplane with his young son

Our First Executive Aircraft--The Ercoupe 1955

At the same time that jet aviation was opening up a new era of flight, it was also creating a demand for a new induction melting technology, vacuum melting. Although jet engines were simpler and more reliable than piston engines, they ran at very high temperatures--as hot as 1,800 degrees Fahrenheit--at which point ordinary steels lose nearly all their strength. Moreover, jet engine parts had to withstand mechanical stresses far beyond those encountered in piston engines stresses that would rupture even the superalloys, if they contained microscopic impurities in the form of oxides resulting from exposure to air in their molten state. Superalloys for the new, more demanding engines could only be produced in furnaces in vacuum chambers free of oxygen or other gases.

For induction furnace manufacturers, vacuum melting brought a new, more stringent subset of criteria. The furnaces had to be more compact to fit into the vacuum tanks. Further, the porous materials used in air melting could hold moisture and gases which would "outgas" into the vacuum, and thus had to be kept to a minimum.

Coil joints and power connections were far more critical than in atmospheric melting because even the slightest water leak, insignificant in air melting, would expand 100 million times as water vapor in vacuum, spoiling the integrity of the vacuum environment. The refractories required in vacuum melting also allowed for less margin of error. They had to be thinner and of higher quality, since contact between the molten alloy and refractory, just as exposure to the air, created impurities.

Even more critical was the coil construction. Coils had to be electrically insulated in order to avoid corona and arc-over in the ionized, rarefied gases in a vacuum furnace.

I was eager to establish Inductotherm as a major presence in this new field, but in terms of experience and volume, the established furnace makers held a clear advantage over us. Ajax and TOCCO and now National Research of Boston, which had built the 2,000 pound Crucible Steel furnace, had carved out a position for themselves in this industry. Nonetheless, perhaps because the technology was so new, or perhaps due to the highly cyclical nature of the vacuum melting industry, they had failed to make the commitment to this field, and no one held a dominant position in this technology. All too often, the burden of fine-tuning and upgrading the furnaces for successful operation in the harsh vacuum environment fell upon the vacuum melter.

So here was an opportunity to gain a foothold in this new and exciting industry. Our smaller size, our flexibility, and our willingness to operate in an "emergency" mode, made aviation alloy producers an ideal market for us.

Further, our first furnace customer, Stokes, was a leader in the manufacture of the vacuum systems, and that 30-pound vacuum furnace--Inductotherm's first ever--had been performing flawlessly for over two years, as had others we'd built for Stokes. Still, it was probably more desperation than confidence in our abilities that prompted Houghton and Crucible Steel to turn to Inductotherm.

The flight to Syracuse took about three hours, as air miles are a lot more direct than road miles. After landing, I rented a pickup from an airport employee for the drive to Crucible, where I found Houghton. We walked through the melting facility and into the melting chamber, a steel-walled chamber about 10 feet in diameter and 10 feet long. It was an eerie place; our footsteps echoed sharply against the artificial, tomb-like silence; the walls were splattered with lumps of solidified alloy--$20,000 worth of scrap.

The furnace, now a blackened hulk about three feet cubed, hung at the center of the vacuum chamber hinged about the axis of the coaxial power conductor that ran through the steel wall of the chamber. The 2,000-pound-capacity furnace was huge compared to anything we had ever built for vacuum. From the standpoint of either engineering or operating, the coax was a nightmare. It was comprised of two copper tubes, one 14 inches in diameter within another, about two inches larger, both water-cooled with complex and expensive sets of bearings and water seals where the coax connected to the furnace. All very fancy and all very expensive and far beyond the specialized capabilities of our still-nascent company.

For what must have seemed ages to Houghton, I walked back and forth in front of the open chamber, occasionally stopping to gaze inside with much the same bedside manner as a physician confident he could get his patient up and walking around soon. But there was no use kidding myself; Inductotherm was not equipped to rebuild that coax. At the same time, it was against my nature to say sorry, maybe Ajax or TOCCO can help you, but Inductotherm can't. My stomach churned as I pondered these two alternatives, neither of them acceptable to me. This golden opportunity to thrust Inductotherm into vacuum melting technology now seemed to be slipping from my grasp. Why, I asked myself, did Crucible's furnaces have to have a coaxial power entry? Why were these coaxials so danged complicated and expensive to build. Rhetorical questions, I knew, but I was desperate.

Yet, the more I thought about it, the more I became convinced that these were good questions. In fact, if it were possible to substitute a standard flexible lead ...

I stopped in my tracks; it just might work. It had to work. But first, I had to convince Crucible Steel of that. "Chris, we can build your furnace," I began, hoping that I sounded more confident than I felt, "but there's no way in the world we can replace that coax. Nor would we want to. It's far too complex, too expensive, and, in many ways, too fragile."

"Well, then, how do we bring the power in?" asked Chris, exasperated, knowing full well that, without a power connection, a new furnace was useless.

This was no time to hesitate, though a myriad of questions and answers raced through my mind even as I was talking. "What I would propose is a whole new approach to the power entry," I continued. "We can use standard airmelt flexible leads adapted for vacuum. It will be simpler, more reliable, and rugged. What's more," I was hoping this would be the clincher, "we can do it and get you back into business much faster than if you were standing around, waiting for somebody to build you another coax."

Houghton nodded, and I went on. "What we'll do is build an insulating Micarta power port to seal on the coax's entry flange. Then we'll vulcanize rubber plugs to the power leads, and they'll plug into holes in the Micarta plate like corks in a bottle, forming a vacuum seal where they enter the chamber. We'll make the connection to the capacitor bank bus outside the vacuum chamber, and then we'll have only the four furnace connections to insulate and make leak proof."

The engineer thought about this for a moment or two before responding, "I don't see any reason why it wouldn't work, only ... "

Only what? I thought to myself, and held my breath. What if Crucible's chief engineer was simply unwilling to depart from the way his company had always done things? If that was so, my trip here was in vain. But, in fact, Houghton wasn't about to object; I breathed a sigh of relief as I heard what he had in mind.

"Instead of replacing the old furnace with one the same size," Houghton was saying, "what's the possibility of moving up to a bigger one? Say, a 3,000-pound furnace?"

My heart leapt! A 3,000-pound furnace would be the biggest vacuum furnace in the world. If we made it--and of course we wanted to make it--we'd position Inductotherm in the forefront of vacuum melting technology. Of course, I agreed with him.

"It sounds like a terrific idea, Chris. You'll be able to produce 50% more alloy with each heat. And we'll be pleased to build it for you."

Houghton smiled at the prospect of turning this misfortune into an opportunity to expand his capacity, and I had to admire his thinking; this was the way progress was made. Then, he came to the big question. "How much is it going to cost us?" he asked, warily.

Any astute businessman would have suggested that he'd have to return to his office, study the cost involved, and call back with a quote. But I was rarely astute, far too impetuous, too anxious to appear the expert, and too bent on closing the deal then and there.

So mentally I made a stab at weighing our probable cost against the market price, reminding myself of Roy's lessons on pricing, yet fully aware of how badly I wanted this job. "How does $5,300 sound, Chris?" I asked, tentatively. What if it was too high? But if I'd expected Houghton to play hard to get, I was wrong.

"Good. I'll take two," he said, happily. "As long as you can get the first to me within two weeks."

Two furnaces? This was turning out better than I had ever imagined it might. I agreed, and we shook hands on the deal. Yet, as we walked out of the Crucible plant I began to wonder how good a deal it was, and for whom.

Houghton was still chatting, expansively, as he walked me up to the truck I'd rented at the airfield. "Thanks for coming up. We're really desperate to get back into operation. I can't wait to work with our new 3,000-pound furnace," and so on.

Then, before I drove away, he said something that hit home. "You know, we paid $20,000 for that 2,000-pound furnace and $20,000 for the coax. So we were looking at a $40,000 problem, and you solved it, with two larger furnaces, for $10,000."

Fifteen minutes later, I had lifted off and was headed south, but I couldn't get Houghton's last words out of my head. As the section head had said, they were prepared to spend $40,000 for one 2,000pound furnace and coaxial, just to get back to work, and with anyone else they'd probably be shut down for six to eight weeks. But no, they were getting two 3,000-pound furnaces for $10,600 and in two weeks. Should I have charged $30,000 for them? Or, $60,000? Of course, I took pride in delivering value to our customers, but still, it gnawed at me, to think that I was selling Inductotherm short. And that I still hadn't learned Roy's lesson very well.

Sure, that $10,000 price would cover our costs and yield a modest profit, but we were providing more than equipment; we were providing solutions to complex, multi-million dollar problems. Either way, it was too late now. I tried to console myself by reminding myself that, with this one flight, my $1,600 investment in a second-hand Ercoupe had more than paid for itself.

Two weeks later, we installed Crucible's first 3,000-pound furnace with the radically different power connection, which performed every bit as well as I had hoped. In fact, it worked so well, it became the standard for vacuum induction melting, replacing coaxial power supplies not only in this installation, but in dozens of other future furnaces of various sizes and configurations.

My little Ercoupe, too, continued to pay handsome dividends in the months ahead. In the business world, flying one's own airplane was still such a novelty that if I told a customer I was flying in to see him, he would generally volunteer to pick me up at the airport. At the same time, the use of the aircraft to start up a furnace or deliver a part underscored Inductotherm's commitment to our customers.

Yet, while flying remained as exciting as ever, I was becoming impatient with the limitations of my Ercoupe, which boasted a top speed of some 90 miles per hour. Even in the air, it took five hours to travel to Allvac, in Monroe, North Carolina, where we had a 500pound vacuum furnace, and 5 1/2 hours to get to General Electric in Cincinnati. As the trips became more frequent, they also became longer and more tedious.

There was another syndrome at work here, too. Even as flying had allowed me to make more efficient use of my time, the result was an even greater demand on my time. The way out of this conundrum was obvious, I felt; I needed a bigger, faster aircraft. Again, with a limited budget and Inductotherm's finances so tight, it seemed I was destined to paddle along at 90 miles an hour for years to come.

Such were my thoughts one afternoon in August of 1957, as I descended towards Wings Field about twenty miles northwest of Philadelphia. I was returning from Allvac, a company started by Jim Nisbet, an engineer who'd played a vital role in our growth--no, our survival--during that first year of operation. Jim was the former GE research metallurgist, who, three years earlier, had placed an order for a 100 kW control panel, the job that convinced the Mint--and Sorensen, and ultimately, who knows how many other prospective customers--that Inductotherm was a company to be taken seriously. Soon thereafter, he left GE and later founded Allvac. He'd installed our 500-pound vacuum furnace in a vacuum system he'd designed and built himself. Based on his perception of my entrepreneurial business experience, he even named me to his board of directors.

I'd been in the air five hours, with another three to go before I arrived at my destination, Lake George, where I occasionally spent summer weekends with the family, just as I had as a boy.

After landing and taxiing over to the gas pump, I stepped out to stretch my legs a bit, and decided to pay a visit to the airport manager at Wings, a fellow named Orville Jenkins.

"Say, Orville,'' I began, after we'd chatted a bit. "I've been five hours in the air from North Carolina, and I still have three hours to go in this Ercoupe. Do you have anything that might get me there faster?"

He chewed on this a moment before offering, "Well, we've got an old Bellanca out back with a 180 horsepower engine that was originally advertised at 180 miles an hour. It won't really do that, but it will give you an honest 150 miles an hour."

We walked out to the parking area to take a look at the plane. It didn't look like much, sitting there with its tail wheel buried in the long grass and with its red paint faded to a pinkish orange. But I knew the Bellanca, even with its canvas-covered plywood wings and fabric fuselage, to be a great little aircraft. And at 150 miles an hour, why, I'd already be at Lake George, if I'd taken the Bellanca to North Carolina.

"We need to get $6,000 for it," said Orville, as I walked around the plane, looking over the landing gear, the engine, and the control surfaces. I didn't want to look too eager.

"I don't know, Orville. That paint job concerns me; it's obviously been neglected for some time now. That little Ercoupe of mine might be slow, hut it's reliable and in tip-top condition. If I were interested in the Bellanca, and I'm not sure I am, how much would you allow me on my plane"

"The Ercoupe? Oh, about $1,100," said Jenkins.

I could spend more time dickering over the price, or I could get going. The company could afford the $4,900 it would cost us for the new plane, and besides, 150 miles an hour sounded mighty good. Tell you what, Orville. Let's take a flight; you check me out in it for three landings, and I'll give you an answer as soon as we come back to your office."

I climbed into the Bellanca's cabin and had Orville check me out on the instrumentation and controls before I fired up the engine and lifted off. We circled the field, then dropped down to the runway for the first of a series of "touch 'n go" landings to get the feel of the plane's handling.

Back on the ground, we taxied the Bellanca over to Orville's office. "Okay, Orville; throw in a tank of gas and a coat of paint and you've got a deal," I bargained. He agreed to repaint it whenever it was convenient for me, filled the tanks, and off I went in my new Bellanca--at 150 miles an hour, instead of 90.

It didn't take long for the Bellanca to prove itself a sound investment. The week after I'd bought the plane we got word that Corning Glass in Corning, New York, was in the market for a new induction power supply for some R&D work in their laboratory. I called Corning and got through to the lab supervisor. "I appreciate your call," he said, "but we've already chosen the vendor for our lab unit."

I wasn't going to give up that easy. "Don't you think you should look over every technology available?" I asked.

"We've already done that," said the other engineer, "and we've made up our minds."

"Well, I know you've invested a lot of time on this decision," I countered. "But you haven't seen it all yet. Why not invest just one more hour, to get the complete picture? After all, whichever you choose, you're going to have it a long time, and it will become an important part of your lab work."

"That may be true, but we want to move fast on this," said the melt supervisor.

"Good. So do we," I pressured him. "I can be up there in an hour."

The man from Corning seemed to shrug at my persistence, but gave in. "Well, okay," he said. "Come up if you want to, but it won't do you any good."

His words should have discouraged me, but as I headed for the Moorestown Airport, I felt much the same excitement I'd experienced the preceding February, when I took my first business flight in the Ercoupe, and look what happened then. Maybe that's why I refused to take "No" for an answer. Or maybe I was looking for a reason to take the new plane up in the air again. A little more than an hour later, I touched down on the airfield outside the town of Corning, and, as I had on that trip to Syracuse, I rented a pickup truck from the local airport operator for the drive to the Corning Glass plant. But the reception I got was totally different; the man I'd come to see appeared cold, and disinterested. "It's nice of you to come up," said the lab chief, meeting me at the door, "but I hate you see you waste your time."

It was obvious he'd heard a lot of sales pitches and really didn't want to hear another word about the complexities of power systems, frequencies, or coil architecture. I would get maybe a minute or two to convince him that Inductotherm was different, and to impress him of the value of that difference.

With a sigh, as if to say, "Here we go, for the umpteenth time," he launched into his story. He required a power source for a variety of applications. At times, he would be melting glass in various size containers, he explained, usually in platinum crucibles. Others times, he would be testing various ceramic materials by heating them in a conducting cylinder. The variety of sizes and materials was endless. As he spoke, I began to relax. Given Inductotherm's capabilities, this sale was going to be a piece of cake.

"It sounds like you need flexibility in your lab way beyond what is available in standard induction systems," I began. "Every time you change load dimensions or load materials or change coils for different projects you're going to need a different voltage to match your load to the power supply, and you're going to need a different number of capacitors to resonate the load. There are only two other viable suppliers for equipment of this type, and neither of them ordinarily provides the flexibility you'll require.

"One of the suppliers"--here, I was thinking of TOCCO--"may have the built-in flexibility, but you have to make the changes with a wrench. That means that every time you change loads, you physically bolt on a different tap and bolt on a different number of capacitors. The other supplier"--here, I was thinking of Ajax--"does provide four transformer taps for matching the load and switches for the capacitors, so this system would be preferable to the other.

"But still, it's far from ideal. It still doesn't offer the range or flexibility you'll require for all the applications you've described."

When I paused to catch my breath, he nodded in agreement, and I went on. "What I would recommend for your lab would be our standard 30-kW, 4,200-cycle, integral unit, but with eight transformer taps selectable from our eight-position rotary tap switch and with half again as many capacitor taps as you would have with what is standard for a melting unit. With this arrangement, you can rest assured that no matter what load or what coil you connect to the unit, you will be able to match it to the power supply in a matter of seconds."

I could see from his reaction that the competition had discussed neither these features nor the need for such features, and he wanted to learn more. Suddenly, he wasn't in such a big hurry.

I discussed the other advantages our equipment had to offer-the compactness, the efficiency, and the reliability. I touched on our customer support and service philosophies, but before I was finished, I could see he was no longer listening. His mind was made up. And the job was sold.

I returned to the Corning Airport that afternoon with a $30,000 order for Corning Glass's new laboratory equipment in my pocket. Once again, the value of aviation was confirmed, and once more, a new Inductotherm aircraft had paid for itself on the very first trip, while helping us build a name for ourselves.

Word of the success of Crucible Steel's 3,000-pound vacuum furnace was getting around, and it led to orders to build successively larger furnaces from such major alloy suppliers as Universal Cyclops and Special Metals, for whom we built a 5,000pound vacuum furnace. This, in 1959, succeeded the Crucible units as the biggest in the world. Shortly thereafter, the status of "World's Biggest Vacuum Furnace" was claimed by Jim Nisbet and Allvac, for whom we built a furnace capable of pouring 10,000 lbs. of alloy in one heat. But I'm getting ahead of my story.

While Inductotherm furnaces were nurturing the state of the art in aviation, making possible the manufacture of bigger, faster airliners and military aircraft, our own flight operations were, by necessity, crude, if not sometimes hair-raising. At least in a B-29, pilots generally knew what to expect; that wasn't always the case for civilian pilots, who flew under supposedly more placid conditions. One weekend, Betty joined me in the Bellanca for a trip to the attractive, suburban village of Basking Ridge, New Jersey. It had been raining that day, and the Basking Ridge airport was nothing more than a couple of grass strips, so I radioed ahead. "How's your field? Dry enough to land?"

"Sure," a voice crackled over my radio. "Use runway 27; just make sure you land short 'cause it's muddy at the far end."

That didn't pose any particular problem; all I had to do was keep my approach a little lower and slower than usual. Everything looked fine, as the Bellanca descended to 100 feet. 50 feet. 30. 20. Touchdown was seconds away when suddenly I saw three dark lines running across the windshield where, a moment ago, there hadn't been any. They could only be ...power lines!

Instinctively, I yanked back on the control and shoved the throttle to the fire wall. The engine screamed as the Bellanca lifted out of its descent path and almost over the wires. I thought we'd made it, but then felt a sudden jerk as the tailwheel grabbed the top wire, and the plane slowed. For an instant it seemed to hang there, frozen in place, between the sky and the ground, until--Thank God!--the wire snapped, and the plane flew free.

I gave the wires a wide berth on my second approach, and after landing, I radioed to the operator. "It looks like I took out one of your power lines. Sorry about that." I was embarrassed; how could I have done something so dumb?

The operator radioed back: "Hey, don't worry about it. You're the third person this week to snag those lines."

The field along the approach, I learned later, was owned by a farmer who apparently hated the airport and refused to reroute the wires to his house, or even to mark them with the usual identifying bright red balls. I made a mental note to avoid this field until they improved its approach.

Back at Moorestown Airport where I kept my aircraft, things weren't much more sophisticated. Night landings were especially tricky, as there were no landing lights. When I knew I would be landing after dark, I would call ahead to tell Betty when I was coming in. At the appointed hour, there would be a dozen flashlights lined up at 200-foot intervals along the left-hand edge of the grass runway and a car parked so that its headlights shone across the approach. Inside the car, scared half to death, Betty would be waiting bravely for me to drop down out of the dark sky, pass over the car, and settle on the grass in front of her.

After a year of flying, my night flights--and the risk of landing on a virtually unlighted field--were becoming so frequent that, in May of 1958, Betty and I finally decided to take things into our own hands and light the field ourselves rather than wait for the operators to do something.

From an army surplus store, we ordered a $50 set of lights and, for another $100, bought a half mile of wire. The following Saturday morning, with the help of a garden tractor and as many other pilots as we could muster, we installed Moorestown Airport's first real runway lights.

With the landing strip finally visible by night, flying became an increasingly important part of Inductotherm's routine. Soon, I could move into the next phase of our flight operations, expanding our fleet and getting others from my company qualified as pilots. If a company enjoyed a competitive lead with its president flying, I reckoned, we would have that much more advantage with our salesmen and servicemen flying, too.

But however practical my reasons for flying, flight remained an intensely personal experience for me. With every takeoff, I felt the same sense of exhilaration I'd experienced as an aviation cadet.

It was also an escape--however illusory--from the realities that afflicted me on the ground, both at home and in business. At the control stick of my aircraft, I could slip free of the bonds of gravity. But then, once back on the ground, the awareness of my responsibilities to my family and employees returned in a rush like a tremendous weight descending upon me. With each passing day, I felt it becoming heavier and heavier. Subconsciously, I was beginning to sense that it was only a matter of time before it would crush me.

As things turned out, I was right.

Chapter 12

A New Beginning

Now that Paul Foley was no longer a part of the company he had helped found, he seemed to take as much joy in its growth as I did myself. We still got together once a month or so for lunch, and he was always hungry for news of our latest ventures--the new plane, our plant expansion, incursions into the vacuum melting market, and new hires. There was never a trace of "sour grapes" about him. "Gee, that's great, Hank. I always knew you could do it," he would say, proudly. At the same time, he seemed relieved that the pressures of building this company were behind him.

By late 1957, our work force had grown to 42, and we seemed headed for our first $1 million year. Of course, with increased sales came increased pressures, and, while I realized we were moving faster without Paul, I was gaining a new appreciation for what his support and friendship had meant to me.

In Paul's absence, I found myself increasingly grateful for the work of our "diamond in the rough" salesman Jerry Wollaston. The genial Wollaston certainly couldn't take Paul's place in the company, nor did he aspire to. Yet, in many ways, his was the more tangible contribution. He knew induction equipment and melting practices and could handle a start-up and trouble-shoot service calls if they didn't require too much technical expertise. His enthusiasm was contagious, and his ability to train our new employees took a huge load off my shoulders. In short, I could count on him.

And then, suddenly, without warning, I lost him. That's the way tragedy comes--without warning.

In September 1957, Jerry and his wife were driving back from a vacation trip to St. Mary's, Pennsylvania, when a truck headed in the opposite direction lost control on a bend in the road, skidded, and smashed head-on into their car. An ambulance rushed Mary to the hospital, but Jerry, who had 28 broken bones in his body, doctors would learn, was given up for dead and thrown on the back of a pickup for transport to the same hospital. A few days later, however, it was his wife who died, while Jerry fought his way back, though it took him a year of painful hospital treatment, and he lost a leg to infection. He lost something else too--his zest for life, and he would be sorely missed.

No longer able to lean on Jerry and his broad experience for support, I felt even more alone. Late at night, after everyone else had left the office, I would roam the plant in Delanco alone, thinking. Sometimes my eyes would settle on a furnace, and my mind would compare it to the turmoil that I was feeling. On the outside, hard and unyielding. Inside, raging fires that, while we might contain them, we barely understood. Fires that, in time, devoured whatever they touched. The difference was that, unlike the furnaces I was building, I had no "off" switch. A sense of desperation, even helplessness, was within me all too frequently, yet I couldn't let it show. I had to put on a good front for our new guys, lest they sense the uncertainty within me, too.

Business was booming. We were booking a new, complete installation at the rate of almost one per week. Each job had to be sold, designed, built, and shipped. Then, after installation to our drawings by the customer, it had to be commissioned and debugged before the job of training the customers' crews in its operation could begin. And too many of our employees were green--untried newcomers to the business.

In sales, Roy Ruble, with his insights into business strategy, was proving how valuable he would become, given the time. But in November of 1957 he had only five months exposure to the world of induction melting. He, in turn, was then being helped by a couple of new additions to our team, Wally Cullen and Carl Propson. They were both neophytes with little knowledge of our highly specialized field.

In design, we now had three draftsmen. And I had hired a young electrical engineer from Philadelphia Electric, Hank Raufer, who had joined us at the beginning of the month.

Elsewhere in the office there was Tom Pippitt, who had been with us a little over a year. He was beginning to learn the parts and was doing a fine job in purchasing and material control.

The shop was Dick Walker's domain; he did a first-rate job of supervising and training our mechanics and had turned production into our area of greatest strength.

Our accounting department consisted of one bookkeeper, a former car salesman named Joe Brown, who had taught himself bookkeeping and looked after the payroll, costing, invoicing, and accounts payable.

In short, Inductotherm's collective enthusiasm and energies far outstripped our experience. And what with the press of new business--business I'd avidly courted--I became increasingly fretful over every aspect of our operations-purchasing, manufacturing, sales, and service. Perhaps if I'd been in less of a hurry, or if I didn't see every sale lost to a competitor as a personal failure, our operations would have become more routine, less chaotic. But instead, with every new job, the demands on the men seemed to intensify, and our staff was still too green for me to withdraw from a single phase of the company's day-to-day operation. Such, at least, was my conviction, though to some of my employees, my "input" bordered on interference.

"Why don't you just let us do our jobs," Dick Walker would say, after I'd stopped by to check on the quality or the efficiency of the shop's work. "You're the president of the company. You're not supposed to be out here supervising the shop; that's my job. If you want to tell my men how to do something, come see me first."

Roy, too, felt frustrated at not being given greater responsibility. "Why don't you let me handle that start-up," he would cajole, but of course, I couldn't. A start-up was too important to leave to a man with so little experience with furnaces; to do so would be to shortchange our customers.

Nobody at the company understood; no job was so small that I could take for granted that they were doing it right. Each and every start-up, every trouble-shooting job, every coil and instrument panel was critical to our success. Rightly or wrongly, I was obsessed with overseeing everything.

I was the one who'd designed every inch of our furnaces. I knew them better than anybody, and in the final analysis, I was responsible for everything. The proof could be seen in our growth. From a struggling two-man shop, we were growing into a position of leadership in the induction industry. Every new crisis merely fueled our vault to a new achievement, every challenge led to new success. However, what nobody knew was that success was hollow.

What did it matter if I took chances, if I didn't fear the consequences? Winning in business only served to remind me that I was already losing that which mattered most to me, my two sons Jimmy and David.

Shortly after David was born, a specialist had confirmed what Betty and I had suspected, that both boys were afflicted with muscular dystrophy. Instead of growing stronger, they became weaker with each passing day. While their friends went out to play baseball or other sports, they already required braces and crutches, just to be able to stand and watch. Soon, they would no longer be able to do that; they would be confined to wheelchairs, unable to perform the simplest task for themselves. By the time their classmates would be heading off to college, to launch careers and begin families of their own, my sons would remain at home, waiting for the end. There was no escaping the terrible reality of their condition; they were both dying, day by day, little by little.

It had been toughest on Betty; I had been able to immerse myself in work. While I was away at the office, or on the road visiting customers, she stayed at home with our boys, watching over them, encouraging them, comforting them. Somehow, she had the strength to make their lives happy, while supporting and understanding me.

Betty was stronger than I; I couldn't cope. Every man deals with grief in different ways. Like a surgeon cauterizing a wound, I tried to numb my own grief through crisis at work. The greater the pressure, the more I could distance myself from my own helplessness. There was no limit, I thought, to the pressures I could bear. But I was wrong.

It happened suddenly. I was sitting at my desk all morning handling the day's routine, which was frantic. The phone had been particularly busy. There had been a problem with the equipment at Bushing, Inc. in Philadelphia, requiring a service call; a request to bid requiring a customer site visit; a start-up needed in Pittsburgh. There were designs to be clarified if the shop was to keep going at peak efficiency, and components to be specified and ordered if we were to keep our delivery commitments. These chores all had to be done and done perfectly, and they all had to be done now. I couldn't possibly do everything myself, yet I couldn't let these problems fall on my inexperienced staff. They'd make mistakes, and mistakes were costly both in terms of finances and our reputation, and we could afford neither.

It was, in short, the kind of crisis I had thrived on for years, immersing myself in problems I could solve through sheer force of will. I had done it before, I told myself, and I would do it again.

Then the phone rang again--a hard, implacable ring. Another problem, another demand, another responsibility to uphold. That ring played along my nerves like a steel file across a wire already stretched beyond its limit. This time, I didn't pick up the phone. I could only sit there, and watch it ring. I could no longer speak, I could no longer think, and I couldn't even muster the strength to care.

I would have collapsed at my desk if I hadn't struggled to my feet and fled the office to return home. There, I fell into a chair, and broke down and cried like I hadn't done since I returned home from Europe to learn my father had left us.

Once again, it was Betty who provided the strength I needed to carry on. "There are some things we can't do anything about," she told me. "The only thing we can do for Jimmy and David is to make their lives as happy and fulfilling as we possibly can.

"You can't help them by destroying yourself," she insisted. "You're not indestructible, and you can't go on this way. Go back to the office and tell your friends what has happened," she urged me. "Let them know you can't do it all yourself any more. Let them help you."

But how could I do that? I had never asked for help. Somehow, Betty persuaded me to go back. I returned to the plant, weak and drained, and asked Dick, Tom Kennedy, Roy, and Jess to come into my office. Nobody said a word as I choked out the words, trying to tell them what was going on in my life, and with the company.

When I finished, it was Roy Ruble who spoke up first. "There's nobody in this room who could have born up under what you've been putting yourself through, Hank. But now, you've got to stop. You can't blame yourself for not being God. And you're not Superman, either. You can run this company like a company, or you can treat it as your cross. If you want it to be a company, you have to let us help you."

He seemed to speak for the rest of the men who spoke up, one-by-one, insisting that I let them help shoulder the load. It meant overcoming my own nature and my grief, but I agreed to try. It was the least I could do; I owed it to them, to myself, and most of all, to Jimmy and David.

If I failed at this, it meant the end of everything I had worked to build. If--with the help of my co-workers--I succeeded, it meant a new beginning.

Chapter 13

Twisting the Dragon's Tail

I have often wondered what might have become of my company if crisis had not compelled me--and my co-workers--to confront my limitations on that painful and for me most shameful day in 1957. It proved, among other things, that I had a great team of good men, but good men seek, and even crave, responsibility and challenge. Had I not been forced to delegate and permit them to grow, the men who stepped forward that day to help shoulder the load, to build Inductotherm into what it was to become, may have sought their challenges elsewhere.

But I was, and I did, and so they stayed.

Roy's innate sense of leadership earned him the heaviest portion of the burden, even though he was new to the industry. With Jerry gone, the former Navy man had not only to learn our product line and how to sell it, but also to help train the couple of new salesmen we had added to our staff. In addition to his work load at the office during the day, Roy spent countless hours of his free time with Jerry at the hospital, encouraging and reassuring the man who had originally brought him into our company. What was remarkable about this relationship was that, though Roy had to carry much of Jerry's work along with his own, he never once maneuvered for his former boss's job or title as Sales Manager. I always admired him for that.

Tom Pippitt, at the same time, was proving to be an outstanding, albeit low-key, purchasing executive with a knack for anticipating the materials we would need for jobs not yet booked, and for negotiating suppliers into deals that were uncanny, especially considering our modest size. He seemed able to convince vendors that they should quote prices based on large volume because we were going to grow. He was patient, following the practice of rarely phoning vendors after he'd received their quote. "I always wait until they call me," he once confided, with a chuckle. "Then, I know they're anxious and I can usually get a better price. Sometimes can even name my own price."

Dick Walker, too, was a tower of strength. He ran the shop with an iron hand, choosing his men with care, training them well, and then insisting on perfection in their performance. As our company grew, so, too, did the proficiency of the men in Dick's shop. Our products took on an increasingly professional look and performed in the field with even greater reliability. As for the gawky teenage boy who'd gone to work for me pulling nails out of lumber, Jess Cartlidge had grown into a top-notch mechanic who could out produce anyone. He was now learning the service end of the business, but it seemed unlikely his role would end there.

We had other outstanding mechanics in the shop, too--men like Tom Kennedy and Jack Agnew, who not only possessed the innate ability to reduce a job to its simplest steps, but were also great teachers. In time, each would serve the company as plant superintendent; but for now it sufficed that they enabled us to keep our costs low by improving the efficiency of the work force. Our competition couldn't touch our production cost, a factor that gave us a tremendous advantage.

Yet, what troubled me was, even with all of Inductotherm's assembled talent, we were not getting what I considered to be our share of orders. We would get the inquiries all right, but all too often we would lose the order to our bigger competitor. It was doubly painful because, whereas every order we won led to a new referral and another possible sale, every order we lost gave the competition the same advantage. My greatest worry deteriorated to keeping enough business flowing in to meet our growing payroll.

It was all too clear to me: a gap had grown up between what we could do, and what the market thought we could do. As chief engineer, I had spent thousands of hours on the design and production of our furnaces, but as Inductotherm's CEO, how much time had I dedicated to the way they were sold?

None of us involved with sales had ever had any formal training in this field; we tended to fall back on our individual strengths. I had always focused on technical advantages. When Jerry Wollaston was with us, he invariably relied on his gift of gab. Roy, on the other hand, approached sales as a business problem requiring a solution. But was this enough?

Not when you're the smallest and newest company in the field. But while there were lots of places to go to study engineering, foreign languages, or religion, where could we go to study selling?

Thus, I was already primed for the call that came in out of the blue. It was a salesman for the Dale Carnegie sales training course. "We teach companies how to sell, Mr. Rowan, and while I'm sure your present selling capabilities are excellent, we've shown a lot of companies how to build on their past successes, to make good salesmen even better. The results aren't measured in terms of sales technique, but in increased revenues."

We agreed to meet the very next Thursday, and I was looking forward to it. Or, at least, I was until a customer called me out of town on the appointed date, and the appointment slipped my mind.

When I returned and learned he had been in--and that I had inadvertently stood him up--I was chagrined and called him up immediately to apologize and make a new appointment. Now, of course, I was not only interested but also felt obligated; he'd probably made the sale before he arrived.

In fact, we were probably the most eager customers he'd seen for quite some time. We enrolled in the course everyone who might talk to a customer and one person who probably wouldn't--Tom Pippitt. And why not? He had his own "sales" job to do: persuading vendors to meet our schedules and still give us the most favorable prices possible. At first, the Carnegie people balked at taking Tom; it was their policy to admit only salespeople, they contended. But, finally, they relented and admitted our purchasing agent as well. I sure hoped it would pay off.

The Carnegie Course was a sizable investment for us, in terms of time, money and personnel. The course cost $1,000 for seven of us and comprised one three-hour session a week for 12 weeks. And so, in February 1958, almost 11 years after Ajax sent me out on the road as a salesman, I joined Roy Ruble, Hank Raufer, Wally Cullen, Carl Propson, Tom Pippitt, and a new sales engineer named Don Anderson in learning how to sell.

It quickly became evident that the Dale Carnegie folks knew their stuff. The instructor was a man named Bob Sappenfield; he made it fun to participate in the course, and really knew how to put his points across. I was especially impressed to learn that Sappenfield didn't deal in "canned" sales pitches, but, instead, taught a philosophy of persuasion and negotiation that could be applied to any sales setting. Contrary to the notion that selling is cousin to hyperbole, the school's first rule was "avoid exaggeration." "If your customer suspects you've exaggerated a single point," Sappenfield warned us, "anything else you say, however valid or important, is suspect."

But if that's the reason for losing an order, a salesman may never know it, he explained. "A sales prospect will seldom reveal his real reason for not buying. In the case of a company like Inductotherm, for instance, sales resistance may be rooted to doubts as to the company's financial strength and long-time viability, its ability to provide parts, or service support. Instead, you'll hear him say something like, "Your price is too high," or "We can't afford it right now." But, once you learn to ferret out the real hidden objections and answer them, said Sappenfield, "you'll be able to turn a potential negative into a positive."

It was fascinating stuff, particularly for an engineer. As I sat there, listening to the instructor, it occurred to me that for years I had been selling to people who were predisposed to buying a furnace, who already knew they needed one, and who were quick to recognize the advantages Inductotherm represented. But I had been selling in terms of engineering. By the time our team graduated from "Persuasion U," we were all speaking in terms of features and benefits.

"You know, Roy," I told our quick-thinking salesman, "this course has been a revelation for me. Until I took this course, I would tell a customer about our products, then go back to the office and wait for the customer to send in a contract. I rarely asked for the order and didn't have the slightest notion how to close the sale."

Roy nodded in agreement, for he had been the course's star pupil. As an Annapolis graduate with a degree in electrical engineering and metallurgy, his engineering knowledge was superb, but his success rate in closing orders had been abominable. With the sales training behind him, he rarely lost an order, once he got in the door.

The problem was, even with our enhanced powers of persuasion, we still weren't getting enough chances to sell. We were receiving inquiries as a matter of course; we would respond promptly, do a follow-up visit, and do our best. But all too often new prospects would either not call back or otherwise show little interest in seeing us again. Something was wrong and Roy thought he knew what it was--our prices. As for the answer to our problem, what he proposed sounded so preposterous, I was inclined to dismiss it out of hand.

I had pegged our prices about 10% under Ajax's conventional price schedule and we'd maintained that level for some time. Yet I was beginning to wonder if we were still too high. I had just hung up the phone after learning that another prospect had gone with Ajax and was anguishing over losing another order, another opportunity. I voiced my concerns to Roy. "You know, maybe we should drop our prices still further. We're still losing too many orders."

Roy looked up with that look on his face that meant he was about to offer the boss some friendly criticism. "Drop the price?" he shook his head. "You know what's the matter with you, Hank? You can't stand to lose an order. You take every order that goes to another company as a personal loss. As a result, you're still giving away the store."

I had heard this before; it was much the same argument Roy had used a few months earlier when he talked me into raising the prices for coils. But this time, he didn't just mean raising them to match the competition. He meant raising them 10% above the other furnace makers' prices. "I think you're underestimating the real value of our products, Hank. Inductotherm's furnaces melt faster. They use less energy. They require less maintenance. They take up less room. We give better and faster service. In short, a furnace that carries the name Inductotherm' is worth more. Far more.

"So how do we send that message to the customer? We don't. We quote a lower price and the customer does the rest. He assumes it has a lower value. Get your price up to reflect this difference in value, rather than what it costs to make them."

His idea didn't make sense to me. "Look, Roy, this is the wrong time to be discussing raising our prices." Philosophically, I still felt that our operating economies should be reflected in lower prices; I hadn't yet totally reconciled myself to selling coils for three times what we had been charging for them, fair price or not. "Even with prices low," I reminded him, "orders are scarce. Raising our prices will simply discourage anybody from buying a furnace from us."

Roy still wouldn't give up. "Okay, if we're not getting many orders, then it won't hurt to raise our prices, will it? Look, Hank, nobody ever calls the low bidder to tell him his prices are too low. But they will call the high price bidder and tell him that his prices are too high or out of line. And they demand to know why they're higher. It gives the salesmen an opportunity to sell."

I remained unconvinced, but I finally agreed to go along with him. Our salesmen, with the notable exception of Roy, looked at me as if I'd been out in the sun too long when I advised them that we were raising our prices on every product 10% above the competition.

The next few weeks were anxious ones, as we waited to hear the reaction from the world outside as furnace users and foundries learned of our new pricing policy. Would anyone even bother calling? Or would our new pricing policy be greeted by a tomb-like silence? And after raising our prices, how would we look if we had to go back to our previous price schedule? Pretty foolish, I imagined.

Slowly, gradually, Roy was vindicated. As prospects received responses to their inquiries--slow sales cycle or no--customers seemed more anxious to talk, to hear our story. More often than ever they were calling us.

"Why are your prices higher than anybody else's?" the callers demanded. What kind of features did we offer that warranted the greater expense? Our salesmen now had the chance to sell, to talk about benefits. Better coil design. Compactness. More efficient leads, bus, and circuitry, Lower power costs. And above all, higher melt rates.

Sales didn't merely pick up, as Roy had predicted they might; they soared. We were landing every major job we knew about; moreover, with Inductotherm furnaces installed, our new customers began learning that, while their new melt systems cost more, they lived up to all the claims we made for them. For some buyers who had become accustomed to products that fell short of the salesman's puffery, the Inductotherm furnaces were a whole new way of doing business.

Meanwhile, the competition was rallying its forces to respond to our new posture in the market. Ajax was still the biggest furnace maker in the country. For years, it had been content to dominate the market by virtue of its size, a sated dragon dozing in the sun, dreaming dreams of past conquests.

Now, feeling its tail suddenly twisted, it had awakened abruptly, and it was fuming mad.

Chapter 14

A Proposition From the Competition

Competition never goes away. It twists and bends and squirms and constantly takes new shapes while appearing in places you never expected to find it, but fortunately it is always there. I say "fortunately" because, much as we hate to lose to the competition, much as we wish it wasn't there, or wish it'd disappear, without competition, a business dies. Without the constant stimulus of a keen competitor, people become self satisfied, complacent, even lazy. They need the common goal and the common enemy, someone to beat and someone to hate.

In May of 1958, after four years in business, we had logged our first $1 million-plus year in sales; our revenues of $1,396,000 were a 65% increase over the year before and we were heady with confidence as we entered the new fiscal year. We were still smaller than Ajax, but we'd achieved record gains and we were feeling good about ourselves and about the future. My brinkmanship had not yet brought the company crashing down about my ears and, as a result of having survived so many crises, my closest co-workers and I had begun to suspect we could survive anything.

And that in itself is dangerous. But if I had known what was brewing in the minds of the men running Ajax, my complacency would have given way to panic.

The record sales we'd chalked up meant two things. First, we were growing and claiming an even bigger part of the induction market. Second, it meant that, whatever we were gaining, Ajax was painfully losing. Although the older company's coreless furnace sales still hovered around the $3 million mark, it could ill afford to lose one-third of its former sales. It was being bloodied and would ultimately turn on the source of its discomfort.

My own complacency was interspersed with moments of illogical apprehension, like somebody sitting in a quiet room suddenly jumping at the slightest sound.

My sense of foreboding stemmed from the feeling that things were going much too smoothly for us, that we were in for a comeuppance. My suspicions were confirmed a few days after closing out our record year.

I was on a sales call to the Carondelet Foundry in St. Louis, Missouri. The company was in the market for a new 2,000-pound steel melting furnace with a 700 kW power supply. It would be a big job, and an important one, but I was confident that we could land the contract. Our M-G-powered systems were fast becoming the standard in this size range, and the 1,000-cycle system I'd proposed was ideal for the foundry's purposes.

But something was wrong. The president of Carondelet Foundry, Mr. Rubin C. Culling, had given me an audience, but now he was barely listening. Nothing I said seemed to interest him. Had he changed his mind? Did he no longer plan to buy a furnace? Or maybe he had already placed an order with Ajax. Finally, it came out, and my concern switched to desperation as the impact of his words became apparent.

"I know all about your motor-generator systems, and they're fine. But Ajax is offering a whole new kind of system for this job, a 180-cycle system they call the 'Multiductor.' Do you have anything comparable"

Comparable to a "Multiductor?" I wanted to ask, "What's a Multiductor?" but I didn't want to reveal my ignorance. So I just choked out an awkward "No."

Fortunately, he went on without any prodding from me. It's a whole new technology," said the foundry chief, as excitedly as a young boy who's just seen his first bicycle. "It can produce 180 cycles from a 60-cycle line with no moving parts. It doesn't need a motor-generator."

New technology? No moving parts? No M-G set? I didn't know what he was talking about, but I didn't like the sound of this. I tried to appear unruffled, but I felt a cold sweat rise as I attempted to penetrate his fascination with this so-called "Multiductor."

"First of all," I began, as nonchalantly as possible, "No matter what a 'Multiductor' is ...no matter how new this technology is ... 180 cycles is much too low a frequency for furnaces like the one you want. With 700 kW on a one-ton furnace, you need close to 1,000 cycles to give the proper stirring. At lower frequencies the stirring action is far more violent and the 80 cycles will erode your furnace linings in a hurry and is likely to produce inclusions in the melt. In addition, the starting characteristics will be poor, and you'll have to choose your scrap far more carefully."

These should have been convincing arguments and, no doubt, the crew from the Dale Carnegie institute would have given me all "A's" for stressing benefits, instead of technology, but all the while, I was fighting a sense of panic. What kind of a device could triple the 60-cycle line frequency with no moving parts. How did it work? How much would it cost? How could we compete against something we didn't know anything about?

One thing was for sure--if it did away with the need for a motor generator, generally the most expensive component in a melting system--Ajax Electrothermic had certainly turned the tables on Hank Rowan and Inductotherm.

I found myself falling back on what was, to me, the most odious rationale: "You know what you're risking by committing yourself and your company to an untried technology." The words almost caught in my throat. What an irony; here I was, the advocate of innovation, arguing for sticking with the "tried and true."

It didn't matter; I was getting nowhere. All this last point earned me was a dissertation from Mr. Culling, lecturing me--me--on the need to take risks, to make the investment in progress. There was no hope of turning him around; he was adamant and, philosophically, he was right. It was a reminder that there are two kinds of customers--those who always buy new technology and those who will never buy new technology. He fell in the first category and, to tell the truth, I had to admire him for it. He may have been mesmerized by those two magical words "New Technology," but hadn't that been the key to our own success and to our strengthening position in the market? But now, it seemed, the tables were turned.

As I flew back to Delanco, the magnitude of what I had just seen and heard became clearer to me. We were going to lose the Carondelet Foundry order and there was nothing I could do about it. Worse, I could foresee this pattern repeating itself in foundries everywhere around the country. It was terrifying to think that a customer would spurn the right technology for something else, just because it was new and different. Even more alarming, how could we compete for those jobs for which this new, mysterious technology might actually be well-suited, the still-bigger, low frequency furnaces?

We had no choice, though. Until we found out what the Multiductor was and how it worked, we could only sell what we had. But how could we sell against a new technology, when we had nothing to compete with it?

Unexpectedly, our competition with Ajax was about to take still another dramatic new turn--with the bigger, older, more established firm suddenly adopting a Kamikaze approach to doing business. We got our first hint of what was in store for us as the summer of 1958 approached. Our new pricing policy--reflecting Roy's proposed price increases--had been in effect for two months when we received an inquiry from Jelrus, an investment casting firm similar in size and process to Foley's Harcast. Jelrus was in the market for a 100lb. furnace system, a size that would have been much too small for Ajax's Multiductor. We submitted our bid, and a few days later, I received a strange phone call from Jelrus's president. "Hank, what's the lowest possible bid you can give us on your furnace?"

His question was oddly worded and seemed an exceptionally blatant approach to price negotiations. I wasn't really sure how to answer it.

"What do you mean by4owest possible' price?" I answered. "Do you mean a 'distress sale' price? A 'fire sale' price? A 'going out of business' price? The price we gave you is the fair price for the finest possible melting equipment you can buy."

"Yes, we know," said the CEO of Jelrus, "but we'd just like to know what your rock bottom price might be."

This sounded fishy. "Come on now, there's got to be some reason why all of a sudden you're asking me to tell you how low I might be willing to go."

He sounded sheepish. "We just have to know the lowest price, that's all."

"Why? What's the problem? Why would you call up and ask, especially when it sounds like you don't really intend to buy from us?" I pressed him.

He hemmed and hawed for a moment but finally revealed the reason for his call. "Hank, I'm not very proud to tell you this, but Ajax has assured us they'll sell us a comparable furnace for $1,000 lower than the lowest price we can get from you."

One thousand dollars? I was stunned; it didn't seem to make any sense. I was tempted to cut our price to the bone, just to force a huge loss on our competition, but I restrained myself. What if he took me up on such a bid? Then we would have been stuck with the loss. Instead, I thanked him for finally coming clean and rushed into Roy's office telling him of the call.

"What do you think Ajax is up to?" I asked, for Roy had an almost eerie talent for divining what people were thinking, given the merest clue.

"It's hard to tell," he began, "but one thing is clear--Ajax must be desperate to try something like this."

I had to agree; spreading the word that they'd undersell us, no matter what the cost, was a foolhardy strategy. But I was still trying to grasp the enormity of the pressures that had pushed them to this point.

Ajax had always dealt from a perceived position of strength. Now, the revelation that Ajax was resorting to cut-throat price cutting--and in a maneuver that bordered on anti-trust violation against their smaller competition-signaled a major shift in this equation.

But why, if Ajax now possessed the ultimate advantage--a product the competition cannot match, the Multiductor--why embark upon a course of attrition, a price war, in the arena of smaller, M-G powered investment casting furnaces? Or, could it be, they were having technical problems bringing this new product to the marketplace? We could hope, but wishful thinking is a sure path to failure.

Yet it was a fact that, no matter how much of an engineering breakthrough the mysterious "Multiductor" might be, the 180-cycle frequency at which it allegedly operated was simply not suitable to the smaller jobs. Steel melting furnaces of 50 to 300 lbs. capacity running between 50 and 100 kW called for 3,000-cycle power supplies, while those with capacities of 500 to 2,000 lbs. and a power range of 175 to 700 kW operated better at 1,000 cycles. Larger furnaces, meanwhile, could operate satisfactorily at 180 cycles.

But then the realization of what we were up against hit us right between the eyes. If the Multiductor really worked, the 180-cycle creation would give Ajax a decided edge on the bigger jobs. And if they could win the smaller jobs such as Jelrus on price, we'd have no place to turn. Ajax would have captured the whole range of our business. The thought was frightening,

To my dismay, Roy's attention-getting pricing strategy began to break down completely. We could be 10% high and sell on features, but the 20% to 30% price cuts were too great for even the most quality-conscious buyers to pass up. Anti-trust violation or no, we had no choice but to fight fire with fire. We would have to cut our prices, furnace for furnace, system for system. And pull in our belts for the long haul.

Yet, even as we braced ourselves for what was to come, my consternation gave way to bemusement. This whole situation resembled an optical illusion--one of those puzzles that seems to be both heading at you and moving away at the same time. Likewise, no matter how we looked at this new offensive Ajax had launched, it seemed ill-advised. Foolish, actually, and damaging to both companies, but bound to hurt Ajax more than it could harm us. We were a far leaner, more productive company, with a more efficient shop and a far more dedicated work force.

Ajax Electrothermic, on the other hand, possessed the advantage's of perception--it was more established, it was bigger, it possessed greater resources, and had a dominant presence in the market. But these advantages were the product of the prosperity and technological advantages of the past. With its greater overhead and corporate structure, it was ill-suited for austerity, or for a contest of wills.

The key, then, was to hold on--to make Ajax feel the pain of its own tactics. To do this, Inductotherm would take on every job we could, at any price, so that the bigger company couldn't make up with volume what it was losing in margin, if indeed there was still any margin left for it. We could still show a slight- margin on the jobs we took at the cut-rate prices we were compelled to offer, but just barely. It was going to be costly.

In the middle of this bloody battle, Jerry Wollaston returned to work. It was September of 1958, just about a year after his accident and it should have been the boost we all needed. We optimistically looked forward to the difference he would make, but it wasn't to be. It soon became clear that Jerry wasn't the same gregarious, energetic salesman be had been before the accident. He had fought his way back as well as any man could have, but he never really recovered from the crash and he remained physically and spiritually broken. Eventually, he began drinking to ease the still lingering pain and, inevitably, it too interfered with his work.

So the burden still fell on Jerry's friend and neighbor, Roy Ruble. Sometimes this meant covering for him at the office, other times looking after Jerry's commitments while still seeing to his own. Of course, I soon became aware of the additional burden Roy was carrying, but the stoic Annapolis grad never once complained--never once let on that he was doing much of his boss's job as well as his own.

It would be early in 1959 that Jerry would realize he could go on no longer and he retired on disability from the company he had served so well. He had been the right man at the right time, but he himself recognized that our company and the industry were changing fast. Few men would do as much to accelerate the pace of change and our ability to stay ahead of it as the man who would become Inductotherm's next sales manager, Roy Ruble.

For now, though, the pressure seemed to be taking its toll on Roy, who hardly ever seemed low. Missing was his usual optimism and encouragement that had kept me going so often in the face of seemingly overpowering odds. Now, even with the devastating price war on our hands and the extra burden of covering for Jerry, his mind never faltered, and it was obvious that he felt his responsibilities deeply and was searching for new ways out of the dilemma.

One night the two of us were sitting in a hotel room in Worcester, Massachusetts. I had just visited a nearby foundry and Roy had come from Boston, where he'd spent the day with Maurice D. Ayers of General Communications. Ayers's company had an age old problem: it wanted to buy a 30 kW induction system, but it didn't have the money to pay for one, even at the reduced prices flying around the industry.

As Roy was describing his prospect's situation, I'd just about written the company off when suddenly Roy became strangely silent. It was obvious he was on to something.

"That's it!" he exclaimed. "And, it will solve both problems. You know, Hank, I bet there are hundreds of companies like General Communications--companies that would love to be working with an induction furnace but can't afford to pay for it."

Idle philosophical rhetoric wasn't Roy's style, but I didn't know what he was driving at. "You're probably right, Roy. So what are we going to do about it?"

Much to my surprise, he had an answer: "instead of selling them a furnace, which they can't pay for anyway, why don't we just rent it to them?"

Rent an induction furnace? Like renting an apartment, or a car? I wasn't sure I liked the idea, but Roy kept talking. "Think about it, Hank. Inductotherm's devoted a lot of time and expertise to developing the best furnaces in the world. Now we can offer another new solution to our customers' problems--by making it easier for them to acquire an Inductotherm furnace."

"Okay," I told him, "I've never heard of anybody renting a furnace, but that doesn't mean we can't do it. Only, how do we rent a furnace?"

Roy reached for pencil and paper, and started writing down some numbers. "First, we'd need to recover our normal sales price in ten years, so we'll start with that ..."100%.

"Then we need interest on our money, say, 6% a year times 10 years . ..60%.

"We'll have to maintain the equipment with service calls, emergency calls, and parts. Maybe 10% a year will cover those costs. . . ."100%.

"If they are free to cancel the lease after, say, three years, they'll be much more inclined to go ahead, so let's add 15% for that risk ..."15%.

"Okay, that totals 275% in 10 years, or 120 months. So, 275% divided by 120 months is 2.3% a month."

I was getting more and more interested. "Let's talk in terms of real numbers. Where does this leave General Communications?" I asked.

"Well, let's look at that research furnace they're hankering to buy. It normally sells for $30,000, so it would rent for $690 a month. You know, I bet they'll be delighted to pay that much a month, rather than lay out $30,000 in cold, hard cash."

As Roy predicted, they were. And so were dozens of other customers, some of them brand new to the induction field, who either lacked the capital to invest in a new furnace or simply wanted to safeguard their cash flow.

Ajax tried to continue its price war, but the popularity of the rental program gave us more than our share of orders and generally better prices, too. Within the next twelve months we would lease out over $500,000 worth of equipment. As so often happened with Inductotherm, this latest success would lead to another crisis. Only this time, it wasn't one I had sought out. For the time being, however, it served us well.

The price cutting spree lasted only a few months before Ajax gave up and raised its prices to conventional levels. By that time it was evident that the larger company's machinations had failed.

Inductotherm had been hurt; at the end of fiscal year 1959, the record would show that sales had dipped $300,000, from $1.395 million to $1.093 million. Nevertheless, we would emerge with a profit of $85,000. And most important, we would survive.

For our bigger antagonist, however, it was too late. Ajax Electrothermic had already dealt itself a mortal blow; with every reduction in price, the company that was three times our size lost three times what we lost. The consequences of Ajax's actions were foreseeable, and it wasn't long before the inevitable took place.

In early 1959, in the face of still-spiraling losses, the once-proud world leader began looking for somebody to buy the company. It found its buyer in another upstart, Magnethermic, the company headed by John Logan, whom I'd come within a hair's breadth of joining back in 1952. In the fall of that year Logan and his partners acquired Ajax Electrothermic and its sister company, Ajax Engineering, and consolidated the Ohio and New Jersey companies under the new name, Ajax Magnethermic.

So there it was, the old dragon had been swallowed by a newer, more aggressive dragon. But the new one was still hungry and, as I was to find out, the next item on their menu was me. "Come join me in my den," came the invitation, in so many words.

It felt strange to hear from John Logan after seven years. "Hank, why don't we get together for dinner," said Magnethermic's CEO, over the phone. "I have a business proposition to talk over with you."

This was now a few months after Magnethermic had bought Ajax and Logan had apparently gotten over my having challenged his company's employee stock program when I visited there in 1952. I couldn't imagine what was on Logan's mind, but I'll admit, I was curious. The next evening, as we sat at dinner at the Stockton Inn on the banks of the Delaware River, I found out.

Logan sipped a glass of wine and we exchanged some small talk before he got to the point. "Now that we own Ajax, we're going to need a strong man to run the operation," he began. Then he said something that caused me almost to drop my glass. "We want you to be the president of the melting division in Trenton, Hank."

I sat there, absolutely stunned. Was he suggesting I just walk away from my own company? Or did he have big plans for Inductotherm, too?

"And what about Inductotherm?" I asked, as casually as I could manage.

"Oh, I think we can just let that go," said Logan, in an offhand manner.

Let it go? It was such an outrageous proposition, it was all I could do to keep from laughing. I should just go back to Delanco and tell Jess Cartlidge, Dick Walker, Tom Pippitt, Tom Kennedy, Roy Ruble, and the other members of our work force, that I was going to fold Inductotherm and take a job elsewhere?

Not only was it preposterous, but Logan's suggestion was something of a revelation to me. It was clear that Logan hadn't done his homework. Magnethermic, until the acquisition of Ajax Electrothermic, hadn't been a competitor of ours, as they specialized in aluminum billet heating for extrusion. Now, while Magnethermic may have bought out Ajax, its president obviously had no idea how fast Inductotherm was growing, nor of the stature we were gaining in the industry.

It was strange, too, that Logan would so badly misjudge me and his competition. He had been a highly successful entrepreneur; he'd built Magnethermic up from nothing. Of all people, he should have understood the challenge, the excitement, the sheer fun of running a company. But I didn't tell him that, either. Instead, as the waiter arrived with the check, I simply said, "Thanks for dinner, and for the offer, John. But I think I'll continue to struggle along with Inductotherm."

I left the restaurant that night wondering what Logan might have said if he'd realized the gaffe he'd just committed; it was like two generals dining on the eve of battle, and one revealing his ignorance of the other's troop size, weaponry, or even what they were fighting for. It had been tempting to brag a bit about our size and growth. But I kept my thoughts to myself. Why goad the competition? They might just try harder.

As I drove back home through the night, the way of the future seemed as clear as the road gleaming beneath my headlights. Yes, I concluded, in the fastest growing, most lucrative segments of our industry--the small furnace and vacuum melting field. We had a decided technical and commercial edge.

But I could see only so far. Just over the horizon there was something waiting for me. It was John Logan and his newly acquired Multiductor.

Chapter 15

New Talents

None of us expected Ajax Magnethermic--the company resulting from Magnethermic's buyout of Ajax Electrothermic--to be anything less than a tough competitor. It now possessed the advantages of size, money, and--more importantly--a new entrepreneurial outlook. And while my own company had survived the price-cutting war with the now-defunct Ajax Electrothermic, we knew it wouldn't be long before competition would be revitalized and bring new technologies to the marketplace.

If our competition had a blind spot, though, it was an apparent indifference to its personnel. It was an attitude I'd observed seven years earlier, on my first meeting with Logan, and again, in the callous treatment of one of the most brilliant men in the induction melting industry, an engineering genius named Ted Kennedy.

Ted was the man who'd been named chief engineer at Ajax Electrothermic ten years earlier, the same man for whom I'd once of dreamed of working as assistant chief engineer, and the uncle of Inductotherm's shop supervisor Tom Kennedy.

Immediately following the buyout, Logan had moved Ted to Ohio, where he was put to work as chief engineer for the parent company. Meanwhile, a man, would learn more of later, Sid Sedgeworth, had taken over the melting line in Trenton. Consequently, Ted had been isolated from this new technology. At the Ohio headquarters, however, he was a square peg in a round hole. Though he was gifted, his talents were ill-suited to the demands of line engineering in the larger company. Ted was a scientist, not a manager. He bore the brunt of his staff's every technical mistake, and ultimately, in November, 1959, John Logan fired him.

Humiliated and unemployed, Ted wrote to me asking for a job. I wasn't surprised to hear from him; I'd already gotten a phone call from John Logan, who'd anticipated this move, and he warned me not to hire him. "The man's a psychological wreck," said Logan. "I've had him undergoing psychiatric treatment."

Logan's advice was suspicious at best; he didn't want Ted working for him, but apparently he didn't want him working for me either. Still, I didn't hire him at first, but not for the reasons Logan gave. The fact was, I couldn't afford a man of his caliber. Nor could I afford financially to support the research I knew he wanted to pursue.

I advised Ted to contact the Westinghouse induction heating group in Sykesville, Maryland, to inquire about the chances of working there; I also called some friends there and recommended him highly, but he wasn't hired.

Three months later, the engineer still hadn't found work, and he contacted me again. But if Westinghouse couldn't find a place for him, how could a company the size of Inductotherm? "I've been out of work for three months now, Hank, and I want a job," he told me. "My kids are grown, so I don't need a lot of money. What's more, at this stage of my career, I don't have to prove anything. Corporate status isn't important to me, so I won't be competing with your own young engineers. All I want to do is make a contribution somewhere."

I was moved by his sincerity and his commitment to his profession. Here was a man whose skills could benefit any company in the country. How could I turn him down? This time, I didn't; instead, in March of 1960, I welcomed him to our team.

Ted Kennedy wasn't the only talented man to leave Ajax Magnethermic, voluntarily or otherwise. In almost any major corporate relocation, certain key personnel--usually, those with the greatest marketability-refuse to be uprooted. In the case of the Ajax move, two key managers who refused to go to Ohio were Jim Hoff and Al Coley.

Hoff had been chief engineer of Ajax Engineering, which was twice the size of its sister company, Ajax Electrothermic. Where "Electrothermic" made coreless induction melting furnaces, "Engineering" specialized in a different technology--channel melting, or "core-type" furnaces.

Unlike the coreless induction furnace, which heats metal to its melting point by means of a copper coil around a container of metal through which alternating current passes, channel furnaces employ a magnetic core with a multi-turn primary and a single loop of molten metal operating as a short-circuited secondary turn. Channel furnaces were generally five to ten times the size of coreless furnaces and were used to melt brass, bronze, and aluminum, and were just beginning to catch on for melting iron.

The sheer size of the furnaces made them a challenge in terms of construction as well as design; I hadn't met anyone who could build a channel furnace better than Jim Hoff, a man with 20 years of experience in creating the huge melt systems for Ajax Engineering in Trenton. His pal and co-worker Al Coley had been an Ajax field service engineer who'd worked on that company's biggest channel furnace installations. Both men were skilled, industrious, and devoted to the foundry industry; with their departure, Ajax Magnethermic lost a wealth of talent and expertise.

Hoff, a tall, slim man with a crew cut and a habit of wearing string ties, was like a lot of brilliant men with confidence in their own abilities--he was both independent and opinionated. He'd spurned the move to Ohio, in part, because he didn't like being dictated to. Finding himself out on his own, he wasn't inclined to come rushing to his former acquaintance Hank Rowan to plead for a job. Instead, the engineer spent several months working for his brother, a restaurateur in North Jersey, before relenting. In October 1959, he gave me a call. "Hank, I'm tired of washing dishes," he said over the phone. "Can I come see you?" I was eager to see both Hoff and Coley. We were still relatively small compared to Ajax Magnethermic, whose combined revenues now were about eight times our own, but I wanted to expand our horizons. How much faster could we grow, I wondered, given new avenues for growth?

I was getting impatient to find out. Thanks to our profitability, I had not only the interest, but also the means, to venture into new, related technologies. Channel melting was one of these. Later that week, Hoff and Coley arrived in Delanco, where they eagerly accepted my offer to finance them in a new company specializing in channel furnaces. Inductotherm would own 52%, and Hoff and Coley 48% of the new company. We decided to call it Inductotherm Linemelt Corporation, since channel furnaces melted using direct line power--in the United States, 60 cycles.

Hoff didn't take long to show what Linemelt would be capable of. A few months after setting up shop in a corner of our increasingly crowded plant, he and Coley began challenging the conventional wisdom surrounding channel furnaces. ASEA, a leading manufacturer of channel furnaces in Sweden, had published several technical articles purporting to define the limits of channel furnaces. So different were these limits from what Jim Hoff was working on that I needed reassuring. I rushed down to the other end of the plant where Hoff and Coley worked and showed them the magazine. They quickly scanned the article and broke out laughing. According to this supposedly authoritative article, what they were doing was impossible.

The magazine article, authored by a Swedish engineer, claimed it was impractical for channel furnaces to function effectively with over 225 kW of operating power in a channel. Yet right here in Delanco, Inductotherm was building channels to operate up to 600 kW, with plans to go as high as 1,000 kW and 2,000 kW. Now that Jim Hoff had read the article, I was confident that we would soon achieve that new power level. Hoff was the kind of man who was spurred on by people saying that what he planned to do was impossible.

Roy Ruble made sure that every Inductotherm salesman handed out copies of that article to our customers and sales prospects. It wouldn't hurt for the industry to know that our little company was already breaking new ground in yet another specialized field.

Roy's strength in his new role as the official sales manager was felt throughout the organization as he hired and trained new men in both sales and service. He was determined to make a difference and I had to admire the energy and effort he put into the job.

In the spring of 1960, it became evident that we were going to need every bit of our company's growing expertise. Though I'd hired Jim Hoff and Al Coley to position us in the channel melting field, I was about to call on Hoff to build an induction furnace like none we'd ever designed or built before.

Chapter 16

The Tri-Line

With the collapse and subsequent buy-out of Ajax Electrothermic, it had been months since we'd heard anything further on the "Multiductor," and we continued to sell our motor generator furnaces with nary a single customer asking for our own version of this "new technology. I Perhaps it had been one of those technological will-o'-the-wisps, which so often flash momentarily on the horizon and then disappear.

Then, just as abruptly as we'd first heard of it, the Multiductor was back. This time, it was Ajax Magnethermic that had it and brought it to the market in earnest.

The new Ajax was offering it on nearly every job of 1,500 pounds or more and sometimes on brass jobs requiring relatively small,500- or 600-pound furnaces.

In the next few months, my worst fears were born out. Inductotherm could talk about greater productivity, higher quality yields, lower utility costs, customer service, and reliability until we were blue in the face, but our once-persuasive sales arguments rang hollow--like so many sour grapes--in the ears of prospective customers who were impressed by one irrefutable fact. Ajax Magnethermic had something that Inductotherm didn't. And, with nothing comparable, we couldn't sell against it.

But by then, at least, we had found out what we were up against. A company called General Engineering of Canada, capitalizing on the ingenious work of Dr. Paul P.Biringer and his team of graduate students at the University of Toronto, had perfected a long neglected "frequency tripler" system that dated back to 1915, when it was patented by an Italian scientist named Spinelli. The technology accented the third harmonic generated in an "overexcited," or saturated, Wye/Delta-connected transformer bank.

The concept had lain dormant for 18 years until 1933, when an American researcher named Brailsford built a 550 kW frequency tripler following the principles of the Spinelli patent. For the next 20 years, however, Spinelli's system and Brailsford's findings remained little more than scientific curiosities until, in the early 1950's, General Engineering picked them up and tried to adapt them to induction heating applications. The company failed to make a commercial success of it, however, as the Canadian Company had no position in the market, no following, and, in the induction field, at least, lacked credibility.

Finally, General Engineering gave up trying to market the technology on its own and dispatched its Chief Engineer, Sid Sedgeworth, to the United States to approach Inductotherm and Ajax Electrothermic about a licensing agreement. As poor luck would have it, I had been away on the day he stopped by our office, so he continued on to Trenton, where he visited Ajax Electrothermic. Sedgeworth was impressed with the size and prestige of Ajax and he struck a deal with the company without bothering to call on our little company in Delanco again.

Though Ajax Electrothermic had failed to capitalize on the Multiductor's technological and marketing potential, it was now in the hands of John Logan, who knew a marketing edge when he saw one. The Multiductor was all Ajax Magnethermic's salesmen wanted to talk about. And soon, it was all our own salesmen were hearing about.

It was our Winter of Despair, and our mood wasn't warmed by the coming of spring. In desperation we'd stabbed in every conceivable direction, but Inductotherm still couldn't offer a product comparable to what Ajax had. All of our guys suffered, but I most of all. I felt the sum of their frustration, I heard the whispers on the production floor and around the offices, as production slowed.

"When's another big job going to come in?"

"How long can we keep going this way?"

"Can Inductotherm survive, just on the smaller furnaces?"

A massive research program offered the only solution, but the time we'd lose and the expense seemed insurmountable. General Engineering had begun its work in 1952 and now, in 1959, seven years later, it was just becoming a commercial success. We needed a quick solution, and I was always anxious to grasp at the flimsiest of straws, to pursue any solution, to keep my company going.

One was a phone call from a company called Induction Heating Corporation, in Brooklyn, New York. Induction Heating had produced its own version of the Multiductor, a 100 kW, 180-cycle unit for heating applications. Now, the president, a man named Goodrich, was eager to license his tripler. Would we be interested in talking to him? I told him I'd be standing by his door when he opened for business the next morning.

I didn't get more than l5 minutes of sleep that night; there were a lot of "if's" standing between Inductotherm and our first frequency tripler. If Goodrich's company had built a frequency tripler, if it worked, if I could acquire a license to it, then maybe we could compete with the Multiductor and Ajax without months, maybe years, of development.

My eyes were red and bleary from lack of sleep the next day, but I could barely contain my excitement as I walked into Goodrich's office to meet him and one of his sales engineers, Larry Hayes. Hayes previously had been employed by General Engineering of Canada, where, he said, he had helped design and build the 100 kW tripler unit. In fact, it was he who had provided Goodrich's company with the technology, which according to Goodrich worked just fine. Further, he would be willing to license it to Inductotherm. However, he wanted 10% of all Tripler sales for 17 years.

Ten percent? And for 17 years? I wanted that frequency tripler technology; I craved it, I needed it, more than anything in my career. But I hadn't worked so hard, so long, to build up my company, just to turn around and give away the store to an outsider. Goodrich wouldn't budge, though; 10% over 17 years was his demand, and I could take it or leave it.

Yet, how could I turn around and walk out, without getting what I had come for, now that it was within my grasp? How could I stand to lose another order to Ajax? Or face the men back at the shop?

"Seventeen years?" I asked him, again, and he nodded, a smile on his face. He had me over a barrel, and he knew it. What recourse did I have? I had to agree. But instead, I heard myself saying, "No, Mr. Goodrich, I'm sorry. I just can't do it." I walked out and drove back to Delanco, despondent and frustrated, not knowing why I hadn't signed the deal. Deep inside, I felt there had to be a better way out of my quandary.

We continued to gain a good share of business in sizes up to the 1,500-pound and 2,000-pound level, but in larger size furnaces where 180 cycles were appropriate, we could see our market share dwindling to near zero. Watching Ajax's resurgence, fueled by this new technology (which it could produce at a fraction of our costs for M-G-powered systems) continued to plague me. Then, out of the blue, came new hope and, just maybe, a solution to our problem. Larry Hayes had called; he'd been impressed by what I'd had to say about Inductotherm and he asked to join us. I would have been pleased to have him join us, with or without his tripler expertise. As a sales engineer, he appeared to be a real "live wire," and his experience with frequency tripler systems was the clincher. We had to have him and I hired him on the spot.

As we shook hands on the deal, I began to feel the pressure lifting. At least now we had a tripler expert on board, or so I thought. I was elated and anxious to get started on the R&D to put us in a position to compete. If we got started right away, we might catch up by the end of the year.

My frustration returned after an April 16, 1960, sales call on a new company called Seaway Nickel, in Jersey City. Seaway Nickel was a joint venture between a man named Ivan Kurzner and Seaway Steel; it was founded to produce nickel anodes for the plating industry in a new plant to be located in Buffalo, New York. Kurzner had been recommended to us by Ernie Sheie of International Nickel Research Laboratories, for whom we'd built several small furnaces. "International Nickel told me I shouldn't even talk to anybody but you," said Kurzner, before outlining the scope of the job. Seaway Nickel intended to produce 5,000 pounds of nickel every two hours, indicating a 500 kW power supply linked to a 5,000-pound furnace. It would mean an $80,000 order using MG sets, and we needed the business desperately So far as the technology involved was concerned, either the 180-cycle or 1,000cycle unit would do the job well. Kurzner had nothing against using motor-generators to power the furnace; he was a businessman, and all that mattered to him was melting nickel as efficiently and profitably as possible. And he needed to be in operation in six weeks.

Six weeks? That was a problem. Inductotherm produced the 500 kW by using two 250 kW M-G sets in parallel, and delivery from Westinghouse was about three months.

"Well, do you need to use motor-generators? Why can't you use one of those new frequency triplers Ajax is offering?" asked Kurzner.

We couldn't, I explained, my voice almost choking. We didn't have the technology to produce a tripler, particularly in six weeks.

"That's too bad," Kurzner said, with obvious disappointment. "I really wanted to buy from Inductotherm Sorry it won't work out this time." He seemed genuinely sorry.

I left Kurzner's office and drove back to Delanco, a two-hour drive. Maybe if the trip had been shorter things would have turned out differently, but two hours is a long time for a mind to dwell on failures. Especially a man who's had to do what I had just done--tell a customer that Inductotherm could not do what the competition could do.

I replayed that conversation with Kurzner over and over in my mind. Here was a man who sought us out, who wanted to do business with us, and we couldn't produce what he wanted. It was bad enough to lose an $80,000 order; it was worse, once again, to have to defer to Ajax and its Multiductor. Should I have taken Goodrich up on his licensing offer after all? Again, I was going back to my office to tell the guys, "Sorry, we lost another job because we don't have a tripler." Why didn't I offer Kurzner a tripler? So what if we'd never built one; we had Larry Hayes now, and he, at least, had an extensive background in the technology. Maybe we could do the job? Everyone has his own tolerance limit, and I had reached mine. By the time I got back to Delanco, I'd decided what I was going to do.

I went rushing into Roy's office, looking for moral support for what I knew was a foolhardy response to the months of pressure. "We've been clobbered long enough by Ajax and its Multiductor," I stated. "If Inductotherm is going to survive at all, we have to get into this business. Here's a customer, Ivan Kurzner, who wants us to build him a melting system, and I had to tell him we can't. Well, I've said "we can't do it" for the last time, Roy. We have to build a 500 kW frequency tripler and in six weeks. I don't know how, but we have no choice."

I'd been hoping Roy would vindicate my decision, tell me I was right, and let's go get 'em. But Roy hadn't been sitting in a car, stewing, for the past two hours, and he was skeptical.

"I don't know, Hank," he continued, "You'd have to be out of your mind. A new power supply with new technology, and a furnace Larger than any we've built before--all in six weeks! Remember, Ajax Electrothermic acquired the technology from a company that had spent six years perfecting the tripler--and it was still a year and a half bringing it to market."

I couldn't argue with his logic. "Roy, you're right on every point. But that doesn't matter. I've had it, and here is a unique opportunity. We're going to build a tripler."

At that, he smiled, as if feeling his own combative instincts stirring, and said, "All right, Hank, if you're determined to do it, then where do we start?"

We would start with a phone call to Kurzner. "Ivan, I've changed my mind". I told him excitedly. Inductotherm will be delighted to build your new furnace. And your new tripler. I'll be back in two hours, if you wait for me." With that, I got back into my car and drove another two hours back to Jersey City.

It was 5:30 p.m. when I arrived, but Kurzner had indeed waited and seemed pleased to see me again, if a little wary. "Now you want to build me a system that doesn't require motor generators?"

"That's right," I answered.

"But remember, we absolutely have to have it in six weeks. We have to be melting nickel June 6th."

"That's fine," I told him. "We'll get it to you by then."

"But what if you don't?" he persisted. "And what if you get it here in that time, and it doesn't work? You've just told me you've never built one of these before."

He had me there, but I was desperate, and, as I'd let happen so often before, I let desperation prevail over good sense; I wasn't going to lose this order to Ajax.

"Well, Ivan, let's look at the worst that can happen. Suppose we're late on delivery. Or suppose it doesn't work when it gets here. How much would it cost you to maintain the plant if you're unable to melt nickel?"

Ivan thought this over, and answered that it would cost about $1,000 a day.

"Okay, I'll tell you what we'll do. For $65,000,Inductotherm will build you a 500 kW tripler with a 5,000-pound steel shell furnace for melting nickel. Today is April 16th and June 6th is just over six weeks away. On that day, we guarantee to have delivered the equipment and installed it in your plant and have it melting nickel. If we don't, we'll pay a penalty of $1,000 a day."

As my words came tumbling out, I reflected on what this might mean to our little company. If we didn't come through, he'd own us in a few months. It was a gamble, but I couldn't stop myself.

That sounded reasonable to Kurzner. "You've got a deal," he said, and, for the second time that day, we shook hands goodbye. I returned to Delanco, all the while wondering why Kurzner had gone along with me. Why was he willing to gamble his own company on the chance that we could build something we'd never built before? And in six weeks? It was hard to say. Maybe he actually thought we could do it. Maybe he saw himself as a pioneer, sharing this adventure. Maybe he just plain liked us. I never found out why. All I knew was that, given my state of mind, I never even considered the possibility of failure; deep down, I was convinced that somehow we'd design our own tripler system, and that, somehow, we'd melt nickel on June 6th. Just how we would do it I didn't know yet, but we'd do it.

I wasn't sure what magnetic values were required to develop the degree of 180-cycle harmonics needed, but Spinelli's patent on the technology had elapsed long ago and, with this as a guide, I was convinced we'd find the answers. Anyway, now I had an ace in the hole--Larry Hayes. It looked like he was going to be our salvation. I still wonder from time to time if I'd have stuck my neck out so far if he hadn't been on board.

The next morning I called the entire Inductotherm team together, to tell them about the venture we were about to begin. I turned to Larry, who was standing with the rest of the men. "Larry, here's your opportunity to demonstrate your tripler expertise," I said. "We're going to need a new 500 kW system."

"Five hundred kW" he gulped. "I don't know anything about 500 kW systems." "What do you mean, you don't know anything about 500 kW systems"

I asked. "You told me you'd had plenty of tripler experience. We're counting on you."

He didn't answer at first, but walked over to his desk and pulled out blueprints for a 100 kW and a 200 kW design. "This is all I have," he stammered. Both blueprints bore the Canadian firm's name in the title block.

"Where did you get these plans?" I asked, astonished. I felt a twinge of suspicion, which turned into panic as Hayes just stood there, a sheepish look on his face. Suddenly, it all became clear to me. Induction Heating had built its 100 kW tripler with stolen plans. For a moment my legs nearly buckled, as the full dimensions of our predicament began to dawn on me. I had just wagered my company, counting on something that did not exist. I could just as soon expect to wring orange juice from a rock as to get the prerequisite engineering support from Hayes. I told Hayes we wouldn't need him any more, that we'd proceed without him, and he skulked off.

The rest of the group cleared their throats and just looked at the floor; right now, it seemed we were all thinking the same thing. It wasn't just my company I had risked, it was their jobs, their families' security, that I'd put on the line.

I tried to look confident, but it was becoming more and more difficult. We had six weeks to design, build, and deliver a 500 kW melting system, using a technology that was totally foreign to us. We were now twelve hours into this project, and we were further behind now than we were when I took the order the evening before.

I could hear the clock ticking.

But there was still hope. Even though we didn't possess this specific technology, we did have Ted Kennedy, who'd just joined us the previous month. If I'd ever suspected I'd need the kind of engineering brilliance I needed from Ted now, I never would have sent him to Westinghouse. What we now confronted was unknown territory, and I would need Ted's help to find the way. Or maybe I'd help him.

"What do you know about triplers, Ted?" I asked him. I felt like a drowning man asking a friend what he knew about lifeboats.

"Triplers? Nothing, Hank," he answered. "Ajax's early triplers were built in Canada by General Engineering; I moved to Magnethermic in Youngstown before we got into design. But it's all science, isn't it? We'll find the answers somewhere in the books."

We began at the very beginning, researching the technical principles that governed harmonics and magnetics. For a week the two of us worked around the clock, Ted poring over magnetic flux densities while I dug out my old textbooks from MIT and relearned everything I had ever known about the harmonics of saturated cores.

If we were to deliver this job on time, it meant the rest of the crew had to proceed as if we already had the solution. Even if we were using familiar technology, the idea of bringing out an entire new furnace line in six weeks was a logistical nightmare.

There were other engineering challenges to be overcome besides the frequency multiplication. Assuming that Ted and I could devise a tripler, it was going to power a 5,000-pound furnace, too big to be built as a conventional "box furnace." Instead, it would have to be fabricated as a steel shell furnace with shunts to keep the flux from heating the shell.

We had never built a steel shell furnace before, either, which added to our hurdles. Tom Pippitt got in touch with our top steel fabricator who was eager to supply the new furnace shell that we described. We could expect it, the supplier told us, in about three months.

Tom Pippitt was tuned in by now. "How about three weeks?" he countered. "We'll have the design drawings to you in a week." Even though we'd never designed such a furnace, we did have Jim Hoff, who was struggling with his channel furnace engineering. We had no recourse, and Jim rose to the challenge.

For the extra-large cabinets, we turned to Sam Michael, our most reliable supplier, and impressed on him once again the need for quick delivery. Still, it would be a week before the capacitors and electrical components could be specified and the size of the cabinets determined.

The pace in the office was hectic as we chose the components that we felt we needed to make this system work. Tom busied himself lining up vendors for components just as soon as they could be designed into the system, vendors that could or would accommodate our frantic challenge.

For Dick Walker and his shop crew it was especially frustrating. He knew the workload was going to fall on them like an avalanche, but until designs were completed and parts received, there was absolutely nothing he could work on.

Then, after a week of the most intensive research I had ever done, Ted and I conceived a design that should, if our solution was right, produce at least 500 kW of 180-cycle power.

And if it wasn't? The question was moot; we couldn't wait another day to start production if we were to meet our deadline. We had to proceed with what we had. We passed our specs on to Bud Brock at Hunterdon Transformer who was charged with building the mysterious new tripler. It comprised a hank of three single-phase transformers configured to saturate the iron with the magnetic flux, thereby producing a high level of third-harmonic magnetic current. When this magnetic current is reflected into the open delta-connected secondary windings of the transformers, the third harmonic becomes available to power a furnace properly tuned to the 180-cycle frequency. The chokes would be connected in series with the primary windings to limit the current as the iron saturated.

Gradually, it all began to take shape. As the transformers and cabinets arrived, the capacitor racks were installed with their switching contactors, the instruments were hooked up and the controls wired. The guys in the shop were intrigued by what they were building and relieved by the thought that we were working our way out from under the terrifying advantage that Ajax had held. "So that's what a tripler looks like," they murmured, admiring their company's newest product.

I could feel the mood in the shop pick up, as the June 6th deadline approached. "We might make it, we just might make it," our guys were telling themselves, to keep from slumping over in exhaustion. They'd been running on adrenaline for almost four weeks now.

Then, with a week to go, the system was almost complete. There was just one thing missing, the line contactor. It was a necessary item, but a conventional one, and one of the few aspects of this job that hadn't represented a major headache. Only ...

"We're in trouble on the contactor, Hank; it's going to be late." It was Tom Pippitt. I spun on my heels to ask what he was talking about. "How is that possible? When we ordered it, Allen-Bradley promised they'd get it to us by today. The contactor has to be here today; we can't run the furnace without it." "I know. But I just called Allen-Bradley, and they haven't even started on it yet," said Tom.

"They haven't started it?" I erupted.

Of all the stupid, infuriating, unconscionable things to happen. For five weeks, every man in the company had been working around the clock. Hunterdon produced the three transformers and chokes to our specs, Sam Michael came through with the cabinet Jim Hoff had designed and, with the help of the vendor and the men in the plant, built the unique steel shell furnace and its coil. The electrical gang had done their part, too, and had almost completed all the circuitry and connected the controls and switches.

Allen-Bradley had a problem, they'd promised a four-week delivery on the unit, and I made an urgent call to the electrical manufacturer, to expedite the missing component. On the other end of the line I heard somebody say, matter-of-factly, "Oh yes. Come to think of it, we've rescheduled that piece to be produced the last week of June."

The last week of June? If we waited until then, we would already owe Seaway Nickel $20,000, thanks to Allen-Bradley and its missing contactor. I suggested, as patiently and calmly as I could that under the circumstances, they had no option but to get going that day, and keep their commitment.

If Allen-Bradley hadn't realized how serious Inductotherm was about getting our parts when they were due, they were about to learn. Tom booked a flight to Milwaukee, where Allen-Bradley was headquartered. He arrived there the next day, and stationed himself in the Allen-Bradley plant, to look on and make sure that one contactor was built and shipped to Buffalo by air. It would be a monstrous assembly in a steel cabinet 3 ft. x 5 ft. x 6 ft. high.

On June 2, it appeared we had done the impossible again. Only this time, we hadn't just built a new melt system; we'd devised a new technology, linked it to a radically different concept in furnaces, and built it. All within six weeks. There was just one final question to be answered: Would it work?

There was no way of finding out in Delanco; the new system required a 4,160 volt, 700 kVA power system, and we had only a tiny 460-volt supply in the plant. "Well, men, I guess we'll see how it works three days from now," I told everybody, as the system--complete except for the contactor--was loaded onto the truck to begin the 15-hour drive to Buffalo, where, with the contactor being flown in from Milwaukee, it would be assembled. I tried to look confident.

It was impossible to sleep that night; there were a thousand questions to be answered. Had we divined the secret behind harmonic multiplication? Would the new transformers, particularly the chokes, stand up to the rigors of vibration? Would the huge new furnace work? Was Inductotherm going to survive? We'd find out the next morning.

On June 6, 1960, Ted and I flew to Buffalo in our newly acquired twin-engine Piper Apache. Aviation had continued to play a vital role in our progress, and hundreds of flying hours per year with lots of night flying and the need for instruments had rendered the single-engine Bellanca that had served me so well at least obsolete, if not dangerous. So, in February of 1960, I'd traded it in on the Apache and qualified for my multi-engine instrument rating. Our aviation was becoming more sophisticated and even more important.

At Seaway Nickel we found Ivan Kurzner in the melting room pondering the new system which had been installed. "So, this is our new Multiductor?" he asked, as he looked it over.

"Don't call it a Multiductor, Ivan," I answered, indignantly. "This is an Inductotherm tripler. We call it the TRI-LINE. The Multiductor is already out of date," I said, full of bravado, but I was thinking, "As long as our tripler works."

"Now, let's watch it melt nickel," I suggested.

But, much to my disappointment and Kurzner's chagrin, there would be no nickel melted that day. Seaway's CEO looked just a little bit sheepish, perhaps recalling the $1,000 he claimed he'd lose each day, if he didn't have his new furnace running by June 6. "Uh, I'm afraid the nickel we'd planned to melt hasn't arrived yet," he apologized.

I was secretly relieved. It gave us a day's reprieve; we'd have time to test the new TRI-LINE "no load" into the empty furnace and correct any minor bugs that developed. Kurzner and his melt crew gathered excitedly around their new furnace. They had almost as much at stake as I did. Kurzner stood to make far more, if the furnace worked, than the $1,000-a-day penalty I would owe him if it didn't. As for his men, if the new furnace didn't work, neither did they.

My finger hovered over the button that would close the 4,160 volt line contactor and send current into Inductotherm's tripler. If we were right, power at 60 cycles per second would flow into the primary and be multiplied to 180 cycles per second.

And if we were wrong? Either way, whether we succeeded or failed, things would never be the same for Inductotherm again.

I pressed the button and held my breath. There wasn't the familiar sound of rotors turning faster and faster: this time, there was a roar--the roar of a new age. I watched the controls as the needle moved, jumping almost immediately to 300 volts output. Slowly, I turned the control knob which added capacitors and raised the voltage. The voltmeter climbed to 800 volts, and the coil began to hum; it was a low, musical note, not unlike the sustained chord heard in a movie sound track, to connote suspense. Here, though, the drama was real.

But would it melt nickel? The next morning, Ted and I returned to Seaway, where Ivan greeted us eagerly. "Well, we've got the nickel scrap today, Hank. Let's see what my new tripler will do with it."

I was desperate to find out, but of course, I couldn't tell him that. We stood by, as the melt crew charged the big furnace with the first 1,000 pounds of nickel scrap. Once again, there was the roar of transformers, the singing of the coils as the power rose effortlessly to the 500 kW level. Ivan stood by, his hands clenched tightly into fists as he watched with his men. In a way, he had been as responsible for this new engineering creation as I had. He could have played it safe and he'd be standing here now with an Ajax Multiductor. Nobody could have second-guessed his decision. What makes men take risks like this? I wondered. I wondered, too, what had made me take this risk.

Common sense said, don't take the job. Don't gamble years of work ...thousands and thousands and thousands of dollars ...my entire company on the chance of perfecting, within six weeks, a technology that had eluded the industry for decades. But I had, and by the end of the day, Kurzner and I would both know whether his new tripler was a technological breakthrough--or a bust. Three hours later, Inductotherm's first tripler-powered furnace tilted around its trunnion, and 5,000 pounds of molten nickel came pouring out. But his new furnace had done more than make nickel--it was making history.

In the years ahead, the TRI-LINE's phenomenal success made possible a long succession of milestone jobs, including Allvac's huge 10,000-pound vacuum furnace, and it spawned a new generation of furnaces, accounting for over $100 million in sales.

And we had done it all ourselves, without Larry Hayes's stolen plans, without giving in to Goodrich and Induction Heating, whose license would have made them $10 million, more than their company's total value, over the life of the TRI-LINE.

Chapter 17


The single-engine Cessna circled low over the farmland that lay by the side of the Mount Holly-Rancocas Road. "There it is, Hank," said the man at the controls, a real estate agent and flying acquaintance from the Burlington County Airport named Bill Cameron, as he pointed earthward "Ninety acres of prime real estate zoned industrial. They're asking $900 per acre, but my guess is that they'd take $700.What do you think?"

"It looks pretty good to me," I answered. "The price is right, and it looks like there's room for an airstrip." Those were the two criteria that seemed most important at the time. "It looks as if Inductotherm has found its new home.

If we could afford it. I sure hoped we could, because we had long since outgrown the plant in Delanco. For some time now, Inductotherm had been confronting the same dilemma we had six years earlier, when we occupied a corner of Paul Foley's plant in Glenolden. Only now, the stakes, if not the headaches, were magnified a thousandfold.

We had rebounded from the 1958: price war with Ajax Electrothermic that had so depressed our fiscal 1959 earnings to close fiscal year 1960 with sales of $1.617 million. The shop's annual production was running close to 100 jobs of varying sizes and types: there were 46 employees on the payroll--ten times the number who had initially moved into the Delanco plant in 1955.

To accommodate the expansion in production and personnel over the past five years, we had expanded the Delanco plant from its original 5,500 square feet to 16,000 square feet, only to find ourselves again crowded to the gunnels. In the front office, as our personnel increased, the crude glass-topped partitions we utilized to define private offices kept moving closer and closer to the men inside, like the walls in the Edgar Allen Poe novel. In the shop in back, the coil copper, instruments, spare panels, and capacitors filled the warehouse area to handle our growing backlog. We were past the point of knocking down more walls or putting in additions to gain floor space; we had grown as far as our acreage would permit.

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.

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."

Besides, I now had another crisis on my mind, things far more important than retribution against a petty banker. According to Ajax Magnethermic, they had just received a patent on the use of a device critical to the efficient operation of the tripler--a device that we'd incorporated in the triplers we'd built up to this time. If this were true, and if we remained dependent on existing technology, and if a court awarded them the damages they were seeking...

Then I might as well have been working for Ajax all along.

It was while we were still struggling to extricate ourselves from the exasperating and time-consuming entanglements with the bank that I received the devastating phone call from John Logan of Ajax Magnethermic. "Hank, you're familiar with our Multiductor, I believe," He sounded overly affable, and I could tell he was leading up to something.

"Why, sure, John," I said, no less cordially. "I hope you're not going to try to sell me one."

He ignored my subtle barb. Since introducing the tripler at Seaway Nickel, we'd built a number of triplers--for Beryllium Corp., the U. S. Navy, the 1,000 kW Allvac vacuum unit, six in all. "Well, it seems we have a problem," he continued. "You're familiar with the chokes and our filter system on the Multiductor?"

"Uh-huh," I said, still listening, still wondering where he was going.

"You know, we hold the patent on the use of chokes," he said, abruptly.

A patent? I felt a cold sweat break out on my forehead. As Logan was obviously aware--or he wouldn't have bothered making this phone call---we were using much the same "choke" concept on our TRI-LINES. For a moment, my mouth went dry; when I didn't say anything, he went on.

"Maybe we should get together and talk about some sort of license arrangement for the units you built. I'm sure you wouldn't want to infringe on our patent, without compensating us for our work."

I heard myself stammering. "A licensing agreement? What are you talking about, John? There's no patent on chokes, not for the Multiductor or the TRI-LINE."

"Oh, maybe there wasn't when you built them, but there is now," Logan told me. Ah, he was relishing this moment. "The patent office awarded it to us just last week, on June 19, 1962. You'll find it all outlined in a 'cease and desist' letter from our attorneys. Give me a call when you've decided what kind of royalty you feel is appropriate for the ones in operation, and take some friendly advice. Don't build any more."

By the time I hung up, I felt as if I'd just run into a tree and had the wind knocked out of me. Obviously, Logan had decided that, if his company couldn't beat us with their engineers, maybe they could with lawyers. And now, if indeed Ajax had obtained a patent on the use of a filter circuit in conjunction with a tripler, maybe he could.

To say the least, the modern tripler's performance was contingent on a filter system of chokes and capacitors. Our new melting system had been a huge success ever since we'd introduced it two years earlier, but this was not to say that it performed flawlessly right out of the box. Over the summer of 1960 Inductotherm had upgraded Seaway Nickel's entire system; much of the time, we were grappling with a problem peculiar to the "stacked cores" employed in harmonics multiplication. Our problem lay in maintaining stability as the flux induced in an iron core approaches saturation, the impedance of the coil drops exponentially. The surge of current drives the core into further saturation, lowering the impedance still further and the entire circuit becomes unstable. To suppress the flow of current through the windings on the core, we had employed a set of three "chokes," which, like the choke in a carburetor, limited the flow of current through the core as it became saturated.

Now the threatened letter from Ajax's lawyers explained, we were being asked to "cease and desist" production of furnaces incorporating the chokes and negotiate a "use" license for the units built previously. Either that, or they would sue Inductotherm and our customers on grounds of patent infringement.

I spent hours--no, days--pouring over the Biringer patent that had been assigned to Ajax. What was new? How did it differ from Spinelli's work 43 years ago or Brailsford's teachings of 1933? Was it valid? Were we infringing? Only a court could decide.

When Spinelli and Brailsford were pursuing their tripler, electrical filters were rare, and capacitors were expensive and unreliable, so they left filters out, ran at a lower level of saturation, and accepted the poor power factor and harmonic currents in the primary. It seemed to us that Biringer had only applied present-day state-of-the-art filtering to their modern triplers. We had done the same, but they had the patent.

If the Ajax patent was valid, we were in deep trouble. After risking everything on Seaway, we could be right back where we started--out of the tripler business after only six units.

I wanted to get into court right away, to settle this exasperating dispute quickly, but unfortunately that wasn't the way things were done in the realm of patent law. "The patent courts are jammed," said Arthur Seidel, the patent attorney we had turned to. "It could be several years before the case comes to court."

Several years? What were we supposed to do, stop selling the product we had worked so hard to conceive? "Either that, or give up using the chokes," said our lawyer.

But without chokes, the modern high-power, high-efficiency tripler was unstable. And we couldn't build a lesser product or go back to using the more expensive motor-generator sets. What's more, as induction melting furnaces were growing larger, the demand for harmonics multiplication was bound to increase.

It soon became apparent that our lawyer was right; it could be a long time before this issue was settled in court. And even if we were right, it didn't mean we were assured of winning; "Anything can happen in court," Seidel kept reminding us. "If the patent is upheld, you might have to pay an operating royalty on behalf of your customers for every tripler sold so far that uses the chokes. And you couldn't build any more unless Ajax gave you a license." That of course was unlikely.

Waiting then was not an option. Rather than beat Ajax Magnethermic in court, we had no choice but to beat them in the research lab and the marketplace, to out-design them. We needed something better, something distinctly different, so that the patent conflict would be made to go away.

As fortune would have it, we were already working on alternative solutions. Not long after introducing our first stacked core-tripler, we went to work researching the possibilities of toroidal cores; if successful, they would represent the next generation in triplers. The advantage of toroidal cores lay in their inherently greater energy efficiencies--up to 95%, as compared to 80%-to-85% efficiencies achieved in stacked cores.

Their geometry eliminated the tiny "air gaps" and the cross-grain flux at the corners of a stacked core and thus took full advantage of the newer grain-oriented, low-loss, high-permeability iron. However, this advantage led to even greater instability as the cores approach the magnetic saturation condition that produced the triple-frequency third harmonic.

We had some success. We had built a couple of triplers with toroidal cores, but we had solved the problem of greater instability with even larger chokes, thus this technology, too, was covered by the patent. The challenge was to find a way of stabilizing the cores without chokes; the research into the toroidal technology intensified. The notion of John Logan and Ajax lining their pockets with royalties, or worse blocking our participation in this market, accelerated our efforts.

Who would buy from us with Ajax owning a patent so critical to the tripler operation? For that matter, the lawsuit itself was already discouraging customers. No customer wants to get in the middle of a patent suit, and no one will wait years before learning whether the furnace he has purchased is subject to court-ordered user penalties.

What an irony. First, we'd been at risk because we couldn't produce a tripler. Now we had one, and we were vulnerable because of it.

In our desperate search for a solution, we hit upon the use of a two-part core of dissimilar materials. The main body of the core was the high-permeability grain-oriented iron, coupled with a section of powered iron of low permeability, which became part of the magnetic circuit as the grain-oriented material approached saturation. But would it work? With time running out, we frantically built cores with the various powdered-iron compositions and wound them with the turns to complete the tripler. But even with this construction, we still had some current surges causing tripping. Maybe, just maybe, if we put the power factor capacitors on a separate winding and partially isolated them from the other windings with still additional magnetic material, these surges could be controlled.

So back to the drawing board and to the R&D lab. With this complex system completed and ready for test, we all held our breath as power was applied. When the switch was thrown, a cheer went up. The new tripler purred like a kitten, and we knew the patent problem was behind us. Encapsulated in shiny new, blue epoxy, the triplers looked like something out of the next century. The sales team pursued the market with new vigor and pride. No longer able to stop us, Ajax settled the lawsuit without our having to pay a penny in damages or royalties. Rather than continue the heavy expenses of the lawsuit with little left to gain, Logan reluctantly granted royalty-free licenses to our six customers and acknowledged that our new design did not infringe. If Inductotherm owed anything to Ajax Magnethermic, it was for forcing us to build the better mousetrap. We kept one of their 500 kW Multiductors (we'd accepted it as a trade-in) on display in the plant, to demonstrate the differences between Ajax engineering and ours. Whenever a customer bent on haggling suggested that Ajax made a unit as good as our tripler, we could say, "Oh, really? Well, it so happens we have one here. We'll sell it to you, at a bargain price."

When they saw it, most prospects simply changed the subject. We enjoyed 90% of the tripler sales, and the TRI-LINE became the mainstay of our business in the decade of the 60s. Over 800 furnace installations were sold using the TRI-LINE as the power supply with a total value of over $100 million.

So active were our sales, and so profitable was this line of equipment, that I often reflected on the financial challenges we would face without the TRI-LINE equipment. It seemed that if it did ever come to an end, so might our growth. Never did I think that, by the end of the decade, the entire TRI-LINE concept would be obsolete. And that the new technology would bring with it a new competitor. But more about that, later.

My relief at the outcome of the "choke war" was two-fold. First, I was gratified that our technology had won the day without the risk and expense of having to test the Ajax patent in court. Second, the harder the fight, the sweeter the victory. Our whole team took great satisfaction in having beaten Ajax once again. We settled down to the fun and excitement of running a business without the constant trauma.

But just when it seemed things were running smoothly, I went into business with J Wooding.

On the facing page is a photo of a TRILINE

The Toroidal TRI-LINE Became the Backbone of Our Business From 1962-1968

Chapter 18

All That Glitters

It was a voyage through the looking glass, a surrealistic series of highs and lows that sometimes had me doubting my own Senses. Had I heard what I thought I heard? Was this really happening?

It began unremarkably enough. In the fall of 1961 I took of from the runway behind our plant in our Piper Apache and headed north, to Albany, New York, home of Magnus Metals. I was looking forward to this trip, as Earl Blasch at Magnus required a highly specialized furnace for especially demanding application Their business consisted primarily of melting depleted uranium-high density, non-radioactive U238, an element whose density made it ideal for a number of diverse uses. Aircraft manufacturers formed counterweights for the control surfaces of aircraft Armaments manufacturers formed the metal, almost two and one-half times the specific gravity of steel, into anti-tank projectiles capable of piercing 5-inches of armor and incinerating everything inside

Since molten uranium oxidizes fast--so fast, in fact, that it could ignite spontaneously--Magnus's needs called for a vacuum furnace pouring from the bottom into a graphite crucible, sized to handle 4,OOO pounds. After a tour of the plant and enough discussion to enable us to quote, a couple of the company's executives invited me to lunch. Midway through the meal one of my hosts called my attention to another man in the restaurant, saying, "Hank, here's somebody you should meet."

I looked up from my companions and found myself facing a dapper gent standing by our table. "How do you do. My name is J Wooding, that's the letter J and not J-a-y," he said, in a cultured British accent. I noticed he was wearing a cape.

Thus began one of the most curious and exasperating chapters in our company's history. The Englishman was of medium height, impeccably tailored, with sandy hair and a charming manner. His wardrobe was of less interest to me than the fact that he was a prospective customer. Wooding was then employed as chief engineer at a company called Electromelt, a subsidiary of Allegheny Ludlum. After introductions were made, Wooding and I had a brief discussion of furnace leads, which his company later ordered from us, but I hadn't given the encounter much thought until several months later when, in the spring of 1962, I received a letter from Wooding.

It was an unusual letter. The engineer had been fired, he explained, after a confrontation with the board of directors of his employer's parent company.

My first reaction was, "How strange." Wooding had struck me as knowledgeable, progressive, well-schooled, and articulate. Why would any company want to fire a man like that? Maybe I should have been asking what kind of man takes it upon himself to tell off the board of Allegheny Ludlum, but I read on.

Allegheny Ludlum had been too conservative, too slow to move, too reluctant to seize opportunities, Wooding wrote, and, with me, his words struck a respondent chord. I'd been there myself 10 years earlier. How often had I complained about the reluctance of industry to adapt, to move ahead? I could envision the idealistic young engineer, eager to innovate, frustrated by a complacent management.

But Wooding hadn't written to me looking for sympathy; he was looking for a job. More specifically, my own job as Chief Engineer. It was an intriguing letter, but not for the reasons he'd outlined. I was handling the responsibilities of the Chief Engineer position adequately. Though I felt he might be superb in that capacity, I was much more interested in exploring the growth opportunities in another field, one in which Wooding possessed considerable experience and expertise--vacuum arc melting.

Vacuum arc melting was a technology critical to the burgeoning aerospace industry, and the demand was soaring, as the high strength-to-weight alloys and high-temperature alloys required for the most sophisticated landing gear and jet turbine blades could only be produced in vacuum arc furnaces. The so-called "superalloys" were expensive, up to $10 per pound, and many times that in fabricated form.

By this time Inductotherm had established a prominent position in vacuum induction melting, but the molten alloys still had to be poured into an ingot, and were thus subject to "ingotism." This takes place because as the metal cools, it shrinks away from the still molten center, resulting in "piping" or holes that rendered the metal mechanically inappropriate for the most demanding aircraft and aerospace applications.

Vacuum arc melting overcomes the problem of "ingotism" by providing the second step of the double-vacuum melting process, now being specified for all the aircraft alloys. The first step in this process employed an initial melt in an induction vacuum-melting furnace, such as the 3,000 pounder we'd built for Crucible Steel, the 5,OOO pounder for Special Metals, and the 10,000 pounder for Allvac--each, in its turn, the world's biggest. This initial step would drive out gases, avoid oxidation, and produce the high-grade nickel or cobalt-tungsten alloys known as super-alloys. The molten metal would then be poured into a cylindrical mold to form an electrode of the vacuum melted alloy. The electrode in turn would then be suspended and lowered into a water-cooled copper crucible where an arc is struck at the bottom and, once again, it is vacuum melted with thousands of amperes of arc current. The resultant cooling beneath the poof of liquid metal which would form as the electrode melted would eliminate radial shrinking and "piping" since the liquid alloy cooled and solidified vertically rather than radially. After cooling, the resultant ingot could be rolled or forged into products without voids or flaws.

It hadn't taken long for the double-vacuum process to prove itself, and such super-alloy producers as Latrobe Steel, Carpenter Steel, Special Metals, Allvac, and Universal Cyclops were eager to avail themselves of furnaces incorporating this new technology, resulting in huge, million-dollar installations. The only thing that held Inductotherm back from entering this field was our lack of specialized expertise in vacuum arc melting. Now, with Wooding available, all the pieces seemed to be falling into place.

On the face of it, a partnership between Inductotherm and Wooding seemed an ideal match. Not only did Wooding possess the technical expertise in vacuum arc melting, but he was also self-assured and persuasive--the sort of man who automatically became the center of attention when he entered a room. In short, a terrific salesman. What the Englishman lacked was financing and experience in running a company.

Inductotherm, meanwhile, lacked the technical depth, but we possessed extensive financing and--having taken three companies from start-up to solid success in the fields of induction melting, transformer manufacturing, and channel melting--a breadth of entrepreneurial and managerial expertise.

And so I made Wooding an offer similar to what I'd proposed to Jim Hoff: instead of a job, how would he feel about running a company that would design and manufacture vacuum arc furnaces?" At first, Wooding found the offer exciting, but things became unexpectedly complicated as we began negotiating the terms of partnership. Inasmuch as Inductotherm would provide not only all of the financing but also extensive engineering, managerial, and production assistance, I felt we should hold at least a 75% position in ownership of the company. The dapper engineer--who'd written to me looking for a job--would hold 25% for which he would pay nothing. It seemed fair enough to me, but not to Wooding. There could be no company without Wooding and his knowledge; he played his card well, holding out for 50%--a 50-50 ownership. In my anxiety to be able to offer both processes, I made in to what was to prove to be one of the greatest mistakes of my business career. I expected that we'd quickly move forward. Instead, there followed weeks of haggling over the fine points of the partnership, especially those provisions governing management autonomy, finance, expense accounts, and buy-out options.

I was starting to have second thoughts, and was searching my own heart and mind about the way I was approaching this new enterprise. Certainly the vacuum-arc-melting market was an attractive one, but it had been men who'd taken risks and made sacrifices, not market conditions that had built our company. Was I subverting what Inductotherm stood for, just to seize a new opportunity? Then, too, if I had to endure this much aggravation just getting this new company off the ground. What would it be like to run a highly complex business with him?

I was on the verge of withdrawing the offer when Wooding--who had an instinct for these things--acceded to what I had advised him was my final offer. It did provide for the 50-50 ownership he had pressed for, but the other provisions seemed to provide a company structure that had every chance of lasting success.

We called the new company "Consarc," short for Consumable Arc. Wooding was named Consarc's President, while I would serve as Chairman. It was hardly likely, I felt, that his zeal to innovate would lead to the kind of confrontation he had precipitated at Allegheny Ludlum. I encouraged the CEO of a company I was financing to be aggressive and inventive.

The new company was chartered in July 1962. Any misgivings I had about relinquishing equal ownership in Consarc were mollified by Wooding's pronouncements of commitment and shared goals. Now we could finally get down to the business of running a company and making a product. We spent many an exciting evening together critiquing designs and identifying probable customers.

Wooding had said he had big plans for Consarc, and he was as good as his word. Initially, our vacuum-arc-melting organization was little more than a one-man company, just Wooding and a secretary a few doors away from Bob Hotchkin's office in the Rancocas plant. But it didn't take him long to build up the Consarc team, whose members Wooding had selected from the Inductotherm roster--the "cream of the crop." First, we transferred one of our top draftsmen, Cliff Anderson, to Consarc, then, a top designer, Stan Myers, and soon thereafter, a number of our most skilled mechanics.

In the second year of Consarc's operations the engineer began building what appeared to be--on paper, at least--a mini-empire. Although Consarc was an Inductotherm subsidiary, it soon became apparent that he saw it as a parent company with its own far-flung holdings. With this in mind, he created Consarc West, Consarc Power, and Consarc Tool and Machine. "West" was appropriate enough, similar to Inductotherm Western which was basically a DISC, or Domestic International Sales Corporation, an entity allowed by an act of Congress to encourage exports through tax incentives. But Why "Power" and "Tool and Machine"? "Power" made direct-current power supplies for the furnaces, and "Tool and Machine" was little more than a machine shop. Under the Inductotherm scheme of things each "subsidiary" should have comprised a department or office, but Wooding set each one up as a separate entity, with its own president.

"I want the best men possible to run my support operations, Hank," he told me. P11 get more talented people if they're heading up their own company rather than just running a department or an office."

I had to agree with this rationale, as this was, in fact, the reason I'd set up Consarc as a separate company. My instincts said to intervene and establish some basic guidelines, but I didn't. As with Jim Hoff and Linemelt, I was prepared to offer assistance when asked, but I expected each CEO to run his own show. Moreover, I couldn't argue with the results of his efforts.

Wooding was not just a gifted engineer, he had a compelling presence as a salesman. With Wooding at the helm, his company rapidly gained leadership in this esoteric field, and the superiority of Consarc equipment was demonstrated with installations in the most demanding settings throughout the world. With fiscal and managerial guidance from its parent company, Consarc enjoyed steady growth, with revenues increasing from $143,000 in 1963 to over $4 million in 1969. We'd bought some land and built Consarc a building in which to continue this growth.

Wooding was affable and a welcome addition to Inductotherm's infrequent social gatherings. He possessed all the social graces, held audiences spellbound as he spoke of worlds far beyond Rancocas; he could discourse on rare wines and global political intrigue with equal aplomb. "J's a fascinating person, isn't he?" I asked Betty, as we drove home from the Wooding's home near Rancocas. "Oh, yes," she said, somewhat noncommittally. "Quite a storyteller."

There was something in my wife's voice suggesting that she saw something I didn't, but I didn't press her on it. The important thing was, so far as I could see, he was doing a terrific job, so it behooved me to overlook the occasional quirk. They were mostly little things, really, but they tended to surface at the most inappropriate times.

Consarc was barely six months old when my new partner and his wife came to dinner at our house in Moorestown. Betty was clearing the dishes when she announced that for dessert she had a homemade chocolate cake. "Oh, I'm sorry, I can't eat chocolate," complained Consarc's chief executive.

"Oh, then how about a slice of melon," asked Betty.

"No, I think not," he demurred. Then, turning to his wife, he said, "Dear, why don't you go out to the car and bring me that box of Cadbury's? I'll have one of them for dessert."

Betty found that odd, since he had just contended that he couldn't eat chocolate, but shrugged it off.

Of greater concern was Wooding's indifference to the way Inductotherm did things. He didn't conceal his disdain for our tradition of frugality. Wooding had been with us for little more than a year when he called Bob Hotchkin with an extraordinary proposal. He wanted the profit sharing trust we had established for the Consarc employees to fund a riding ring for two of his daughters.

Hotch was aghast at the idea. The profit sharing trust was sacred to our accountant; it symbolized the unique relationship-literally, the trust--that existed between Inductotherm and its employees. "I'm sorry, J," he told him. "That fund exists for Consarc's employees; it's not a slush fund to provide perks for our executives."

Wooding became indignant, and by the time the Englishman hung up, he'd made it clear that the accountant had made an enemy.

The relationship between Wooding and Hotch didn't improve when the latter questioned an expense report the former had submitted for business travel in Europe. Consarc's head hadn't been content to book commercial flights; he'd chartered a private jet for a week to fly himself and his family between England, Paris, Belgium, and Sweden. The jet rental alone cost $7,000. "It's the way people do things in Europe," snapped Wooding, when Hotch asked about the private jet. "I wouldn't expect you to understand."

Hotch didn't understand. It wasn't merely that Wooding's extravagances were personally repugnant to him; they contravened the very principles that had built Inductotherm. Moreover, Wooding's extravagances failed to materialize into overseas sales or even real sales interest. In spite of this, J formed a company in England, and appointed his aging father as managing director. He bought him a car which Bob reluctantly paid for, and he ordered Bob to open a bank account and deposit funds for him in England with his father as the signatory. This Bob refused without the appropriate Board action, and J was thwarted once again. He wasn't yet ready for the confrontation at Board level.

But the crowning blow took place over an expense voucher for a lavish weekend in Bermuda with his wife. Hotch sighed and gave him another phone call.

"J, I wasn't aware they were doing so much vacuum arc melting in Bermuda these days, so how should I categorize these expenses?" inquired Hotch with tongue in cheek.

Wooding had apparently anticipated this phone call and was ready with an answer. "As you may be aware, Consarc isn't standing still. We're growing, and we expect to grow even faster in the near future. That will take money, and a lot of it. So if you must know, I was in Bermuda to meet with a couple of bankers from England to discuss financing."

To Hotch, Wooding's rationale sounded fishy. If Consarc needed a loan for expansion, why fly to Bermuda to meet a couple bankers from Europe, when he could have walked up the street to Inductotherm and asked Hank Rowan, his partner? So Hotch probed a little deeper. "Just for our own records, J, would you mind giving me the names of the bankers, and their banks?"

"Certainly. There was, uh, Mr. Atkinson from Keyser Uhlman, a merchant bank in London, I don't know if you've heard of it, and ...oh, Mr. Pell, Managing Director of the London Interstate Bank. Now, if you don't mind, I have things to do." With that, Wooding hung up.

The next two phone calls Hotch made were typical of his tenacity. He first called the Elbow Beach Surf Club to inquire if Mr. Atkinson and Mr. Pell had been guests there during January, 1972. There was no record of such guests.

He next called the London Interstate Bank and sure enough, Mr. Pell was Managing Director, but Mr. Pell indicated that he had never been to Bermuda and was not familiar either with Wooding or with Consarc.

After speaking with Mr. Pell, Hotch called Wooding again. "J, I'm afraid there is some confusion on these expenses. The Elbow Beach Surf Club never had either Mr. Pell or Mr. Atkinson as guests, and when I called Mr. Pell, he indicated he had never been to Bermuda. Can you help me clear this up?"

At this, Wooding burst into a tirade; red-faced at being caught in a lie, he began berating Hotch as an incompetent. It didn't end there, as Wooding subsequently sought out occasions to downgrade Hotch to others, even to the point of accusing him of malfeasance. To the stylish, suave, Englishman, Hotch seemed to embody all those traits of our corporate culture--frugality, diligence, candor-which he disdained.

While Hotch recoiled from Wooding's antics, he endured the Englishman's incessant taunts patiently. "You've got to give credit where credit is due," he would say. "He's a brilliant engineer and he's doing a great job with Consarc." Hotch was a true team player and, as long as his antagonist was making money for the company, that was what counted, not his own sensibilities. I had to admire Hotch for rising above Wooding's pettiness. I wasn't sure I would have put up with it, and I wouldn't have asked Hotch to, no matter how much money he was adding to our group's earnings.

In the Consarc offices, Wooding's co-workers learned to ignore their boss's bizarre mood swings. On one occasion, Stan Myers, Consarc's sales engineer, was meeting with Consarc's CEO when the phone rang. "It's British intelligence," Myers' boss advised him in a whisper while covering the speaker with his hand. "I hope you don't mind if I speak in Japanese."

"Well, maybe I'd better step outside then, J," offered Stan, "this being confidential, and all."

"Oh, no. I doubt you'll understand a word," Wooding chuckled condescendingly. Indeed, Myers didn't understand a thing the Englishman was saying, but it sounded more like gobbledygook than Japanese. For that matter, the person on the other end of the line didn't understand it either; through the receiver Myers overheard a voice saying. "J, this is your mother. J, will you please speak English?"

Another side of Wooding's personality was emerging; J Wooding was a man whose compulsion to impress and to deride surpassed all reason. He could be gracious one moment, and mean-spirited and cruel the next. He often set upon the most vulnerable people around him, in unexpected and petty ways. One evening he hosted a group of Inductotherm managers and their wives at a cocktail party at his home. He walked up to a group of the women with a tray bearing a half dozen exotic cordials, explaining, "This is a framboise, this is a cognac, this is a poire William ...."

The wife of a man who worked for him pointed to one of the bottles saying innocently, "I think I'd like to try some of that, please."

Wooding rebuffed her in the rudest way. "Oh, no. You wouldn't appreciate it. Why don't you just take a creme de menthe?"

Even with his peers, he was capable of repaying a friendly gesture with an insult. In the second summer of our association I had invited Consarc's CEO to be my crew for a Comet-class sailboat racing regatta at Surf City, New Jersey. On the day of the regatta, however, the wind was blowing much too hard for safe Comet sailing and the race was canceled, leaving the assembled sailors standing around the clubhouse watching the wind whip across the water.

Generally I liked heavy air, but I wasn't anxious to go out in this storm. Wooding, however, got to spouting off to some of the other club members and guests about "fair weather sailors," implying that he and I were ready and willing to sail and anybody else with any guts would go out and race against us.

Finally, Jerry Drew, a fellow in a boat called the "Yellow Banana," had heard enough of his boasting, and took him up on his challenge with a $20 bet at stake. It would be a match race, we agreed, just the two boats, and the committee agreed to hold it while the other 15 or 20 boat crews watched from shore. I can't say I was terribly enthusiastic about having to back up Wooding's taunts, but I could hardly back down from such a challenge.

The race began promisingly enough for us. Wooding and I had a terrific start, leading all the way up the beat to the windward mark and continuing to lead on the first of the two reaching legs. On the second reach, though, things didn't go as well. With the wind howling and the boat heeling, J managed to lose his grasp on the jib sheet, which blew out of his hands and went flapping around in the wind, causing us to fall off our plane. With the Yellow Banana gaining ground on us, my crewman looked at me with a sickly grin, as if to say, "What do I do now?"

"Grab the sheet, J," I yelled over the noise of the fluttering jib, and he complied, though it meant getting off the rail, which slowed us even more. By the time he'd regained control of the sheet and was back on the rail, the competition had planed past us, maintaining their lead up the beat to weather and on the next reaching leg. Now, I was not a happy sailor. I hadn't wanted to sail in a storm in the first place; I hadn't appreciated Wooding's braggadocio; I was annoyed that he had dropped the line; and most of all, J didn't like being beaten.

But things were about to get worse; in a desperate attempt to pass our opponents in the jibe at the reaching mark, we managed to capsize the boat, for which I was probably more to blame than my crewman.

We were towed in, and as the usually impeccably attired Englishman clambered up onto a pier, one of Inductotherm's most effective salesmen, Del Dhein, greeted Wooding--now drenched and wrapped in a blanket--with a beer. "Here," offered Dhein, "I thought you might want this."

But Wooding wasn't to be mollified with a lowly beer; he knocked it out of Dhein's hand, snapping, "Don't give me that swill. Get me a scotch."

Ultimately, his contempt for others became evident to his own customers. While he fawned over senior executives, beguiling them with his charm and glibness, he began alienating their subordinates. When talking to staff engineers or scientists of lower corporate rank, he would denigrate them and hold their ideas up to ridicule, forgetting that in most scientific environments, such personnel frequently called the shots.

Repeat orders became rare, but Consarc's equipment was so far superior to anything else on the market that every year brought orders from new customers even though the field was limited. The positive figures on the balance sheet obscured the underlying malaise, one I found hard to acknowledge.

And though word of his odd behavior filtered back to me, I discounted it. I couldn't resolve the Wooding others described to the executive I knew--capable, cultured, unfailingly polite and deferential. I should have recognized the truth---that as the man who controlled the purse strings, I would be the last person he would abuse.

And a few years later, I was.

Chapter 19

Spreading Our Wings

The early sixties were dynamic years for Inductotherm. It was exciting to walk through the plant at Rancocas and see our furnaces--the "state-of-the-art" in induction melting-taking shape. It hadn't been so long ago that Paul Foley and I were still subsisting by winding replacement coils in a corner of his shop at Glenolden. Now, I could envision our company becoming a cornerstone of American industry. The coins in our pockets, pump housings, machine tool bases, the parts in the cars and trucks we drove, turbine blades, control surfaces, and landing gears of jet aircraft flying thousands of feet overhead ... the first step in the creation of these and countless other products of modern society took place in furnaces bearing the name "Inductotherm."

Our sales reflected this heightened stature in the market. Within five years of our move to Rancocas our revenues would climb from $2.52 million in 1962--the slump occasioned by the "new home" syndrome--to over $15 million for the Inductotherm group in 1967. The landing strip behind the plant was beginning to get plenty of use from servicemen Jess Cartlidge, Steve Milich, and Charlie Fink; top territory sales managers Del Dhein and George Duncan, and later Charlie Eckert, Jerry Wood, and Wayne Hause; engineers Herb Zelley and Clete Van Dine, and Linemelt's CEO Jim Hoff and Hoff's service manager Cal Mason. They, like Ollie Hazeltine, our Midwest district manager, all took up flying to better serve their customers, and the Inductotherm fleet had grown to three, with the addition of a Beech Bonanza, and the twin-engine six-seater Apache purchased in 1960 which Jess had learned to fly and pretty much took over when I moved up to a used twin-engine Cessna 310 in 1963.

Roy Ruble had taken lessons for a while, but he wasn't especially enthusiastic about flying. Perhaps he preferred feeling the deck of a naval cruiser or battleship beneath his feet. Bob Sundeen had earned his private pilot's license, but his first business flight turned out to be more exciting than he might have wished. He took off in our Beech Bonanza for a customer's site in Detroit that was four hours flight time away, with precisely four hours of daylight and four hours of fuel in his tank. If the "best case" scenario had applied, he would have made it to his intended landing field just as he was running out of daylight and gas. But since "best case" scenarios rarely apply in real life, he ran out of both just short of his destination and made a forced landing in a nearby pasture. It took a professional pilot experienced in the Bonanza to fly the plane out, and although I commended Bob for making an excellent emergency landing, he had lost his zeal for flying--at least, in any aircraft where he was at the control stick.

In 1964 the company acquired an invaluable asset in the person of Julia Greenhalgh. When we first met Julia, she was answering an ad Inductotherm had run for a secretary to the CEO--the latest in a series of recurring ads for the position. Since the departure of former secretary Ruth Smith (who had served me well in Delanco) for Florida, I hadn't had much luck finding anyone who could fill this position and provide the assistance I needed. None had been able to keep up; none seemed to pay attention to the hectic and erratic schedule that I thrived on. All had left after a few weeks or a few months because of my exasperation or theirs.

So, I'd really given up and, to avoid the continuing parade, I literally tried to scare away the faint-hearted by carefully explaining to any applicant, including this bright young lady named Julia, that mine was apparently an impossible job to fill, that no one had been able to keep up and no one had lasted more than a few months in the job. Julia Greenhalgh said she was confident she could handle it and welcomed the challenge. I warned her, though, not to take the job if she wasn't absolutely tops as a professional secretary. In spite of all this, she accepted, and I was delighted. She was scheduled to start in two weeks after giving proper notice to her employer.

Only a few days had passed when she stopped back to my office. She was sorry, she explained, but because of temporary family obligations she wouldn't be able to take the job. Although I was disappointed, I was somewhat relieved to have avoided another costly mistake. I politely let her off the hook with, "That's OK, I don't blame you for changing your mind."

"Mr. Rowan," she retorted, a little angry that I hadn't believed her. "If I'd just changed my mind, I wouldn't have come back in person to tell you. I'm sorry I can't take it right now, but if you're still looking for a secretary sometime in the future, I'd like the job."

Four months later, Julia called out of the blue to ask if I was still looking for a secretary. "As a matter of fact, Julia, I am," I answered. I was almost embarrassed about it, as I'd tried a couple more people in the job in the interim and neither made the grade. "When can you start?"

Julia was a revelation to me. Here, at last, was a true professional with top secretarial skills and a keen interest in the job, the company, and the office. She quickly got to know the people, both in and out of the company, the ones who could make a difference and the ones who couldn't; yet she treated them all with tact and diplomacy.

It wasn't long before outsiders noticed the difference; I'd get comments from callers such as, "Say, that secretary of yours is quite a lady--a real asset to your office. She always makes me feel welcome and glad that I called."

Julia was a perfectionist, too, and perhaps a bit frustrated when the work piled up. One day after hours, she poked her head into my office with a question. "Mr. Rowan, there's one thing I have to ask. Of all the people who've held my job, did any of them ever get caught up with their work?"

I laughed and told her, "Julia, don't feel bad. As long as you're here, you'll never get caught up. The business opportunities here are infinite, so the work never ends for either of us." Three decades later, she would still be trying to prove me wrong on that score.

With all that was happening, with all the work to be done, we were too busy to become self-satisfied or complacent. There was, however, a dramatic change in the mood at the company. The first half dozen years of our existence as a company had been concerned with survival; now, those all-too-frequent moments of panic and doubt had given way to a quiet confidence. The sense of momentum, of successes yet to come, was energizing.

When our salesmen called, customers no longer asked "Inducto-who?" In the shop, many of those neophytes whom I'd had to instruct in the fundamentals of induction melting back at Delanco had become seasoned supervisors and managers with a "can-do" attitude. The new hires who'd come with us to the Rancocas plant were now experienced mechanics and machinists. In every aspect of our operations, I had men I could depend on.

There was nobody I depended on, however, as much as my sales manager, Roy Ruble. No matter how advanced our technology, no matter how efficient and economical our production techniques, these all went for naught unless we served the customer. Roy seemed to understand this equation instinctively, and his command presence ensured that every salesman and serviceman shared his attitude and commitment. With him running the sales and service operation, I no longer felt compelled to involve myself with every major sale.

I still made a point of touring the shop, looking over new blueprints, checking shipment dates and purchases, keeping tabs on service and start-ups, but except for the engineering side of our operations, I was no longer tied up with the routine tasks. I had more time to devote to the "business of business." As a pilot would have expressed it, now that I had gotten my company off the ground, where did I want to take it?

There were so many directions to take, so many new markets lying just over the horizon--Europe, Japan, Mexico, Australia, even undeveloped countries in Asia, South America, and the South Pacific. We were getting a lot of inquiries from foreign foundries and from manufacturers eager to ally themselves with us and enter the induction furnace market. So, starting in 1963, I began travelling to such far-away places as Great Britain, Liechtenstein, Sweden, France, the Philippines, Korea, India, and Japan, to get a firsthand look at the foundry industries in these countries. By the time the decade was over, these trips overseas, as often as not, were to our own foreign-based subsidiaries.

But I didn't intend to define our growth by geography alone. We had already expanded into related fields with Consarc and Linemelt, but what about other fields of manufacturing? Could we diversify, while continuing to specialize? It sounded like a contradiction in terms, but I was eager to find out.

At the same time, there were ominous signs that the climate which had nurtured our growth was changing, that the challenge, in the not too distant future, was not merely to grow but to evolve, as well. Environmental concerns and governmental regulations had begun to reshape certain segments of the foundry industry. It was much the same change that had already occurred in Europe, where the smaller land mass and denser population tended to sensitize the Continent's governments to environmental issues pressuring foundries to abandon fossil fuels in favor of induction melting. As a result, European furnace makers, descendants, or benefactors from the original Ajax licensees, enjoyed a l0-to-15-year lead over both Inductotherm and Ajax Magnethermic in the large 50-or 60-cycle melt systems, so suitable for iron melting. Brown Boveri, particularly, would capitalize on this wealth of experience.

The early sixties saw other new technologies emerging, as well. Solid-state transistors, silicon-controlled rectifiers, and diodes, for instance, had been replacing vacuum tubes in small, lightweight electronics such as radios and televisions since the fifties. The power transistors weren't yet big enough or fast enough to handle the power or frequencies required for induction melting, but it would be just a matter of time.

It wasn't just the competition we would have to worry about; our increasing size and prospects for the future were making us an increasingly attractive target for labor unions. Even before our move to Rancocas I had begun receiving "solicitation" letters or phone calls asking for "contributions" to union events or publications. These messages included a thinly disguised hint that if I didn't cooperate, they'd come over and organize us. I had little interest in spending my company's hard-earned profits to support a movement that, from what I'd seen, could do nothing for me or for my work force except upset the relationship of trust we'd tried so desperately to build up over the years, and I declined their requests. Yet it was, I suppose, inevitable that we would, at some point, have to confront the possibility of unionization.

Nonetheless, it is hard to describe the panic that seized me when I opened the letter from the National Labor Relations Board advising me that on May 14, 1965, an election would take place at the Inductotherm plant, one in which the work force would decide whether or not they would become members of the International Union of Electrical Workers.

My mind was spinning as I put the letter down; it was hard to grasp the full meaning of a union election and its implications. It wasn't just a matter of what unionization could do to our prospects for the future; just the news that an election would take place--that enough employees had signed cards expressing their desire to vote on the issue--was a shock. Quite simply, my feelings were hurt. I thought our employees, particularly the mechanics in the shop, liked working for me. In fact, I thought they liked me! And trusted me! I thought we were different from other companies, not just management and labor, but a team.

It was a team that had built that control panel for Specialloy in record time and had built the tripler for Seaway Nickel in the prescribed six weeks. I'd asked things of our men that "management" doesn't ordinarily ask of "labor," and after they'd met the challenge, I hadn't heard our men grumbling. They seemed to take pride in what they'd accomplished; there was an "esprit de corps."

That kind of spirit can survive hardship, it can survive setbacks, and it can survive long hours of hard work. But the one thing it can't survive is having a union tell us what we can and cannot do.

I wasn't just hurt, I was angry, too. Darn it, I hadn't been content to offer fair wages, paid vacations, coffee breaks, everything other companies offered their workers, I'd stuck my neck out with our profit sharing trust. I could have poured every penny of earnings back into the company, or paid for executive "perks"; instead, much of every year's annual earnings went into a fund to ensure our employees' financial security. On April 30, 1965, the trust balance stood at $766,000, and our top shop mechanic's account had already grown to $19,000.

I was concerned for our workers, too. When "labor" negotiates with "management," the union has one weapon--the strike of the company's own workers. If a company won't bend to the will of union negotiators, a strike is threatened. Only, it isn't the union bosses who strike, who tighten their belts and worry about how they're going to pay the light bill, or whether they'll have a job when the strike is over--it's the workers.

I was worried, too, about my company. If the biggest companies in the country hadn't been able to stave off unionization, how could Inductotherm, one little company in a New Jersey cow pasture, stand up to them? How would having a union in our plant change us? Would they insist that we sign a contract defining and restricting responsibilities and deployment of workers? What kind of company would we be, if contract language forbade an electrician from helping to wind a coil? Or prohibited a manager from helping to load a truck?

Yes, I was indeed naive.

I didn't know and I didn't want to find out. But I was certain of one thing--l was going to fight. Only, what were the rules? There was a lot I had to learn, and learn quickly. I began the way most companies do when facing a union vote for the first time--by hiring a specialist, a labor lawyer named Fred Rohloff. According to Rohloff, the rules that govern a union vote are fairly straight forward. "There are basically three things a company cannot do, Hank," the lawyer explained. "It cannot promise, it cannot threaten, and it cannot bribe.

"In other words," he continued, "management can't tell labor that if they reject the union they will receive higher wages or any other benefits they're not presently getting. Nor may management fire, nor threaten to dismiss, anyone because of pro-union sympathies or activities. Third, management may not offer anyone money to vote against the union."

That all struck me as reasonable, especially as I hadn't considered any of those three alternatives as a plan of action. "You shouldn't take a union vote personally," he added. "The fact that at least one-third of your work force has signed cards to hold a vote doesn't necessarily mean that they want to organize. Sometimes employees are just curious about their options. Or maybe they'll ask for a vote in the hope of shaking up management, and getting raises or other benefits after they've voted 'No.' Sometimes, too, workers will sign the card because they're disgruntled one day, but will have gotten over it by the time the vote takes place."

That was some consolation, but nonetheless, he continued, "Don't take anything for granted. There's no telling what the union organizers might promise their prospective union members, or what they'll say about you and your company. They're experts at propaganda. According to them, you're not an entrepreneur who has created jobs and financial security for employees, but a heartless robber baron who's been exploiting them for years." "Still," he concluded, "you have one big advantage--the truth." The key to winning the election, he said, lay in communications. It was up to me to tell my side of the story. I did so, in frequent meetings, in discussions, and in a letter dated May 7, 1965. In it, I urged every employee to vote, but suggested they ask themselves:

Who are these outsiders who have suddenly become so interested in my welfare and why are they doing so?

Do I want to pay union dues and have this union represent me about my wages, hours, and working in fact, it was becoming more like a game, a new challenge. But I didn't enjoy defeating the unions any less.

conditions; or, do I prefer to continue to enjoy the close personal relationship, individual contacts) and talks with the management which I have been free to hold in the past?

Remember that any union organizer is, first and always, a salesman. He will promise that if you join his organization, you will be rewarded with unlimited benefits. His pitch usually sounds like this: "Join my union, for vacations, holidays, coffee breaks, hospitalization, pensions, steady work, and more money." I only ask that you don't let him sell you some thing you already have.

I then listed the benefits enjoyed by every Inductotherm employee: paid vacations, paid holidays, hospitalization, wages (comparable to area rates for both union and non-union shops), regular wage reviews, an incentive bonus plan that, since its inception, was running 25% higher than was initially announced, life insurance, and finally, our phenomenal profit sharing plan that, for those with a few years seniority, had grown to an amount equalling one year's wages for every five years service. In conclusion, I exhorted every employee--again--to vote.

Finally, May 14--the day of decision--arrived. The suspense as the ballots were counted was overwhelming, but I tried not to show my concern. NO, YES, YES, NO, NO, NO. Gradually the "NO" pile grew higher, and I knew we were going to win the day. When it was all over, the work force had voted, by a ratio of 2.4 to 1, to reject the union.

Two and a half years later on October 13, 1967, the International Union of Electrical Workers asked for another union vote, and again they were turned away. On May 16, 1969, it was the Teamsters whom our employees rejected at the polls, as they did again on December 10, 1970, and again on December 10, 1976. With each vote, the union's margin of defeat grew larger and larger, until on December 14, 1979, the Teamsters were again beaten, this time 3.4 to 1. By then, the prospect of confronting a union had lost its terror; in fact, it was becoming more like a game, a new challenge. But I didn't enjoy defeating the unions any less.

Meanwhile, the TRI-LINE was building on its rapid acceptance as the acknowledged leader in this country's 180-cycle melting market. With the help of Ted Kennedy, we had developed such expertise in the realm of harmonics multiplication that in 1964, we "tripled" the tripler to produce a new melt system, the "NINELINE." With an operating frequency of 540-cycles (the common term for cycles per second), the NINE-LINE filled the gap between the tripler's 180-cycle and the 1,000-cycle motor generator set systems, and was ideally suited for mid-range steel melting applications of 1,500 and 3,000 pounds. Its importance transcended specific applications, and as a sales tool it was the ultimate weapon--a product none of our competition, not even Ajax with their Multiductor, could match.

In Europe, Junkers had a crude version of the tripler, similar to the Ajax Multiductor, but the concept was otherwise almost unknown there. Where it had been known, it was by derogation, as Brown Boveri had denigrated the 180-cycles concept in published articles and through sales calls to their customers, calling it a useless frequency.

Nonetheless, we were confident that it was only a matter of time before the European furnace market recognized the advantages of the tripler, once they were exposed to them. Several European manufacturers, including Metalectric in England and Huertey in France, shared this opinion, and expressed their interest in producing triplers as well as M-G equipment for European furnace users. Both wanted a license to build our equipment.

Well, it was tempting. We were eager to sell to European foundrymen. And it was clear that it would be, and continue to be, problematic for a small company to serve a global market by selling from New Jersey. We were competing at a distinct disadvantage with local furnace makers who didn't have to cope with the added expenses of shipping, customs, and other taxes, or the added time involved. As a result, through fiscal year 1963, only three Inductotherm furnaces had been shipped beyond North American shores; one each to Taiwan, France, and Brazil.

We suspected that this would change, should we ever establish a presence abroad; but manufacturing overseas was then beyond the scope of our experience and capabilities. We knew little about international trade--local trends, markets, and ways of doing business. But if we simply licensed manufacturers in selected countries, I reasoned, that would all change. We would gain an immediate penetration of the induction market by a company already established in the foundry market with engineering, manufacturing, and service facilities, plus knowledge of the local market.

In short, quick profits.

So, why was I reluctant to grant licenses to these two companies? In part, because I had never forgotten Ajax Electrothermic's example of the folly of licensing some three decades earlier. In the process of licensing companies in England, Japan, Germany, and even in the United States, the one-time technical leader not only created new competition for themselves, but also lost whatever foothold they may have enjoyed in the world market. By the onset of World War II, each licensee had outstripped the very company that had pioneered the technology.

But that wasn't the only reason. To be sure, licensing would conceivably produce a rapid surge in cash flow. Only, I wasn't so sure this was what I had in mind when I started Inductotherm. Profits were necessary; without them, we couldn't go on. But excess cash--fast money--doesn't last long. It's spent, and then it's gone. It's different, though, with a company's name, its stature, and position in the market. These are the things that endure.

I was determined not to make the same mistakes Ajax Electrothermic had by selling our birthright for a mess of potage. Yet, maybe it would be possible to grant a license while protecting our technology. With this in mind, I flew to England in 1963 with an alternative to the arrangement Metalectric had proposed. For a 10% royalty, we would allow the British company to build the furnaces, controls, capacitor bank, coils, instruments, and meters. We would build the vital but intricate tripling transformers. They agreed to the deal.

With the Metalectric contract in my pocket, I continued on to Sweden, to make a similar offer to ASEA. After all, if British foundrymen were demanding triplers, why would their Scandinavian counterparts be any different?

ASEA turned me down flat. They seemed almost amused at the notion of a tiny upstart of a company from Rancocas offering the great ASEA a license. On the way home, I consoled myself with the notion that maybe, in the long run, licensing a manufacturer as powerful as ASEA wasn't such a good idea after all.

Unfortunately, in the short run, neither was licensing Metalectric, whose sales, after four years, barely justified maintaining our agreement in force. We had even less success with the French firm, Huertey, whom we licensed in 1965. After three years of negligible sales their license was cancelled.

Neither European licensee, it appeared to me, possessed the commitment or the vision to make a go of it in the induction melting market; instead, they bad simply let their golden opportunity languish. It was a disappointment, and not only from a sales standpoint. In 1965, during a trip to the Philippines, I had seen how zealously foundrymen, even in an undeveloped society, would embrace progress, new efficiencies, and the opportunity for a better way of life.

Twenty-five hours after we'd left San Francisco, the Pan Am 707 rolled to a stop in front of a one-story crudely built terminal building, and I stepped out into the sweltering heat of the Philippines. The airport was a mob scene, with people milling about looking for luggage, waiting for flights out, or waiting for arriving relatives. For every passenger, coming or going, there seemed to be a delegation of a dozen men, women, and children seeing them off or welcoming them home.

After an eternity in the customs line, I was met by the man I'd been corresponding with for several months, Jess Baum. "Hank, you've got your work cut out for you here," he said, as his old Plymouth bumped along the rutted road towards the EEI foundry in the center of Manila. "Induction furnaces are almost unknown here in the Philippines."

Baum had been in the Philippines for several years, first as a representative of the U.S. Aid Program, established to promote the economy of underdeveloped nations, and now as consultant to Engineering Equipment, Inc., which operated a local foundry. Baum sincerely wanted to make a contribution to the local economy and upgrade the Filipinos' quality of life.

To say the least, induction furnaces would be a quantum leap, technically speaking, for local foundrymen. Up to this point for melting steel they had used only ancient arc furnaces. But now the more enlightened foundry operators wanted to modernize and get into the high-quality maintenance-casting market, and make replacement parts for the mining, lumber, sugar, and coconut mill industries. I was no less eager to provide them with our furnaces and to give the local economy and the Filipino people a boost towards modernity and self-sufficiency.

As so often happens though in the third world countries, the businessmen who want to make progress are hampered by their own government's restrictions and regulations. Foreign credit and the letters of credit covering purchases invariably require bureaucratic approval at the central bank. The paper work and delays in buying such equipment are enough to discourage anyone lacking stubborn determination. I wasn't sure what I could do to help, but with Baum's enthusiasm and the need that was so flagrantly obvious, I was anxious to try.

Baum's Plymouth came to a stop in front of the Engineering Equipment foundry, a ramshackle structure with a tin roof supported by occasional posts. Outside, dogs, chickens, and naked children chased each other along the adjacent river bank; inside, there were men--lots of men--milling around with no apparent direction.

"We've always bought used furnaces," explained Baum, as he led me through the crowd to the old arc furnace from which workers were pouring steel. None of the men was encumbered by a hard hat nor, for that matter, gloves, nor even a shirt or shoes.

However backward their technology, though, the Filipino foundrymen hungered for progress, and their gratitude at my visit was touching. My three-day stay in Manila was interspersed with welcoming banquets, lunches, and meetings with local functionaries and entrepreneurs, all who wanted to know more about this seemingly magical new technology, induction melting.

It was easy to convince EEI that their foundry would be way ahead using a 6,000-pound 750 kW TRI-LINE, and I went home with their order in my pocket.

I returned to Manila six months later to start up the country's very first induction furnace and to instruct our new customers in its use. What ensued was a lesson to both the melt crew and to me.

The EEI foreman listened carefully as I told him and his subordinates what should be done before the furnace melted metal for the first time. "Every time we start up a new furnace we have to dry the lining all the way through. Normally, we'd use a controlled flame from a gas torch. But since we don't have a gas torch handy, we can accomplish the same thing with a little wood fire in the bottom of the furnace and no water through the coil."

The EEI crew nodded their heads. Yes, they understood, and they set about gathering wood.

When I returned to the plant the next morning I could scarcely believe my eyes. The area around our beautiful new TRI-LINE furnace was flooded with water. The 6,000-pound furnace cavity, which measured about 28 inches in diameter and three feet deep, was full to the brim with ashes. They had to have burned a couple of cords of wood in it. "What happened?" I asked, aghast.

None of the men was very eager to talk, but finally the story came out. They had started a wood fire in the bottom of the furnace; given the dearth of air it could only burn with the lazy flame I'd wanted, but in their judgement that wasn't hot enough. So one of them dropped a pipe connected to an air line into the furnace, turned on the air, and-Eureka!--they'd created a miniature blast furnace. I suppose they figured that if a little heat was good, a lot of heat was better and they maintained this miniature inferno going throughout the night. Eventually, though, the blazing fire overheated the lining and set the water in the coil to boiling, whereupon a cooling hose popped off and the steam erupted from inside the furnace shell. Realizing the internal lines had overheated, the foundry workers then turned on the water with the hose off and flooded the area.

Fortunately, the furnace was not beyond repair and, a couple days later, the TRI-LINE was ready to show its stuff. From its first melt, the furnace's efficiency, the higher quality of its yield, and its ease of operation captivated the island's foundrymen. Before I left Manila for the second time, I sold another TRILINE to a Chinese foundryman, Servillano Lim, who used it to melt steel scrap from tin cans, after first removing the tin chemically. The remaining steel he poured into ingots for rolling into reinforcing bar stock.

His first 750 kW TRI-LINE worked so well, the tin dealer soon ordered two more, another 750 kW and a 1,200 kW unit. It wasn't long before every major foundry in the Philippines wanted a TRILINE; we went on to sell 33 of them in the Philippine Islands For the local foundrymen, the furnaces were a bonanza. For the first time, they could melt quality metals for replacement parts which, up until now, had to be ordered from the United States or from Europe. New foundries started up to cash in on the induction melting boom. I was pleased to make the sales, but at the same time, I was troubled by what I saw ahead: virtually every foundry was trying to make the same kind of castings for the same customers. Instead of diversifying beyond the sugar and mining industries, they wound up cutting each others throats and slashing prices.

I tried to tell them that, for the Philippines to build up their foundry industry, they couldn't just produce maintenance castings; instead, they would have to make products.

Jess agreed, but his contract was up, and he had to return to the States before he could convince the island's foundrymen to diversify. Except for one or two forward-looking foundries, including Alinsu on the island of Cebu, the foundries didn't expand into new industries and as a result, the industry went into decline.

And yet, I kept fond and endearing memories of the Philippines in the person of Ben Octavo, Jesse Baum's former housekeeper and factotum. Ben was an ambitious and charming young man who had worked for Jesse during his tenure in the islands. Once Jesse left, however, Ben was out of work, so we persuaded him to come live with us in Rancocas, where he could help care for our boys and give them a fuller life than their wheelchair confinement and my obsession with my work allowed.

Ben was everything we could have hoped for in his new role-kind, patient, and attentive, carrying through projects that their minds envisioned, but their bodies could not alone pursue. It brought a new dimension into their short lives and provided comfort where my helplessness made it hard to cope.

The lack of planning and foresight that hurt the Philippines' foundry business were all the more memorable in contrast to what I'd seen after leaving Manila for the first time and flying 3,000 miles north, to Japan.

Inductotherm had shipped its first furnace to Japan in 1965. I arrived a few weeks later, after the melt system had been installed, to watch it in operation and to have a firsthand look at that country's resurgent foundry industry. I came away impressed. In terms of technology and efficiencies, the Japanese then lagged two decades behind American foundrymen, but they were making progress incredibly fast. Their engineers were fanning out all over the world, visiting trade shows and manufacturers, all the while asking questions, looking, listening, and learning.

Their work ethic was especially refreshing. It was after hours when I got to the valve manufacturing plant where our furnace was installed. The adjacent machine shop was empty except for one little workman, who came rushing out from behind one machine, which he reloaded and restarted, then went over to another and did the same. I watched him as he moved from machine to machine. He was running five of them at the same time, alone.

Three years later, when the Japanese conglomerate, Shinko Denki, proposed that we license them to produce triplers, the first thing I thought of was that determined little workman. No, it was unlikely that the Japanese firm would let our technology languish; on the contrary, they would make the most of the opportunity to build and sell Inductotherm furnaces.

This was just what seemed to bother my sales manager. "Okay, Hank," argued Roy, "Let's say we give Shinko Denki a license and it's a success. What happens after the license lapses? Inductotherm has a tremendous lead in engineering. Why hand it over to a Japanese company that may be competing with us in a few years?"

I thought about what Roy was saying and I knew he was right. Still, I wasn't willing to turn my back on the entire Japanese market, so Roy reluctantly offered a solution. "If you're intent on offering them a license," he warned, "make sure you price it with every eventuality in mind. The fees and royalties should be so high that, whatever happens in the future, you won't regret having given them the license. Remember what this new technology is worth in the Japanese market; it's more than a license, it's a franchise."

Shinko Denki's zeal to land a license was obvious; the Japanese manufacturer's envoy was a man named Mr. Fujimoto, and he didn't just "stop by" Rancocas. He'd been ordered not to return home to Japan until Inductotherm had awarded his employer a license contract. What Shinko Denki wanted, said Mr. Fujimoto, was a five-year license to build the TRI-LINE, for which they would pay a 5% royalty on sales. After the five-year period, he implored, they would then own the rights to the technology and build them free of any further royalties.

That sounded like a pretty good deal--for the Japanese. But we had a different arrangement in mind: as with Metalectric and Huertey, we would let Shinko Denki build the furnaces, the controls, the capacitor bank, the coils, the instruments, and the meters. As for the tripler transformers themselves, we would build them here in Rancocas. Instead of a 5% royalty on sales, we wanted 7%. And after five years, we would consider extending the license another five years, but if the agreement was not renewed, they would withdraw from using the technology and under no circumstances could they build the tripler transformers.

Of course Mr. Fujimoto objected, but we held fast. He reluctantly advised us that on his return, he would have to forward our demands to the Japanese Ministry of Industrial and Trade Imports, the government arm formed to protect Japanese interests. We suspected MITI was the negotiation ploy for Japanese companies, a way to refuse an offer without appearing to offend the other party, and we weren't surprised when Mr. Fujimoto wrote from Japan to advise us, still with all due respect, that the matter was out of his employer's hands and that, alas, MITI could not approve our offer.

In the years to come, with the benefit of 20-20 hindsight, I would reflect on the deals I had presented to both ASEA and Shinko Denki, and shudder at what I had almost done. Whatever we lost by not engaging the Swedish and Japanese firms as licensees, we would have lost far more, in the long run, if they had accepted. I was confident that the deals I had offered them were overwhelmingly advantageous to us, but, on reflection, I had miscalculated. With ASEA, the tripler technology would have only made an existing competitor stronger. In the case of Shinko Denki, we would have created new competition. All for a mess of potage.

Clearly, there were risks involved in overseas trade that were not immediately evident, just as there were risks with expansion into fields unrelated to melting. Prudence dictated moving slowly into foreign markets and foregoing ventures into new technologies, for the time being.

On the other hand, there was only one way to find out, first hand, whether the benefits outweighed the risks. And that was to plunge ahead.

Chapter 20


International trade is a two-way street. While we were setting up plants in Australia, Europe, Mexico, and Brazil, the furnace subsidiary of one of the wealthiest companies in Europe--one many times bigger than Inductotherm, Ajax Magnethermic, TOCCO, and Lepel combined--was making significant inroads into our own home territory since arriving in force in 1959. We'd given them a run for their money in Mexico, after they'd lobbied the Mexican government to set up import restrictions; but now the Swiss behemoth, Brown Boveri, was raising the stakes.

In doing so, the Swiss were responding to the climate of change that had come over the American foundry industry. During the first decades of the 20th century, the smokestacks of factories and steel mills were a sign of progress and prosperity. But by the end of World War II, increasing industrialization (of which cupolas were a tiny part) had left places like Pittsburgh, Pennsylvania, and Fort Wayne, Indiana, literally covered in soot. Against the rising tide of environmentalism, smokestacks were viewed as a menace to society. By the sixties, environmental concerns, governmental regulations and technology were rapidly reshaping every sector of American manufacturing; as a side effect, these same forces combined to consolidate foundry capacity among fewer, yet larger foundries.

Hardest hit were the iron foundries, where small "Mom-and-Pop" operations predominated. For generations, these foundries typically had been using coke-fired cupolas to melt the metal for a myriad of iron products. A schematic drawing of a cupola would resemble a small blast furnace, with the bottom end closed. With the coke, pig iron, scrap metal, and limestone charged in the appropriate proportions, the coke was then ignited by a wood fire at the bottom of the furnace. As the coke burned, fiercely fanned by forced air fed in through tuyeres near the bottom, the iron scrap and pig iron melted; at the same time, the bath absorbed carbon from the coke to form the high-carbon, high-silicon iron known as cast iron.

The advantages of the cupola were simplicity and low capital investment, well-suited for the small operations that predominated in the iron casting field. But cupolas were "dirty," emitting smoke and pollutants disproportionate to the metal they yielded.

Cupola melting, once so inexpensive, had become increasingly costly because of the cost of installing "bag houses," scrubbers, and other pollution-control devices mandated by federal and local environmental legislation enacted in the early sixties. It wasn't long before the requisite bag houses and emission control devices cost more than the entire cupola and often cost more to run.

For the most progressive and well-capitalized foundries, induction melting technology--which was far cleaner and more efficient than cupola melting--was the preferable alternative to sticking with the old technology and installing bag houses. Further, the newer technology reduced the cost of melting iron and thereby represented a sizeable return on investment, while bag houses only added cost. Besides a cleaner operation, induction furnaces afforded more constant and productive operation as well; cupolas were usually tapped in "batches," generally once a day, and poured into molds lined up in long rows that occupied a large area of a shop floor. By contrast, induction furnaces could be operated continually and tapped every 20 to 60 minutes, all day long. This permitted foundry operators to adopt "assembly line" concepts to run molds down a pouring line, resulting in far superior utilization of the floor space and people.

For all the advantages of induction melting, however, only the best of the smaller foundries could afford to make the transition from cupola to induction melting; the melt shops that were once the backbone of this country's foundry industry began to shut down, replaced by larger, "cleaner" foundries. Thus, while the numbers of foundries declined, poured tonnage grew, and the demand was for larger and larger furnaces.

The change that was taking place in the United States brought a new challenge that we found ourselves poorly equipped to meet. The strength of the Swiss furnace maker, Brown Boveri, lay in their vast experience in 50-or 60-cycle furnaces. They weren't suited for smaller melts yielding the most sophisticated steel alloys that had been the mainstay of our business, but they were well suited for large melts of 10,000 lbs. or so of cast iron, typical of European iron melting. As the consolidation of foundries in this country led to increasingly larger melts, it also played into the hands of the competition from abroad.

For Brown Boveri, the timing couldn't have been better. The Swiss, who owed their expertise in induction systems to the technical outflow from Junkers, the former Ajax licensee, had begun to move into the American market just a few years after Inductotherm was born. In the early sixties, Brown Boveri was having considerable success with their 60-cycle melt systems, and it was clear they had their eye on the lion's share of the iron foundry market. They spent lavish amounts of money entertaining American foundry operators, flying planeloads of them to Europe to tour the continent and visit existing Brown Boveri installations.

While Inductotherm had no place to take potential customers and little to show them in 60-cycle melting, we countered with our toroidal TRI-LINE technology that was ideally suited to medium size iron melts.

But it wasn't enough to offer a technology that would do the job as well as another technology. "If we don't offer a 60-cycle furnace, then we can't sell against the people who do," I told Roy. It was much the same reasoning that had led us to develop our tripler.

"Fine, Hank," said Roy. "But this time, please don't commit to a delivery date for the new furnace until we're sure we know how to build it, Okay?" While it was fun to reflect on the excitement of building our first tripler, he didn't ever want to relive the trauma of 1961. And, frankly, neither did I.

We had begun building 60-cycle furnaces in 1963, but we continued to get clobbered in the marketplace, losing job after job. We came up with features and offered what we felt was a superior, more reliable furnace with a beefier coil mounted in our rigid steel shell, a descendant of the Seaway Nickel adventure, but it wasn't enough to overcome Brown Boveri's almost impenetrable lead. We got only an occasional job where, perhaps, the foundry owner preferred working with Americans.

Opportunity knocks in many forms and, in the midst of our desperate position in the 60-cycle iron melting field, we were offered an unprecedented opportunity to capture a major portion of the new emerging market. It began in June of 1964 with a visit from the president of a leading foundry design firm from Chicago; he flew in and landed on the grass airstrip behind our plant in his twin-engine Piper Aztec. I was eager to meet him, as he had advised me over the phone that he had an offer he was sure I wouldn't be able to turn down. Once in my office, he explained what he wanted to do for us.

"Hank, how would you like to get into the iron melting business in a big way?"

I told him somewhat brashly that we had planned to do just that, and he continued. "Good, because I'm in a position to put you in the thick of the iron industry," said the consultant, expansively. "As you know, a number of foundries across the country have retained our services as design consultants and our client roster is growing every day. It's hard to say just how many foundries we'll be designing in the years ahead, but we expect to be a driving force during this changeover phase.

I nodded and looked impressed, but I was wondering where his pitch was leading. "As you can imagine," he continued, "changing from cupolas to induction furnaces represents a significant investment for our clients. They want to purchase the most advanced, the most productive, and the most economical furnaces on the market. And they expect us to tell them who makes those furnaces. He paused, for dramatic effect, before concluding, "I'm prepared to recommend Inductotherm."

I started to thank him for his confidence in us, "Well, that's certainly good news ...," I began, but he wasn't finished.

"Of course, since we'd be assisting with your sales, we'd expect a commission on every furnace you install."

I felt the blood rush to my face. "Let me get this straight," I said, as the significance of his proposal began to sink in. "The iron foundries are your customers, and they're paying you to advise them on what melting equipment to buy?" He looked surprised at my question, and nodded yes, and I went on. "And you will recommend Inductotherm as long as we pay you to do it. Is that the idea"

The consultant looked around the room, apparently wondering why I was so slow to catch on. "Why, yes. It's a standard practice," he began, but I interrupted him.

"We couldn't do that. How can you take money from somebody for your advice, then turn around and take money from somebody else to recommend them?" I asked.

"It's done all the time," he said with a shrug.

"Well, it's not going to be done here," I told him. "It's out of the question."

A few minutes later the consultant's plane rolled down our grass airstrip and disappeared in the distance and with it a program that would have assured our instant success in the iron foundry market.

Did I have second thoughts about turning him down? Of course, many times. But the truth is, I could not have done otherwise. It wasn't just a question of ethics; how could I go to Roy and tell him of this shady deal? Or Tom Pippitt, or Jess Cartlidge, or Dick Walker? Men don't take risks, make sacrifices, and devote lifetimes, just to wind up cutting corners and duping their customers. At least, not the men who'd built Inductotherm.

So now the odds were doubly stacked against us. Not only was Brown Boveri's experience an overwhelming obstacle, but the foundry design firm added their weight against us and invariably recommended BBC. We watched perhaps $100 million worth of 60cycle furnace sales go their way in the next few years and it hurt; but we still had our self-respect, all of us, and we were proud and more determined than ever.

So, back to the drawing board. We had entered the induction melting field with design innovations. We'd captured the lion's share of the vacuum-melting market with unique concepts. We'd licked both Ajax and Junker in the tripler field by out-designing them. If we were to penetrate this market, we had to do it again, though this time we were up against an electrical giant with thousands of engineers at their disposal.

The weakness in 60-cycle furnaces was the power control. Stepped taps on a transformer changed the voltage and power level in coarse increments. Wear and tear on the tapping switches and on the main contactor resulted in high maintenance, and the exact power desired couldn't always be attained.

Had reliable SCRs (silicon controlled rectifiers) been available in large enough sizes, stepless control would have been easy, but perhaps we were fortunate that they were not, as Brown Boveri would have left us way behind in this technology. They were already using small SCRs in mill drives and similar applications.

Standard saturable reactors with their massive DC control windings were out of the question. Little ones were great for control, but, in the sizes we needed, they were far too expensive and heat removal posed an almost insurmountable problem.

It was our research head Ted Kennedy's genius in magnetics that came to our rescue. Large silicon diodes capable of carrying thousands of amperes were coming on the market. Ted reasoned that if a proportionally large DC current was superimposed on the AC windings of a pair of iron core reactors, saturation would force the 60-cycle AC current feeding the furnace to be in direct proportion to the DC current applied. Control the DC with a tiny rheostat and a tiny transformer and thousands of amperes of AC could be controlled. It functioned like the standard saturable reactors but without the expensive and inefficient DC winding. The single windings on torroidal cores could be water cooled for compactness and reliability. He dubbed it the "UNICOIL" and was granted a patent.

Now we were back in the driver's seat with stepless control, a feature no one else could offer. The tables turned quickly and we built dozens and dozens of jobs culminating in four 10,000 kW systems for Kohler for casting bathtubs, a job we'd have had little chance of selling without the stepless control feature. It could only be used on single-phase systems, but, more often than not, we could persuade the customer, or, more particularly, his power company, to provide single-phase. The more jobs we won, the easier it became, and gradually we began to dominate this 60-cycle field too.

But even to this day I wish I'd been a little smarter or a little less naive when the new Mint was built. The Department of the Treasury planned to phase out operations of the San Francisco and Denver Mints and consolidate them in Philadelphia. Consequently, the Philadelphia melting facility would move from its time-honored site on Spring Garden Street to Independence Square, where a brand new Mint--bigger and more modern--was to be built. Besides the new building and new offices, the Mint would require new furnaces to replace those first six furnaces that we had built for them in 1955.

The consultants the Mint had engaged were the highly respected and well-known firm of Arthur D. Little, from Boston. They would never have suggested anything that smacked of impropriety. However, it is the nature of consultants to look to the more prominent vendors in specialized fields to provide the expertise they lack. Shortly after the Arthur D. Little firm won the design contract for the new Mint, they contacted us to inquire if we would like to "participate" in drawing up the specifications for the melting system: power, size, capacity, and features. "Nobody can expect our men to be as familiar with induction melting techniques as yours," said the Arthur D. Little man.

"Well, fine. I'm flattered that your firm wants to hire Inductotherm to write the specs," I answered, as if I didn't know what he was driving at. "What kind of fee arrangement did you have in mind?"

"Oh, no," the Little man said, "that's not quite what we had in mind. Frankly, we expected you'd be eager to participate. We understand you'll be bidding on the furnace contract, and, uh, there's nothing like bidding according to your own specs. What's more, I think the Mint would appreciate any help you could give us on this project."

I'm not sure whether I was driven by stubbornness, pride, or stupidity, but my position turned out to be a terrible error. He was right--most people like to write the specs around designs where they hold an advantage. And we should have jumped at the chance, but I turned them down thinking they'd struggle through by themselves.

Only, they didn't do it themselves; they apparently made the same proposition to Brown Boveri, where they got a different reception. The Swiss were eager to have a voice in deciding what kind of furnaces should be used at the Mint, and undoubtedly, they perceived that they would gain a competitive edge over Inductotherm in our own backyard. And since Brown Boveri specialized in 60-cycle phase balanced furnaces, they wrote the specs around this technology. As soon as I saw that, I called Doc Myer, to call his attention to the fact that, in my opinion, the specs were all wrong.

"Doc, this is the wrong application for a 60-cycle system. In my opinion, you're asking for trouble if you try to use that kind of furnace. You're aware of the heavy stirring action associated with 60-cycle. That's tough on linings as well as increasing metal loss and gas pick up. What's more, they're harder to control. If you phase balance and allow the power factor to wander away from "unity," one or more of your lines can be overloaded by as much as 50%. That can jeopardize the lines and the air-cooled transformers called for in the spec.

"What we'd really like to quote on is a 180-cycle system--our TRI-LINE equipment. But if you must have 60-cycle, now that it has been recommended, you can get much better reliability and better control with a single-phase power supply. It's simpler to operate, easier to maintain, and less expensive. It will also give you the advantage of stepless control for fine tuning." Doc Myer seemed to realize I was right but I was now whistling in the dark. "Hank, I have no choice. You know the government's policy--you've got to quote on spec."

What a quandary, and I had nobody but myself to blame--by not cooperating and helping to write the specs. When would I learn? On the one hand, we didn't want to lose a customer with whom we'd enjoyed such an excellent working relationship and who had been instrumental in our early growth. On the other, we were reluctant to bid on specs we felt were simply inappropriate for the job. But now we had no choice.

We estimated that Brown Boveri would charge about $600,000 for the system they specified; we figured that the low bid would come in right below that figure, say, $590,000. But since the job was going to be awarded strictly on price, we went a little lower--to $585,000.

Sure enough, we were the low bidder by some $5,000 and we won the contract. But now, with the contract in hand, we went back to Doc Myer suggesting that since the three-phase balanced system was called for, would he at least let us furnish water-cooled transformers. "I'm afraid your personnel will have their hands full trying to keep any phase-balanced system in perfect synch, Doc. You could very easily wind up overloading the transformers. At least with a water-cooled system, the water will absorb the heat from the overload."

Doc Myer shook his head, resignedly. "Hank, my hands are tied. This is the government. We have to install the equipment that's been specified."

And so, just as the Mint ordered, Inductotherm built three six-ton furnaces with phase-balancing components and with air-cooled transformers. And it didn't take long for our prediction to come true. A few months after the three furnaces were installed, the Mint's personnel reset the overload devices to obtain full power under a broader range of power factor deviation; the result was a severe line imbalance. With one winding overloaded, the first transformer failed.

A month later, another transformer failed; this time, the Director of the Mint, Mrs. Mary Brooks, summoned me to her office at the Bureau of Mints in Washington. She was not a very happy hostess. Mrs. Brooks was an impressive executive and a perfect lady, but, this time, with the demeanor of a Grand Inquisitor. She sat at the far end of a conference table as long as most houses. She was flanked by her subordinates like a cavalry officer lining up a charge. I was outnumbered 20-to-1.

"Don't you know how to build furnaces, Mr. Rowan?" Mrs. Brooks asked, by way of greeting. Thus began a tirade that lasted for several minutes, as she reminded me that the Philadelphia Mint was intended to be a showplace featuring the most modern and efficient minting procedures in the world. Finally she concluded her harangue with a question: "So why have two of your furnaces failed, Mr. Rowan?"

I thought she'd never ask. "Mrs. Brooks, the problems with the Mint's furnaces began long before they were even built. The specs for the new Mint were drawn up by foreigners." I explained where I felt the design was flawed.

"Then why on earth did Inductotherm build the Mint's furnaces that way?" she asked, accusingly.

"Because that was the only way we were allowed to build them," I answered. "We explained in advance that the phase-balanced, air-cooled system was wrong for the job. In our opinion, it was too easy to throw the phases out of balance. For instance, on the furnaces the Mint's specs called for, power has to be reduced if the power factor is allowed to wander off unity, or else a line-overload condition would develop. But cutting back the power affects production. We predicted that the Mint's personnel would run the furnaces for maximum production and that overloads and breakdowns would occur. And that's just what's happened."

The imperious look on Mrs. Brooks face faded; she was now on the defensive and she didn't like it. Her inquisition took another tack. "Very well, Mr. Rowan, what can we do now?"

Twenty sets of eyes shifted from her to me. Outnumbered as I was, I wouldn't have liked to be one of them. "We can't rebuild as we'd like to, to a single-phase, stepless controlled furnace, but we can replace the transformers with water-cooled units. That way, they'll tolerate larger current imbalances resulting from power factor excursions and allow full power for melting."

Chapter 21

"You're Ready For Me Now"

I often say that people have two reasons for doing the things they do--a good reason and the real reason. I was no different when, in the mid-sixties, I decided to embark on a campaign of diversification and acquisition.

By that time, my preoccupations as Inductotherm's CEO were changing. It was no longer a question of whether Inductotherm would thrive and be profitable; instead, it was what would we do with these profits? Thanks to the hefty demand for the TRI-LINE, and our huge technological lead over Ajax and others, we'd been able to standardize much of our shop operation, thereby realizing new gains in operating economy and efficiency. Consequently, profitability soared. In fiscal 1962, the year we moved into Rancocas, pre-tax income comprised roughly one-sixth of our sales of $2.52 million; five years later, our fiscal 1967 sales of induction furnaces alone had quadrupled to $9.257 million, with pre-tax profits one-third that figure.

This kind of success can be dangerous. To some entrepreneurs, such accelerated profitability is the signal to raise salaries all around and provide a staggering array of executive perquisites: country club memberships, company cars, box seats at the ballpark, and corporate tables at black-tie benefits and social events.

That wasn't Inductotherm's style--or mine. Except for the bonus program and the profit sharing trust, we had always plowed every penny possible back into the company. The problem was, given the relatively small scale of the worldwide induction melting market, there was only so much money we could invest back into R&D and methodologies before reaching a point of diminishing returns.

We could always bank the money and earn interest on it, but I felt that was an undesirable precedent. Money is the one universal tool; with it, you can plow a field or erect a dam or build a furnace. If we banked our money, it would be working for the bankers, doing what they wanted it to do, and it would grow slowly. I wanted it to work for us, and help us grow a whole lot faster.

While growth in our own specialized field was finite, there had to be other fields with potential. Other companies had diversified; why not Inductotherm? Like other companies, we were looking for broad-based revenue growth, technical synergies, and, in some cases, guaranteed sources of supply.

Unlike many other companies, that were eager to style themselves as "conglomerates"--a popular buzzword of the time-we intended to diversify while maintaining our focus on induction melting. The way I saw it, specialization was the key to our success and for that reason I had established Linemelt and Consarc as separate companies, rather than as divisions within our corporate structure. I was convinced that a smaller company specializing in unique technologies in limited fields could outperform a larger company with adjuncts in a specific field. This is why the giants of American industry, Westinghouse and General Electric, for example, had never made a go of it in induction melting. At such companies the most talented men would not be found making furnaces for a limited market; instead, they would migrate to power generation, aerospace, or appliance divisions, where the potential for growth and profits was less restricted.

We had already begun the move to diversification by starting up companies in such related fields as channel furnace and vacuum arc furnace manufacturing, in 1959 and 1962, respectively. Now, the time appeared to be right to diversify farther afield, by acquiring existing companies in non-related fields.

The real reason for carrying out this strategy of acquisition, though, was more personal. Ever since my days at MIT---and for that matter, in the Army Air Corps--I'd enjoyed showing people how to solve problems, work more effectively, and achieve their potential. Since graduating from MIT 20 years earlier, I'd gotten to know scores of entrepreneurs-foundrymen, engineers, and inventors--and from what I'd seen, few of them came close to achieving what they were capable of.

Sometimes it was a lack of capitalization that held them back, and sometimes it was profitability itself that stunted a company's growth. How often I'd seen the same pattern: after achieving some modest success, the founder would become convinced that he had reached his goal. Instead of sustaining the efforts that had led to success, he would cut back and begin taking it easy.

It was all too easy for a business owner to justify a flattening of his growth curve. "Why should I work twelve hours a day, just to pay more taxes?" was a familiar refrain. Some of the most talented entrepreneurs would plateau out at the $2 million to $3 million a year level. At that point, they had their house at the shore and a Cadillac in the driveway. They could afford to take off and play golf whenever they wanted. Other people envied them, admired them, and told them they were a success, convincing them that they had found the Holy Grail, and maybe they had ...."

But what if the sights were raised and sufficient capitalization provided? What if an entrepreneur were given a whole new set of challenges and standards to meet?

The answer lay in buying the owner out, then giving his company--now an Inductotherm subsidiary--back to him, saying, in effect, "Now let's see how successful you can make this company."

Call it philosophy or call it ego, it was an idea I wanted to test and, in the late 1960s Inductotherm took the next step in our corporate evolution, moving into such diverse fields as sheet metal fabrication and electronic filtering and switching devices. In almost every case, the companies' founding entrepreneurs had a different reason for becoming a member of the Inductotherm family, but none were "hostile takeovers"; we didn't want anyone to be part of our team who didn't want to be there.

In fact, one of our earliest acquisitions-Pemberton Fabricators, a steel fabrication company in Pemberton, New Jersey--was by invitation of the owner. PemFab was an Inductotherm vendor, a small, five-man shop which had been making steel cabinets and other fabrications for Inductotherm furnaces since Sam Michaels had given up the business years earlier. PemFab's founder, Ralph Aspling, dropped by my office one day in 1967 to announce, "Hank, I've been watching you, and I think you're ready for me now."

I had no idea what he was talking about. "What do you mean, I'm ready for you now, Ralph"

"Well, I mean, you're ready to buy me now," our supplier answered.

I was astonished. "You mean you want to sell your company? Why? You've got what everyone dreams of. You're your own boss, you have a growing business, you have a good income. Why would you ever want to sell?"

He had a good reason. "Because you can give me tomorrow what it would take me 10 years to earn on my own," said the entrepreneur. I was curious to know what he meant.

"First of all," he began, "PemFab's been working out of a little rickety loft. You can give us a more modern building, with power to run heavy equipment and cranes for handling our products.

"I want to be able to handle the bigger, more profitable work available in the Delaware Valley. So my price for PemFab is $35,000 plus a 3/4 inch plate shear, a 500-ton press brake, and a building-say, 25,000 square feet--to put them in."

It sounded appealing and I agreed to these terms, on the condition that Aspling remain to manage the company--the same agreement I had with the CEO of Trenton Transformer, a company we bought in 1966 to provide us with a reliable source for transformers.

Valley Metals, the Cherry Hill-based metals distributor, was already in bankruptcy when Bob Guthrie, the troubled owner, asked Inductotherm to "buy him out." The acquisition of this company in 1967 was especially advantageous for us, as we had to carry a large inventory of copper tubing and aluminum shapes. Now, by distributing copper and other metals to area manufacturers, we were able to turn our inventory over many times more often while realizing a profit from it.

The next year, GRM joined us. It had been founded by three engineers who ran it profitably, but their limited finances restricted the size of the jobs they could bid for and they wanted greater challenges. One challenge I gave them was to find a "proper" name for the company. I hated acronyms. They may have been okay for IBM, which first built its reputation as International Business Machines, but I could never remember a string of initials and assumed that no one else could. Nothing happened with the name for a few years until one day at a board meeting I pressed the point.

"You know, guys," I said. "I can think of three names we can make out of GRM--GRIM, GRIME, and GERM. How about choosing one." They chose GRIM, and interestingly, business boomed. Who could forget the name "GRIM."

We went on to acquire Electronic Coil Co. in Plainville, Connecticut, which became available when the two founding partners decided they couldn't get along with each other any more. With Electronic Coil, we gained new expertise in the manufacture of miniaturized, clock-sized coils.

In 1968, Bob Buss was calling on us to sell capacitors made by High Energy Corp., a company he had founded a few years before. He, too, was floundering financially and wanted to join us. Capacitors are a major component of an induction system, and our purchases from GE, Westinghouse and others were enormous. We couldn't turn it down.

It was our desire to enhance our position in the vacuum melting field that led us to acquire a company called Cragmet. And with Cragmet, we also acquired one of the most colorful figures in the vacuum melting business, James "Jest Call Me Jimmy" Metcalf.

Jimmy Metcalf was the self-styled "hillbilly entrepreneur," a colorful wheeler-dealer who'd bragged of having flunked out of Mars Hill Junior College in North Carolina, but never let the lack of a college degree--or, for that matter, technical expertise--get in the way of closing a multi-million dollar, high-tech deal.

When I first met "Jest Plain Jimmy," it was 1956 and he was the melt shop superintendent for Cannon Muskegon, an alloy producer in Muskegon, Michigan. Typical of his ingenuity, he asked me how to configure a coil to increase the capacity of a furnace beyond its original design. I said it was, of course, possible and gave him some concepts. A few years later I bumped into him again at Allvac, when I was a director and he was in charge of the vacuum melting operation. We met again in 1961 at Beryllium Corporation, where he bought one of our early 125 kW, 180-cycle TRI-LINES. After six months he called to complain about the kilowatt meter on the control panel. "This one's broke, Hank. I need a new one. And by the way, make sure the next one has a O to 250 kW scale."

That was an odd request, I thought. "Why do you want a higher kilowatt meter scale, Jimmy?" I asked.

Metcalf hemmed and hawed for a bit, and finally admitted it was because he'd found he could run our 125 kW unit at 200 kW and the meter didn't go up that high.

In 1962, Metcalf became a competitor, signing on with John Logan as sales manager for Ajax Temescal, the vacuum melting division of Ajax Magnethermic. Metcalf complained that Logan wasn't willing to make the commitment to vacuum melting, however, and when Ajax got out of the vacuum melting business in 1966, Metcalf formed his own furnace company with Chuck Cragnolin; they took the first syllable of each name and called their new company Cragmet.

The mid-sixties, though, were tough times for the vacuum induction market, and most of the vacuum suppliers had been floundering. It was a feast-or-famine business as the demand for the super-alloys fluctuated. If a company put together a staff of engineers to design these complex systems when sales were active, they'd lose everything they'd gained in carrying the experienced staff through the lean years. If they downsized in bad times, they'd lose their experienced staff. So, no one really had survived. We'd developed a great working relationship with Stokes Machine Company in Philadelphia, the same Stokes that had bought that first little $300, 30-pound vacuum furnace that had kept Paul and me alive back in Glenolden in 1954.

We'd also worked with other vacuum suppliers such as Consolidated Vacuum, Kinney Vacuum, Deltec, and even tiny ones such as Paul-Walp Corp. But they were all in trouble financially and most had withdrawn from the market.

In 1967, though, prospects for vacuum induction melting appeared to be on the upswing. There was a new generation of wide-body jets--with bigger wings, bigger engines, and greater demands on load-bearing struts--on the drawing boards, and superalloy producers like Universal Cyclops and Allvac were stepping up their vacuum melting capacity.

Thus, we were elated when Jimmy Metcalf and Chuck Cragnolin called with a proposition. Their newly founded company had fallen on bad times, and they wanted to sell Cragmet to us and join us in Rancocas. I knew Metcalf to be an enterprising guy, and to enhance our role in the vacuum induction equipment market by offering the entire package was an opportunity I couldn't pass up. Never mind the cyclic nature of the business. We'd find a way to solve that. So in 1967, Cragmet became an Inductotherm subsidiary.

Coincidentally, at about the same time we acquired another company, Cheston, which specialized in resistance heaters for hot forming and forging, a technique derived from the techniques used in heating rivets for railroad cars. Cheston had, on its books, a big tax loss carry-forward, which Metcalf coveted. He didn't share my philosophy about taxes--that we don't really pay them, we collect them for the government--and just in case he made a profit, he was eager to have this deduction available. When he asked if Cragmet and Cheston could be merged, I gave my assent, and the two companies became one, under the Cheston name.

At Cragmet, just as at our other new subsidiaries, I left the founding owners in charge. After all, I reasoned, if they had known enough to build the company up to be attractive to us, chances were they knew more about their own business than we did. Once exposed to the principles that had guided Inductotherm to profitability, who knows how successful they might become?

The results weren't always what we expected. With the "successes" Jimmy Metcalf would bring us two decades later and other international repercussions, who needed failure? But more about that later.

During this time of rapid expansion and acquisition, I was often reminded of Bob Hotchkin's earlier advice. "It is not enough to be ethical. You must also associate with people who are ethical."

At the time, his advice sounded self-evident, even redundant. Since the day we opened for business in the corner of Paul Foley's little investment casting facility, Inductotherm had attracted a widely diverse group of men: hard-working shop hands, keen minded salesmen, pragmatic managers, idealistic scientists. But if there was one common denominator linking such men as Jess Cartlidge, Roy Ruble, Dick Walker, Tom Pippitt, and Ted Kennedy, it was principle. It was the awareness of their integrity, as much as my own feelings about business ethics, that, in at least that one instance with the foundry design firm, had led me to turn down the offer that would have made millions for Inductotherm.

I can't say that I consciously sought out men with principle. It wasn't as if it were a slogan, or the sort of thing we had carved over the doorway; it was the kind of thing we took for granted. Inductotherm seemed naturally to attract that kind of individual, men who sought more than a paycheck, who wanted a challenge, and whose word was their bond.

But, I was to learn that not everybody thought as we did, and I was in for some surprises.

Chapter 22

Solid State

Sailors and pilots both develop an ability to "read the wind," to sense changes in currents and sudden squalls before they happen and, to me, 1966 felt like the calm before the storm. In the induction melting field, the TRI-LINE continued to win us an increasing share of the national and international markets, and our 60-cycle stepless iron melters were growing in recognition and popularity. From all that we could tell, we had finally surpassed Ajax Magnethermic in sales.

There was no time for complacency, however, as the bigger, more powerful competitors still loomed on the horizon. The Swedish giant, ASEA; the Swiss conglomerate, Brown Boveri; Junker in Germany; as well as Mitsubishi, Toshiba, and Fuji Denki in Japan--all were nipping at markets we liked to consider ours.

At the same time, we could tell that the induction furnace industry was in for a mammoth shake-up. The solid-state SCRs (silicon controlled rectifiers) which were suitable for little more than low-power applications scarcely a half dozen years earlier were now faster and more powerful and were being proven in a variety of industrial settings for motor drives, speed controls, and variable-voltage power systems. Once these devices were perfected for the induction melting industry, and we knew it was just a matter of time, the advantages they represented over motor-generator sets-the technology on which our success had been built--would be overwhelming.

Solid-state inverters, when linked to the appropriate power supply, would provide higher operating efficiencies, lower cost, and allow miniaturization of components, enabling manufacturers to build far more compact yet powerful units. In concept, important operating advantages could be realized as well. Motor-generators were big, heavy units frequently weighing three tons or more, and they were expensive. For some foundries, a single motor-generator set represented the sole source of power for melting. If the generator failed, it would have to be sent back to the manufacturer to be rewound and repaired, a job that required five to six weeks. As a result, a foundry could be out of business while waiting for the repaired motor generator unit to be returned and installed for operation. (The TRI-LINE and NINE-LINE equipment, and the 60-cycle power supplies, already offered huge advantages, but their applications were limited to the larger furnaces.)

A solid-state inverter, on the other hand, would be made up of many small parts, and could, in principle, be repaired in a matter of hours or in a day. This reduced the risk of long-term down-time dramatically.

To Inductotherm, solid-state inverters represented another important advantage over the older technology. There were only a few sources of motor-generators in the country. General Electric had virtually discontinued making M-G sets for the induction industry, leaving Westinghouse as the primary supplier and Bogue a poor second. We had become Westinghouse's largest customer for M-G sets and while they were highly responsive, with an excellent product, our dependency on them was uncomfortable, if not dangerous. Moreover, out of every dollar Inductotherm spent for materials, 50 cents went to Westinghouse for M-G sets.

As soon as operational solid-state inverters could be developed for induction heating, I was determined that our company would be the leader in the new technology. At the same time, I realized that we lacked the knowledge and expertise to successfully develop solid-state inverters on our own. Ted Kennedy, for all of his genius in magnetics, wasn't versed in the intricacies of solid-state electronics, and my background didn't cover this new discipline. As for simply going out and hiring engineers with skill in this field, they simply weren't available.

Still, I hoped, maybe we could buy the technology. I had, in fact, given purchase orders to everyone and anyone who'd walked into my office claiming that they could produce a solid-state unit. But invariably, after landing the order, the prospective vendor never showed up with his product.

That was hardly surprising; even General Electric with all of their resources had been working for years on the concept of medium-frequency inverters, and they'd come up with nothing suitable for induction melting.

So I didn't set my hopes too high when, in October of 1966, Ernie Goggio and Phil Landis, who, a few months earlier, had founded a small electronics company named Pillar, Inc., came to us with a proposal for a solid-state inverter that sounded as though it might be the right mate for our power supply for melting metal. These two sounded pretty sure of themselves.

Phil Landis was the technical brains behind their company and Ernie Goggio, the businessman. They had previously worked for Louis Allis, first on the design of solid-state motor controls and later, on a project commissioned by Ajax Magnethermic to develop a solid-state inverter for induction heating and melting. Apparently they had failed to fulfill the development contract and had left to establish Pillar. Now, they felt confident that within a few months they could have a pilot inverter operating. It crossed my mind that there might be a breach of business ethics lurking in this background, but it wasn't my place to judge, and our need to get on with this project prevailed.

Again, we issued a purchase order for a 50 kW, 3,000-cycle inverter with the hope that this little company might succeed where others had failed. We wanted only a "breadboard" unit to prove the feasibility and permit our engineers to configure the cabinet with capacitors, transformers, meters, and other controls to build it into a complete induction power supply.

When nine months had passed since our first meeting with Goggio and Landis, we'd just about lost hope. Suddenly--a phone call that they were ready. They returned with a breadboard model of what they claimed was a functional solid-state inverter. Only, when we hooked it up to induction controls in our lab, it didn't work. We were devastated. Was it all for naught? Nine months of hope and optimism down the drain, and our dream of beating the world to solid-state melting was slipping away. Were the SCRs still too unpredictable, too delicate for the demands of induction heating? Or was it just that more work had to go into component design and protective circuits? We couldn't give up now--the induction power supply of the future seemed too close.

We sent Goggio and Landis back to Milwaukee loaded with lots of ideas for correcting the problems and stayed in constant touch. The two months that passed seemed an eternity, but at last they were back--and this time the 3,000-cycle hum from their inverter echoed thru the plant. And so, a new era had arrived.

Before unveiling the new melting technology to the foundry industry, though, some real-world testing was vital. We couldn't afford to introduce a failure. What more fitting site for its shakedown, I thought, than the investment casting plant where Inductotherm was born.

Paul Foley, still the pioneer, was not only willing, he was eager. Using a new, larger Pillar inverter as the frequency changer, we quickly built Harcast a 100 kW, 3,000-cycle induction system and lived with it for a couple of months while we quietly debugged our new baby. Finally, we were satisfied that it could stand the rigors of a working foundry.

And then came the unveiling at the 1968 American Foundry Society Show in Cleveland, Ohio. The Inductotherm MARK I V.I.P. (for Variable Induction Power) was the hit of the Foundry Show.

We set it up for a dramatic demonstration, 100 kW on 17 pounds of cast iron. From start to finish, the melt from cold billet to bright white molten iron took less than five minutes. Each melt attracted a crowd of 50 to a 100 foundrymen, and we knew this day would belong remembered as a turning point for the foundry industry.

Seeing the response of prospective customers to the Mark I, I couldn't help but think back to the days when a small, struggling company in Delanco dared to depart from the conventional thinking in the industry. Now, when Inductotherm unveiled something new, we didn't have to wheedle people to try it; the name Inductotherm was like the "Good Housekeeping Seal of Approval." Whoever wanted the latest and the best was eager to adopt this new technology from Rancocas.

Still, I felt some trepidation as the show opened. We weren't the only company there with a solid-state inverter; TOCCO was displaying a melt system with a General Electric inverter that we'd known nothing about. However, my confidence returned once the demonstrations began; whereas the Inductotherm solid-state system was running every day, making a demo heat every hour on the hour, the TOCCO furnace remained cold and inoperative. The GE inverter program for the induction industry died at that foundry show.

Solid-state systems spelled the death knoll for motor generators, and the men who made M-G sets saw the handwriting on the wall. Shortly after that 1968 show, I was visiting with a group of senior managers at Westinghouse's motor-generator plant in Buffalo, New York, when the plant manager, Warren Trigg, asked the inevitable question, "What life remains for the motor-generator set, Hank?"

The question itself underscored the change that was taking place in our industry. Since the inception of induction melting some sixty years earlier, motor-generators-and the men who built them--had been the center of the industry. Now Inductotherm had leapfrogged over the very technology that had served us so well. The demand for motor-generators in some other fields would continue, of course--the induction furnace industry was but a small percentage of their total market--and perhaps this was why the industry giants hadn't developed the new, solid-state technology themselves--they didn't have to.

How much longer would the demand for M-G sets last? "About five years," I told them. But I'd underestimated the zeal of foundrymen to incorporate the new technology, along with the enthusiasm of our own salesmen to sell where they had an advantage. For all intents and purposes, motor-generator sets were obsolete within the year.

The Mark I was a conceptual breakthrough and a marketing triumph; in the course of the next few years Inductotherm would sell 241 induction systems worldwide using the Pillar solid-state inverter as the heart of the power supply. But as we built and sold them, who would have thought that even this new triumph would come close to breaking our growing company.

The inverter wasn't all we had hoped it could be, and there were problems--lots of them. Pillar employed from 12 to 16 complex solid-state control boards, and training our servicemen to understand them and analyze field problems was almost insurmountable. So great was the pressure on the 20 men we needed to keep the inverters running, that at times I was afraid we would go unstable in service. As a serviceman gained experience and skill at ferreting out inverter problems, he would, by necessity, be overloaded with work, as we struggled to keep customers running. When the pressure became too great, we would lose him and the burden would fall on newer, greener men.

Sometimes the inverter problems got so stubbornly complex that we would have to call on Pillar's chief engineer, Phil Landis, to go to the customer's plant and get his contrary device running again. We hated doing this because, though Phil was a peach of a guy and I admired his expertise as an engineer, I couldn't shake the feeling that we were teaching Pillar our technology and our side of the business. Nonetheless, our reputation--and our customers' production--were on the line, so we had no choice.

We had tried to protect ourselves as best we could in our agreement with Pillar. We paid for the development of each new size, and we were to purchase a minimum of $350,000 worth of inverter kits per year, all in exchange for exclusive rights to the use of the inverter in the melting field and a rather fuzzy non-compete agreement. It seemed a fair and equitable relationship, and it vaulted Ernie Goggio and Pillar to sudden prominence in solid- state electronics, not to mention new-found fiscal stability, enabling them to sell to non-competitive industries. Still, even as Goggio and Landis met with Roy and me in Rancocas to formalize this agreement, I couldn't help reflecting back on the genesis of their company. Had it been coincidence that, even though they hadn't been able to produce an inverter with their former employer, Louis Allis, they somehow succeeded in devising a rudimentary inverter once they were out on their own?

I couldn't help wondering, too, if some time in the distant future Pillar might be our next competitor. I was wrong, though; it wouldn't take that long.

Chapter 23

Sorrowful Flight North

With our triumph at the Cleveland show, Inductotherm was riding high. Yet a few months later, I would confront the awful moment that for years I knew was coming. It was August 1968. Ginny had just graduated from Cornell and was working in her first job in New York City. Betty, along with Jimmy, David, and Ben Octavo were at Lake George for the summer. I planned to fly up from Rancocas the afternoon of the fifteenth to join them there. The night before, however, I got a call from Betty telling me Jimmy was having trouble breathing and had been in pain. His mother sat up with him most of the night trying to make him comfortable, but nothing seemed to help. Jimmy knew what was coming. "Mom," he had told her, "I'm going to die tonight."

His mother, as always, tried to boost his spirits. "No, don't be silly," she had told him. "You're going to be all right."

Only this time Betty was wrong. When morning broke, Jimmy was gone. His frail body had given out. He was twenty-one. I called Ginny and picked her up at the Teterboro Airport for an early flight north to join Betty and David in their devastation.

I tried to tell myself that Jimmy's death had been a release from his pain, but it didn't help. He was so much like me; he railed against his affliction. There had been so much he had wanted to accomplish in life, a life that should have been just beginning. He had suffered for so long that he and pain had become one. Now, my son's pain was gone, but so was Jimmy.

Chapter 24

Going Global

Somehow, life went on. As before, I tried to override my sense of loss by working even more intensely than before, and preoccupying myself with ever more far-flung ventures. While the Mark 1 inverter was imperfect, it represented the most advanced approach to induction melting, and as our reputation as the leader in the furnace industry grew, so did sales. Inductotherm closed fiscal 1968 just as we were introducing the Mark 1 at the foundry exhibition. Revenues reached $12.48 million, an increase of 22% over the previous year. An additional $7.42 million was reported by our subsidiaries which now numbered 11, so we'd become just shy of a $20 million company.

With the new solid-state melters ready for the foundry industry, we were poised for some real growth. If we played our cards right.

The overseas markets were to he part of that growth--a huge part. Since moving to Rancocas, the number of furnaces we'd shipped beyond our shores had climbed from three to 77, including 12 to Mexico and 37 to Canada. What impressed us about these figures was that they were achieved without an aggressive foreign sales effort. What could we do if we tried! The trouble was we didn't really know how, so we were false starts in for a lot more blunders and false starts.

The French firm, Huertey, was already history (little more than a footnote, really) and, in 1967, the British licensee, Metalectric, had sold out to another British firm, Wellman Incandescent Furnace Company. Wellman was an accomplished manufacturer of atmospheric, heat-treating, and tunnel furnaces--many as large as eight feet square and hundreds of feet long--but their efforts to penetrate induction melting had bogged down. As a result, our hopes for serving foreign markets via licensed partners had diminished.

It took an Australian businessman, Bob Simpson, to propose still another way to tackle the foreign market. Simpson ran a furnace company, Process Plant Construction, Ltd., in Australia; PPC made box furnaces and tunnel heat-treating furnaces similar to those made by Wellman in England. PPC was jointly owned by Simpson himself and the John Holland Group, an engineering construction firm that had diversified into manufacturing. What Simpson proposed for us was a 50-50 joint venture with the Holland Group, financed at $100,000 each, licensed for our technology, and with PPC overseeing the operation.

It sounded like a great arrangement, a license and 5% royalty for our technology combined with 50% ownership, thereby obligating us to put in the effort to ensure success. We reasoned, too, at the time that having an Australian who understood the local markets would accelerate the start-up process and make a huge contribution to the success of the operation.

We were moving so fast, in so many areas, that we didn't have time to study a project to death. Bob's first letter to us was dated April 24, 1968, and, six weeks later, in early June, I met with him and John Holland in Australia to sign the necessary agreements. We needed someone to head up the joint operation and transfer the technology from Rancocas to Australia, and I knew just the man for the job--none other than our former shop hand, Jess Cartlidge. Jess had lived through the start-up of Inductotherm itself, he had continued his education in electrical circuitry and math, and had become an accomplished sales and service representative, responsible for the West Coast territory and handling several million dollars in new sales each year. He was ready for the Australian challenge and I never doubted for a minute that he would jump at the opportunity.

So it was that, on June 13,1968, with the signed papers in hand, I called Roy Ruble from Melbourne. Australia, to give him the news. Then, I asked him to contact Jess. When Roy tracked him down, he was making a service call on the Esco Foundry in Portland, Oregon, where they called him to the phone. Roy got right to the point: "Jess, how would you like to go to Australia to start a new company?"

If Roy thought he'd catch him off guard, he was mistaken. "Great," said Jess, undaunted by the prospect of heading up a manufacturing company on the other side of the world; "My bags are packed."

I had to laugh when Roy told me of Jess's reaction; I knew what he was referring to I'd expected that, by now, Jess was itching to move on to something new. As he'd once told me, he liked his challenges in "five-year bites," and he'd been in the same sales territory for almost five years now. And while he was headed far away, Jess had already come a long way from the raw, unskilled teenager whose early lessons in industrial engineering came via digging root cellars for me. Even after 15 years in the induction melting industry, he retained the enthusiasm for his work that he'd had as a teenager. He spent one vacation traveling to Canada to the Canadian Hansen Van Winkle Company, Ltd. plant to see the furnace he'd helped build in operation.

Since then, he'd tackled every job we gave him with gusto, all the while setting his sights progressively higher as he progressed from shop helper to draftsman to serviceman to salesman. From me, perhaps, he'd developed a yen for flying, and he carried a little scooter in his plane to literally scoot from the airfield to customer's plants. The sight of Jess in a business suit and fedora, tie flapping in the breeze as he motored along on two wheels, became familiar to Inductotherm customers.

In l961 he'd begun commuting by air, usually flying himself from Rancocas to Ohio to open up a Midwest sales office, Then, after a successful two-year stint in the heartland we sent him to Los Angeles to establish our new West Coast sales office. Here, too, he'd succeeded. But somewhere along the way, it seemed Jess was no longer measuring his work by conventional standards of success or failure; at times I got the strange feeling that he was not just working for me, he was mentally competing with me; measuring his own commitment and determination against mine. If I was impatient to get results, he was twice as impatient. If I had worked late into the night to solve a problem, Jess would go without sleep.

If I got by with an inexpensive car, well, Jess drove a scooter. Ever since that time when he was a teenager and I'd lectured him on the value of time, he was in a hurry. Not just to get a job done, but to get it done right. He was determined, whatever job he was doing, to know more about it than anyone else. When he first began brazing copper, he read up on brazing alloys and on the theories of joining metal. When he had to assemble wire panels, he studied the control circuitry and understood every function of every part that he installed. In time, he became capable of building a copper induction melting coil in four or five hours, where others in our shop took two to three days.

He used to wonder what the future held for a fellow like him, a young man who couldn't afford college, and had little patience for the classroom. "Someday, if I'm lucky," he'd sigh, "I'll get to wear a white shirt and go to work at a desk."

Now, at the ripe old age of 32: he was about to travel halfway around the world, to a continent he'd never seen, to start a new company as Managing Director of Inductotherm, Australia. It remained to be seen if he could build a team "Down Under" to match the one I'd built back in Delanco, but the parallels between our infant company in 1954 and the new Australian subsidiary were striking. In both cases, an old established manufacturer held a virtual monopoly in the induction furnace market. In Australia, it wasn't Ajax Electrothermic, but Birlec Major, a subsidiary of the English company originally licensed by Ajax three decades earlier. And just as with Ajax in the thirties, forties, and fifties, Birlec was used to customers coming to them. "The way I see it," Jess wrote back after a few weeks "Down Under," "Birlec is overdue for some competition."

He began by renting a 5,OOO-square-foot factory on the outskirts of Melbourne. Then he began the most important task of all--finding and hiring the men who would make up Inductotherm, Australia. One of the first men he hired was a young Australian named John Mortimer. Mortimer was then two years out of college and was working in Tasmania as a project engineer for Comalco, an aluminum subsidiary of Commonwealth Engineering. Mortimer had responded to a "Help Wanted" ad Jess had placed in a local newspaper and, when the managing director flew down to ask him to join the new, six-man company, Mortimer didn't take long to accept. Even though, true to Inductotherm tradition, the initial salary Jess was offering was considerably less than salaries with which other companies were trying to lure Mortimer away from Commonwealth, none of them could match the opportunity

It didn't take Jess long to show the Australian furnace market what this upstart company could do. While Birlec Major and other less significant furnace makers in Australia subcontracted out the bulk of their production work, Inductotherm, Australia's managing director knew furnace production from the bottom up. He organized his company to be the only one to design and manufacture entire furnace systems. What's more, as Australian foundrymen were delighted to learn, Jess's company not only delivered an entire assembled package, but the "new kid on the block" installed the furnace as well.

Just as it had at the parent company's plant back in New Jersey, the workday often stretched long into the night at the small plant outside Melbourne. As the "younger brother," our Australian sibling wasn't content to merely outperform its competition on the Australian continent, it wanted to prove it was every bit as aggressive and innovative as its older sibling. It didn't take long for the hard work to start paying off.

But then disaster struck. John Holland's construction group was involved in a massive construction project building the Westgate Bridge over the Yarra River in Melbourne. The plans provided by an English design firm called for box-beam construction to be cantilevered from both ends out over the river until they met in the middle to be joined. On one of the cantilevered sections there was some buckling of the beam plates, and the representative of the design firm recommended the removal of a critical pin to allow straightening or replacement of the beam section. It proved to be the worst move he could have made; the entire cantilevered section crashed into the river carrying to their deaths the entire team of engineers, including 21 of John Holland's best men.

With all the pain and problems he now faced, Holland chose to retrench and asked us if we would buy out his investment, an accommodation we were then glad to make. Thus, in December 1970, we became the sole owners of our Australian licensee, Inductotherm Australia, Ltd.

A year after Jess had arrived in Australia, his company had outgrown its original factory and moved to larger quarters to meet the booming demand from the local foundry market. After another six months, Inductotherm, Australia, had not only surpassed the older competitor, Birlec, in sales, but it also commanded 90% of the Australian market. Now Jess began looking north, to Taiwan, Korea, and Japan.

It was in the third year of our Australian subsidiary's operation that the company landed its biggest contract to date--an iron melting furnace for Thompson and Scougall, one of Australia's biggest iron foundries. Since the furnace would cost $500,000, and our Australian company had not had much experience with iron furnaces, the design came from the parent company back in Rancocas. But John Mortimer, Inductotherm Australia's chief engineer, wasn't content with the American design. It would perform much more efficiently, he reckoned, if he reconfigured the coils, used square tubing, and brought the turns closer together to improve the "copper factor." But, when the furnace was installed and the power turned on, the coils developed a corona ionization of the air around the coils, a condition that led to arcing between the coil turns.

The furnaces had to be rebuilt at an estimated cost of $100,000 to the subsidiary. While the young Chief Engineer's intentions were well-founded, he felt, in the aftermath of the repair work, that he had let the company down. The only honorable thing to do, he decided, was to resign. He reached me back in Rancocas to advise me of his decision.

"Mr. Rowan, I'm sorry about all this. I realize I've disappointed you. It will take a few months to get everything sorted out here, and then you can be sure I'll be leaving the company."

I wasn't hearing of it. "What?" I yelled into the phone. "You mean you're quitting after I've just spent $100,000 on your education?"

Finally he agreed to stay, though he sounded dubious about his future with Inductotherm. John Mortimer would go a long way to make up for this fiasco, but he could hardly imagine how far.

While it's tempting to claim that in expanding into foreign countries Inductotherm was following a grand, global strategy, it just wasn't so. In almost each instance our reasons and approach to establishing subsidiaries outside the United States varied along with the circumstances.

In Mexico, for instance, we were responding to a threat by Brown Boveri. In 1968 Inductotherm learned that the Swiss were lobbying the Mexican government to close their borders to imports of industrial machinery. This wasn't done out of concern for Mexican self-determination; Brown Boveri already had a factory in Mexico, and such protectionist legislation, once passed, would have left the Swiss competition with a monopoly in that country. Inductotherm had to move fast.

In 1969, Brown Boveri's lobbying efforts paid off in part when the Mexican government enacted the import law. But, by then, the Swiss company had another Mexico-based competitor to deal with--a company called Inductomex.

Inductomex was a partly owned subsidiary run in partnership with our former sales agent, Len Mayer, of Casa William Mayer in Mexico City. In accordance with Mexican law, Len Mayer owned 51% of the venture.

But all did not go as planned. According to the agreement between Inductotherm and Casa William Mayer, we would provide the technology, while the Mexican partner was expected to select the management for the company.

Len Mayer had made a poor choice of men to run the Mexican subsidiary. After several months of acquainting themselves with Inductotherm technology and practices, Mayer's manager and a handful of his crew left Inductomex to form their own company in direct competition with us.

This left Inductotherm with one option--to take over operation of the Mexican venture. We negotiated with the Mexican government and with Mayer for control of the company; in spite the initial difficulties, we felt there was of tremendous potential in the Mexican market. Further, the Mexican peso, at 12.5 to the dollar, was still strong and, at a time when American banks were competing to loan money to the Mexican government--a move not only sanctioned, but encouraged by our own government--the currency seemed stable.

We hired another manager and gave him the financial and technical backing to build Inductomex into a formidable furnace maker, offering a level of service unheard of in Mexico. Inventories grew, delivery schedules were rigidly adhered to, and the service staff was trained for immediate response to customer needs.

As in the Philippines, the stage was now set for the country's foundrymen to achieve new plateaus of profitability, if the economy held up. It was a big "If"

Farther south lay another foreign market with tremendous potential--Brazil. Sao Paulo was said to be the fastest growing city in the world, and Inductotherm received scores of inquiries each year for melting furnaces But duties on imports were high, rendering direct sales both difficult and unprofitable Further, the resultant paperwork led to tremendous delays in accommodating customers.

Such were the conditions in 1971 which spurred us to form other partnership--Pyro-Inductotherm--with a local furnace maker called Pyro Industrias Empreendimentos Ltda. The Brazilian company appeared to be a good match for us, as they had a strong track record in the manufacture and sales of standard box furnaces in Brazil. In our usual impetuous style, we took a superficial look at our potential partner and plunged ahead, but this time our impatience and lack of diligence would prove very costly. Once up and running, we reckoned, our new Brazilian-based subsidiary would allow us to tap into this new market on a cost competitive basis.

The first man we sent to represent us in this venture was Larry Pringle, our internal sales manager, who would handle the sales end of the operation and expand into the manufacturing end of the business. While Larry was setting up his sales office, our Brazilian partner presented us with a plan to rent a plant that was under construction in Manaus, 1,000 miles up the Amazon River. He had recommended this site to take advantage of tax incentives offered by the Brazilian government, which wanted to encourage industry to move away from the country's major cities which were bursting at the seams. We agreed to do so, and why not? After all, we were relying on our partner's knowledge of conditions in his own country, so we agreed to this plan, and the Brazilian rented the factory.

With construction underway in Manaus, Pringle was finding the Brazilian foundry industry especially eager to acquire Inductotherm's furnaces; before a single unit was built, he had acquired $350,000 in sales advances. Customers were especially eager to pay deposits due to the high inflation that afflicted the country's economy.

Our Brazilian partner was just as eager to spend these advances on other things besides manufacturing. In a matter of months he'd spent the entire $350,000 in advances on travel, entertainment, and advertising and public relations, with perhaps a little self indulgence thrown in.

This wasn't the way we were used to doing business, so I flew to Brazil to take a firsthand look at the situation. The first matter of business was to sever connections with our Brazilian partner; if he could spend $350,000 before we'd built a single furnace, how much could he spend once we got into production?

With the money gone, and with a work force to train and production deadlines to meet, Larry Pringle offered me his candid assessment of the situation: he was in over his head. He wanted to go home.

I consented, and told him that as soon as I returned to Rancocas, I would replace him with Hank Raufer. Raufer was now a 15-year veteran of our company, and if Inductotherm, Brazil, was a challenge, well, that's what he'd joined us for. At that time--in 1957--he was an electrical engineer with the Philadelphia Electric company. His job was secure and he was earning a good salary. But, as he explained, working for a big, bureaucratic utility didn't offer the growth or the challenge he was looking for.

A few days after he joined us I gave him his first challenge. I needed a licensed engineer to back me up and make sure that all plans and designs were done to precise engineering standards. He was going to be that licensed engineer.

He wasn't too happy about the idea, at first. "Hank, earning that license will take a lot of study, and review classes are expensive," he complained.

"Don't worry about the cost, "I told him. "We'll pay all the expenses--tuition, books, even your mileage to class--on the day you hang your license upon the wall."

A year later, his study completed and all the examinations passed, Hank Raufer had his engineer's license hanging on the wall and he was reimbursed for all his expenses. "You know, Hank," he admitted, "if you hadn't prodded me a little bit, I might never have gotten that license." He was justly proud of the accomplishment.

Now he was CEO of Inductotherm, Brazil with a huge debt and a ton of obligations. He was wise enough to limit his company's new offerings to smaller, simpler equipment that could be produced cost effectively; thus he decided to offer nothing bigger than 500 kW or 5,000-pound Mark 11 solid-state inverters and TRI-LINES. Before his work force wound a single coil, however, Raufer was determined to teach his men the Inductotherm way of working. He shocked the Brazilians by showing up in work clothes instead of pinstripes. He persuaded them that by meeting Inductotherm's standards, they were making their own jobs secure. He also introduced an incentive plan and an annual bonus plan. But Inductotherm, Brazil wasn't just going to make furnaces better than anyone else in South America; the new company was going to service them better, too. Raufer gave his service manager full authority to hire the qualified people needed to maintain the equipment in the field.

The Rancocas-grown formula of hard work and perseverance made Inductotherm, Brazil the most successful furnace maker in the country. Within two years of setting up shop, Raufer's company had gained close to 65% of the market.

Things weren't going so well in every foreign-based subsidiary; as we were about to learn, the management of our newly acquired company in England wasn't even talking to the work force.

Chapter 25

An Reward from the Queen

The British licensing venture with Metalectric had proven to be a great disappointment. Things hadn't improved, either, after the company--along with our license--was acquired by Wellman Incandescent. After two years of considerable investment in its new subsidiary, however, Wellman's management despaired of ever making Metalectric profitable on its own; in November 1969, they dispatched Bill Overton, the Managing Director of its languishing furnace company, to Rancocas to make us an offer: Would we care to become a partner with them in Metalectric?

Taken by itself, it wasn't an unattractive offer. But, so far our experience with joint ownerships was all bad. Mexico had failed. Brazil had been a disaster and, even in Australia, the good intentions were dashed by the sudden need of our partner to terminate the joint venture. So why enter another joint operation? It had become apparent that, all too often, joint endeavors between corporate entities are doomed to failure, probably because neither gives it his undivided supreme effort and the enterprise can flounder.

So I met Bill Overton's overture by countering, "No, we wouldn't be interested in a partnership, but we'd be happy to consider buying out the induction melting operation."

Three months later, in February 1970, we bought the licensed entity, leaving the present management in place and hoping we could train and influence them to success.

The English countryside is beautiful--largely because it is meticulously zoned. There aren't the miles of commercial and industrial confusion stretching out on each highway leaving a city. I had thought we could repeat the Rancocas experience--buy a farm and build a plant, but no, not in England. Farmland is farmland, commercial is commercial, and industry has to remain separate.

So we settled for an ideal building of about 25,000 square feet in the industrial estate in the little town of Droitwich, about 20 miles south of Birmingham.

Months later, the English subsidiary continued to languish. Instead of leading Inductotherm into the European market, Metalectric was a drain. From its Managing Director, Bill Overton, I heard the constant lament, "If only Britain were a member of the Common Market. Then we could compete with other European manufacturers."

Maybe that was the reason, and maybe the company simply lacked the leadership necessary to make it competitive. One of the major problems was Metalectric's dismal degree of operating efficiency. In England it was taking more men more time to produce a less reliable furnace than was the standard in Rancocas, or in Australia. After eight months of reviewing lackluster performance reports from Britain, I decided it was time to show our British colleagues how we did things back home, starting with the shop. The man for the job was our shop superintendent in Rancocas, Tom Kennedy. "Tom," I asked, "how would you like to spend a few weeks in England"

Tom Kennedy appeared surprised and delighted at the prospect. "I'd love to go, Hank." He had been stationed there during the war, during which time he'd met and married his British-born wife, Peggy. "I wonder what it's like today."

Droitwich--more specifically, the Metalectric plant--was like nothing he'd seen before. At least, not in Rancocas. A few days after Tom had arrived in Droitwich, in November 1970, he was on the phone to me, a note of incredulity in his voice. "It's no wonder the company's been losing money, Hank." he began. "The men in the shop don't have any tools, even screwdrivers are scarce, and management doesn't have any idea what tools are needed. Jobs that are routine in Rancocas can't be done at all over here."

It took me a moment to sort this out. "What do you mean, the shop doesn't have the tools? And management doesn't know what tools they need? Why haven't the men told their supervisors what they need?"

"They don't talk to each other, Hank," Tom went on. "It's just not done. Labor talks to labor and management talks to management. It's almost as if they belonged to two different companies."

"Well, Tom, it looks like you've got your work cut out for you," I told him, and he agreed. Instead of "a couple of weeks," our former shop superintendent stayed in England two and a half years.

Meanwhile, it was becoming clear to me that what Metalectric needed was more than new tools and operating techniques; the company required a complete overhaul, a whole attitude and sense of mission. The British Managing Director appeared to be pleasant enough and a capable engineer, but he was too eager to be popular to make a good manager. He knew all too little about the business, and even less about what was going on in the plant or what was needed to turn a profit. Nonetheless, I was reluctant to remove Overton. Maybe he would turn things around, I told myself. Maybe it wasn't too late for him to learn. Maybe he could learn something from Ted Kennedy about setting standards and seeing that his company met them. It wasn't that I had any particular faith in the man's latent talents; it was, rather, that I didn't believe in firing people. Oh, I would occasionally blow my top at the executives running one of my subsidiaries if they were negligent or contravened my policies. But there were now 16 different companies in our group, and I had never dismissed the CEO of any of them.

Until Overton. When it happened, it wasn't his poor sales performance or slipshod fiscal management that earned him his termination, although, if I had been managing properly, it should have been. It was, instead, the example he had It was the straw that broke the camel's back, and on July 11, 1971, torn between feelings of great reluctance and grim determination, I flew to England to fire Overton. It was a trip I hated to take.

What made it worse was, I knew that as a matter of principle I could not now bring myself to offer Overton a full measure of severance pay. As I saw it, when he dipped into company funds to award the departing purchasing manager redundancy pay--money the company desperately needed to survive--he voided any obligation we might have felt for him. To me it was, pure and simple, dishonest. In the parlance of the nineties, I had to send management a message. A few hours after landing in England I was in Overton's office, giving him the bad news. "I'm sorry, Bill. You gave your severance pay to your friend, Bob Moore, in the form of redundancy pay. That was improper in that the money belonged to this company, not to you." I paid him a couple of months' pay, no more.

Was that a cruel thing to do? Yes, it was and I felt guilty about it. And I still do. But it was also a matter of principle. I named Metalectric's chief engineer, John Perks, acting Managing Director and returned home to put my plan of action into effect. Metalectric needed a dynamic executive, somebody who could shake things up, show the work force what they were capable of and show them the Inductotherm way of doing things. And I knew just where to find such a man. A few weeks earlier I'd received a letter from Jess Cartlidge:

May 17, 1971

"Hank, you now have a group of people in Australia similar to the original Inducto gang. They are young, they are enthusiastic, and they are keen to tackle anything.

"They are tops in the part of the world they have been given and they have demolished the competition.

"My assignment was to establish Inductotherm in thee induction business in Australia. That has been done. This group no longer needs me. There is obviously a lot of fine tuning to be done and this will take a couple years, but to withhold from my successor the joy, sorrow, sweat, tears, worry and the satisfaction in doing this would be to rob him of the very things that have made this experience so totally satisfying to me and so potentially satisfying to Inductotherm. "What's next?"


When I returned home from England it was 8 p.m. our time, 11 a.m. the next day, Sydney time, and placed a call to Australia. I first explained the situation in Droitwich, and then asked, "Jess, I wonder how you and Brenda (his new and very lovely Australian wife) would enjoy England?"

"My bags are packed," he laughed, eager to tackle this new assignment.

Metalectric's new Managing Director arrived in Droitwich on November 1, 1971, to find the company's morale dismally low. The labor force and management alike recognized that the company had not been productive; they seemed to doubt that intervention by a bunch of Yanks was likely to change anything for the better.

Jess quickly recognized that Metalectric's management really didn't understand their product, their customers, or their industry. Moreover, the work force was conscious of the fact that they had never really been trained, and they couldn't comprehend what was expected of them. The lack of communication between labor and management was symptomatic of British industry, a problem that led to the depression from which England was then just emerging.

The British subsidiary's new leader realized that turning the company around would require more than providing the appropriate tools; he would have to instill a new attitude and a new corporate culture.

A self-made man, Jess had no use for the British class system that had prevailed for generations, a system that had hindered communications and cooperation between labor and management for decades. From Jess's standpoint, there was only one way to work--the Inductotherm way. He'd seen it work in the United States and he'd seen it succeed in Australia. But could it work in England?

If Jolly Old England was a change of scene for Jess, Metalectric's new managing director was a revelation for Droitwich. Instead of an executive who kept to the office, rarely venturing out from his ivory tower into the shop, Jess showed that he was a "hands-on" manager. It didn't take long for the work force to realize that the new boss knew as much--and more--about production techniques as anybody in the factory. And why not? After all, he'd performed almost every production job there was. He not only knew every procedure inside and out, but he also didn't shrink from rolling up his sleeves and getting his hands dirty to demonstrate the most efficient way of using a drill press or brazing copper tubing to form it into a coil.

As Jess realized, his new work force had never known what it felt like to be a team. That was going to change. When Metalectric landed its first big sale, Jess didn't celebrate with the salesmen and management alone, but invited the entire work crew to share in celebrating their mutual success. This was unheard of for these British workers who had never been invited to share recognition for achievements of any sort.

Scarcely six weeks after his arrival, as Christmas was approaching, the Managing Director invited the company's employees to a holiday party at his home. At first, some of the old-line employees were reluctant to accept. Surely there was some mistake, they insisted. Workers simply didn't socialize at the Managing Director's home. In England, it just wasn't done. But eventually, the most hidebound traditionalists recognized that, not only was the invitation sincere, but that the old days were gone forever.

Jess sent further shock waves through Metalectric. After Friday night executive meetings, he would invite the managers down to the Star and Garter, the local pub, which was, as pubs are in most small English towns, the center of the village's social life and gathering spot for the company's workers. For the first time, with a little prodding from the boss, the firm's management and workers began talking to each other.

After three months in Europe, the new Managing Director made another major change; METALECTRIC LTD. became INDUCTOTHERM EUROPE LTD. The new name signaled two major changes in the company's status. First, that the once struggling subsidiary was on its way to becoming a stalwart in the Inductotherm family. Second, that the British company was now poised to move beyond the boundaries of England.

Jess was determined to carry out a true trans-European strategy, with sales offices established throughout the continent. But penetrating the continent was going to be far tougher than gaining respectability in Great Britain. Over the previous two decades the continental market had lost faith in English manufacturers. The incessant labor strikes had diminished the ability of manufacturers in England to meet delivery schedules.

What's more, even though Inductotherm Europe was adopting a new work ethic, Inducto-style, the power company frequently suffered slowdowns, sometimes from a lack of coal resulting in brownouts.

In the face of these obstacles, our former shop-hand-turned executive was as resourceful as ever. One winter, when the country was plagued by a series of strikes by electrical company workers and the ensuing brownouts, Jess went out and found two ice cream trucks. The vehicles carried their own diesel-powered generators to power the refrigeration units during the summer. Since this was winter, the trucks had been standing idle.

Jess rented the trucks, and for two months the trucks stood backed up to loading docks, powering Inductotherm Europe's lights and power tools. This ingenuous approach to staying in operation, whether the local power company was on strike or not, made headlines when a reporter came by. Even more important, it enabled the company to operate continually and to make its deliveries on time.

By 1974 Inductotherm Europe was well on its way to disproving the myth that English companies couldn't compete. That year, over 50% of the company's sales were to continental Europe. But there, besides the German giant, Junker, and Swiss giant, Brown Boveri, Jess's company found itself butting heads with a competitor the Managing Director knew better than any other--his own parent company back in Rancocas. In the Middle East, Asia, and Eastern Europe, too, salesmen representing the company's two separate arms frequently wound up bidding against each other.

Such a situation would be anathema to most global conglomerates, but--our expertise as engineers notwithstanding-Inductotherm was still relatively new to the often complex arena of international trade. It was unavoidable and natural that there be overlaps--far better than having gaps. "We have a better shot at landing the business this way," I would tell Roy and Jess, whenever either complained about competition from the other.

I wasn't just dismissing their complaints with a glib quip. In Germany, for instance, Jess could back up his sales arguments with reams of performance statistics; but the German foundry industry was slow to trust English suppliers. On the other hand, they knew the American Inductotherm's reputation for reliability and efficiency; one might have thought the Rancocas Creek was the Rhine.

I saw this rivalry between our American and European organizations as a healthy sign. Both teams wanted to pursue new markets and new opportunities, even if it meant competing against their sibling company on the opposite side of the Atlantic. The intramural rivalry would make each company that much more effective against other companies, I contended.

The British Government inadvertently lent weight to my argument in 1976, when it honored the company Jess had brought from the brink of failure with the Queen's Award to Industry. It was given in recognition of the Droitwich company's contributions to both the economy and the image of England. Even in the face of stiff competition from Inductotherm in the United States, Inductotherm Europe was among a handful of companies in Britain to earn this distinction.

It was an impressive conclusion to Jess's five-year stint in England. In that time he had propelled Inductotherm Europe to the $10-million-a-year level in sales. Moreover, he had positioned the company for continued growth for the years ahead; just as he had in Australia, he'd selflessly trained a new management team to take the reins from him. John Perks, Managing Director, Ian Haywood, Sales Director, John Simcock, Engineering Manager, and Graham Hawkins, Production Manager were men who epitomized what Inductotherm Europe stood for.

On the day the Queen's Award was presented, all of Droitwich turned out for the ceremony, which was attended by scores of white-robe magistrates and other dignitaries in robes and medals. The only element missing from the ritual was Jess Cartlidge; he'd already returned to the United States to tackle his next job, as Inductotherm's first Vice President of International Sales. There were still a few parts of the world left where we hadn't sold Inductotherm furnaces, but that would soon change.

Chapter 26


I've heard people say I'm hard to satisfy, but that's not quite right; the fact is, I'm impossible to satisfy. This doesn't mean I'm not proud of our company's accomplishments, because I am. Or that I can't appreciate the hard work and the sacrifices our employees have made, because I do. And I've been thrilled by some of the things we've achieved. But I've never been satisfied; I've never been content with the status quo. I have never said to myself, "This is the best that we can do."

In fact, to my way of thinking, satisfaction has always been the enemy of progress. It's not the satisfied man who invents the steam engine, or devises a new way to melt metal or, for that matter, composes a symphony. It's the perfectionist who's dissatisfied with what has been done before and wants to do things better.

To the perfectionist, competition isn't something to avoid; instead, it's something he seeks out. What others see as a threat, he recognizes as a condition vital to the health of his own business. It's competition that prods people to do their best and to build on past successes, rather than rest on them. Without competition, a company gets lazy, complacent, and satisfied.

About ten years after our move to Rancocas, I sensed the signs of satisfaction setting in throughout our company and I was worried. While imperfect, our Mark I solid-state power supply had afforded us a tremendous advantage over the competition and the enjoyment of this advantage was destroying us from within like a cancer. Our servicemen were taking longer to respond. Our sales force didn't seem to have that same keen edge they had displayed when we had to fight for every order. Our work force seemed to be less driven than they once were. On one occasion, I had advised one of our shop hands, a big burly fellow, that we needed to transfer him to the Tripler Department to wind coils on the toroidal tripler. His face went white. This was considered the toughest job in the plant, but still, it had to be done. "Oh no! Not the tripler room," he pleaded, and his eyes welled up with tears.

I even worried about myself. I was getting close to 50, the age when some entrepreneurs lose sight of the vision that led them to start their own business; they ease up and become less inclined to make the tough decisions, to resist expediency, in the name of principles. And when the boss gets soft, the company does, too.

I wondered if we were still the company we used to be. If we had to, could we still build a control panel in four days, the way we did for Specialloy, back in Delanco? Could we survive a price-cutting war instigated by one of the conglomerate giants? Could we still put forth the effort that had born fruit in our first tripler? More important, would we still take the same risks now that we had then? After all, back then, the stakes were different. Inductotherm was a young, brash company, eager to upset the status quo in the induction melting business. And so we had. We'd toppled Ajax Electrothermic in 1959; surpassed the surviving combination. Ajax Magnethermic, in the mid-sixties; and were on the brink of overtaking even Brown Boveri in the global market for induction.

Now, we were the dragon, but there would soon be new challengers with new technologies and new threats to our core business. In a strange way, I was eager to find out how we could react. I wouldn't have to wait long to find out.

Within three years after introduction of the solid-state Mark I in 1968,our furnace sales had increased to $14 million. As Inductotherm had thrived, so had Pillar, our sole supplier of solid- state frequency inverters. We had paid handsomely for each new size and, in return for this support, Pillar had granted us exclusive rights to the inverter unit in the induction furnace and foundry industries but was free to market its inverter in any other industrial field. But, somewhere along the way, Ernie Goggio, the CEO of Pillar, began to chafe under this agreement. In 1971, he licensed two manufacturers, Radyne in England and AEG in Germany, to build solid-state inverters for their induction-heating applications-but using the technology we'd helped Pillar develop. This was not, in and of itself, a breach of the agreement he had struck with us--at least, not technically. But it was a stupid move, and I told him so. Once these companies saw the technology and the concepts underlying a successful inverter, I pointed out to Goggio, they could adapt it to other applications and develop their own inverters for the melting and foundry industries. Indeed, this was what happened. By late 1971, we could see our technological edge dwindling. But that was only the beginning. If, to my way of thinking, Goggio and Pillar had violated the spirit of our agreement in 1971, he violated it to the letter in April 1972. That was the month he licensed Neturen of Japan to build his inverter for a broad range of induction heating and melting equipment. And then the rumors started coming back from the field that Pillar was offering to lease inverters directly to the foundry industry.

When I first got an inkling of Goggio's apparent change of position, I was stunned. First of all, there was the matter of our business relationship; if Pillar really was planning to market the unit direct to foundries, it meant the electronics company was deliberately planning to further and flagrantly breach our agreement.

I was terribly disappointed--and angry. After all, Inductotherm had contributed measurably to Pillar's first workable inverter. Then, it was Inductotherm that had introduced the unit to the foundry market, thereby endowing it with the kind of credibility it couldn't have otherwise had for years. And, all along, we had nurtured the electronics company from a shaky start to its current profitability. For that matter, Inductotherm was still Pillar's biggest customer.

Now, if those rumors were true, we were once again in deep trouble. When I confronted Goggio directly to give him the chance to confirm or deny the story of their duplicity, he blithely admitted it was true.

"And what about our agreement?" I asked, incredulous. "I suppose it doesn't matter that Inductotherm bought exclusivity to the frequency inverter. Are you just planning to go back on your word, and let the chips fall where they may? Ernie, I'm disappointed in you. I suppose you feel no loyalty to Inductotherm at all, do you?"

Goggio shrugged off my words with, "Hey, we're not violating the agreement. It says we won't help directly, but we're offering to lease the inverters. Besides, it's not as if anything has to change, Hank. We can go on doing business the way we always have. But look at it from our perspective. The way we see it, we've been shortchanging ourselves by restricting ourselves to Inductotherm."

Restricting themselves? That was a strange way to look at a contract with a customer that had put them in business, I thought. By the time Goggio left, I was beginning to grasp the full, disturbing implications of the situation and I was worried. If Pillar began supplying inverters directly to the foundry customers or to other induction furnace companies, what would happen to our position in the marketplace? Obviously, the appeals to his sense of ethics had fallen on deaf ears. In desperation, we threatened him with a lawsuit. We also contacted Neturen, advising them that their license agreement with Pillar was invalid because it contravened the exclusive rights that Pillar had contracted to us four years earlier, and threatened a lawsuit.

As I could have predicted, all of this did little good. Our patents and contracts attorney, Arthur Seidel, advised against a lawsuit, feeling that, regardless how much assistance we had rendered Pillar, it was questionable whether our contract with them was enforceable. As for Neturen, the Japanese company simply ignored our position; within a few months the consequences of the Neturen-Pillar arrangement became evident when Inductotherm lost a sizable job for Hitachi metals to the Japanese and their new-found solid-state technology.

Ultimately, our efforts to salvage our relationship with Pillar were fruitless, and on June 5, 1972--months after he had begun supplying our competitors with solid-state inverters--we received formal notice of Goggio's intent to cancel our agreement of exclusivity. By that time, I wanted nothing more to do with him or his company and I told him so at a final meeting, "Look, Ernie, it's fruitless to try to hold you to our agreement if it's your intent to breach it. So, I guess we're all through doing business together. Why don't you just go your way, and we'll go ours."

Goggio rose to leave, but not before he revealed the full depth of his duplicity. "That's fine with me, Hank. To tell you the truth, Inductotherm needs Pillar a lot more than Pillar needs Inductotherm. We've outgrown you. In fact, we're going to sell more than inverters. We're going to make our own furnaces. Pillar and Inductotherm are going to go head-to-head. We'll see whose technology wins."

It took a moment for his words to sink in; I began to see what had happened to him. His judgment had been clouded by the difference between what we paid Pillar for the inverter and what we charged for the system. The inverter kit that Pillar sold to us was the heart of the Mark I furnace system and the OEM price for a 175 kW unit was $15,000; when built into a complete melting system with capacitors, meters, controls, furnace, and refractory, the price reached $35,000.

It was obvious that he wanted a bigger share of the pie. Still, I couldn't let him go without a word of advice. "Are you serious, Erie? I'm afraid you'll find selling furnaces a different ball game from making frequency inverters. Do you know what a foundryman's problems are? Do you have a reputable sales staff? Do you have servicemen? People like these don't grow on trees."

He assumed a pose of nonchalance as he pulled open the door. "Don't worry. I might not have them now, but I know where to get them."

It was strange; even as he was speaking, I found myself in the thrall of conflicting emotions. My mind was in turmoil as I grappled with the consequences of a break with Pillar; yet at the same time, on a level that had nothing to do with logic, I felt a strange sense of exhilaration. If Inductotherm had been growing complacent, it wouldn't continue to do so much longer. Not now, when we faced a new crisis.

As Goggio walked out of my office for the last time, I called Roy, now the company's executive vice president, to fill him in on this latest development. Roy was well aware of the financial and technical help we'd provided to Pillar, and he, too, was incensed. "I know you'll hate the idea, Hank, but this time, I'd love to take that guy to court.

"No, Roy; Seidel doesn't think we have a sound case, and that--for a lawyer--is unusual and, therefore, probably right. Besides, a lawsuit would drag on for years. And while we're waiting to get into court, the very fact that we're suing would lend credibility to the claims they're already making--that it was Pillar that created our power systems." In fact, that was a claim they made in their advertising. I wouldn't have minded, if they'd taken credit for the inverter. They would have been right, but claiming our entire induction power supply was a gross misrepresentation.

"No, we're just going to drop Pillar--stop doing business with them. We'll use up the inverters we already have in inventory, but we're not going to buy another Pillar unit. If we did, we'd just be promoting their technology. And, as of today, we can no longer afford to do that. Instead, we're going to offer a better solid-state inverter."

Roy got a look on his face, as if he'd heard this before. "You mean ... "

"That's right," I told him. "Inductotherm is going to build its own solid-state units."

Roy's face turned grave. "Hank, you know we've got a record backlog. And we've got deadlines to meet. This is no time to begin R&D on products we're committed to delivering in a matter of weeks. This isn't Seaway Nickel needing one furnace, Hank. We've got orders for dozens of inverter-powered furnaces. We can't go back to the drawing board to find a new power supply."

He was right. But if we couldn't design our own solid-state inverter, we stood to lose far, far more than that $1,000 a day penalty commitment that had cost me so much sleep. We had orders from all around the world and customers waiting to start melting with their new Mark I's. If we couldn't meet these commitments, if we had to admit that we were dependent upon Pillar, it could deal us a mortal wound.

Yet, at the same time, the break with Goggio could prove to be a blessing in disguise. While Pillar's CEO obviously felt that, as our sole source of solid-state inverters, he had Inductotherm over the proverbial barrel, the fact was, there was a major flaw in Goggio's operating philosophy. As the first company to develop a workable solid-state inverter for induction power systems, Pillar had enjoyed a big lead over the competition in 1968. But it was now 1972, and the company had done little to upgrade its technology and make its units more efficient and reliable. Moreover, we had become increasingly dissatisfied with its product, which had pushed us to the crisis point in the field.

I'd always guarded our company's reputation for quality and service, and I was distressed to see this reputation jeopardized by an outside supplier. But, with 240 Mark I units operating across the United States and around the world, the pressure on our front-line troops--the servicemen-continued to mount. They would no sooner return home from one emergency than they would have to go out and confront another.

Just hiring more servicemen wasn't the answer. They had to undergo rigorous training before they could meet Inductotherm's standards; sending out substandard or inadequately trained servicemen would have been almost worse than sending no one at all. The Mark I was more than a service problem, though. It was a design problem as well. Our engineers had to "design around" the Pillar inverter parts--mixing electronics with the power circuitry. This interfered with the clean, uncluttered look that had been the hallmark of Inductotherm's furnaces and control panels since our days in Glenolden.

Still, it was reasonable to expect that if we could just hang on ...if our servicemen could just keep the furnaces running ...we'd come up with something better. We eased the problem in many ways, for example, by replacing troublesome Pillar reactors with our own reactors.

Steps like these helped, but it wasn't enough. For months we had been hounding Goggio for an improved, more reliable inverter unit, but to no avail. Now that the relationship between the two firms had been dissolved, it was to our advantage that he hadn't responded; but our necks were in the noose once again. There was no point in worrying about whether we could. We had to. This time, though, I had an ace in the hole. Although our dependency on Pillar had left us without in-house expertise in solid-state technology, I was aware of one other company which had dropped Pillar and had made tremendous progress on its own solid-state inverters--a company called Induction Process Equipment, or IPE, in Madison Heights, Michigan. I knew the company well; two years earlier, we had bought it.

IPE's specialty was induction heating, a process related to, but separate from, induction melting. It was a technology used in heat treating and quenching gears, splines, and other machinery parts requiring hardened surfaces. Their market was highly concentrated, including such companies as Ford, General Motors, International Harvester, and other household-name manufacturers of cars, trucks and heavy machinery. IPE's products were often large, convoluted affairs, incorporating multiple mechanical processes for handling the parts and automatically heating to temperatures as high as 1,600" F, then spray quenching the heated metal to obtain the desired hardness. Such monsters (as we called them) could cost as much as $2 million per machine and were a nightmare to engineer and debug--often over a period of a year or two. For about two years, between 1968 and 1970, Bill Peschel, the founder and CEO of IPE, had been buying Pillar's solid-state inverters for his induction heating applications. The relationship led to the first use of solid-state technology in IPE's field but failed to staunch the flow of red ink on our subsidiary's books. After a promising start, personalities got in the way, and the relationship between IPE and Pillar deteriorated as Goggio failed to provide the kind of cooperation and technical progress Peschel deemed for his own, often quixotic, projects. Further, Pillar was already selling to IPE's competitors, neutralizing whatever competitive edge our subsidiary may have hoped to enjoy.

In September l970, at the urging of Byron Taylor, his chief engineer, Peschel launched a research project aimed at developing IPE's own solid-state inverter. He assigned this task to Taylor, who became Research Engineer. Peschel was a tough taskmaster and the conditions he imposed on Taylor seemed almost impossible. Taylor was given nine months, two assistants and the penurious budget of $10,000 for material to succeed where even such industrial giants as General Electric had failed after years of research on inverters for induction technology.

The amiable Taylor went to work, undaunted by the skepticism of his co-workers. How are you going to do it?" they all wanted to know, "when General Electric and Westinghouse couldn't do it?"

Taylor's answer was simple. "We're going to work and work and work, until one day--Shazaam!--it will just turn on."

Thus his task was dubbed "Project Shazaam!" and Taylor drew a lightning bolt across the front of the cabinet containing his research supplies. A plastic bag containing a $2 cigar was hung nearby, with a note on it saying, "Not until Shazaam."

But Taylor wasn't waiting for cosmic inspiration. He was convinced that three men, working 40-hour weeks, could not possibly perfect the technology; so he multiplied his resources using the formula so often applied at Inductotherm--he doubled his work schedule. "This way, we're better than six engineers, he told his two assistants, Dave Mellon and John Stokely. "We're really more like eight or nine, because we'll know what each has done and don't have to waste time on communication." Taylor's enthusiasm was contagious and the other two went along with him.

So did Taylor's other co-workers, many of whom began spending weekends at the IPE plant, eager to participate in this almost mystical quest. For nine months, Taylor's team pushed on, researching, learning, designing, building, and testing. Still, he couldn't arrive at the right combination of saturating reactors which seemed critical to the workings of every other solid-state system.

As the deadline drew closer and closer, Taylor became desperate; if he couldn't get the reactors to work, why not just leave them out? It would require a completely different circuitry; but maybe, just maybe, it would work.

At the nine-month goal in May 1971, almost to the day after the project had been launched, Taylor, Mellon, and Stokely gathered around the crude inverter unit they'd tacked together. It stood six feet high, and was 18 inches deep by three feet wide--half the volume of the Pillar units. But would it work?

The three of them held their breath as Taylor pushed the "on" button and twisted a dial. The inverter began to hum louder and louder as Taylor ran it up to its maximum power. After a minute, he turned it off, and the three of them sat down, just staring at each other, as if dumbfounded. "Let's do it again," said Taylor, after a few minutes had passed, "just to make sure it wasn't a fluke."

Sure enough, it ran again; this time Dale Mellon picked up a phone, dialed the company-wide intercom system, and said one word: "Shazaam!"

Within minutes, the lab was packed with co-workers, all exultant over what Taylor, Stokely, and Mellon had done. Taylor was especially happy. He had not only achieved a major engineering breakthrough: he had saved his job and probably the company.

As a result of Project Shazaam, IPE president Peschel severed his arrangement with Pillar, and in December 1971, the company's first solid-state system, a 100 kW, 3000-cycle induction heating unit for hardening brakes was shipped to the Rockwell International plant in Tilbury, Canada. But Taylor's new solid state unit did more than provide IPE with its own technology; it expanded the company's product line, giving Peschel an inverter to sell in competition with Pillar's.

Two days after Goggio announced his intentions to go into the furnace business, IPE's Byron Taylor arrived in Rancocas to work with our engineers to design Inductotherm's new solid-state inverter for melting applications. Even with Byron's experience in building this inverter at IPE, it was no small task.

In induction heating applications, the load is constant and steady, fixed by the characteristic of the slug of metal being heated. In melting, on the other hand, the inverter must accommodate and respond to sudden and violent load changes as loose scrap melts into the bath or as perhaps 1,000 pounds of cold magnetic material is dropped within the coil. Yet if the inverter control were to react too quickly to these changes, the rolling metal bath in the all molten state would become unstable. Major control changes were required to solve these challenges.

Recalling the complexity of Pillar's solid-state units, I advised Taylor to keep the circuitry simple with a minimum of components. "Keep one thing in mind, Byron," I reminded him. "Non-existing parts can't fail."

Within a month, Taylor and Inductotherm's engineers Paul Boehm and Art Johnson tested their first prototype, and it became the heart of the Mark II power supply--a great improvement over its predecessor using the Pillar inverter. Instead of a forced commutation circuit, it employed a self-commutating circuit, which placed less strain on the solid-state devices. Where the Pillar inverter required between 12 and 16 control boards, the Mark II required only one. Within weeks the all-new, all-Inductotherm, solid-state power supplies were being installed in every melt unit built in Rancocas.

In the field, the response from servicemen responsible for keeping customers' furnaces running was enthusiastic. There was still a host of problems to be resolved, but the morale among the servicemen underwent a dramatic change for the better, as finally they saw progress and simplicity.

Meanwhile, Goggio was proceeding with his plans to knock Inductotherm off the top of the heap. We learned where our former supplier hoped to find the people with the expertise and experience needed to build, sell, and service Pillar's latest addition to their product line--induction furnaces. Goggio rented a room at a local motel a few miles from our plant in Rancocas, where he and his staff set up a recruiting station to lure employees away from Inductotherm. They ran ads announcing the exciting opportunities awaiting Inductotherm employees if only they'd quit and join Pillar. Servicemen were offered jobs as salesmen, and salesmen offered jobs as sales managers, and salary increases averaging $5,000 were promised.

With these inducements, Pillar succeeded in luring away a grand total of 13 of our people; good guys, some with a bright future at Inductotherm. We learned later that Inductotherm's furnace drawings began showing up in Pillar's engineering department and Pillar started quoting complete melting systems. I encountered Goggio a year later. He had the audacity to complain that the personnel who'd left us to join his company weren't so great after all; in fact, of the 13 he'd recruited away, only two now remained.

Poetic justice, I reflected; perhaps Goggio got what he deserved, but I felt sorry for the 11 men whose careers were destroyed.

With the introduction of the Mark II, Inductotherm had ushered in a whole new generation of solid-state inverters and 120 of them became the prime melting units in foundries worldwide. But solid state components were small and slow to "turn on"; even our inverters were still finicky. Shared currents and multiple SCRs (silicon-controlled rectifiers) in series--parallel with balancing reactors--proved to be another form of service headache. Misfires of one or more SCRs often caused fuses to blow at an alarming rate, shutting down the melting operation.

It became more and more apparent that we still were not out of the woods. New inverter circuits began showing up in the literature like ants coming out of the woodwork. As new solid-state devices became available, engineers in such diverse fields as motor control and power generation were continually experimenting with new circuitry. They all fell into just two classes, however-constant voltage inverters, which we had pursued, and constant current (called current-fed) inverters.

Could it be that the current-fed inverter would give us greater reliability? Early in 1973 we commissioned our engineer, Art Johnson, to develop and test for melting applications the Mark III, based on the constant-current circuit. Whereas by now Ajax and others were adopting this concept, it didn't perform as we wanted it to for melting systems. It couldn't respond to the changing characteristics of the load and the deeper power dip as the charge in the furnace heated, resulting in longer melt times and lower efficiencies. It wasn't the answer.

As larger SCRs became available, we moved on to the Mark IV design, but reliability still plagued us. It was Charlie Fink, our sales manager covering Pennsylvania, who forced the solution to this problem--particularly the fuse problem. Duraloy in Scottdale, Pennsylvania, was one of his customers with a pair of 750 kW, Mark IV inverters. The Mark IV was similar in circuitry to the Mark II but used one-quarter the number of larger hockey-puck SCRs, so called because they were about the size and shape of a hockey puck. But still, occasional misfiring blew fuses and shut down the melt. Charlie lived with the customer as the pile of failed fuses grew.

"As things stand now, Hank," Charlie needled, "every time I sell a melting unit, I'm going to have to sell them a barrel, too, just to put the fuses in." He may not have been very diplomatic, but he was right. His job and our company's reputation depended on getting this problem solved and Charlie wasn't going to rest until it happened, somehow.

And it happened. Back to the concept that "non-existing parts can't fail," we set about building the fuseless inverter. By incorporating current limiting reactors in the DC line to delay the rate of rise of current in the event of a misfire, a fast-acting breaker could take the inverter off the line before an overload occurred. We were fighting for milliseconds, but it worked. Shortly thereafter, to protect against other types of overloads, we returned to building Mark IV's with oversized, slower-acting fuses that rarely blew. The "fuseless feature" as we dubbed it had proven its worth, and the Mark IV power supply became the bellwether of the industry. Phenomenal performance and reliability was achieved, and the need for field service dwindled to manageable levels. We would build 420 Mark IV's before the more efficient Power-Trak was introduced in 1977.

By the time Pillar, our new competitor, had positioned itself in the market, the vast technological and economic advantage it had enjoyed only a few years earlier--as the first supplier of solid-state inverters--had evaporated; the company was becoming just another also-ran. Just to keep going, Pillar resorted to price cutting, offering and sometimes selling less-efficient, less-reliable melting systems for 20% under the premier furnaces which still bore the name Inductotherm.

Chapter 27


Something very strange was happening at Consarc. In its highly esoteric field, where installations of highly sophisticated vacuum-arc and vacuum-induction systems could cost millions of dollars, the company's products had quickly gained worldwide recognition, challenging the older German competitor, Leybold Heraeus, then the dominant force in the vacuum remelt field. From its first year of operation, our new subsidiary had begun winning contracts from industry leaders like Universal Cyclops, Latrobe Steel, General Electric, Special Metals, Allvac, and Carpenter Steel.

But after six years of prosperity, the company was beginning to falter; though its furnaces performed well, Consarc was attracting very little repeat business. This was alarming, because the customer base in this highly specialized field was limited to those relatively few companies with the expertise to produce vacuum alloys. Nobody needed a crystal ball to see that, if this trend continued, Consarc would soon be left without customers.

For a year or so, the company's dilemma was hard to comprehend. Not only was Consarc's equipment technically advanced, but also its president, J Wooding, seemed to be a consummate salesman--charming, ingratiating, the sort of man who could fit in anywhere when he chose to.

So why was I having to make excuses for him with his customers, some of whom were old friends of mine? "There must be some misunderstanding," I would tell them. "J's usually so deferential. I'm sure he didn't mean to offend."

To me, it just didn't add up. Like most people, I suppose, I considered myself a pretty good judge of human nature. I could understand a flash of temper, a misunderstanding, or even pretense of superiority to mask feelings of inadequacy.

But finally, I had to come to grips with the fact that I had either gravely misjudged Consarc's CEO, or that his ego was getting the upper hand, clouding his judgment and his ability to function in the business world. I forced myself to put aside my admiration for his intellect and his prowess as an engineer and the fact that I considered him a friend. When I did, I began to see what everybody else was seeing. In the sixth year of the company's operations, after alienating nearly every member of the Inductotherm and the Consarc work force, he had only one last new target for his contemptuousness-me.

His battle with Consarc's treasurer, Bob Hotchkin, had continued almost incessantly for years as he became obsessed with freeing himself of Bob's scrutiny. My unwavering support for Hotch and my frequent summaries of the fine work Bob had provided on behalf of Consarc seemed to infuriate him still further, and, like a cornered tiger, he finally turned his wrath on me. So sudden and so intense was this new direction that I suspected that I had really been the source of his frustration all along. We could hardly meet without almost instant tension ending in insults and innuendoes so severe that for long periods we resorted to communicating by memos. These became so frequent and so voluminous they could, themselves, fill a book.

His appalling lack of courtesy--not to mention simple consideration for others, and his insolence and sometimes guile--didn't bother me as much as his growing litigiousness. Any situation that didn't pan out to his satisfaction became reason to sue.

In late 1968 he hired a lawyer to prepare a suit against Inductotherm to remove Hotchkin as Consarc's treasurer, claiming malfeasance and incompetence. His lawyer apparently advised against such action, since it was never filed.

In early 1970 he was especially eager to sue a sales agency who was representing Consarc overseas. To get things underway he wanted me to authorize a $50,000 retainer for his lawyer who was, he advised me, a friend of President Nixon, and worth every penny of his $250-an-hour fee.

I didn't share his enthusiasm for the suit or his lawyer, who wanted the retainer so he could investigate whether or not Wooding had a case. "This is a waste of time, J. That's a lot of money to pay a lawyer just to tell you whether he wants to work for you or not. But the legal fees are just the beginning; in the long run, the time you and your staff will have to devote to the case will cost you more than the lawyers." I could see him change before my eyes; it was like seeing Doctor Jekyll turn into Mr. Hyde. Gone was his charming smile and his deferential manner, replaced by snarls and sneers.

Things got worse during the seventh year of Consarc's operations. The company's business had fallen off and I found it necessary to monitor the company's performance on an increasingly closer basis. To Wooding, this was tantamount to persecution.

Still, I was astonished at his behavior upon calling to check some financial figures one afternoon in 1970. Wooding became increasingly defensive, then began to sputter as his tone became more and more heated. Suddenly, I heard the CEO of my own subsidiary threatening me. "You're lucky we're having this conversation over the phone," he erupted. "Because if you were here, I'm not sure I could control myself, and my hands are registered as lethal weapons in six countries."

Ridiculous, I thought to myself. It sounded like something a child might say, so I inquired, "Which six?"

He stammered and named four countries, then said he'd forgotten the other two, and abruptly smashed the phone down.

I began to appreciate anew the job the Consarc staff had done, sales of only $2,630,000. Annual sales continued to climb to $4 million during the next couple of years, but extravagances had doubled the administration and selling expenses and profits were in free fall. By 1972 Wooding had apparently either insulted or offended sufficient numbers of his customers that sales dropped to only one-third of that peak level. With the continuing waste and lack of frugality, the company wiped out the last four years' profits with a $1 million loss, reducing the stockholders' equity to only $563,000. Consarc couldn't even meet the payroll, let alone pay its bills.

Wooding tried to raise the money from the banks, but to no avail--not, at least, without a guarantee from Inductotherm to back up Consarc's loans. He tried to wheedle advances from prospective customers, but, by this point there were few left. Finally, in desperation, he turned to the one person he knew could help him the partner he had come to malign, me.

"Hank, old boy, I'm sorry about the way things have gone the past year," he began, his voice heavy with remorse. "I've been under a tremendous amount of pressure recently, and you, more than anyone, understand what pressure can do to one. What say we let bygones be bygones, and get Consarc off to a fresh start" Once again, his tone suggested, we were the best of friends.

A fresh start was precisely what I had in mind, only this time, J wouldn't have a partner, he would have a boss. I reasoned that, once he realized that he was no longer an equal in our partnership, he would have to conduct himself civilly on a day-to-day basis within the company, that he would finally face reality and cease berating those people he dealt with outside the company--our customers.

To this end, Inductotherm provided Wooding with enough operating capital to meet the payroll for some weeks and to meet the outstanding payables. In return, we gained an additional 10% of Consarc stock, giving Inductotherm a 55% ownership position. Moreover, as Wooding had requested, we agreed to a "buy-sell" arrangement requiring Wooding to meet certain financial criteria. If he failed, the company's president would have to sell his interest in Consarc and leave the company.

While at first I found it curious that the engineer would insist on making his continued participation in the company subject to such provisions, I could only conclude that, consciously or subconsciously, he wanted out and this agreement was a means to that end. I became more convinced of this five months later.

For a while, he tried. I could see him making a conscious effort to function within the parameters of our new relationship, and I thought my plan for saving him and the company was going to work. Only, where the 50-50 ownership had deteriorated into a struggle for dominance, having a boss was now abhorrent; the "fresh start" Wooding had promised may have been preordained to fail. At any rate, the "new, more cooperative" Wooding didn't last long. Consarc's president had sold a very special vacuum degassing furnace to Vasco (the new name for the old Vanadium Alloy Steel Company). He'd befriended a senior metallurgist there, a Charles Sherman, and the system became known as the "Sherman Special."

About the time it was to be commissioned, Sherman retired and no one else at Vasco had any interest in the process. Early operational trials were unsuccessful, partly because there was now no one at Vasco dedicated to the process; the new president of Vasco, Frederick Kaufman, wanted it returned and his money back.

Then Teledyne bought Vasco and the Teledyne management got into the act, claiming Consarc's degassing furnace didn't work and generally "badmouthing" Consarc.

To be sure, it was a bad situation. The furnace had not been given a proper try and Consarc could ill afford to take it back anyway. Wooding's solution, he later told me, was that he phoned Henry Singleton, founder and chairman of Teledyne, at his home that weekend where Singleton was hosting a dinner party, and insisted to speak to him immediately. Once Teledyne's chairman got on the line, Wooding informed him he planned to file suit for libel.

Singleton was flabbergasted; it sounded like a bad joke. It wasn't merely that Teledyne included various technological divisions, several of which were good customers of the furnace company and several of our subsidiaries; at Inductotherm, we had built our business by helping our customers. We rarely insulted them and never sued them.

I felt myself slump into my chair the following Monday morning when Wooding advised me of his scheme to solve the problem by taking Teledyne to court. I had no recourse; there was no point trying to deal with Wooding as a rational person. He had to go.

For Wooding, the end came at a board meeting at Consarc in February 1973. The agenda called for the election of corporate officers, and the outcome seemed predetermined. The five-man board was comprised of J, his friend from Consarc Power Corporation, George Johnston, Roy Ruble, Bob Hotchkin, and myself. Wooding and Johnston could be counted on to preserve the Englishman's interests, while Hotch, Roy and I were determined to save Consarc.

Wooding was beside himself at that evening meeting. There was no doubt in my mind that, while subconsciously he yearned for independence, his conscious mind was fighting for the survival of the status quo and the prestige that being CEO of Consarc had brought him.

He sneered and fidgeted and stalled, fully aware that I planned to remove him as president of Consarc. But it wouldn't happen that day; he protested that he had not been given sufficient notice to prepare for a board meeting, as it had been called a few days short of the 10 days advance notice required by the bylaws.

He had us on a technicality; so Hotchkin, Roy, and I picked up our papers advising the Englishman we'd see him in another two weeks, on February 26, 1973.

The next meeting was like something out of The Exorcist. Besides George Johnston and the two lawyers he'd hired, Wooding arrived at the Consarc board room with a priest who had flown in from Ireland, presumably to provide moral support for Consarc's soon-to-be-ex-CEO. We had invited a local lawyer to join us so as to avoid any technical oversight.

An air of ritual hung over the proceedings which began with Wooding's lawyers examining the bylaws and confirming the validity of the board meeting. With that business out of the way, we nominated and voted on a new slate of officers. Wooding's name was conspicuously absent; to all intents and purposes, he now was fired.

The next order of business was to buy out the Englishman in accordance with the formula we had agreed on months before, one which incorporated annualized earnings over the last few months when the company had shown modest gains. However, Wooding didn't agree with our figures. As he saw it, the tax saving resulting from the tax loss carry forward should also be multiplied by 10 in arriving at the buyout price.

Inductotherm's lawyer and Bob Hotchkin tried to explain that what Wooding was suggesting was an accounting fantasy, that a tax loss carry forward takes place only once, and was not part of operating profit.

The Englishman wouldn't listen, though. Instead, he rose from the board room table, and intoned, "Gentlemen, it's been a pleasure. I'll see you in court." With those words, he exited, theatrically, like a prince being banished from his fiefdom and walked out with his chin in the air, his fellow director, the two lawyers, and the priest trailing in his wake.

This tableau finished, the rest of us breathed a sigh of relief and got down to the business of rebuilding a business. I had been elected president pro tem, with the intention of installing Stan Myers, Wooding's former number two man, as CEO as soon as things calmed down.

But we hadn't heard the last from Wooding. Blinded by his own self-image, and convinced that he was the victim of a conspiracy, the vengeful engineer filed suit against both Consarc and Inductotherm. Another two and a half years passed before the suit was heard in Federal Court in Camden, New Jersey, where Judge Devine listened as Wooding and his "expert witness," an accountant from Touche Ross, stated their case. A stunned expression developed across the face of the judge, as if he couldn't believe his ears. Yes, contended Wooding's accounting expert, there was justification for multiplying a tax loss carry forward by 10, but it was obvious that the judge wasn't buying it. He let another year pass before rendering his verdict. Consarc's former CEO received precisely what the formula had originally called for, plus prevailing interest for the three and a half years that had transpired, though the judge was wise enough not to call it interest. Both combatants could claim victory--always a perfect verdict.

When I got news of the judge's verdict, I felt relieved and vindicated, but there was no sense of triumph. I couldn't help wondering what Wooding might have gone on to accomplish if he'd been able to keep his ego in check. I wondered, too, if I had somehow fueled what I saw as megalomania by making him an equal partner. It was hard to say, but one thing had become clear: we had no recourse but to remove the man who seemed to be steering the company to certain ruin.

By the time the verdict was handed down, Inductotherm veteran Stan Myers, a down-to-earth, soft-spoken engineer who'd been with us since 1961,was President of Consarc. With him in charge, customer goodwill and confidence gradually returned. In 1980, eight years after Consarc's previous CEO had posted a loss of $1 million, Myers led the company to $20 million in sales and $5 million in profits

It was hard to imagine after surviving the Wooding era that Consarc's subsequent success would embroil us in far greater controversies, with implications that reached around the world, pitting us against such adversaries as the Soviet Union, British Intelligence, the CIA, the Pentagon, and ultimately, the White House itself.

Chapter 28


It's no fun running a company if there aren't new challenges to face, new risks to take, new horizons to explore. And I'd had plenty of fun running Inductotherm, especially during the times we were struggling, taking chances, and even making mistakes. It was all with one goal in mind--becoming the preeminent manufacturer of induction melting systems in the world. Now we'd reached that goal and I felt as if I were running down. Or maybe, the challenges had just begun to look familiar. After all, I'd held the same job for 21 years.

There was still lots of work to be done, refining our methodology and technology, developing new markets, and buttressing our position of leadership; but I wanted to do something new. I wanted to build other companies in other fields of industry with completely different sets of problems. In short, I desperately needed new challenges.

I knew just where to find them. Inductotherm hadn't just grown in size, but also in scope; by 1975 our little furnace company in Rancocas had become an international conglomerate, with 19 companies in North America, Europe, South America, and Australia, and over $45 million in consolidated sales, with $13 million of these revenues originating overseas. The growth and acquisition campaign which was rooted in the formation of Linemelt in 1957 and Consarc in 1962 had continued throughout the sixties, bringing us Tech-Tran; Cragmet; Pemberton Fabricators; Rancocas Metals Corporation (formerly Valley Metal and Supply); Inductotherm Australia Pty. Ltd.; High Energy Corp.; Cheston; Grim (formerly GRM) Corp.; Electronic Coil; Inductomex; Inductoheat, Inc. (formerly IPE); Inductotherm, Europe; and Inductotherm Industria E Comercio, Ltda., in Brazil.

During the first half of the seventies, we added to this list. In 1972 we bought Thermatool from AMF, the world's leading maker of induction welding equipment for pipe and tube production. In 1975, with Telegenix (formerly S.M.S.), we plunged into the manufacture of direct-current, plasma, electronic display systems and components; the type commonly seen in computer centers, banks, brokerage firms, and hotels.

But in organization, Inductotherm hadn't changed since the days when we operated out of a corner of the Harcast plant. The furnace company now owned suppliers as well as unrelated businesses, and I was spread too thin. The danger was that without a champion a business will flounder, and if, as CEO, I neglected the furnace operation, we could lose our edge and the whole group would be in jeopardy.

The key, then, was a new company, a parent company, to own, guide and challenge all of the subsidiaries. Thus Inductotherm Industries, Inc. was formed, and I took on the roll of taskmaster and "father confessor" for the whole group.

But what about the "champion" for Inductotherm Corp. and its entire line of furnaces? I couldn't do both and I would never have given up the presidency of the furnace company if we hadn't had a man who had all the qualities I wanted in the next CEO. There was no doubt in my mind that Inductotherm's Executive Vice President, Roy Ruble, was the right guy in the right place at the right time. He'd certainly earned it.

Who could have foreseen, back in 1957, that the man sitting quietly in a corner of my office, picking up smatterings of knowledge about the induction melting business by listening to me talk on the phone, would have such an impact on both the company and the man he worked for? Yet, two years later, when he became Sales Manager, his rise within the corporation had just begun. In 1961 he was named Vice President of Sales; in 1964, Corporate Vice President, then, three years later, Senior Vice President, and in 1968, Executive Vice President. It was no coincidence that, as his own role within our company grew in importance, so had the company's stature within the foundry industry.

Roy's acumen for business had become apparent, even when he was a relative newcomer to the induction furnace industry. He had been quicker than I to grasp the value of our products to their users. His philosophy of pricing, which he'd demonstrated first with coils and then with complete melt systems, not only moved us to greater profitability, but also let us add quality and performance to our equipment resulting in a whole new identity for the company as the premium furnace maker.

The rental program he'd suggested and outlined on a sheet of paper to me back in 1958 was still paying dividends years later, while bringing the advantages of induction melting to foundries which could not otherwise afford our technology.

As a salesman, his personal style was anything but "slick"; it was, instead, based in sincerity and truth. His approach was to identify the customer's needs, reduce them to the simplest terms, and then present solutions with convincing clarity and honesty. He was also a tough negotiator, with a favorite way to break an impasse with a customer over price. If they couldn't agree, Roy would suggest that the prospective buyer write down the highest price he would pay, while Roy would write down the lowest price for which he would sell. When they compared the two, if the customers' highest price was above Roy's lowest, they split the difference and had a deal. (Theoretically, if the customer's price was still lower than Roy's there was no deal, but as I knew Roy, he could usually work something out.) He was no less apt as a friend and ally to foundrymen, many of whom owed their start in the business, or later success, to Roy's advice, whether i~ was of a technical, financial, or general business nature.

On the next page is a photo with Hank standing and Roy seated at his desk.

Roy didn't owe his statesmanlike stature in the induction-melting industry to the title on his business card, but rather to his relationships with foundrymen, big and small. He had a great talent for remembering and recalling the name of virtually every customer, their equipment, and application. This wasn't just a knack, it was the expression of his genuine interest in our foundry customers' well-being, as was his position as director of the Cast Metals Institute of the American Foundrymen's Society.

As Vice President of Sales, he'd built a top-notch sales force, and ensured an awareness of the customer's needs that would become his legacy. Under Roy, salesmen weren't born, they were made; the process usually began with three years in customer service. "You don't understand what the foundry business is all about until you've spent a Saturday night trouble-shooting a furnace for a foundryman whose livelihood, and whose work force's livelihood, depends on getting that furnace back to melting metal again," he liked to say.

Roy hadn't forgotten the value of that sales training course we'd undergone in 1957, and every sales candidate underwent the Dale Carnegie sales course.

After a new member of the sales force had "earned his stripes," he didn't become a "salesman," but a District Manager. This was more than a glorified title; unlike many salesmen, whose managements had to sign off on anything other than routine sales, Inductotherm District Managers were expected to manage their own territories. When they committed to a sale, Roy made sure the company backed them up. As a result, we continued to attract the cream of the crop in industrial sales.

It was expected, too, that every member of the Inductotherm sales team actively participate in the American Foundrymen's Society; not passively, by merely joining, but by making presentations on technical issues, and making the most of forums to demonstrate Inductotherm's technology and customer commitment.

When necessary, Roy's dedication to his customers led him to apply his redoubtable negotiating skills on their behalf. One of these who benefited from his personal intercession was the Columbus Foundry, in Columbus, Georgia. We first became acquainted with the company in 1971, when its proprietor, George Mathews, inquired about our lease program. Roy flew down to Columbus to visit the foundry and assess its credit-worthiness and enhances of success.

As Roy learned, Mathews had not yet established himself in the foundry business, but he was enthusiastic, energetic, and struck our Executive V.P. as a man sincerely committed to making his company a success. The foundryman wanted to concentrate on providing metals for specialized classes of automotive safety parts such as brake housings, which were formed from castings of ductile iron rather than the less expensive gray iron castings. Moreover, his company had a contract to make axles for General Motors. None of this would have mattered to Roy, however, if he didn't think Mathews had the right stuff. "This country's foundry industry could use more men like this guy Mathews, Hank," he told me, upon his return to Rancocas. "He's going to make a go of his foundry, and we should help him."

Roy began by assisting Mathews with the planning and configuration of the young foundryman's proposed new melt shop and equipment. Then, though Mathews possessed little collateral for a loan, Roy arranged a lease for a 2,750 kW, l0-ton, Main-Line furnace. In the next three years, his confidence in Mathews was confirmed, as Columbus Foundries added five more similar furnaces, before leasing three huge, 800 kW, 70-ton, channel furnaces worth $600,000. With the newer, more efficient furnaces in place, Columbus Foundries experienced phenomenal growth, fed by an increasing number of Inductotherm furnaces.

In 1982 Mathews saw an opportunity to expand overseas as well as domestically when a foundry operated by the Bendix Corporation in Neunkirchen, Germany, went on the market. As with most captive foundries, the Neunkirchen plant had enjoyed a guaranteed market, so the foundry's management and work force had little incentive to seek out new cost efficiencies. As a result, Bendix was losing $300,000 a year on the foundry's operation before they decided to cut its losses and put the plant, which it had built for $4.7 million, on the market for $400,000.

Mathews wanted that foundry and the expansion overseas that it would bring him. But there was a hitch, as Mathews learned when he flew to Germany to look over the foundry. The plant's electricity bill was three times the cost of electricity in Georgia and could rise even higher in the years to come.

The foundry was vital to the local economy, however. So much so that, when the Neunkirchen burgermeister and members of the Stadtrat, or city council, learned that a prospective buyer was put off by the cost of power, they contacted the country's finance minister in Bonn, where a meeting was arranged between the appropriate German authorities, George Mathews, and Inductotherm's ace negotiator and president, Roy Ruble.

Roy succeeded in extracting dramatic concessions from the Germans. If Mathews bought the Neunkirchen foundry, the federal government agreed, his power bill would never exceed the equivalent rates he was paying back in Georgia. With a source of relatively cheap power guaranteed, Mathews bought the plant and the local foundrymen went back to work.

It was inevitable that Roy's military background would pervade his management style; he could sometimes strike his subordinates as demanding and unyielding. This impression was at odds with the man whose compassion was evident, as he supported his predecessor, Jerry Wollaston, through those months of pain and anguish following his auto accident.

If he was sometimes unyielding, it was with regard to his own integrity. It was, in fact, his obdurate sense of "right and wrong" that might have led to a parting of the ways between Roy and me. It happened at a time when our sales and production were running far ahead of cash flow. The salesmen's bonuses were due and I wanted Roy to require the salesmen to collect their accounts in order to provide funds to pay their bonuses.

Roy wouldn't hear of it. "The salesmen are owed their bonuses, Hank," he insisted, "and Inductotherm should pay them, even if it means borrowing the money from a bank."

And if I wouldn't do it, then he was willing to go to his own bank and borrow the money personally to pay his men's bonuses. His next move, he advised me, would be to resign from the company.

If Roy was bluffing, it was a bluff I didn't want to call. Moreover, the more I thought about it, the more I felt he was right. We borrowed the money for the bonuses, and he stayed on.

With Roy installed as president, some things, like our corporate culture, would stay the same, while others would change. For years the work force had been in the habit of walking into my office with questions, suggestions, or even complaints. Now, they went through channels. When I was president, the company had been driven by operations and engineering. Roy seemed to know instinctively which avenues were most worth pursuing, and how to most effectively market new solutions to the foundry industry.

I had always enjoyed explaining things to people, showing them why I did things in certain ways. The furnace company's new CEO rarely solicited advice or input; he simply made his decisions and expected them to be carried out, with no further explanation. The problem was, Roy was such a lightning-fast thinker that he was generally far ahead of his subordinates; it was hard to keep up with him. As IPE's Byron Taylor once observed, "Talking to Roy is like taking a drink from a fire hose."

Like me, the new president was a perfectionist with little tolerance for sloppy work or fuzzy thinking. But I had been the quintessential hands-on manager--so much so, I almost destroyed myself. His was the antithesis of my "hands on" management style; unlike me, he never circumvented his supervisors; instead, like the naval commander he had been, and perhaps still secretly wished he could be, he relied on delegation and organization. Roy's style was to manage "from the bridge," and he did it successfully. He'd engaged a consultant to devise and introduce a series of graphs for monitoring "Corp's" operations, sales, trends, expenses, inventory, and overall performance.

In fact, this technique proved so successful that "Industries" applied it to the management of our growing numbers of subsidiaries. Just as a pilot, or the captain of a battleship, can readily monitor his craft's course, heading, and general disposition by scanning his instruments, Inductotherm Industries' board became adept at surveying a subsidiary's "vital signs," projected from an acetone overlay. With one glance, we could see how the company was progressing, in terms of sales, margins, expenses, profits, operating costs, and year-to-date trends.

It was just one of the things we learned from Roy, and there was much more. While some members of the team complained about the change in management style--which was to be expected--there was no arguing with the results Roy achieved, results that were reflected in the work force's year-end bonuses, our profit sharing trust, and everyone's job security. Roy's marketing savvy and Inductotherm's engineering strengths were an unbeatable combination and the company's performance showed it. As CEO of the company, he would change not only the course of our company, but that of the industry, as well.

As for me, although I had stepped down as president of Inductotherm Corp., I couldn't bring myself to let go completely; Roy was wise enough or understanding enough to tolerate my occasional meddling--after all, I was chairman of the board. I also landed two brand new jobs--chairman and president of Inductotherm Industries, the new holding company. I could finally devote myself more fully to growing our acquisitions.

Chapter 29


When I relinquished the day-to-day management at "Corp," as we called the furnace company, to concentrate on managing and acquiring new subsidiaries, Inductotherm's expansion accelerated, and we became increasingly diverse with the acquisition of such companies as:

MAGNETIC METALS CORPORATION, headquartered in Camden, New Jersey. Owner David Langworthy's father had founded the company to produce unique grades of nickel-iron alloys for the magnetic cores in communication equipment. With plants in Canada, Mexico and California, they also stamped standard motor and transformer laminations as well as ring cores for the relatively new ground-fault interrupters for household protection. (1977)

VANTAGE PRODUCTS CORPORATION, Conyers, Georgia, specialists in structural foam building products such as storm doors, decorative shutters, and burial vaults. Vantage stumbled badly for the first seven years under our ownership, but gradually, as Jim Rinard, the Hercules executive who we chose to run the business, studied business administration by trial and error. He turned the company completely around. He turned in phenomenal profits as the shutter king of the world as annual sales reached 1,500,000 pair of high-quality, decorative shutters from recycled battery chips. (1978)

JOMAR CORP., Pleasantville, New Jersey, specialists in injection blow-molding machinery for making plastic bottles. (1979)

SUPER PRODUCTS CORPORATION, New Berlin, Wisconsin, manufacturers and distributors of heavy-duty vacuum loaders and vacuum sewer-maintenance systems. (1979)

PERIPHERAL DYNAMICS, INC., Plymouth Meeting, Pennsylvania, makers of marked card readers, magnetic card and badge readers, point-of-transaction form readers, and other data acquisition terminals for electronic voting, casinos, pay phones, lotteries, and racetracks. (1980)

OPPENHEIMER PRECISION PRODUCTS, INC., Horsham, Pennsylvania, suppliers of illuminated avionics display systems for high performance aircraft. (1981)

W, J, SAVAGE COMPANY, INC., Knoxville, Tennessee, designers and builders of precision spindle saws for cutting metals, stone and ceramics for a variety of industries. (1982)

AMERIND-MacKISSIC, INC., Parker Ford, Pennsylvania, producers of gasoline-powered garden equipment and bulk explosive-handling systems for mining. (1982)

SONEX CORP., Philadelphia, Pennsylvania, producers of traffic-control lighting systems. (1983)

FREDERICKS CO., Huntington Valley, Pennsylvania, makers of high-quality technical and vacuum-sealed glass products, including vacuum measurement and control instruments for the metallurgical, defense, aerospace, and other industrial markets. (1983)

MOTSON COMPANY, INC., Flourtown, Pennsylvania, ink and conductive circuit printing. (1983)

LEPEL CORP., Edgewood, New York. What a pleasure this was. This was the same Lepel High Frequency Corp. whose salesman had competed with me 33 years earlier in the sale of Paul Foley's melter. It was owned by the widow of Dr. Eng. Von Lepel who had founded the business way back in 1926 and was run by George Einhellinger. Einhellinger had contacted us when the owner decided to sell the business and we were delighted. The business had grown to about $10 million a year in sales, largely in the radio frequency field of induction heating at 450 kHz. They were a to Inductoheat's line of lower-frequency perfect complement heating equipment, and they greatly enhanced our position in the world-wide induction technology. (1984)

METL-SAW SYSTEMS, INC., Benicia, California, manufacturers of precision plate saws for ferrous and nonferrous metals. Ken Forman was running the company when we bought it in the wake of near financial disaster. His uncanny ability to anticipate what the market needed in precision plate saws and cut-off saws carried it to a position of world leadership in these products.

(1984) BURRIS COMPANY, INC., Greeley, Colorado, manufacturer of fine rifle and handgun scopes. Burris was in a highly competitive product, and I've always doubted they would have succeeded had it not been for the management skills of Don Burris' right hand man, John McCarty, who took over the company in 1986 as Don's health failed. McCarty was one of the finest production men I'd ever met, bordering on genius. What a difference a man makes. (1985)

SQN PERIPHERALS, LNC., Rancocas, New Jersey, pioneers in electronic signature verification devices and software for banks, election bureaus and casinos. Signature recording and verification was the brainchild of Joe Uhland, who turned to us for much needed financing to promote his concepts. (1985)

SONOBOND ULTRASONICS, INC., West Chester, Pennsylvania, a manufacturer of ultrasonic welding equipment for the automobile, aerospace, medical, defense and electronics industries. (1986)

CANOGA-PERKINS CORPORATION, Chatsworth, California, designers and manufacturers of data-communications and telecommunications test equipment. (1986)

ELECTRO-STEAM GENERATOR CORP., Alexandria, Virginia, makers of steam generators for use in hospitals, research institutions and industry. (1987)

These were fun times, exciting times, but sometimes frustrating times. The sheer numbers of holdings enforced a discipline of their own, the need to work through others. Nonetheless, I could never visit a subsidiary, talk with its managers, or look over the plant without feeling the pangs of withdrawal. "You know, Roy," I would sometimes tell the new president of "Corp" (as we often referred to the furnace company), "if I could take any one of our companies and go into the office every day, read the mail, make sure the salesmen followed up every lead and keep production at peak efficiency, I wonder how much more that company would grow."

Roy always brought me down to earth, reminding me, "And what would happen to the other four dozen companies, while you're doing that?

He was right, of course; as much as I missed being a hands-on manager and envied the guys who were doing it, there was no way I could become enmeshed in the operations of our subsidiaries. By the time we'd reorganized, the numbers of new companies alone made it impossible for me to spend even one day a month with each of the newly-formed Inductotherm Industries holdings The most I could do was choose the right president, offer some guidance as to pricing and cost control, along with lots of encouragement, and show what we had done at the furnace company.

And as long as the company lived up to performance standards, each CEO was free to run his company as he saw fit. I never minded a CEO making a mistake. I had made mistakes, lots of big ones; I expected them to make mistakes as they moved forward. "Business is a continual risk," I reminded them. If you don't take risks, you're not a manager, you're a caretaker"

But while I gave every CEO complete autonomy, I also monitored their performance closely. As the numbers of subsidiaries grew, the monitoring techniques which Roy Ruble had sales, margins, expenses, profits, operating costs, return on investments, and year-to-date trends--became increasingly important to the holding company.

Even when the ranks of our subsidiaries swelled to a total of 50 separate technical entities, it would rarely take the holding company's board longer than an hour to review them all. As long as was on the right course, we'd move the charts showed the company on to the next one. But sometimes, when the "instruments" showed a company was on a crisis course, we had to seize the control stick.

Such was the case with a company called Scientific Measurement Systems, which we'd acquired in 1972. SMS made computer tape-drive hardware and software equipment designed to show computer operators which tapes corresponded to give" programs. The company's revenues had been running between $4 million and $5 million a year, and for the first few years it was marginally profitable. Then, in the second year of ownership, SMS's president Jerry Ciccone, decided to develop a Business Information System (BIS). In the course of this venture, the company began dealing with a public company known as Video Systems, headed by Charles Cascio. Shortly thereafter SMS began losing money at a precipitous rate, and, in the second and third years of our ownership, the subsidiary lost $2 million.

"How could you let this happen," I fumed at Ciccone. "Don't you know how to run a company? How much longer do you expect your company to survive? "The curious thing was, my castigations didn't seem to faze Ciccone, who was either the soul of patience, or simply didn't care what I said to him. Everyone else on the Inductotherm board was puzzled, too, except for one person. "Of course he's willing to take your criticism," explained Betty. "If he fights back and gets himself fired, then his game's over. I don't trust the guy."

Betty always had an uncanny, sixth sense about people. If she didn't like them, or particularly if she didn't trust them, watch out. Some months later, after a small fortune had slipped away, I'd see what she had sensed at the first meeting. Ciccone lasted until 1975, when, after another meeting of the SMS board at which Ciccone offered no defense for his continuing failure, we finally--and much later than we should have--asked him to leave and take the Business Information System part of the operation with him. He took the offer gladly and we bade him good riddance.

A few months after Ciccone's departure, the FBI paid us a visit. The federal agents were interested particularly in SMS checks signed by Ciccone and tendered to Charles Cascio's company, Video Systems. On their own, the FBI had been chasing clues to what we had suspected--Ciccone had been embezzling money from the company he ran, through bogus exchanges between SMS and Video Systems.

Later that year, Ciccone was indicted for embezzling $9 million from a public company he'd formed out of the Business Information System Concept called Data Access, Inc.; he was found guilty and sentenced to four to five years in jail.

For SMS, the effect of firing Ciccone was like removing a parasite, and under new president John Taylor the company rebounded immediately to new levels of growth and profitability.

It was harder to explain what was happening in Madison Heights, Michigan, and I surveyed IPE's charts with mounting concern. The same concern perhaps that had caused Bill Peschel's financial backer, Olsen Machine, to sell us their interest. How could this happen? The company should have become the leading company in its field by now, with its own subsidiaries and overseas operations. But even after seven years as an Inductotherm subsidiary ...even with the guidance and advice from some pretty good performers at Inductotherm-engineers. Accountants, and production managers--and even with the most advanced solid state inverters in the induction heating field ...IPE was financially dead in the water. In 1971, with sales of slightly over $2 million, the company had lost $348,000. Four years later, sales were nudging the $4 million level, but the company was still losing money.

Much to my disappointment, IPE's president, Bill Peschel, still had not caught on. He was a brilliant engineer, but he was still chasing "monsters," million-dollar jobs that were fraught with potential for error, rework, and "make-good"-he was undercharging for them to boot. An automated induction heating system is a highly complex piece of work involving multiple engineering disciplines. It is so complex, in fact, as to be beyond the scope of most engineers, or even most engineering groups.

The automotive industry and other high-volume producers of gears, splines, cams, and similar parts demanded complete automation. In essence, this meant a system that would take its parts from a random bin and transfer them through heating coils and water-spray quench stations and on through tempering heating coils until they were discharged, fully heat-treated, into another bin.

There was the occasional entrepreneur--and Peschel was one of them--who could conceive and design a system of this type and get it right quickly enough to make money on the project. But Bill could not understand why his engineering staff couldn't match his performance. It's rare that a group of salaried engineers succeed at the same task. As an extension of Parkinson's Law predicts, the job expands to consume the dollars allotted to it. In company after company that I have observed, the only ones that make money on such specials are those that are still tiny, and where the entrepreneur himself--the Bill Peschel's of the world--is the project leader on every major job they tackle. As soon as that tiny company grows to a scale beyond which the entrepreneur can serve as project leader, then the company begins to falter.

The consequences are exaggerated when the entrepreneur gives up engineering altogether to concentrate on corporate management. Then, the company's plunge into disarray becomes even more precipitous.

As a result, IPE's turnover in personnel was appalling. Over a period of seven years, the average tenure of Peschel's chief engineers was four months. This, in a field where it could take an electrical engineer four years--the span of another college degree--to catch on to the nuances of induction heating and the automation demanded by the customers. Overall, the company had experienced 100% turnover over the preceding two years; morale was abysmal. The reasons were obvious. "Bill, there are very few engineering teams in the world who could fulfill the kind of contracts you're chasing," I insisted. "You'll never make a profit until you concentrate on standard products you can build again and again from the same engineering. You're asking too much of a group of engineers."

My advice didn't take. As brilliant as he was in engineering, Bill's company was floundering.

But there was one bright spot at IPE. It was the Electronics Division, headed by the engineer whose solid-state wizardry had given us a technological lead, Byron Taylor.

In the summer of 1975, Taylor was into his second two-year contract with IPE when Peschel arbitrarily voided the contract and advised Taylor he had decided to promote him to the position of Vice President and Chief Engineer.

For Taylor, this was no cause for celebration. He was an affable sort of person, but he took intense pride in his work and his ability to get things done. As General Manager of the Electronics Division, he had his own scorecard. Byron Taylor's Electronics Division had earned a profit three years running when the value of his inverters was credited against the cost of buying similar units from Pillar, but these were chewed up by the losses on the "monsters," so the overall picture remained a dismal loss.

So, as Taylor reminded Peschel, he wasn't excited at the prospect of becoming "vice president"; he would just be returning to the job he had held six years before, chief engineer of "the whole mess," as he called it. Once he lost his division and his autonomy, he reckoned, he would be dragged down with the rest of the company.

And so, he quit.

It took about an hour and a half for word of his resignation to reverberate from Madison Heights to Rancocas, and as soon as I learned of this development, I put in a phone call to him. I hated to lose a good man. "Byron, what are your plans?" I asked him. He hadn't decided. "I don't know, Hank. But I've been thinking about opening up my own business," he told me, dejectedly. It was clear he hated to leave his old friends and colleagues at IPE, no matter how troubled the company had been.

"Why don't you fly out to Rancocas?" I suggested. "We've got a challenge for you here." Taylor caught the next plane.

What I had in mind for Byron was a massive redesign of our inverter so it could inherently and automatically adjust to the changing characteristics of the furnace load as it went from magnetic, to non-magnetic, to partially molten, to a full bath of molten metal. The change in impedance was at least two-to-one, sometimes more.

The early motor-generator-powered units coped with these characteristics with manual taps on the furnace coil and, of course, an array of capacitor switches and contactors. Back in my Ajax days, Ted Kennedy and I had replaced the cumbersome coil taps with the high frequency matching transformers. Inductotherm had employed this method too, although with greater range and flexibility. When the inverters made the M-G sets obsolete in 1968, they only partially overcame the characteristic. No one, not even Inductotherm, had properly addressed the problem. Whereas the inverters, particularly the Mark IV, were more tolerant of mismatch, most foundrymen just accepted the "slump" in power that took place just before the charge began to melt.

By this time in 1975, Pillar was a formidable competitor, and Ajax, too, had introduced its own inverter and was regaining market share. Our Mark IV inverter out-melted both of these competitors by a small margin, but that little difference wasn't good enough. We'd carved out our leading position with big-time advantages; we wanted another big advantage, and quickly. "What we need, Byron," I challenged him, "is an inverter that rides through the changes in the melt at full power, one that delivers full power start to finish--hands off.

"And while we're doing it, Byron, let's get the efficiency up." Inverters were, at best, running at an 85% efficiency, and most of the losses took place in the "commutating" reactor, a large reactor whose only function was to reverse the voltage on the SCRs and thus "turn them off" so they would stop conducting current until fired again by a trigger voltage on the gate.

"Why do we add all of that inductance to the circuit when the best inductor of all is the furnace coil? Can't that do the commutation?" I asked Byron. "That way, the losses would become useful heat in the melt."

Byron saw it all immediately. "Yeah, a series circuit would make that work, and series resonance would give a huge change in furnace voltage with a tiny change in frequency. And what's more, we'd be eliminating still more components." He threw it back at me with that twinkle in his eyes that made Byron so much fun to work with. "As you once said, non-existing parts can't fail."

A few weeks' work, and it was "Shazaam" once again. We had the world's best melting inverter. Efficiencies jumped to 95%, and it put out full power under all furnace load conditions. We dubbed it the "POWER-TRAK," introduced it in 1976, and once again enjoyed a huge advantage in melting performance.

But while in Rancocas, Taylor was studying more than electronics; he immersed himself in the Inductotherm culture. How much time did our aircraft save us? What were the shipments per employee? At what point did new products begin to show a profit? These were issues that had never been raised before at IPE, where Taylor's absence was being felt. The company was on its way to recording its fifth loss in seven years.

I was a softy when it came to good guys who gave it all they had. Peschel was neither crooked like Ciccone, nor overwhelmingly rude Like Wooding, nor had he violated our trust, as had Bill Overton in England. It was simply a lack of profits and progress. Maybe one more year was all he needed.

The rest of the board didn't agree, however, and in January 1976, after Peschel had been given six years to achieve profitability, the vote was four to one, with Roy Ruble, Tom Pippitt, Bob Hotchkin, and Betty voting to fire Peschel, and me voting to keep him. There was no disagreement, however, as to who the next president should be--Byron Taylor.

Taylor's marching orders were simple: "Go out and grow your company," we told him. He proceeded to do just that. He had a hunch IPE already had some good people in place, but they'd been stifled by Peschel and his autocratic management style.

He had relied on an elaborate reporting system, based on a multiplicity of forms so time consuming, so complicated, that project engineers had been coming in on weekends just to do the paperwork their boss required. The first thing Taylor did was staple IPE's various forms to the walls of the board room, until the entire room was covered; then he called a meeting of his managers.

"Who needs this form?" he asked, pointing to a handy one. Nobody raised his hand. "Anybody mind if we get rid of it?" and he ripped it off and threw it into a trash basket. "Who needs this one?" he asked, moving to the next one, which also wound up in the trash can. At the end of the meeting, of the several dozen forms he'd stuck to the wall, only one was retained. At every opportunity he preached a new litany to his managers, one he'd absorbed during his five-month stay in Rancocas from the master of successful management, Roy Ruble. "Competition sets our price," he reminded them over and over again, "but we set the cost of making that product. And we have to drive our cost way below the market price. It's just a matter of discipline."

He wanted to show the work force, many of whom had lost faith in the company, that it was possible to make a profit. With only four months left in the year, he did it by "brute force." He doubled management's hours and decreed that orders scheduled to be shipped in May and June would be shipped before the April 30 year end. "But what do we do next year?" asked some.

"We'll do the same thing all over again," answered the irrepressible Taylor, and they did. Within a year he increased IPE shipments per man from 50% to 80% of Inductotherm's "per-man" ratio.

But his company wasn't going to be complete without an airplane. "I've seen what flying has done for Inductotherm," said IPE's new CEO. "I want IPE to have our own strike capability." He'd intended to buy a small single-engine aircraft, but I had a surprise for him. "Why do things half way?" I asked, as I gave him my twin-engine Sky Knight I was about to replace with a newer, bigger, and--most important--faster, Aerostar. Taylor wasn't satisfied with one aircraft, which he shared with Bob Bemis, Vice President of Sales; before long he'd added two more, one to be used to ferry customers into Madison Heights and the other to be available for servicemen.

"You know, Hank," he told me enthusiastically as if he'd just discovered the concept, "for our particular customers, the larger automotive-type companies, to send a man down here requires multiple sign offs, approvals for expenses, and one heck of a good reason. But if we just say, "We'll pick you up in the morning, and fly you down here where you can see the equipment we're building and meet the guys who are doing it,' chances are that man's boss will want to come, too." It was all a question of the right man in the right place. Bill Peschel had been CEO of IPE for fourteen years and the history of his leadership showed 10 years in red ink. With Taylor in charge, the company's revenues and profitability sprouted.

Over the ensuing decade, Taylor's company--whose name he changed from IPE to "Inductoheat" to capture some of the goodwill that Inductotherm had painstakingly earned-recapitulated the parent company's own growth. In the eighties, they took over the Australian induction heating division from Inductotherm Australia, as well as three European companies-Banyard in England, Elphiac Heating Division in Belgium and Brazil, and HWG in Germany--as well as our former competitor, Lepel. Within four years of being named president, Taylor had built the once-faltering company's sales to $10 million, with profits of $1.15 million. By the early nineties, by joining our operation in India, purchasing Radyne of England, commencing activities in Taiwan, Korea, and Japan, and rescuing a company named Welduction from the same straits that had beset IPE, Taylor was closing in on $100 million in sales, and his company was the acknowledged leader in induction heating.

Chapter 30

Inductotherm Japan

Much had changed between 1968,the year Jess Cartlidge left the States to pioneer overseas manufacturing in Australia, and 1976. The company he had left had yet to exceed $20 million in total consolidated sales, including subsidiaries; we were still a domestic operation with one manufacturing facility, in Rancocas, and overseas sales took place on an ad hoc basis.

The company to which he returned in 1976 alter his Australian and English challenges was an emerging global force in the foundry industry, with manufacturing subsidiaries in Australia, England and Brazil. Our export revenues alone exceeded 4 million, almost one third our total furnace sales of $42.7 million, and an additional $28.7 million from subsidiaries. Yet it was clear that we hadn't really crossed the threshold of expansion, and that vast opportunities in South America, India and the Orient remained untapped.

Before we could grow further, however, our overseas operations had to be orchestrated to function as efficiently and aggressively as we had been doing in the United States. This was the job that faced Jess, our new--in fact, our first--Vice President of Inductotherm International. The dynamics behind our push into foreign markets were unique. Usually, a company prospers when its managers work together in harmony. But Inductotherm's rapid overseas growth was accelerated by the intense rivalry that had sprung up between Jess and his boss, Roy Ruble.

This was due, in part, to the competition that evolved in the early seventies between the parent company, with Roy as Executive Vice President, and our subsidiary in England, where Jess was Managing Director. Jess was eager to establish an Inductotherm presence in as many countries abroad as the market would support. He also had a rather more idealistic view of what our company should stand for.

"There's more to a business than just profits," wrote Jess in a 1975 memo alluding to what he called Inductotherm's "spiritual leadership." Roy was disinclined to start up manufacturing subsidiaries in foreign countries. In response to Jess' memo he wrote:

"I am against setting up any more individual small companies overseas because, in order to make them profitable, it takes a great deal of time and effort by our people in the U.S. which could be more profitably spent on other endeavors... While it is true that there is something else in business besides profits, in my opinion, profit is a way of keeping score and that is what business is all about, as long as you don't compromise personal integrity in so doing. If there is one thing we agree on, it is that the future expansion of the furnace business must lie overseas."

Given the circumstances of our headlong move into the international arena, it was to be expected that our foreign subsidiaries would sometimes run more rambunctiously than did the parent company back in Rancocas. Jess had brought a strong spirit of competition to our subsidiaries in Australia and England. Now he had to bring about a sense of cohesion and worldwide teamwork. As he saw it, this meant more than coordinating sales and manufacturing activities. He recognized that Inductotherm was developing synergies--a favorite password of me seventies, to be sure, but Jess's results in Australia and England had proven that two plus two sometimes equals five.

Before returning to Rancocas, Jess had pinpointed specific areas he planned to upgrade: foreign-based sales reps and agencies, for instance. He set up a network that cut down travel to secondary markets and imposed standards of efficiency and economy on sales efforts in this sector. He standardized the product line, while working towards universal standards by which to evaluate furnace performance, the better to illustrate the advantages Inductotherm enjoyed over the competition. He trained our far-flung sales reps to use actual log sheets used by Inductotherm customers to demonstrate how much more metal and how much more money could be made with Inductotherm furnaces.

While Jess had been in England, it was acceptable--even desirable--that his gang in Droitwich look upon Rancocas as the competition. Jess had a point to prove--to us in the States, the European market and to his own employees--that his new company could compete with any furnace maker in the world. Having made that point, it was time for our overseas subsidiaries and the parent company to work closer and smarter, by sharing market information.

Part of his strategy involved spending as little time as possible in Rancocas and around Roy. Fortunately for both men, there was a vast market in South America that called for the energetic young executive's personal attention.

While in Australia and England, Jess proved to be highly effective at preaching the virtues of induction melting. On both sides of the globe, he learned, foundrymen were eager to learn and they sought him out to appear at industry meetings, seminars, and informal dinners. Now, he wanted to carry his message south and spread his gospel of progress across South America. He wasn't deterred by the fact that he didn't speak a word of Spanish. "Maybe I don't speak their language now, Hank," he told me, "but I will by the time I get there."

I didn't doubt him. Jess was one of those exceptional people who loved learning; unlike so many executives whose education ceases once they graduate from college, Jess, who had never graduated from college, learned something new every day. He was a quick study; while in England, he'd taken the time to learn German, the better to deal with industry leaders in the Bundesrepublic. This latest change in geography meant the opportunity to learn another language. After six weeks of study at home and classes at Berlitz, he had become conversational in Spanish.

In 1981, with the South American market on a strong growth curve and the overseas and domestic operations working in concert, Jess began to look farther afield for his next assignment. He was intrigued by the possibilities represented by two vast, but diverse, countries: India and Japan.

The two countries presented dramatic contrasts to each other. India stood with one foot in the Jet Age and the other in the Stone Age and straddled the gulf precariously. Japan, on the other hand, was making tremendous strides in technology and manufacturing. Some pundits suggested they would eventually challenge the dominance of the United States in the automotive and electronic sectors.

Jess knew it was officially forbidden for any foreign company to own a subsidiary in India, and we were reluctant to license foreign manufacturers to use technology developed in Rancocas. The alternative was obvious--a joint venture. Several Indian companies had proposed such an arrangement to us, but we hadn't considered any of them seriously. Not until 1981, when we were approached by an Indian company which had appropriated, perhaps coincidentally, the name of our now-thriving Madison Heights subsidiary-Inductoheat. Instead of heat treating equipment, however, the Indian "Inductoheat" produced induction melting equipment.

Jess traveled to India to have a look at the Indian Inductoheat, its products, and the men who ran the company. What he found there offended him deeply. They hadn't merely borrowed their name from an Inductotherm subsidiary, they had also copied the design of our Mark IV.

"I could never work with a company that would steal designs," said Jess, vehemently, upon his return. He was more concerned, though, about India's existing laws of ownership and repatriation of dividends which made it problematic, if not impossible, for a small foreign investor and joint venture partner to earn a return. Besides, as Jess put it, while India represented tremendous potential, "The action is in Japan, Hank."

"I can't argue with you, Jess," I told him. "Several Japanese companies are already established there in induction melting. I think we've got two choices--either there will be a strong American competitor in the Japanese market or there will be a strong Japanese competitor in the American market. Which would you rather see"

"I'll pack my bags," Jess answered, with a broad grin.

Inductotherm had already made incursions into the Japanese market and, by my standards, we'd come up short. During the seventies we'd been represented there by a trading firm called Fuji Industries. Most of our sales came in specialties such as vacuum melting, usually in conjunction with Consarc, where our advantages were obvious and well-known. But even so, revenues had averaged only $300,000 annually. In more conventional melting applications, however, Inductotherm's higher melt rates and greater reliability were matters of degree rather than capability, and demand was negligible.

But we'd been trying to compete with one hand tied behind our backs. The Japanese market wanted more than technology and product; they were also highly sensitive to after-sales service and support. Without a manufacturing subsidiary there, it would be difficult, if not impossible, for Inductotherm to become a major factor in that country's ever-expanding induction melting field.

Thus, in August of 1982, Inductotherm International gained a new Vice President--sales veteran Bob Sundeen, who a quarter century earlier had prevailed on his employer to manufacture plain push buttons for our control panel. Jess, meanwhile, had studied the Japanese language until he had become conversant in Japanese and then departed with his wife and two children for Kobe, Japan.

There he planned to build another company from the ground up Inductotherm Japan.

It wasn't easy to faze Jess. In his travels and travails throughout Australia, Europe and South America, he'd become accustomed to the unexpected, but Japan was full of surprises. There was, for instance, the matter of hiring personnel. Elsewhere in the world, this was a routine procedure that went on all year. Not in Japan. There, as Jess learned, all the hiring of new personnel took place in the spring; few were inclined to change jobs at other times of the year and almost none liked the idea of working for a bunch of foreigners.

He also planned to rent an office and a plant, but he had never planned, nor imagined, to pay so much for them. A serviceable, four room, 12,000-square-foot office and plant cost $250,000 a year in Kobe, 10 times what Jess had paid for similar facilities in Droitwich, England and three times the equivalent in the United States.

The Cartlidge family's home for the next few years, too, cost a small fortune--$4,000 a month. Even so, it was a bargain, as similar housing in Tokyo would have cost at least $10,000 a month.

But there were also unexpected reminders of home. Shortly after Jess and his family arrived in Kobe, the Japanese city welcomed another new arrival from the United States--a full-sized replica of Philadelphia's historic Liberty Bell, without the crack down its side. The bell was cast by the West Philadelphia Bronze Company and had been melted in the company's Inductotherm furnace. After the bell had been created, it traveled to Rancocas for photographs and a celebration before shipment to Japan.

The mayor of Kobe invited Jess to the presentation ceremony, after which the bell was installed in a tower not far from Inductotherm Japan's new offices. There, several times a day, the bell is rung and, for blocks around, the city resounds to its tone.

Jess didn't take long to make Inductotherm's presence in Japan felt. With his new Japanese employees assembled, Jess swapped his executive pinstripes for denim work clothes and went back to work winding coils, fabricating furnace shells, and soldering bus bars, partly to get the work done, but primarily to demonstrate to his new team how their new company worked and what it was all about.

Though there were reputed to be 27 established induction companies in Japan, Jess basically faced four major competitors-Toshiba, Mitsubishi, Fuji Denki, and Shinko Denki, the same Shinko Denki that had proposed the licensing agreement, not too many years earlier. While Shinko hadn't enjoyed a particularly strong position in the foundry market, they were partly owned by the huge Japanese conglomerate Kobe Steel, which bought tremendous quantities of foundry castings. This in itself influenced the foundries' furnace-buying decisions, and we lost several major orders because of this corporate interrelationship.

The furnace system with which Jess planned to take on the four Japanese giants was powered by the solid-state POWER-TRAK VIP, a system he ultimately wedded to a concept he called the DUAL- TRAK, enabling foundrymen to power two furnaces simultaneously from one power source. Sharing power between a furnace in the holding mode and one melting afforded greater utilization of the available power.

Whereas Inductotherm's equipment would substantially outmelt any Japanese furnace. Jess found himself at a tremendous price disadvantage because the inverters were imported from the United States. The yen was relatively weak compared to the dollar and import taxes increased the furnace's selling price further.

The price differential wasn't lost on the furnace industry's Big Four, who responded to this American challenge by doing at home what their counterparts in the car business were doing in the States; they started dumping their products, cutting their prices to about half what Inductotherm Japan had to charge for the POWERTRAK, presumably to make sure this upstart American company didn't get a toehold in the Japanese market.

The first several months for our Japanese subsidiary were grim, as Jess lost sale after sale to one of the Big Four and, for the first time in our long friendship, I saw him become despondent. "This is a kind of competition we've never seen before, Hank," he told me, during a trip back to New Jersey. "In Australia and Europe, all we had to do was deliver a better product and better service. In Japan, it seems, every company is interlinked with its suppliers and its customers.

"In the United States, every industry is studying Japanese methods; they all want to work the way the Japanese work. Here I'm trying to teach a bunch of Japanese the American way, or rather the Inductotherm way. I don't know if I'm up to it." I took to writing him letter after letter, reminding him that he had the best product in the world, and it was just a matter of time before the Japanese found it out for themselves. But I was worried; Jess without his customary ebullience was like a bird without wings--it was what had enabled him to soar above the challenges of the past.

While he was discouraged, he didn't give up. He visited foundry after foundry, collecting log sheets and data from the few POWERTRAK furnaces operating in the country. Little by little, his persistence, his commitment and the efficiencies and superior yields achieved by a small handful of Japanese with Inductotherm furnaces captured the attention of Japan's more aggressive foundrymen.

Along with superior equipment, Jess's new company provided a level of responsiveness, service, and support far beyond what the Japanese had been used to. By the end of his first year in Kobe the market was beginning to respond. Five years after Jess had arrived in Japan, sales had increased more than ten-fold, topping the $3.5 million mark. In the newer territories Jess had also staked out, Korea and Taiwan, Inductotherm was on its way to a position of preeminence.

And when the mightiest of the Big Four threw in the towel, Jess knew he had it made. Mitsubishi's response to the new competition was reminiscent of Ajax Electrothermic's ill-advised and short lived price-cutting war; Mitsubishi's losses in the furnace business were such that the industrial giant decided to exit the induction melting industry altogether.

But if any of us secretly suspected Inductotherm had "broken the code," and divined the secret of success in the international arena ...well, events would prove us wrong.

Chapter 31

And David Too

Success and money; triumph and profits. These are the standards by which society measures the significance of a man's life. Yet, at the same time, they sometime serve to underscore the things that count most. So it was in the late fall of 1978. Betty and I had been traveling through Japan, Taiwan, the Philippines, and Australia. It was a trip made necessary by our growth and success in increasing numbers of foreign markets.

David remained home in Rancocas, confined to his electric wheelchair that he could maneuver around the property with a tiny finger-operated control stick.

He'd made the most of his limited life-style with interests that reached far beyond his confined world. He read incessantly, books on science, technology, nature and, of course, lots of fictional adventure that I felt must have been frustrating for him. He could talk as an expert on nearly any subject and continually amazed me and others with his knowledge.

David had the patience and talent to turn out some pretty fine oil paintings--not Rembrandt quality, perhaps--but good. Electronics fascinated him and he built radios, stereo sets and tape players, usually from kits. He'd built a CB radio and we'd installed an antenna on the roof so he could converse with the truckers plying the Jersey Turnpike nearby. His "handle" was "Ironsides."

David had a flair for production too--the ability to look at a project or a problem and come up with the easiest way to accomplish the result. Maybe his limitations accentuated this talent.

Once when we set out to build a dozen birdhouses to hang around the property, I started by cutting out six little panels to be nailed together to form the box. "Hey, Dad," he suggested, "why don't you nail the eight foot boards together to form a square tube, then cut it up on the band saw alternating straight and diagonal cuts. Nail on the tops and bottoms and you have a dozen birdhouses." Not bad for a guy who had never lifted a hammer.

Returning from our trip on December 8, Betty and I stopped in San Francisco, where Ginny and her husband Manning were then living. Our visit was cut short, though, by a phone call from Ben in Rancocas with the frightening news that David was not well and had been taken to the hospital. We left on the first flight east, cautiously hoping for the best and dreading the worst.

David never again left the hospital; his remaining strength abandoned him on a Friday evening, December 22, and he was gone. He was 28 years old.

In a way, it was remarkable that Betty had kept both Jimmy and David alive so long in the face of a disease that permitted few victims to survive long into their teens.

Chapter 32

Passage to India

Though Jess had been denied the opportunity to head up a joint venture in India, I was still captivated by the thought of establishing a company on the subcontinent. In 1983, with the recent changes in the currency repatriation laws, the time seemed right to put this idea into action. It was a challenge that transcended business as usual. In India we had the opportunity to showcase our furnaces while providing Progress for an entire subcontinent and contributing to improving the quality of life for hundreds of millions of people.

True, all we were talking about were melting furnaces, but I had seen the difference that modern foundry methodology could mean to less developed societies, ever since my first visit to the Philippines almost 20 years earlier.

For India to succeed in its extensive program of national modernization, it had to provide basic household goods to a population of 800 million, the majority of whom still pursued primitive life styles, carrying pots to wells for water, or using dung fuelled fires for cooking.

Unfortunately, while the Indian government was then preaching modernization, it did little to promote it. Though some barriers to foreign investment had fallen, the Indian government limited foreign ownership of companies to 40%.

As a result, the country's technology lagged far behind that of the Western World. This was especially true of India's metal casting industry; it lacked the capacity to produce metal products from investment castings and stainless steel ingots for the manufacture of such commodity items as knives, forks and spoons. It may have been the reason, too, why Brown Boveri had discontinued its ownership in its Indian subsidiary at the same time we were contemplating moving in.

The country's entrepreneurs, though, were like entrepreneurs everywhere; they wanted to catch up to the modern world and improve the standard of living for themselves and their communities. As a result, in the late seventies and early eighties, Inductotherm had been selling about $1 million worth of furnaces a year in that country, though sales were declining rapidly. Reaching this level of sales was no small tribute to the superiority of Inductotherm's product line. For an Indian company to buy from a company in the United States was to invite "ordeal by paperwork." It required several layers of government approval and extensive correspondence before credit could be established and a furnace shipped to a buyer.

Delays of a year or more were not uncommon. Often a buyer would order a furnace for delivery a year hence, on the condition that the price remain the same--in spite of the double-digit inflation which was then playing havoc with the economy of the United States.

Moreover, the system under which buyers and sellers had to operate was shot through with the potential for graft. Bribery--to expedite import of equipment or import applications--was taken for granted by all too many government officials and customs agents, as a natural supplement to their meager incomes.

In order to escape the high duty costs, buyers were eager to pay with "Black Money"--currency that circulates, but is never reported. Generally, Black Money would be offered in equal amounts with reported money. After the first few years of exposure to the Indian system, Inductotherm representatives were no longer astonished when a buyer from Bombay or New Delhi asked them to falsify papers required for shipment of a furnace. "Please describe the 1,500 kW furnace as being a 750 kW furnace; the customs agent won't know the difference," a buyer would wheedle, so that he would only have to pay the duty on the lower price of a smaller furnace. The difference could be substantial--as much as$45,000. The difference would be offered in U.S. dollars deposited in a U.S. bank, perhaps from a "friend" living in the U.S.

The higher-ranking Indian bureaucrats appeared to be, for the most part, "straight shooters" who were intent on enforcing laws designed to keep their currency from flowing out of the country. Still, the system was so inefficient that, just to survive, an entire "business culture" had grown up around circumventing taxes, duties, and government regulations.

Tax dodging and similar shenanigans were so commonplace in the Indian business culture that many buyers simply could not understand why Inductotherm would not participate in their schemes; they even became angry. Roy and I could appreciate the difficulties confronting businessmen who had to operate under the limitations and restrictions of an inefficient and sometimes corrupt system. It was often tempting, partly out of sympathy for the Indian businessman's plight in trying desperately to compete and partly because there was lots of business to be gained or lost. But Inductotherm continued to operate as we always had in the States--the only

way we knew how to work, really--on a basis of trust. So, when one longstanding customer wrote to Inductotherm requesting the company to ship the spare furnace parts he had ordered "collect" on an Indian vessel (thereby legally avoiding duty on the freight, as Indian law permitted), we were only too happy to oblige. After all, the buyer was not only a customer, he was also a respected foundryman in his hometown and he had even been my host in his home in India.

As a further guarantee of payment, and in accordance with standard terms, the buyer had sent us a letter of credit, though that letter specified shipment on a prepaid basis. It was a minor change, we concluded, and in accordance with the buyer's wishes, we shipped the parts "collect" to the designated port.

It wasn't just a minor change, however, but rather a scheme, as we learned when we presented the letter of credit to the bank for payment. The bank refused to pay, contending that the equipment had not been shipped according to the terms outlined in the letter of credit. "It's just a misunderstanding," I told Inductotherm's president. "Just wire the customer and ask him for a replacement letter of credit."

Neither Roy nor I ever heard from the buyer again. It was hard for me, whose faith in human nature had been vindicated hundreds of times over, to finally acknowledge that, all along, the customer in India had planned more than saving on import duties; he had decided to eliminate the cost of the parts altogether.

But even our early experiences in the Indian market hadn't prepared us for the "sleight of hand" that awaited us. Inductotherm was represented in India by a trading company, the Chowgule Agency, where most of our dealings were handled by a very personable employee and salesman named Kumar Harve. In 1979 Harve was making plans to leave Chowgule to start his own business as a manufacturer's representative. Before leaving Chowgule, Harve had written to Jess in Rancocas, inviting him to drop Chowgule and engage Harve as the company's agent.

Jess turned Harve down. Inductotherm appreciated the work Harve had done on their behalf and Jess would be pleased to provide him with a letter of recommendation, but we intended to maintain our relationship with his employer, the Chowgule agency, which had assigned Harve to handle our products in the first place. It was only fair.

Meanwhile, Inductotherm was awaiting word on a major furnace order from Bharat Heavy Industries, Ltd., in India. Harve, who had not yet left Chowgule, was representing us on the project, an arrangement with which we were becoming increasingly uncomfortable. When no news was forthcoming on the job, Roy and Bob Sundeen became suspicious that something funny was going on. "Hank, according to these reports from Harve, we're getting strong competition for the Bharat job from ASEA in Sweden," Roy observed to me one day.

"ASEA? That doesn't sound right," I said, observing that recently ASEA hadn't even been active in induction melting projects in Europe or U.S., let alone India.

"That's what I was thinking," said Roy. "We'd better send somebody over to India to drop in on Bharat and see what's going on."

A few days later, we dispatched our international salesman who had joined us from Australia, Gabor Horvath, to pay a visit on the chief engineer for Bharat. There, the chief foundryman showed him a letter that explained everything. As soon as he read it, Horvath got on the phone and called Roy back in Rancocas. Roy's blood began to boil when he heard what Horvath had to say.

Horvath's fact-finding mission to India took place only a few days before Harve was expected to visit Rancocas as part of a final 'round the world swing he was making on behalf of the various clients he still purported to represent for Chowgule. On January 30, 1976, Harve arrived and I invited him for a visit in my office. "By the way, Kumar, how is everything going at Bharat Heavy Industries?" I asked, after the usual greetings. The trap was set. Harve frowned, to show his concern. "Oh, Mr. Rowan, I'm afraid ASEA has the inside track there," he answered, fretfully. "I just don't know how to pull it out."

"Oh, really" I challenged. "I understand Pillar is being considered for the job. Do you think they have a chance?"

Harve shook his head, as if that was the last thing that could happen. "Oh, no, Mr. Rowan. I don't think they've even heard of Pillar."

Then I sprang the trap. "That's funny," I commented, pulling out a copy of the letter Horvath had brought back from Bharat, "because we have a copy of a letter here from you, recommending Pillar to Bharat."

For a moment he was stunned, but if I'd expected him to be embarrassed, I was disappointed; instead, a sheepish grin came over his face. "Oh, you know about that, do you?"

I was aghast at his nonchalance. "Kumar, how can you do something like that? You come to us, bragging about all the work you're doing for us, and all the time you're double dealing and imagine what he could do with the real thing!"

Grudgingly, Roy began to see Vyas and his colleagues in a new light and, in 1983, the company known to Indian foundrymen as Inductoheat merged into a far more formidable company, Inductotherm (India) Ltd.

We held a 40% share in the new venture, the maximum permitted under the laws of India, with the other 60% held by Vyas and his partners. For the first time, a company in India could produce melting units using genuine Inductotherm components, circuitry, design and engineering.

After surveying the market on the subcontinent, Vyas and Roy agreed initially to limit the new company's offerings to POWER-TRAK Trak systems in sizes up to 450 kW and one ton, which became its highly standardized product line. It was our 500 kW unit, de-rated to operate reliability on the Indian power systems where voltage swings of 20% were commonplace.

It was not as easy to transplant our sales philosophy. To our Indian partners, the manufacturing license we'd signed with them gave them more than the top technology; it also represented a significant price advantage over other equipment on the market. Even though import duties and taxes on components imported from the States added $60,000 to the cost of the 500 kW, Mark IV which sold in the States for $100,000, its $160,000 price tag in India was $10,000 less than that of competitive furnaces. While it was easy to sell at this price, it contained only a marginal profit, certainly not enough to build a company.

To Roy, and now even to me who was finally beginning to grasp Roy's pricing philosophy, this was tantamount to price cutting and prompted me to send Vyas a memo.

"We've worked too long and too hard to produce the world's best furnaces for you to give them away in India," I wrote. "Don't sell on price, sell on features, superior performance, better service, more efficient power usage, and faster melts.

"You're providing your customers with the finest technology in the world. Whoever sells an Inductotherm furnace should never have to discount the price."

I reminded him of what he'd told me previously about what Indian foundrymen faced in importing components alone: a $1,000 control board would incur another $1,000 to buy an import license and an additional $1,000 in import taxes; local taxes would add another $500. Thus, by the time it reached India, that $1,000 control board would cost at least $3,500. It was much the same: though less severe, with capacitors and other components.

Our Indian partner saw our point, but he was dubious. "Okay," he wrote back, "we'll raise our prices, but sales will suffer."

For a while, it looked as though he was right; two months after raising their prices to the $l90,000 level, Inductotherm's sales came to a complete standstill. But--just as in Japan--word began to travel along the grapevine; a few foundrymen were getting higher efficiencies, faster melts, and were enjoying better service than they'd ever thought possible. And their furnaces all bore the same brand name--Inductotherm.

By the third month, orders began streaming in for the 450 kW units. A few months later, our Indian partners invited me to visit the Indian facility and meet with their employees. Sales had been proceeding so well, people were afraid we'd saturate the market. I was eager to allay these concerns.

In January, l985, I stood on the stage of an auditorium at the University of Ahmedabad to address the 300 employees of Inductotherm India, whose numbers swelled Co over 750 with families, friends, and relatives.

"We are delighted with what you folks are doing," I began, "but some folks have asked if the market can keep growing, or will the bubble burst? Are we in danger of saturating the market and losing our jobs?

"There is no way that can happen," I continued. "Why, just last night, Kishore introduced me to one of your city's excellent restaurants. They brought me a wonderful meal; it was served on a large palm leaf and we ate it with our fingers, in the old traditional style. But I suspect that, as a daily routine, most people in your country would prefer to eat with a knife and fork.

"Outside the cities, however, very few people have them. So, now, your factories are stamping out knives, forks, and spoons as fast as they can. And for every man, woman and child in India to have one knife, one fork, and one spoon,"--here, I consulted some figures I'd worked up before hand--"it would take a hundred one ton furnaces melting 24 hours a day, seven days a week, for an entire year, just to produce the stainless steel ingots to be rolled into sheets to be stamped into flatware. And if they wanted a set for guests, it would take still another year"

From the audience, there was a cheer of renewed confidence. I looked at another set of figures.

"If everybody in India wanted a cold water spigot-forget the pipes and plumbing, let's just talk about the spigot--it would take 40 more one-ton furnaces running flat out for a year to produce the castings needed for the spigots.

"It gives you an idea what 800 million people can consume and what they need. It will be a long time before the foundry industry begins satisfying these basic needs. When that time arrives, the country will enjoy a higher standard of living, thanks to the work your Inductotherm employees are doing today. At the same time, the demands will multiply."

A year later, our joint venture had sold 50 one-ton furnaces at the prescribed $190,000 price, primarily to customers melting stainless steel for flatware. In its first full year of operation, Inductotherm sales in India had risen from the declining $1 million level to $10 million. We were only 40% owners, but we'd found a group of honest Indians and were delighted that we'd gone forward.

But I wasn't looking at the situation through rose colored glasses. There were other obstacles to overcome; the Indian arc furnace builder's lobby, for instance, wanted to inhibit the use of induction furnaces which competed with them but which required a higher grade of scrap, most of which had to be imported. The Indian government was receptive to this lobby's argument that use of imported scrap accelerated the flow of Indian currency out of the country. In 1985, new regulations were enacted restricting the use of imported scrap for induction furnaces. As a result, after two years of hectic growth, the market flattened out. We put this "lag time" to good use; our

Indian partners upgraded their component selection and rebuilt their service department to prepare for the future and bolster its own reputation. "Real progress will take time, Kishore," I reminded him, "but it's only a matter of time."

The following year the government eased its restrictions on scrap and the market resumed its growth. By the summer of 1986 engineers from the joint venture traveled to Rancocas to prepare for the next phase of this adventure. After building a strong reputation for one-ton, 450 kW furnaces, they were now gearing up to produce furnaces with capacities of three to five tons, and from 450 kW to 2,500 kW. And just like the original Inductotherm, the Indian venture had outgrown its facilities in Ahmedabad and constructed beautiful new quarters outside the city, where they have expanded into induction heating, capacitors, electronic circuitry, temperature controls, and components for associated applications.

In India, Inductotherm was helping pour the foundation for a more self-sufficient, advanced and prosperous society. But just as our furnaces could produce the metal for plowshares, in other parts of the world it was feared that what our furnaces produced could also be beaten into swords. Or even more terrifying weaponry.

Chapter 33

Foreign Entanglements

It's hard to say how things might have turned out if we'd played it safe and remained a domestic company, doing business at home, where we knew and understood the markets, the laws and the ways people did business. But, of course, we hadn't; we'd plunged ahead, impetuously at times, into foreign markets, taking on the competition on their own home ground. There was ample justification, too, for second-guessing ourselves, when it appeared we might be getting in over our heads, or over-extending our resources. To be sure, we could have commissioned feasibility studies to determine the validity of our far-flung ambitions; but then, as I sometimes reflected, it's likely that if I'd had access to such information three decades earlier, we might never have founded the company at all. After all, the world was hardly crying out for another furnace company.

So in expanding overseas, we weren't following a Master Plan so much as we were a principle--that decision is always preferable to indecision, as action is to inaction. It was a philosophy that precluded smooth sailing, or easy successes. On the contrary, it ensured a course of turmoil, encountering crisis after crisis. But by the mid-1980's, we had overcome the most formidable obstacles; we'd learned enough to avoid most crisis and we'd achieved sufficient successes that we had become the biggest manufacturer of induction furnaces in the world.

And we planned on becoming even bigger. Besides Inductotherm operations in Australia, Japan, England, India, Brazil, and Mexico, we would soon realize plans to set up operations in Belgium, Korea, Germany, Pakistan, Turkey and Taiwan. At the same time, we could see much the same pattern of expansion repeated among some of our subsidiaries as they established their own overseas companies: Consarc, in Scotland; Jomar, in England; Magnetic Metals, in Canada and Mexico; and Inductoheat, in Australia, England, Brazil and Korea. Given the changing nature of our business and the constantly expanding scope of our operations, it was, perhaps, appropriate that the furnace company's new president would also come from overseas. In fact, he came about as far as one could--halfway around the world, from Australia.

The process of selecting Inductotherm's new president began in 1979, when, in a casual conversation, Roy Ruble first broached the subject of retirement. I was taken aback at this turn in our conversation; it didn't ring quite right. Roy wasn't the sort of man whose idea of fulfillment was golfing every day, or otherwise taking it easy. He had always been a doer, a man who was invigorated by challenges. But I respected both his wishes and his privacy. If he was contemplating retirement barely four years after succeeding me as president, so be it.

Nonetheless, I told him, only half in jest, "Roy, before I let you retire, I want to make sure you've picked your replacement, and prepared him for the job." Roy assured me he didn't have any immediate plans to step down, but allowed that he had a candidate in mind. However, before installing him as President, he wanted to see how this man would handle the challenges of the Chief Engineer's job. And so, in December of 1979, he placed a call to Melbourne, Australia, where John Mortimer, former Managing Director of Inductotherm Australia, was lecturing at the Caulfield Institute of Technology (now Monarch University) and operating his own business as an independent consultant to the foundry industry.

"John, this is Roy Ruble calling from Rancocas," he explained. "We have a job opening here as Chief Engineer, and you're the man I want to fill it."

At first, John wasn't sure he was hearing right. Roy Ruble wanted him to be his Chief Engineer? He would have been even more incredulous to hear that Roy had already picked him to be his successor. The plain fact was that while Roy and John were acquainted, they hadn't gotten along very well. They first met in l971; John had just been named Managing Director of Inductotherm Australia, and had come to Rancocas on a training mission. Part of it was their totally disparate personalities--where Roy was reserved and somewhat formal, the Australian was brash and given to speaking his mind, no matter who the audience.

Their relationship had been exacerbated by the rivalry in the world market between the domestic organization, headed by Roy, and its European counterpart, then headed by John's mentor, Jess Cartlidge. As a result: it wasn't surprising that the CEO of the parent company and the CEO of our Australian subsidiary didn't always get along.

But, like any good commander, Roy wasn't the sort of man who would let personal differences interfere with his judgment or his responsibilities. And in Roy's estimation, John was the best man for the job.

John Mortimer had proven himself at Inductotherm Australia, where Jess had put him in charge as he left for England. With John at the helm, the young organization mushroomed into a substantial force in the Southeast Asian economy with sales growing to the $5,000,000 level in John's fourth year, and with profits before taxes approaching $500,000. Their technical accomplishments, too, were impressive which the construction of the biggest vertical channel of its day, a 30-metric-Lon melt system in Sydney, as well as the most powerful coreless induction furnace system our group had built, a 4,400 kW system for Ferrovorm in South Africa.

Having built Inductotherm Australia to a position of dominance, though, John wanted to expand his horizons and his expertise further and, in the summer of 1976, he returned to college in the dual capacity of student and lecturer at the Caulfield Institute. Now, three and a half years later, here was the opportunity to rejoin the parent furnace company as chief engineer. It was an offer--and a challenge--he couldn't resist.

That didn't mean that working in Rancocas didn't require certain adjustments. In Australia, John once noted, silence to an idea meant rejection. In the States, it meant acceptance. How was he ever going to run a company in a country with such strange ways?

If there was much to learn about running a company that was an order of magnitude bigger than the one he'd managed in Australia, what better mentor in the field of management and leadership could he have than Roy Ruble. As Chief Engineer, though, John was, by virtue of expertise and nature, nothing less than dynamic. After I'd finally relinquished the engineering responsibility (if I ever really did), our succession of chief engineers--Richard "Doc" Antuzzi, Jack Harrington, Joe McNulty, and Andy Hammerschmidt--had struggled to perform their duties conscientiously, but the job was more complex than any of them had foreseen; or perhaps I was just too demanding.

With John's arrival in Rancocas, the role of engineering again became a driving force. Our new Chief Engineer had an instinctive grasp of the interplay between theory and practice; which, as Professor Dawes used to preach back at MIT, is the essence of engineering. He was capable of the kind of conceptual thinking that would earn him a dozen patents in the induction melting field; at the same time, he recognized the role of detail, like the need for precision in drawings. Our R&D was charged with a new vitality, while our manufacturing processes became more efficient and economical.

On February 29, 1984, finally convinced that the man he had selected had the right stuff for the job, Roy Ruble retired, and John Mortimer was named President. It wouldn't be easy, following in the footsteps of a man like Roy, and the transition was the subject of intense interest to both the foundry industry and to our competitors who waited to see what kind of a company Inductotherm would become with the new man at the helm. Roy had been a great friend to foundrymen around the world; his innovative thinking had helped countless customers employ technologies they might not otherwise have been able to afford. What could John Mortimer do for them?

What John did was to develop even more efficient, more profitable ways for foundrymen t, work. With the larger and more efficient inverters available in 1986, he introduced our iron melting customers to the concept of "batch melting" in high-powered furnaces at medium frequencies, thereby enabling customers to increase productivity by pouring their furnaces empty, instead of having to retain 50% to 80% of the furnace capacity between melts.

It wasn't just our products he was changing, but also our corporate culture. To most of our work force, Roy was enigmatic, seemingly all-knowing and unapproachable. John was different; he was accessible. He wanted to know what was on our people's minds. During Roy's tenure, the plant's summertime work schedule ran from 5 a.m. to 2 p.m., thereby escaping the afternoon heat. John preferred having the shop working the same hours he did--so he air conditioned the plant. Coffee breaks in the office, which Roy, with military precision, had scheduled to take place at 10 a.m. and 3 p.m., simply disappeared. John bought each employee a thermos of his own; anybody who wanted coffee could have it at any time, right at his desk. Later, John instituted the practice of ensuring regular contact with the work force by having lunch with employees on their birthdays.

Of course, no matter how talented John was, running a company--as I had grudgingly learned many years before--is a team effort. And, just as I had Roy Ruble to turn to for support and advice, John had Paul Cervellero, his Vice President of Sales.

Paul had joined us in l963, straight out of the Navy, where he'd been an electronics technician on a "submarine search" crew. In his spare time, he studied electronics, and his efforts won him an Associate's Degree from Trenton Institute.

Paul was originally hired by Jim Hoff, CEO of Linemelt, and spent eight years as a sales and service specialist with our channel-furnace subsidiary. In that capacity, he was in great demand when a customer had a "start-up." Channel furnaces were huge beasts with complex refractory shapes; a start-up had to proceed without a hitch if the user expected to enjoy good "lining life" at the high power levels that Jim Hoff h8d developed. However pressure packed these situations, Paul had a talent for leading a customer through the complex installation phase while, at the same time, underscoring the value of the features and benefits of the customer's new, made-in-Rancocas equipment.

Paul's expertise was matched by his commitment to his customers. In 1970, after he had transferred to the parent furnace company, he was working as Assistant Service Manager under Cal Mason when he got word that a 15-ton furnace operated by Grede Foundry, in Wichita, Kansas, was down. The next day, Paul arrived in Wichita from the Virgin Islands where--until the moment he got the phone call--he had been honeymooning with his new bride.

It was in 1980 that Paul was named Vice President of Sales under Roy Ruble, and in some ways the two former Navy men shared similar traits. Like Roy, Paul wasn't given to small talk; he shared Roy's ability to listen and reduce a problem to its essentials. He was also, like Roy, a skilled negotiator. But with the arrival of John Mortimer to the position of Chief Engineer, sales and engineering enjoyed a whole new synergy. Paul had an outstanding ability to take engineering concepts to the field. When John and his engineers achieved new levels of power from our solid-state units, Paul made sure that his sales force delivered these advantages where they counted most--to the user.

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.

But in my wildest imaginings, I could never have envisioned a scenario like the one chronicled on the front page of the November 8, 1987, edition of New York Newsday.

A special casing used on U.S. nuclear warheads makes them more accurate and has given the United States a decided advantage.

But a U.S.-owned firm has sold the Soviets the means to help make the vital material, and experts say the Soviets may have gained five years or more in research and development time.

With this material, they could improve markedly their "first strike" capability.

I didn't have to turn the page to learn more; the company they were writing about was Consarc.

"The Technobandits" screamed the headline in Time Magazine; "America struggles to stop leakage of its industrial secrets to the East." In the next few weeks, the American public heard of a new secret material, "carbon-carbon," a lightweight material with a strength-to-weight ratio many times greater than steel and temperature tolerance that made it ideal for warheads. The key to making carbon-carbon, said the Pentagon, the CIA and Congress, was the furnace.

The incident became a political football, not only in the United States, but in England, too, where Prime Minister Margaret Thatcher ordered Consarc's equipment embargoed.

In the United States, there was a Congressional investigation. Who were Inductotherm and Consarc? What were these secret furnaces? How long had they been dealing with the Soviets and who else were they selling to?

The truth was, the entire affair was less reminiscent of James Bond than it was of Inspector Clouseau, with bureaucratic bungling, indecision, flip-flops, and panic on both sides of the Atlantic. And what the press generally overlooked was the fact that it wasn't the CIA or Congress that had tried to stop this sale in the first place, it was Inductotherm.

In the years following Wooding's departure, Consarc had become the world's undisputed leader in vacuum-arc melting furnaces. The most sophisticated aircraft in the world carried engine rotors, blades and landing gears made of super-alloys born in a combination of Inductotherm and Consarc furnaces.

It was inevitable, I suppose, that the Russians would want our furnaces, too. Nonetheless, neither Inductotherm nor any of our subsidiaries sought out contracts from behind the Iron Curtain; we might never have dealt with them at all, if we hadn't acquired Cragmet--and Jimmy Metcalf--back in 1967. Thirteen years afterwards, newspapers and magazines on two continents were calling Metcalf a mystery man, a shadowy figure who moved in that gray area between espionage and commerce, but he insisted, "I'm jest plain Jimmy."

At the time we acquired the company, Cragmet was engaged in carrying out a sale it had made to a Soviet governmental agency, the Kama River Purchasing- Commission, which had bought a vacuum furnace for a truck plant it was building near Kramagorsk, in the Ukraine.

Selling to the Russians was different from the way Inductotherm liked to do business--instead of dealing with entrepreneurs, foundry operators and corporate officers, you had to deal with bureaucrats, planning commissions and politicians--men with a totally different set of priorities. While most Russian people couldn't afford a pound of hamburger--if they could even find it in a grocery store--money was no object to the government functionaries and party members who ran their industry. They liked having the biggest, most modern equipment.

The Cragmet furnace in this instance was the wrong tool for the job, which we explained to the Soviets once the company became an Inductotherm subsidiary. But the Planning Commission wanted it anyway. They worked on its purchase for five years before abandoning the project in 1976.

The acquisition of Cragmet and Cheston had created some duplication within our group of companies, and under Metcalf's leadership the company was losing money at a pretty good clip. The heating division of Cheston was a weak competitor of IPE in the field of heating for forging; the vacuum division competed with Consarc. The obvious solution was slow in coming, but in 1978 we merged the metal heating operation of Cheston into IPE in Madison Heights, Michigan, and, to consolidate our vacuum efforts, we merged the remaining Cragmet business into Consarc. This reorganization resulted in Metcalf becoming a Consarc vice president under CEO Stan Myers, as well as Managing Director of Consarc Engineering, Ltd. in Scotland.

The Russians' failure to get the Kama River truck plant into operation didn't inhibit Metcalf's "down home" selling style in the slightest. It was his efforts that landed a $17 million contract for 71/2-ton, 15-ton and 30-ton vacuum furnaces to be installed in the Ural mountains, where they would allegedly melt alloys for hydroelectric power plant turbine shafts.

Six years later, the furnaces were completed and shipped as ordered. Metcalf went along to assist the Russian engineers with the installation and start-up.

While there, he was approached by a Russian contact about yet another new job for Consarc. The Russians were building a plant in Khotkovo, a little town about 40 miles south of Moscow, where they planned to manufacture electrodes for power plants and other electrical equipment. Was Consarc interested in building the furnace? As Metcalf would later recall, he not only sold them a furnace, but something he had never seen, didn't know how to make, and had no idea what it was used for--a device called an isostatic press. To him, it was a brilliant stroke of salesmanship and the sale was worth $11 million to Consarc.

But to the Russians, both the British and American intelligence sources claimed later, the equipment was priceless.

Since Metcalf had been the chief architect of this sale to the Russians, Consarc's new President, Ray Roberts, (Stan Myers was now running a

nother subsidiary for us) agreed to let him build the furnaces and the isostatic presses at Consarc Engineering, Ltd., a long, blue-walled plant in an industrial suburb of Glasgow, Scotland, that we had acquired some years earlier. This would be the biggest sale in the history of Consarc's subsidiary; but the Scottish company wasn't equipped to produce components such as the power supply, which Metcalf would generally order from Inductotherm, Europe.

Call it suspicion or call it a premonition, Roy Ruble had given orders that any time Inductotherm Europe received an inquiry from Consarc Engineering, Ltd., he wanted to know about it immediately. In early 1983 Roy got word that the subsidiary in Scotland needed a power system for nine vacuum furnaces and two isostatic presses for a plant in Russia.

Roy didn't like the sound of that. Conceptually, an isostatic press is a long tube which may or may not be heated; hydraulic fluid is pumped in to achieve tremendous pressures--up to 20,000 pounds per square inch or more. The pressure and the heat combine to densify the charge inside the tube, squeezing out any voids and producing materials with unique properties. In the United States isostatic presses played an important part in nuclear research and, though such presses could be sold to foreign interests, they were limited to pressures of 3,500 pounds per square inch or less.

Though these presses were specified well within the allowed limits, Roy immediately contacted the Defense Department to advise them of the Russians' interest, then summoned Metcalf to Rancocas. Metcalf arrived on April 14 to explain to the board of directors what the power systems, furnaces and the isostatic presses were to be used for. There was, he insisted, no problem.

"The presses are well within the legal limits, Hank. No need to worry." "Have you checked with the Pentagon to see if any of the equipment is on their 'embargoed' list?" I asked him.

"Shucks, I can check with them, Hank, but those ol' boys won't tell us nothin'."

"Why not?" I asked.

"Because the embargoed products list itself is secret."

"Secret?" My eyebrows shot up. "That doesn't make sense, Jimmy. What's the point of an embargo, if people don't know what's embargoed"

Ray Roberts spoke up. "It may sound crazy, Hank, but what Jimmy says is true. There is a Military Critical Technologies list but the Pentagon won't release it. We've asked for it dozens of times." Ray's integrity and loyalty was without question; he never shot from' the hip, speaking without facts or personal knowledge. His opinions always carried a lot of weight with me.

"Metcalf spoke up again. "Hank, I just don't see what the big fuss is all about. Consarc isn't doing anything illegal; we've already contacted the British Ministry of Trade, and they've told us we don't even require licenses to ship this material. I've even gone down to the United States Department of Commerce and told 'em all about it; they acted like I was wastin' their time. This ain't the first equipment we've sold to the Russians. Every deal has been on the up and up."

"I wasn't moved by his argument. "This is more than a question of an $11 million sale, Jimmy. This seems to be leading us into a gray area, where there are too many unanswered questions for my liking. I'm sorry; I know you've worked hard on this deal, but I don't see how we can permit Consarc to proceed with this sale."

"Metcalf looked crestfallen and Ray Roberts spoke up again. "Hank, I appreciate your feelings on this matter, but we can't just drop a job we've agreed to do. We signed a legally binding contract. The British have told us the equipment isn't embargoed. We have permission to export the product It's a big market. If we don't move into it, our competitors will. Both ASEA of Sweden and Leybold of Germany are after this job and their governments impose no restrictions."

"I looked at Roy, who hadn't been saying much, just listening. Now, what the former Naval commander had to say surprised Metcalf as much as it did me. "Hank, this time, I have to agree with Ray and Jimmy. As long as we proceed carefully, making sure to notify the British and American authorities of our every step, I think this sale will reflect creditably on Consarc and Inductotherm."

"But that wasn't all Roy had to say. "It's imperative that we be covered against every contingency; just because a product isn't embargoed today doesn't mean it won't be embargoed tomorrow. Is there any kind of insurance available against such contingencies?"

"There is in England," said Jimmy. "The British government offers it to encourage foreign trade."

"Then let's take it out and move forward," said Roy. "According to the contract, the Russians don't have to pay until the equipment has been shipped and installed. A lot could happen before everything is up and operating.

"I want it understood that we're going by the book on this job, dotting our i's and crossing our t's, with no shortcuts."

Metcalf looked elated and swore to proceed as Roy dictated, obviously eager to get on with the job. Maybe I'd been too hard on him, I thought. After all, he'd just been doing his job. "Well, Jimmy, it looks like you've got yourself an $11 million job. Congratulations."

Metcalf went back to Scotland where, for a premium of $150,000, he arranged an insurance policy for 90% of the value of the contract with the exports Credit Guarantee Department, an agency of the British Department of Trade and Industry. It would take a year to build the furnaces and presses, and many of the vital components-automatic controls, cooling equipment, switch gears, starters and relays--had to be bought from outside vendors in England, West Germany and the United States. And "jest plain Jimmy" didn't make any secret of his big score with the Soviets.

Lord only knows how the story went, by the time he was done adding a little intrigue here, a little mystery there, and after it was passed around within the tightly-knit world of vacuum melting specialists. Ultimately, the grapevine carried the story to U.S. military and intelligence officials. Of course, we had advised the Pentagon of the sale; but that was Pact and nothing stirs the imagination like a rumor.

The busy year passed and in July 1984, Consarc Engineering began shipping the nine furnaces and two presses to the Soviet Union.

By this time, although the U.S. Department of Commerce and the Pentagon had shown little interest in the sale, a separate government agency had begun making its own inquiries--the Central Intelligence Agency. According to the CIA, the Russians had lied to us. Consarc's equipment wasn't going to be used to make carbon electrode material, instead, the furnaces and presses would be used to produce the mythical carbon-carbon.

Carbon-carbon, with its high strength-to-weight ratio and heat resistance, was a vital component in the manufacture of the most sophisticated aircraft and missiles, where it was used primarily for reentry leading edges. But even those of us who had heard of it had no knowledge of the process or equipment that was involved, as it was highly confidential. In theory, we learned its production involved weaving fibers of carbon-rich material such as rayon into bundles, heating them in a vacuum and carburizing the fibers, and then immersing them in pitch, which soaks into the open spaces between the weave. The weave is then placed into an isostatic press, where, under heat and pressures of 2,000 pounds per square inch or more, the pitch is forced further into the fibers.

When the isostatic and vacuum induction processes are repeated, the new material becomes increasingly dense and heat resistant. The most dense and heat-resistant form was called "carbon-carbon," When formed into nose cones for missiles, its slow burn rate reduces "wobble" upon reentry into the atmosphere, thus increasing accuracy of "first strike" weaponry.

While I was furious at the thought that Consarc equipment could be used to form and heat treat nose cones, I was astonished that the CIA now ascribed such importance to the equipment our Scottish subsidiary was shipping. While isostatic presses and vacuum furnaces represented steps in the manufacture of carbon, the secret to carbon-carbon lay in the weaving process and the chemistry involved. It was like calling someone a gourmet chef because he owned a skillet.

Nonetheless, on October 31 of 1984--a year and a half after we'd told the U.S. Department of Commerce about the sale---the Pentagon transmitted an urgent message to the U.S. Embassy in London. The story they told was alarming: Consarc Engineering, Ltd. was shipping an entire plant for processing carbon-carbon to the Soviet Union.

The next month, after lengthy meetings between British and American authorities to discuss the alleged carbon-carbon plant and the possibility of Consarc's involvement, British Customs officials arrived at Consarc Engineering to inspect the equipment scheduled for shipment and asked Metcalf to delay further shipments. After the inspection was over, British Customs removed their official "request for delay" and told Consarc to go ahead and deliver the goods.

This didn't satisfy Washington, however. Three weeks later, a delegation of Pentagon, Commerce Department and CIA officials arrived in London to petition the British government to halt any remaining shipments. They acted too late; only a few days earlier the British Department of Trade and Industry echoed the Customs Department's approval of the sale and, even as the Americans were landing in Heathrow Airport, 95% of the equipment was already on its way to the buyers in Khotkovo.

Several more weeks passed, with no further action from either government; then, in February 1985, after having told Metcalf three times to proceed, the British government passed an emergency regulation blocking the sale of the rest of the equipment. In the seaport town of Hull, England, a team of British customs agents swooped down on the docks where they seized and destroyed a shipment of Consarc goods destined for Russia, most of it a consignment of standard insulation in which to wrap furnaces, and steel parts for the bottom of the isostatic presses.

Shortly thereafter, finding themselves with a multi-million-dollar vacuum melting facility for which they had not paid a cent but couldn't get to work, the Russians cancelled the contract, a move that cost the British national insurance company $9.9 million. They paid Consarc the amount due.

Consarc and Inductotherm hadn't heard the last of the Soviets, though. "We're going to sue you, Mr. Metcalf," said Nikolai Ivanov, head of the Khotkovo operation and a man whose own future was probably riding on getting the plant running. "We know who owns your company and that company is worth hundreds of millions of dollars. So if you don't get our plant operational, we'll take you to court."

The Soviets knew the law; both the British and American governments permitted engineers to work on equipment in the Soviet Union, even when those products were embargoed. But now, even Metcalf seemed to suspect he was getting in too deep. In April 1985, Metcalf wrote a letter to the U.S. Department of Commerce, advising them of the Russians' demands, and expecting that, under the circumstances, the government would forbid him to work on the plant. This way, he could go to the Soviet Union, drop the letter from Commerce on his client's desk, and say, "I'm sorry, Mr. Ivanov, it's out of my hands. The American government won't let me do what you want me to do."

Only, much to his surprise, in June 1985, the Department of Commerce wrote back saying, in effect, "Sure, go ahead." Could it be that the Pentagon, the CIA and the Department of Commerce had discovered that the Khotkovo plant was harmless, and that the Soviets really were making electrodes there, as they had claimed all along? Why else would Commerce permit Metcalf to go back and get it running?

Back in England, Metcalf stopped off in London, where he showed an official at the British Department of Trade and Commerce the letter of authorization he'd received from that department's American counterpart, hoping perhaps that now the British would provide the taboo he sought.

The Englishman, remembering the intense pressure from the Americans to stop the project at all costs, almost fell off his chair. When he had composed himself, he dashed off an irate letter to Washington, prompting another stream of angry correspondence between the American and British governments. Still, though it was now clear that neither the U.S. nor the British governments wanted the equipment started, neither would issue instructions or a document prohibiting it.

I was now out of patience with Metcalf, the Russians, the British Department of Trade and Commerce, their Customs Department, the U.S. Department of Commerce, the CIA, and the Pentagon. Somebody had to protect Metcalf from himself; and I didn't want Consarc or Inductotherm to get in any deeper, even if just by association.

When I decided what to do, I didn't expect that, years later, Metcalf would leak a copy of my memo to Newsday, which reprinted it two years later in a lengthy, 11-page, two-part series on the affair:

"By now, Henry Rowan, president of Inductotherm, was becoming increasingly annoyed at the indecision of both the United States and Britain.

"Apparently no one in the U.S. government or the British government has the authority, power, or inclination to order us not to send personnel to complete the contract or to start up the equipment," Rowan wrote to Metcalf on October 4, 1985. "On the other hand, they seem very anxious that these activities not go forward. In view of all this confusion, it would appear that we have to make a decision."

"No Consarc personnel are to do any further work on the contract in Scotland or in the Soviet Union and nothing is to be done that will contribute toward the operation and startup of this equipment.'"

It wasn't long afterward that Metcalf resigned and any association between Khotkovo's alleged carbon-carbon plant and Inductotherm or Consarc came to an end.

So too, did our dealings with the combined bureaucracies of the United States, Great Britain, and Russia. But not our frustrations at the vagaries of governments; six years later, we would find ourselves caught in the middle between two former allies, Iraq's Saddam Hussein and President George Bush.

Chapter 34

The Persian Gulf

"Baghdad is like one big trade fair," said Bill Marino, Consarc Executive Vice President. It was January 1989, and he was briefing the Consarc board of directors on his trip to Iraq. "Sit in the lobby of the Baghdad Sheraton, and you see engineers and contractors from everywhere--France, Germany, Japan, Korea. Except that, outside, there are sandbagged anti-aircraft emplacements on every corner.

"What they want from Consarc is a way to melt titanium for making prostheses; they have a lot of wounded veterans from their war with Iran. In addition to vacuum-arc furnaces and a skull melter, they're especially interested in buying an electron-beam furnace. It could be a whopper of a sale, Hank. Maybe $11, $12, $13 million."

It wasn't the money that concerned me, right then. "Have you contacted the Department of Commerce?" I asked, though I was certain Marino had. Unlike our breezy friend Metcalf, whose association with Consarc had come to an end, Marino wasn't one to cut corners.

"Oh, sure, Hank. As a matter of fact, I've already met with them in Washington. Then they came to Consarc and they've been in touch with the Embassy in Baghdad. I have it all documented right here," said Marino, patting a log book.

"And, you explained what an electron-beam furnace does, and what it's used for?" Again, I was sure he had, as an electron-beam furnace is no garden-variety piece of equipment. Like the picture tube in a television set, it emits a focused beam of electrons, perhaps a million times stronger than those in a TV, against a small area of metal within a vacuum chamber. In this case, it, is the friction of the electrons against the metal, rather than electromagnetic fields, that heat the metal and melt it. The electron beam furnace or the "skull"-melting vacuum induction furnace were the only means of melting high-purity titanium which is so reactive when molten that it combines violently with oxygen and even reduces any refractory material containing it. But electron beam furnaces were not only prized by makers of medical supplies who used titanium for medical applications such as hip or joint replacements. They were also critical to nuclear scientists who, as we pointed out to U.S. government officials on several occasions, used them to melt zirconium for coating nuclear fuel rods.

It wasn't just the technology that concerned me, it was the customer--Saddam Hussein. A year later, our government would revile him as the Beast of Baghdad but, in 1989, he was our country's ally. Or at least he had been waging war against Iran, which was hostile to the United States and posed the greatest threat to stability in the Middle East.

"The government has inspected the specifications for the equipment and the Department of Commerce says it's a 'go'", reported Marino. "In fact, they say the Bush administration is encouraging this kind of export to Iraq."

"All right, let's proceed," I assented, "but this time, it's vital that everyone involved with this project stay in close touch with government agencies and document every contact with every official, whether American or Iraqi. Keep a file of all correspondence. Do everything as if there were a camera from'60 Minutes' watching you at all times. I don't want to be reading some reporter's half-baked interpretation of events a year down the road."

In the weeks to come, Marino and Roberts began compiling a copious file detailing minutes of meetings with officials from the Office of Technology and Policy Analysis, the Office of Export Enforcement, State Department and others.

Meanwhile, Marino got a tip from the trade attachŽ at the U.S. Embassy in Baghdad. "The Iraqis are notorious schemers," said the man at the embassy. "Make sure the money is in the U.S. See if you can get a "blocked letter of credit" with funds to pay for the equipment deposited in a U. S. bank."

At first, the Iraqis balked at giving Consarc the letter of credit blocking the funds; it looked as if all of Consarc's work on the furnace designs, the weeks spent traveling to Baghdad, the continuous meetings with government officials, would all go for naught. Finally, after seven days of talking, Bill Marino told the Iraqis he was going home. At this, the Iraqis relented. Upon signing the contract, they told Marino they would order a $6.4 million blocked letter of credit, payable to Consarc, the funds to be deposited in the Bank of New York within seven days.

The company also received a telex from the U.S. State Department representative in Baghdad, whom we'd kept apprised of our negotiations with the Iraqis. "Hooray for you!" it read.

We didn't sign the contract right away, however. Consarc had gotten word that the Iraqis might be developing a missile program. Concerned that our furnaces might be used for such purposes, we again contacted the Department of Commerce requesting their advice--in writing. Commerce told us not to worry; our furnaces would be used for civilian, not military purposes, as stipulated in an affidavit issued by Iraq.

What they didn't tell us--or maybe didn't know--was that American export control authorities were already beginning to have second thoughts about Iraq's potential nuclear capability.

It took a year to make the furnaces. Finally, on June 29, 1990, the first of the furnaces, not yet paid for, stood on the docks of the Philadelphia waterfront, waiting to be loaded aboard a ship when a team of U.S. Customs agents descended with a request. Would Consarc agree to a voluntary delay of shipment-?

We didn't know why the shipment should now be delayed, but of course we acquiesced.

A month later, the furnaces were still on the docks. The decision--to ship or not to ship--had been bucked up to the White House. Only now, President Bush was rethinking his policy on Iraq. And to some politicos, our furnaces weren't merely industrial equipment, they symbolized every missile, every jet fighter that Washington had sent Hussein's way, willy-nilly. Seen in this light, the outcome was predictable.

New York Times July 19,1990: WHITE HOUSE BARS IRAQ FURNACE SALE "The white House moved today to block the shipment of three advanced industrial furnaces to Iraq because of concern that they will be used to build nuclear weapons.

"The decision requiring the New Jersey maker of the furnaces to seek a Federal export license, effectively overrides an earlier ruling by the Commerce Department. It came after the Pentagon and a group of Republican senators urged President Bush to keep the furnaces out of Iraq hands.

"Had the White House not acted a temporary ban on their export imposed by the Customs Service, would have expired on Friday.

"The action settles for now what has billed as a test of the Administration's commitment to stop the export of weapons-related technology to unstable regions like the Middle East.

Pentagon and some Congressional experts believe that Iraq planned to use the furnaces to cast titanium and other exotic metals for use in ballistic missiles and perhaps components nuclear weapons."

To those aware of what had preceded this blockage, the White House's action raised more questions than it answered. Why, with all the experts concurring that Iraq was not going to use the furnaces as they claimed, did the Government encourage Consarc to take the order and build the equipment? Why did they award us an export license to ship the equipment? Why did they wait until the equipment was standing on the docks, about to be loaded, to pull the plug?

Especially infuriating were the conclusions drawn in the media. Even the local Burlington County Times--our home-town paper-couldn't resist depicting us in the most odious light possible.

"For the second lime in five years, Federal officials are questioning a local firm's sale of industrial equipment to a foreign nation because they fear the equipment could be used to manufacture military hardware," the article began. "U.S officials are becoming increasingly concerned about shipping supplies to Iraq that may be used for warfare. In March, a Customs Service investigation led to the seizure of American-made electronic devices as they were about to be shipped from England to Iraq. U.S. officials said the devices were to be used as triggers for detonating nuclear warheads. A month later, British officials seized high-tech tubing they claimed was to be used by the Iraqis to construct a super cannon barrel."

Guilty, by association. More painful, though, was hearing some of our best men ask, "Mr. Rowan, Why are we selling weapons to the Iraqis and the Russians? Do we need the business that much?"

In an effort to clear our name, I decided to take a course of action I have never embraced--to sue. We sued the Iraqi government for misrepresenting their reasons for buying the furnaces, and in June 1991,Federal Judge Stanley Sporkin awarded us $1O million in compensatory damages and $55 million in punitive damages, all quite uncollectible.

It was a Pyrrhic victory, one that set us at odds with the White House. It hadn't been enough that the Bush administration had handled this matter in such a capricious and clumsy manner, vacillating back and forth and failing to identify the security issues we had called to their attention. Now, said the White House, Judge Sporkin's ruling should simply be set aside on grounds that it conflicted with the President's order establishing economic sanctions against Iraq. As it stands even today, although Consarc has been awarded the $6.4 million deposited against the Iraqi letter of credit, it is on the condition that, if so ordered, we must pay it all back to the government. Our own government was appealing Judge Sporkin's order.

We hadn't really enjoyed running the gauntlet of national publicity, but a year later, the reporters, tabloid writers, columnists and TV cameras descended on Rancocas in droves. And while most of them assumed a deferential pose, it was clear to see they were thinking to themselves, "Is this guy Rowan nuts?" After all, nobody gives away $100 million. Or, rather, nobody had until Rowan.

Chapter 35

A Small Gift

In April of 1992,the newest addition to our corporate air fleet, a sleek, eight-passenger Lear jet accelerated down the runway. As I pulled back on the control yoke, it vaulted into the sky and climbed to 47,000 feet, bound for Biscayne Bay, Florida. It was trip I was looking forward to, on two counts.

First, even after almost four decades as a pilot, I still got a thrill so than when I was behind the yoke out of flying, and never more of the twin-engine jet. The Lear 31 had joined our fleet in the fall of 1990 and I'd spent a month at Flight Safety in Wichita Training and earning my jet rating. It was a far cry from commanding a B-17; flying the old four-engine bomber was a physical challenge requiring heavy pressure o, the yoke to maneuver the plane; I had returned from many a flight exhausted Still, the B-17 was a slow, lumbering old bird and there was usually plenty of time for us pilots to compensate for a false move or plan our next maneuver.

By contrast, things happen fast in a Lear; it will climb off the runway at 6,000 feet a minute and cruise at .78 mach, over 500 miles an hour. There's little call for sheer strength in the cockpit, as the Lear's controls are fully automated But ten miles above the earth-l0,000 feet above the highest flying 747--the man piloting a Lear has to think and react many times faster than in a propeller aircraft, to keep things from getting ahead of him. And so, flying was still a challenge.

Here is a photo of Rowan and his airplane.

Our Latest Executive Aircraft, a Lear 31 Acquired in 1990, Has Brought Hundreds of Prospective Customers to Our Plant Following Site Visitations

So was sailing, or rather, racing. People often acted surprised when I would tell them it wasn't the sailing I liked, but rather the racing competition. This was the second reason I was looking forward to this trip; I was headed south, to the United States Sailing Center founded by a friend and longtime sailing opponent, Ding Schoonmaker, to compete for a place on the Olympic Sailing Team that would be competing that summer in Barcelona, Spain. I wasn't harboring any illusions about my chances; it wasn't so much the fact that, at the age of 68, I was the oldest candidate for any Olympic team; it was, rather, that the best sailors are young suntanned fellows who sail all the time and I'd been much too busy and having too much fun running Inductotherm to spend weeks or months on the water. Running an international conglomerate, operating in five continents leaves precious little time for World Class practice. Most of my sailing had been restricted to the club at Lake George, where, later that year, I would win the club's Star Class trophy for the 24th time.

So when I entered the Olympic trials with my son-in-law, Manning Smith, as my crew, I was competing as much against myself as against other sailors. We performed as well as I could have realistically expected; after the first four of 10 races we stood 15th out of 22 crews. A newspaper reporter covering the event tactfully avoided commenting on my age, but asked what I hoped to do there; to which I replied that I'd planned to beat a few boats. That's exactly what we had done.

Before leaving, though, I'd chatted with Rick Burgess, another sailor and longtime friend, and his words of encouragement still rang in my ears. "You know, Hank, if you had spent less time at the office and more in your boat, you might have had a shot at it. You can afford to do whatever you want, now. Why not give the younger guys a chance to run Inductotherm and concentrate on the important things in life--like sailing?"

Why not, indeed? Especially now that my daughter Ginny and her husband had returned from San Francisco to join us in the company. If the change of scene from San Francisco to Rancocas meant a big change for Ginny and Manning, it also augured a change in the way Inductotherm had been doing some things.

Ginny was indeed a "chip off the old block," an idealist and perfectionist to a fault. She had graduated from Cornell in 1968, where she had earned a bachelor's degree in psychology before entering the advertising field with Campbell-Ewald, at the time one of the largest ad agencies in the country. After a stint in the agency's TV and radio division in New York, she joined General Electric before moving to San Francisco in 1971. There, she was an account executive for a graphic design/corporate identity firm before returning to college for a graduate degree at the University of California at Berkeley, where she won an M.B.A. in 1978. That same year she married Manning Smith, a former Marine Corps officer and Dartmouth graduate who had earned his M.B.A. from the Wharton School and who, like Ginny, had grown up in the Delaware Valley, across the river in Philadelphia. They both had flourishing careers in San Francisco, Ginny as an account executive with the McCann-Erickson advertising agency, and Manning in real estate acquisition. But, in 1981, my daughter and her husband had begun to do some genuine soul-searching about where their futures, their obligations, and their greatest opportunities lay.

They had just attended our annual stockholders meeting in Rancocas in June 198l. It had been an especially exciting year, not only from the standpoint of revenues, profits, overseas expansion, and new acquisitions, but also in terms of what the Inductotherm philosophy was achieving. It's likely that anyone attending that stockholders meeting would have come away with the same conclusion: that our horizons were boundless. I suppose I would have been disappointed if Ginny, my daughter and, now, my sole surviving child, had not shared this excitement on an even more profound level.

As I would soon learn, she had. A few weeks after that 1981 meeting, I received a letter from Ginny. Ever since that last trip to Rancocas, she wrote, all she and Manning could talk about was the prospect of returning home, and of the two of them taking an active role in the company. Manning's acquisitions background was a perfect match with Inductotherm's needs for expertise in this field. At the same time, Ginny's own expertise in advertising and marketing would benefit both the furnace company and our subsidiaries. They reasoned that both they and the two children they were adopting could be closer to their roots and their families who were all on the East Coast. Each time Ginny and Manning explored the issue, they arrived at the same conclusion.

We agreed to discuss it further in December, when Ginny and Manning planned to join Betty and me in Rancocas for Christmas.

December finally arrived, and the holiday season was, for me, energized by the time I spent with my daughter and son-in-law, talking about the company's plans for the future and their own.

Several months later, Ginny called with the news I'd been waiting for; the adoption of their two young children was final. Soon, the Smiths--who now included a daughter they christened Rowan and a son Jamey (Manning J. Smith IV)--would be coming home, this time to stay.

Manning joined Inductotherm in November of 1982, and Ginny was elected to Inductotherm's board of directors two months later. It wasn't long, however, before she hankered for a hands-on role in the company. And so, in October 1984, she became Manager of Advertising and Communications for the furnace group, Inductotherm Corp. In a way, what Ginny did for our advertising was similar to what that Dale Carnegie course did for our sales efforts some 31 years earlier.

Previously, our advertising had been built around specific products, such as the VIP. And though the ads were, in and of themselves, effective, they all looked different. Ginny disdained puffery, but she understood the need for cohesion, for a sense of continuity and a unifying thread in all our ads, brochures, and even trade show promotions, from one product to another.

For the first time, an over-all strategy, one linking communications with our sales and marketing efforts, underlay our advertising. After six years at Inductotherm Corp., her efforts were rewarded with a bigger challenge, to provide advertising support for all fifty product lines represented at Inductotherm Industries.

Meanwhile, Manning's work on the acquisition side at Industries had brought him promotion to Group Vice President and Director of Corporate Development, in which capacity he oversees such companies as Sonobond Ultrasonics, Corotec Corporation, Jomar Corp., and Electro-Steam Corp., besides remaining involved in joint ventures in China and Europe. Away from the office, his skill as a sailor had earned him the slot as my crewman at the Olympic Trials.

So, it wasn't as if the family wouldn't still be represented at the company if I decided to step aside, and why shouldn't I? I'd reached the age where most men, whether successful entrepreneurs or nine to-five workers, have either retired or start slacking off and spending fewer and fewer days at the office. Every time I'd walk through the plant, I'd be reminded of this. Where were all the old faces?

Roy Ruble, the man who had lent me so much guidance and support through the years, was now gone; he had died of cancer. It is likely that he knew he was ill back in 1979, but he never told anyone, not even me. Though he could be the most compassionate of men, it was like him to bear his pain silently, with neither explanation nor complaint.

As for the rest of the old gang who'd started with me back in Delanco--Dick Walker, Tom Pippitt. Bob Sundeen--they had all retired. Even Jess Cartlidge, now president of Inductotherm Japan, was on the verge of retiring. So, was it finally time for me to step down? To pass on my work and responsibilities to a younger man? What more did I have to prove? The little furnace company Betty and I had started in our back yard was now the dominant manufacturer in our field, commanding what we estimated to be about 50% of the world market.

Our other larger companies--Consarc, Thermatool, and Inductoheat with their affiliates--enjoyed similar positions ol prominence in their industries, while many of our newer acquisitions showed tremendous potential, in terms of technology, market share, and profitability Consequently, prospects for the future looked secure for both Inductotherm Corp. and Inductotherm Industries, whose combined annual sales were approaching $500 million.

Moreover, the people running these companies were a singular collection of executives, highly motivated, capable and eager to build on Inductotherm's record of success and achievement While they were a diverse group, they all shared one common trait: they were all eager to put their own stamp on their companies. Like Dick Walker in our shop in Delanco almost four decades ago, they didn't want Hank Rowan looking over their shoulder, telling them how to run their businesses.

Then, too, as Rick Burgess had suggested, I could now afford to pursue almost anything. I could go out every da) l and fly a plane or race a Star. I could buy bigger boats--a yacht, maybe--and cruise the world. I could acquire rare art works and antiques, attesting to my good taste. Betty and I could throw lavish parties so that people would read about us in the newspapers, and envy us for our wealth and our importance.

But the truth of the matter was, I not only loathed that way of life, I dreaded the thought of retiring. I couldn't bear the thought of getting up in the morning with no new objectives to reach, no work to be done, nothing to inspire me for the rest of the day. I felt it sad that, for far too many people, retirement becomes a goal! Some even spend 20, 30, or 40 of the best years of their life, often at a job they hate, simply to acquire financial security, or even worse, to make enough money to do the things they loved doing. Why shouldn't the job itself be the challenge, the fun, the excitement? I had never wanted anybody working for me who didn't enjoy the job, who didn't want to make a contribution That was one reason why I was so enthusiastic about our company's profit sharing trust.

No, I had no intention of retiring. To the contrary, I was beginning to feel that familiar burning in the pit of my stomach, the same old dissatisfaction with the status quo. It was the same compulsiveness--the drive to shake things up--that had caused me to risk my company over and over again in the past. And ultimately to drive my company to new plateaus of success.

Yes, it was time for a new challenge. In the spring of 1992 I found what I'd been looking for. Or maybe it found me. Either way, it was a challenge like nothing I'd known before.

Part of it was the attention it got. I'd always preferred to do things quietly, with a minimum of fanfare. Truth to tell, I hated publicity.

Yet there I was, about to climb out on a limb again; this time, there were scores of newspaper and TV reporters and millions of men and women around the country looking on.

"Why is Henry Rowan doing this?" the TV reporters asked their viewers at home. Some of those around me seemed to be cheering me on, while others were suspicious. Most people, I suspect, were just shaking their heads, wondering what they would do with all that money. The Philadelphia Inquirer even referred to me as an eccentric philanthropist. Who knows, maybe I was a bit eccentric, but I'd never considered myself a philanthropist

It had begun on April 1,1990, with a routine solicitation for funds from a fundraiser for a nearby college, Glassboro State College. I had never had any connection with the school, though I had given a talk there to the business students some ten years previous. As I recall, I may have been a disappointment that evening. I had promised my audience that, at the end of my speech, I would let them in on the secret of running a fail-proof business. As they sat on the edge of their chairs, impatient to hear this "secret," laboriously described Inductotherm, its beginning and the industries we served. Finally, I arrived at the moment they had all been waiting for and they leaned forward, all ears.

"The key to running a fail-proof business," I told them, "is to have ZERO expenses." We'd done that, of course, in the early days of Inductotherm, but they couldn't even imagine such a concept.

My audience almost groaned at this news. Zero expenses? That was no secret, that was impossible. Yet, year after year, companies large and small go bankrupt or close their doors simply because they let their expenses build beyond their ability to support them.

The circumstances surrounding that first visit to Glassboro State were unknown to my caller, Dr. Philip Tumminia. He'd been advised by a local banker, C. B. Shingleton, to call me, he explained.

"Well, Dr. Tumminia," I responded, "you're welcome to stop by and see me, but I'm not inclined to give any money."

Tumminia came by anyway and the two of us sat in the reception area of my office as he told me about Glassboro State and its needs. Glassboro State wasn't a well-known college; the most attention it had ever received was back in 1967 when then President Lyndon Johnson and Soviet premier Kosygin held their summit meeting there.

As I listened to Tumminia, I couldn't help but be struck by the contrast between his request and another I had heard only a few days earlier. The YMCA was planning to build a new facility in Moorestown and, as the Y's fundraiser insisted to me, "A man in your position should donate at least $50,000."

Now there was a presumption, for a fundraiser to come into my office and tell me what I should do and what my position was. I suppose he expected me to be flattered, to join the exclusive ranks of other New Jersey businessmen who wanted to burnish their halos in each others' company. I had never had much interest in, nor need for, that sort of thing. Further, Moorestown was a well-off community. This appeal was another case of the rich getting richer while the poor, who lacked access to recreational or other community facilities, were overlooked.

"The new Y will be nothing more than a health club for the millionaires of Moorestown,, I told my visitor. "Why not put a new YMCA in downtown Camden, where it will serve the kids who really need it?" Nonetheless, I donated $3,OOO to the YMCA's building fund, though I can say I derived a tremendous amount of satisfaction in doing so.

Tumminia's approach and his cause were a different matter. The fundraiser, a man in his late forties, struck me as friendly, optimistic and highly competent without being pushy about it. He didn't have a canned 'bitch,' and the more he spoke about Glassboro, the more evident it became that he was sincerely committed to education and to the college he represented.

What Tumminia proposed was a corporate contribution of $l,500 to the college's Development Fund. In return, he advised me, Inductotherm would receive two tickets to Glassboro's "Autumn Nocturne," whatever that was, and a listing in the event's program book.

At first, I wasn't inclined to give. "I'm sure your college is worthwhile, Dr. Tumminia, but isn't Glassboro State College a state institution? I'm not inclined to donate to the state. I already do that every time I pay my taxes."

"Oh, no, Mr. Rowan. You won't be subsidizing the government," he began. "True, the state of New Jersey provides operating expenses, but that's just to keep the college running, and maintain the status quo.

"But we want to build the college and improve it. That's what the

Development Fund is for, raising our standards."

Only, in the past, he allowed, the college had minimal success in raising money; just six years earlier, Glassboro's total endowment fund stood at $l2,000. That was about as much as some prestigious colleges spent on phone calls to potential donors in a month, it occurred to me. Ultimately, much to Tumminia's delight, I decided to make that $1,500 donation; he seized on this opportunity to ask for another appointment. "I'd like to return and discuss a more substantial gift."

I had to smile at his persistence. "Phil, I have no problem meeting with you and discussing things. But that doesn't mean I'm going to do anything. After all, you've already got your $1,500."

I can't say I gave my donation or the school a great deal of thought; after he left, it occurred to me I never found out what the Autumn Nocturne was.

In the months ahead, Tumminia proved to be a man of his word; he stayed in close touch with me, telling me about Glassboro, its students and its needs at every opportunity.

I didn't mind. He had a tough job, and a necessary one, and I enjoyed talking to him, though I was less enthusiastic about what he was then proposing.

The college was trying to raise $20 million for a new library; Tumminia's strategy was to raise it in increments of $2 million and $3 million each from several donors.

I had to throw cold water on his plans, at least so far as I was concerned. "Phil," I explained, "I'm sure it's a worthwhile project. But I'm not inclined to be one of a bunch of people. I don't serve on committees, I don't belong to clubs, I don't get a kick out of being mentioned in the same breath with other successful people. I'm a loner. I like doing things independently."

To Tumminia, who saw every glass as at least half full, this didn't sound like he was being turned down. On the contrary, his ears perked up; "Does that mean you'd consider funding the library by yourself?" he asked.

"Sorry, Phil," I had to smile at his irrepressible optimism. "I just don't find the idea of a library that exciting."

In September, undaunted by my lack of interest in the library project, Tumminia took me over to the college to give me a closer look at the young men and women who were benefiting from my $1,500largesse.

Aesthetically, it was a far cry from MIT or Williams or those college campuses we envision "nestling in the foothills of the Berkshires." It was quaint enough, with the old traditional type of college buildings contrasted with some beautiful modern and a few nondescript structures situated on either side of Route 322.

Some of the facilities certainly didn't project the image of a college, especially the glass-walled, anonymous building that housed the School of Business. It would have been an ugly manufacturing plant.

Far more impressive than the physical plant, however, were the students I encountered on the campus; they were a clean-cut group, enthusiastic about their college and excited about getting an education. Tumminia sensed my empathy for the students and my concern over the buildings where they had to study and learn. Over and over again, in the days that followed, his conversation returned to the subject of the School of Business.

"That's where we really need improvement, Hank. Only, upgrading the business school will take a tremendous commitment from somebody. A face-lift alone will cost between $4 million and $5 million. An entire new building and new facilities would cost upwards of $11 million.

"We would hope that whoever gives us the money for capital improvements would also provide an endowment to improve the curriculum." Then, he told me something that totally startled me. He had already discussed the possibility of such a donation with the college's president, Dr. Herman James, who agreed with what Tumminia had suggested. "Hank, if you were to endow Glassboro's new business school, we will see to it that it is known as the 'Henry M. Rowan School of Business.'"

The Henry M. Rowan School of Business? Up to this point I had been listening patiently, but now I had to interrupt him. "Phil, I appreciate the thought you and Dr. James have given to this matter. Only, regardless of my empathy for the students, don't we already have enough business schools? It seems to me that's where a lot of our problems come from. We have young people graduating from college knowing how to manage a leveraged buyout, or knowing how to inflate stock prices, or take a company public.

"But at some point, we have to make something. We can't compete in the world market by taking in each others' laundry. This country has been neglecting our core values too long. We have a generation of young people who have college degrees in Business Administration but know nothing about manufacturing or competing in world markets.

"We should be teaching people how to build things, how to create real wealth, real jobs. Maybe we should be talking about industrial engineering, not business administration."

Only, as Glassboro didn't have an engineering school, that seemed to end the discussion. But not my meetings with Tumminia, which continued on into September of 1991. It started out as another casual get-together, until I heard myself saying, "Phil, I'm just curious, but what would you and Glassboro do with $100 million?"

Tumminia looked stunned, as the sheer magnitude of the figure sank in. "Now remember, this is just a whim," I reminded him.

He still didn't give me an answer. Instead, he stood up and excused himself, promising to give me an answer later that day, then dashed out of my office.

I had been telling the truth when I told Tumminia my question was a whim, a rhetorical question. For that matter, though I'd been wondering what they might do with such a sum, I hadn't intended to suggest the possibility of such a gift. I certainly wasn't ready to commit myself to making another contribution to Glassboro State. But at the same time, I had been doing a lot of thinking. About myself, about my company, and about money, and what it could-and should--be used for.

The idea of philanthropy isn't something that just pops into a person's head. Building Inductotherm to a position of worldwide prominence had taken a lifetime of concentrated effort and often grueling work with sometimes devastating disappointments along the way. Consequently, giving our profits away as a matter of course wasn't my style.

Then, too, I never had the need to bask in the limelight that comes with philanthropy. For that matter, I'd always disapproved of CEO's of publicly held companies who give away money that isn't theirs to begin with.

On the other hand, though I didn't believe in "charity for charity's sake," Betty and I had been substantial contributors to causes we believed in, and with which we were personally involved.

In 1975, after I'd just completed my term as president of the Burlington County Boy Scouts, and while Betty was serving on the board of the county Girl Scouts, we contributed $250,000 to each organization to build a headquarters on land Inductotherm had donated, just across the Turnpike from the plant.

Further, for some years now, the prospect of increasing profits from our various businesses raised an increasingly serious question: what should I do with these profits?

One of my earliest concerns had been the financial security and well-being of those men and women who'd left substantial positions and comfortable salaries to throw in with me and my fledgling enterprise. The result was the profit sharing trust we'd established in 1957 for Inductotherm. Now, 34 of our subsidiaries shared the trust concept and, in total, enjoyed over $100 million in corporate contributed value. It brought me tremendous satisfaction to see my employees--managers, salesmen, and factory workers alike-become financially independent and even amass what some might consider small fortunes, thanks to these funds.

Once I'd assured myself of the profit sharing trust's on-going strength and vigor, I had continued reinvesting earnings back into the companies or using profits to acquire new subsidiaries or grow the ones we had. Now, however, there were limits to how much more money the companies could absorb, and how much more they could grow. Our core company, Inductotherm Corp., already held the lion's share of the world market. It would have cost more to gain additional market share than we would have earned.

We faced a similar problem in other fields, in which our larger subsidiaries-Consarc, Inductoheat, and Thermatool--already represented the state of the art and held a dominant position worldwide.

As for the continued acquisition of new companies, prices had risen in inverse proportion to falling interest rates and, with prevailing interest rates lower than they had been for decades, so was the return on investment.

It was a quandary. I couldn't spend the money. I couldn't take it with me. I had no taste for ostentation or expensive living. There was, however, another option: I could direct it where it would do the most good for the most people.

Once one embarks on this line of thinking, of course, the possibilities are endless. Some wealthy men have endowed museums of natural history or of modern art; others, hospitals, wildlife preserves, or shelters for the homeless.

I wanted to do something consistent with my life's work. Inductotherm had never been just a way to make money; I had always wanted a company that stood for something. Integrity. Progress. Opportunity.

This meant different things to different people. To our customers, we represented the commitment: to serving them, to delivering more efficient, more profitable ways of working.

For our employees, working for an Inductotherm company meant more than a livelihood, it was always something they could take pride in.

For our country, no matter what my feelings about the way the outgoing Bush administration and his Treasury Department had treated us, we were--and I was determined that we remain--a vital national resource.

And where did all of this begin? With education. It had been my schooling at MTT that had instilled in me the capability, such as it was, to create and grow Inductotherm. In the years that followed, the people who joined us were schooled all over again in the Inductotherm way of thinking.

Thus, if I were to succumb to the philanthropic impulse, it seemed logical that I support the cause of education. Of course, I had no particular ties to a school like Glassboro, with the exception of that $1,500 contribution. Meanwhile, my own alma mater was in the middle of a major fund raising effort aimed at raising $750 million. But there was a big difference between MIT and Glassboro.

MIT not only offered the finest engineering education in the world, it was also one of the wealthiest universities in the country, with an endowment of some $3 billion. It was not likely that a contribution of any size--even 100 million--could enhance the quality of the schooling at Cambridge one iota. What's more, it was likely MIT would achieve their fundraising goal, with or without my support. It was almost a self-perpetuating cycle; the student bodies at the most prestigious colleges represented an intellectual elite whose success and subsequent personal fortunes were almost predestined, as were the vast sums they could, in due course, bequeath to their colleges.

Likewise, "name" colleges often attracted funds from successful graduates of lesser-known colleges. Some did this out of the yearning for personal recognition; others, in the hope of easing the admissions process for a son or daughter.

But for an alumnus of a well-known school to endow a less prestigious institution, well, it just wasn't done.

Nonetheless, I had a two-fold interest in Glassboro State College. The student body was drawn, in the main, from the state where I had lived and worked almost all my life. It was a state whose people had been good to me, my family and to Inductotherm. No doubt some of my own employees had sons and daughters and grandchildren earning degrees at the college.

Then, too, it was a no-frills kind of college, a place to roll up your sleeves and get down to work. Not unlike MIT, in that respect. Yet, how much of a difference could I make at MIT? Oh, my alma mater would have put the money to good use. Of that, I was certain. Yet, where would my money have the most impact? Where would it actually change people's lives?

One option was to start a new school of learning or buy an existing one that may be floundering. I seriously considered this route but I had enough entities to "run" and there didn't seem to be time left to set in motion the standards that would assure continuity to a private school. Such a project should be undertaken by a younger man who has a lifetime to devote to building an education institution. A public school, on the other hand, one run by the state, was more likely to enjoy continuity and receive the proper attention in the years to come.

Still, I wasn't ready to commit myself. Not even when I got the phone call from Phil Tumminia later that afternoon. Apparently, he had rushed back to the college to confer with the president with news of my "whim"; he wanted to come back the next morning, as he had important news for me.

"I've spoken with Dr. James, the president of the college, Mr. Rowan," he began, excitedly, when he arrived in my office the next morning. "We've discussed the question you asked yesterday. He wants me to advise you that, in the event you should make a gift of $100 million, we would recommend to the State Board of Regents that the college be renamed in your honor. Instead of Glassboro State College, it will be known as Rowan College of New Jersey."

Rowan College? For a moment I permitted myself to envision the signs on the campus, "Rowan College, Established 1923." It was an appealing thought ...a claim to perpetuity ... and I was touched by this thought on the part of the school. Only, that wasn't what I'd been driving at. What I wanted to know was, would they or would they not establish a school of engineering?

Oh, they would, Tumminia enthused. Why, just think of all the oil refineries along the Delaware River. They all needed chemical engineers, so why not an engineering school, to offer a degree in chemical engineering?

"No, Phil," I countered. "I wasn't thinking of chemical engineering; what I had in mind was the whole spectrum of engineering. Electrical. Mechanical. Civil. Industrial. Chemical, too. But chemical engineering alone, I'm afraid that wouldn't do it."

His face fell and, for a moment, he didn't respond. A moment earlier, he'd been energized by the thought of what $100 million could do for his college, the new classrooms it could build, the teachers it could pay, the young men and women it could educate.

He was aware, too, that what he was asking of me had never been done before. Nobody had ever given so much money to a public college; if I were to grant Glassboro State $100 million, he had advised me, it would establish a new high-water mark in American education, as it was almost twice as much as the record $51 million that had been given to the University of Houston a few years earlier. And, not coincidentally, my young friend would earn himself a place in the fundraiser's Hall of Fame.

I had to sympathize with him. Though I had just rejected the college's offer, I appreciated the energy and enthusiasm Tumminia brought to his work; I realized, too, that what I wanted--a full-fledged college of engineering--was far beyond his authority to grant.

His fundraiser's customary ebullience seemed to be evaporating as he answered, "The whole spectrum of engineering? Well, uh, maybe. Of course, what we'd have to do is get the state to perform a feasibility study, to see if an engineering school is needed."

A feasibility study? To me, that smacked of bureaucratic foot-dragging. "Phil, if we had relied on a feasibility study to tell us if the world needed another induction furnace company back in 1953, we would have never started Inductotherm.

"Anyway," I reminded him, "I just wanted to know what you'd do. Like I said, it was merely a rhetorical question. Just a whim."

Tumminia sounded dejected as he said goodbye. By now, he may have been regretting the day he ever stopped by my office, in spite of my generous gift of $1,500.

Chapter 36

A College Endowed

In the days that followed, I found myself pondering the same question over and over again. Even if I were philanthropically inclined, where would I put my hands on $100 million?

For that matter, where would the chairman of General Motors or Westinghouse or any other major corporation pet $100 million in cash? It wasn't a matter of sitting down and writing out a check; like most companies, Inductotherm didn't have that amount of money sitting around in petty cash or in a checking account. Instead, it was tied up in hard assets, real estate, and inventory. The only source for funds of this magnitude was our own profit flow. Was it wise to diminish our companies' resources to this extent? How would it affect the health of my company and the jobs of the 4000 worldwide employees? To say the least, it would deplete my resources, and, after my experiences with banks, I never again wanted to have to be dependent on one.

Amidst all these concerns, I also found my mind returning, time and time again, to the memory of my two boys. David and Jimmy. What if they had survived and lived full lives? There was so much I'd wanted to teach them, so much I'd wanted to give them. Both been brilliant young men. Either could have carried on the continuing growth of the business that was so dear to me.

The person I turned to, as my ideas crystallized, was the one who'd been my comfort and strength throughout the years, my wife. Much to my surprise, Betty took it all in stride; it was as if she had been reading my mind these past few months. "Well, we certainly have more than we need," she responded, after thinking it over for a few moments, "We can't eat it, we can't wear it, we can't take it with us and, the way you and I live, we can't spend even a little of it. So I think it's a great idea."

But was it fair to our only remaining child, Ginny? After all, whatever form my philanthropy took, it would diminish her inheritance correspondingly.

But, as Betty pointed out, my daughter and her husband were quite capable of fending for themselves. "Ginny's a Cornell graduate and for the past half dozen years she's been doing a topnotch job for you. And, if she can meet your expectations, she can succeed anywhere. Manning, too, was successful on his own, long before he came to Inductotherm. And when have they ever depended on money from us?"

Further, as Ginny reminded me when I told her of this crazy idea I'd gotten into my head, I'd already given her a valuable block of stock I owned as a founding investor in Dynamet, a company a former customer had started 10 years earlier and had carried to a huge success. To her credit, she expressed even more enthusiasm than Betty.

But my responsibilities didn't end with my wife and daughter. How would this affect Inductotherm's employees? Any fund directed to outside philanthropy would be diverted from profits 1 had heretofore shared with my work force, via the profit sharing trust we had established in 1957.

Only, what if a gift could benefit Inductotherm employees, well as the college? What if a portion of the endowment were set aside for scholarships for the children of Inductotherm employees to attend Glassboro State College, with the cost of tuition, books and fees paid for out of this fund? Wasn't this--ensuring their children's future--what everyone wanted? And what could ensure a young person's lot in life more than a top-notch education?

Of course, prudence dictated putting off any commitments to Glassboro; for every reason for proceeding, a dozen others surfaced for not doing so. And so I vacillated back and forth, testing the idea and my reaction to it al various times and in various moods, throughout the winter of l991 and on into the spring of 1992. Until suddenly, one day in June, it all became clear to me. I knew why I had been reluctant to consider an endowment of $10 million, or $20 million, or $30 million. It wasn't that it would have been too much; it was, rather, that it wouldn't have been a challenge.

But $100 million! Now, that was a challenge. Perhaps the biggest I had ever undertaken. To deliver on this promise would take every bit of energy and determination I possessed and would make sure that I couldn't let down. I'd be tied to my company and my job-a job I dreaded leaving, for years to come. And so,

I decided to do it.

On the morning of July 6, 1992, a buzz of expectation filled the auditorium at Glassboro State College as Betty and I climbed the stairs to the stage where New Jersey governor James Florio, college president Dr. Herman James, Phil Tumminia, vice chairman of the Board of Trustees Steve Weinstein, and the state chancellor of higher education Edward Goldberg awaited us. Once seated, we looked out into an audience of students, faculty members, administrators, plus TV cameras and reporters.

The audience fell quiet as Dr. James strode to the microphone and thanked everyone for coming, then broke the momentous news. "This morning, I'm pleased to announce that Henry and Betty Rowan and Inductotherm Industries have pledged to us a gift of $100 million."

At this, the auditorium thundered with applause and cheers. There was another round of applause--mixed with appreciative laughter--when he noted, with deadpan good humor, "When you receive a gift of $100 million, a simple 'Thank you' hardly seems enough. Therefore, the first thing we'll do is take the steps necessary to change the name of this college to Rowan College of New Jersey."

So there it was. I had not only my engineering school, but also my next challenge--living up to this commitment, the commitment that would, in Dr. James' words, transform his institution from "a small state college of moderate means into an internationally acclaimed institution of higher education."

Then it was my turn to speak. For a man who had just had a college named for him, I didn't talk long.

"I'm thrilled to be able to make this contribution," I began, "and I'm very pleased at Dr. James' offer to name the college for me. I spent many months agonizing over this decision. I did it because I feel that education is the foundation of society, and engineering is vital to the educational process.

"Betty and I also wanted to give something back to New Jersey, and we're delighted to be able to do this. We hope it goes a long way towards strengthening New Jersey in the hierarchy of states, and strengthening the values of the people in the State.

"Thank you very much."

I then sat down, to hear Governor Florio tell the audience they were enjoying a "ringside seat at one of the most important moments in American success stories ....

"This act of generosity on the part of Henry and Betty Rowan will stand as a beacon of enlightened philanthropy for all time."

Then it was the reporters' turn. "How many other institutions have you endowed?" came one question from the floor. The audience laughed again when I advised him I hadn't done this sort of thing on this scale before, concluding with, "I don't want to mislead you. This isn't a habit."

As to the need for the college and for the feasibility study, I replied, "If it is a mediocre school of engineering, then we don't need it. If it is an outstanding technical college, which is what I intend it to be, then the need and value are so obvious that we don't need a feasibility study."

When the press conference was over, the stage was mobbed by excited students and faculty members, all of them eager to thank us close up, and to shake our hands; their gratitude and enthusiasm were touching.

It was an exciting and hectic week for Betty and me; we weren't really used to all this attention. As the New York Times explained in a front-page story the very next day, my $100 million gift was a phenomenal amount of money, $47 million more than Paul Mellon's gift to Yale and $30 million more than David Packard's gift to Stanford.

It also represented a hundred fold jump in the college's endowment, making Glassboro State--or Rowan College--the third richest college in the state, behind only Princeton and Rutgers.

Only one other college, a private university, had once received more--Emory University, which was the beneficiary of Coca-Cola chairman Robert Woodruff's $105 million bequest. Prior to the announcement, Phil Tumminia couldn't resist needling me on this point. "Why not go for the world's record, Hank? It's only another six million."

Only another $6 million? "Phil, two years earlier, you were thrilled to get a check for $1,500 from me," I admonished him. "Now you're getting 100 million and you want another $6 million? "I'm not interested in world records," I continued. "I decided on $100 million because it's something I think we can do without jeopardizing my companies or my employees' jobs, and as I've told you all along, I wanted to establish an engineering school. I don't have any hidden agenda." It had also occurred to me that to stretch my commitment to $106 million just to break a record would look a little trite. A little "corny."

Actually, I had a very private reason for arriving at the $100 million figure; I felt there was a kind of symmetry to approximating the total value we'd contributed and had already partially disbursed by our profit sharing trust.

If I had thought I could announce my gift to the college and then slip away from the glare of TV lights and the incessant querying of reporters, I was mistaken.

In the days that followed, I could hear the telephone outside my office ringing nonstop with calls from reporters, editorialists, and columnists asking for interviews. The phone calls would generally begin with the media asking to be connected to our public relations department, perhaps assuming we had a staff of people churning out glowing press releases about me, or our company, or the gift; to which I'd hear Julia say, "You're talking to it." She'd handle the press with the skill of a trained public relations officer and, if they sounded friendly and constructive, she'd sometimes recommend that they might like to talk with me and she'd put me on the phone. To be sure, the initial accounts of my gift to the college were positive and, by and large, accurate. It's always interesting to see yourself depicted and analyzed by strangers who've had the most superficial contact with their subject. According to the local press-the Burlington County Times, and the Philadelphia Inquirer--l was a down-to-earth, unpretentious fellow with a sincere interest in education. Well, I couldn't complain about that. The Wall Street Journal speculated that, considering Inductotherm's origins, I wanted to build something in my own back yard again.

Eventually, however, I was to be reminded time and time again of the old saying, "No good deed goes unpunished."

"What's the catch?" some reporters seemed to be asking in the aftermath of the press conference. After all, people don't give away $100 million without getting something in return. When reporters couldn't find a secret motive, they did what the media frequently do: they invented one.

Hardly a week had passed since the press conference at Glassboro State--it was going to take some time for me to get used to calling it Rowan College--when the "spin" on the story began to change. The hubbub of the press conference hadn't yet subsided when a 1982 graduate of Glassboro State made known that he was going to file suit to prevent the name change. The college board, according to this zealous alum ("Strange, he'd had no contact with the college whatsoever since he graduated," Dr. James observed) was merely a "rubber stamp." The basis of his complaint was a technicality; by publishing on July 6th that the meeting to decide the name change would be held on July 8th, the board had abrogated its duties by not giving a full 48-hour public notice, he alleged. With that, the college decided to reconvene the board on July 15th this time, with notice being published several days beforehand. And again, the board voted to rename the college "Rowan College." But this wasn't the end of the story.

News of the lawsuit had been picked up by the Gloucester County Times, whose editors recognized the potential for controversy. "Mr. Rowan, I'd like to see the contract between you and the administrators at Glassboro," began the reporter on the other end of the line.

When I advised him there was no contract, his tone turned belligerent. "How could there possibly not be a contract? This is a $100 million transaction, isn't it? And if there was no such contract, then why would the college change its name from Glassboro to Rowan?

"And wasn't that one of your conditions for giving the college the money, in the first place?"

I thought I had made it perfectly clear at the press conference how all this had come about. For that matter, I'd admitted, in all candor, that when the college suggested the name change, I had been honored. Moreover, as I had explained to the press over and over again, it was hard for me to say what role that played in my decision making. Was it the main reason? Was it one-tenth the reason? One half? One-twentieth? It's impossible to quantify these things.

So I didn't bother trying. Instead, I told the caller, 1 really didn't feel I owed him any explanation of my actions, or another minute of my time.

He bristled and retorted, "You may have given the college a lot of money, Mr. Rowan, but Glassboro State is still a state college, and its contracts are a matter of public record. If I can't get the information I need from you, I'll get it from them." With that, he hung up.

It was hard for me to say which was more dispiriting: the cynicism exhibited by some members of the news media, or the arrogance.

But the inquisition had just begun, and in the days that followed, the calls asking to see the "contract" became more shrill. When they got nowhere with me, they began haranguing Dr. James, the college president. As I had expected, he turned them down as well.

He could hardly have been expected to do otherwise. At Glassboro, as at virtually every other college or school in the country, bequests, endowments and gifts from private sources are confidential information. It would have been nothing short of a violation of trust for Dr. James to acquiesce to the media and provide the documents attesting to gifts to the college from me, or from any other individual.

To some reporters, the college's refusal to violate this credo merely supported their darkest imaginings, some of which found their way into print: Industrialist Henry M. Rowan had bought himself a college and renamed it to satisfy his own monumental ego, went their story.

What an irony. If I'd wanted to see my name on things, Inductotherm would have been called "Rowan Technologies," or some such title, and people would see "Rowan" furnaces, "Rowan" precision equipment, and "Rowan" machinery all over the world.

The controversy grew, as a handful of disgruntled "old grads" railed against the name change while the local media, particularly the Gloucester County Times, fueled the furor with headlines like "Betrayal" and "Glassboro State, The School That Sold Its Soul."

Then, while speculation over my "conditions" fermented from one end of the state to the other, I made an incredibly naive, ill timed blunder, one that invited even more broad-based criticism.

This time, it wasn't just fuzzy-minded journalists who were assailing Hank Rowan; now, the voices of politicians, educators, and pundits from around the country--some of whom I'd never even heard of--swelled the chorus. This time, the issue was, of all things, the Inductotherm scholarship program.

The way I had drawn up the scholarship program appeared straightforward enough to me; $3 million of the total $100 million endowment was set aside for the children of Inductotherm employees not covered by a collective bargaining agreement; in other words, 4,000 of the 4,200 employees on our employment roles as of July 1, 1992, were automatically eligible.

That 200 of our work force--employees of companies already unionized at the time we acquired them--were not automatically covered was a consequence of collective bargaining. By agreement with their unions it was up to their union representative to negotiate and announce all benefit changes to this sector of our work force.

As the scholarship program was a distinct benefit, I would have been usurping the roles of the respective union representatives if I had simply dashed off a letter to their "organized" constituencies and said, "Look what Hank Rowan's doing for you, no thanks to your union."

So instead, I waited for the unions to contact me. When the first one, the president of the United Electrical Workers representing 120 employees at Magnetic Metals, communicated the union's interest in discussing this matter, I responded with a tough position letter outlining my views on union cooperation. We'd make him work for the benefit and maybe we could expect a little more cooperation.

Within a few days, I had reasons for regretting my actions. As I had explained in my letter, the scholarship program was intended for those employees whose work was "in harmony" with Inductotherm's efforts, a perfectly understandable position, I felt; after all, who would want to reward a bloc whose intentions were counterproductive? Frankly, I was looking forward to hearing back from the union leadership; perhaps, I thought, the prospect of this extraordinary corporate perquisite would mollify their traditionally confrontational attitude towards management. Maybe it would even usher in a new era of cooperation.

I was wrong. Instead of getting in touch with me to discuss this new opportunity, the union immediately circulated my letter to the media, who were already hungry for a "hidden agenda." Now, in my letter to the union, they found it. Hank Rowan, founder of Inductotherm, was no longer the benevolent philanthropist, the epitome of the American Dream; instead, according to letters to the editors and columnists, he was not only a power-hungry egotist, he was also guilty of discrimination. A union buster who wasn't playing fair.

Publicly, I simply declined to comment; but in private, I seethed. How was it possible that an act I'd intended to provide so much good could be dragged through the mud? I hadn't been asking for "give-hacks" from the unions, but I did want to enlist their cooperation in making their members, and the companies they worked for, more productive.

I was predisposed to shrug off these half-baked media screeds, but it was harder to ignore the corollary to these base allegations: that Dr. James and Phil Tumminia, who had for months stood unflinchingly against the barrage of innuendoes on the name change, were somehow complicit to union-busting tactics.

Certain that there was still another story to be told, the Gloucester County Times threatened to enter a lawsuit to force release of the documents. Both Herman James and Phil Tumminia were under tremendous pressure, but they didn't waiver and stoically vowed to vigorously defend the suit.

But why? I was proud of what we'd done and proud of the simple letter and scholarship agreement that described it. Had it been appropriate to make them public at that first press conference, I'd have been happy to do so. However, when the Times began to push, my immediate reaction was to push back. A mini challenge, but nonetheless another challenge.

The expense would be a waste, and the pressure and suspicions would counter much of the good we hoped to do. There's a time to fight, and a time to smile--only this time, we'd have the last laugh.

On December 22, 1992, I met individually with reporters from six newspapers, the Philadelphia Inquirer, the Trenton Times, the Burlington County Times, the Camden County Courier, the Courier Post, and the Newark Star Ledger, spending between 15 and 30 minutes with each.

They were looking for sensationalism, but I'm afraid the disclosures were a great disappointment. I guess you don't sell papers with headlines proclaiming, "Sorry, Folks, Henry Rowan Was Telling the Truth All Along."

What the reporters finally got was a look at what wasn't even a legally binding contract, but a simple letter from Betty and me, telling the college of our wish to donate $100 million. There were no conditions, no demands, beyond our requirement that an engineering school be established. Concurrent with the release of this letter, we expressed our plan to include the total work force in the scholarship program, subject only to their unions' approval.

The effect was dramatic, as the muckrakers slunk away to invent controversy elsewhere, and life went on.

A year after disclosing my endowment plans, I was able to meet my early commitments to the college. Of the $100 million I'd promised, some $26 million had been transferred to the school, which was about $1 million ahead of the pace I'd set for myself. This doesn't mean I can sit back and relax. I'm reminded every day of the reaction of the reporter from the Wall Street Journal when my gift was first announced. After talking to me for 20 minutes or so, she hung up, only to call back a minute later. "Say, Mr. Rowan," she asked, "$100 million is a lot of money. How are you going to get it?" Now, retirement looks a long way off.


A New Purpose

I have always had a passion for privacy and I had dreaded the idea of scrutiny by the media. But, at the same time, there was something to be learned from it. One of the things I learned was that most reporters are more interested in feelings than facts. "How does it feel to give away $100 million?" they all asked, perhaps hoping for a glib answer. But I couldn't give them one.

The truth is, endowing Rowan College had been a terrifying decision for me to make. It was not merely an awesome commitment, it meant a tremendous personal risk. I wondered, how many philanthropists change their minds? How many harbor second thoughts, and think to themselves, "I wish I had that money back." I wondered, too, what it would be like to spend the next 10 years of my life living up to this new promise. To wake in the morning, wondering how much I would be able to earn that day towards paying off that $100 million. It was entirely conceivable that my pledge would become a burden, one I would prove incapable of bearing.

On the next page is a photograph of Rowan when he is about seventy.

But as I've learned, it's been nothing like that. Rather than a sense of loss, my gift to the college has been a tremendous personal gain. And instead of it becoming a burden, my pledge has given new purpose to my life and revitalized my work. I've often thought as I've watched the streams of fresh molten metal pouring from my furnaces that they were casting a better life for the enormous segment of the emerging population that had not yet enjoyed the benefits of industrialization. Now I can envision a procession of bright, energetic young men and women moving out to create things of enduring value, to create and improve the world they live in.

It's exciting to drive through the college, where a new library is rising next to the old one, and see the sign of expansion and improvement everywhere. The students, too, seem to feel that they're part of something unique, and a new spirit has settled in.

So, too has the man who will become Dean of the School of Engineering, Dr. James U. Tracey, formerly the Dean of the School of Engineering at University of Texas, San Antonio, who is currently occupied with recruiting faculty for the new school.

There is intense interest and cooperation from business and educators throughout the country toward establishing the Engineering School. A National Advisory Board for the development of the School of Engineering has been established, whose members include such renowned business leaders as Alfred C. Koeppe, President of New Jersey Bell, and Richard Klein, President and CEO of Sybron Chemicals, and key Figures in education such as Professor Bruno Boley of Columbia University, and, perhaps even more important in my situation, Joel Moses, Dean of the School of Engineering at MIT. Even John Mortimer, president of our entire furnace melting group, asked if he might serve on this renowned board, and I was delighted.

I had to admire MIT's attitude They might have been miffed that one of their alumni endowed a small public school in New Jersey rather than his alma mater, but, instead, they offered their assistance almost from the first announcement and contributed further by having Joel Moses join the Advisory Board. It's an impressive Board, all bringing enthusiasm for the opportunity and responsibility they've undertaken to assure success, with the first engineers graduating from the new school before the end of the century.

If I have one wish for the college, it is that the students who benefit from the success we've achieved at Inductotherm go forth to build on our achievements. To do this takes more than engineering skills; it takes hard work, commitment, and the willingness to take risks. And sometimes, a little luck.

My greatest wish is that this entity we call "Inductotherm" will continue to thrive, with its key divisions continuing to be world leaders in the products they've developed and in the markets that they've tackled. It remains a monument to my life's work, but more important still are the challenges and pleasures it can bring to the future generations of young people who choose to make it theirs.

I know I was lucky. I had the great fortune to have been raised by the remarkable woman who was my mother and who instilled in me the joy of doing a thing well. I was blessed with two courageous sons, whom I still miss. No, I do more than miss them; as the years have passed, I find myself reflecting more and more on how things would have turned out if David and Jimmy had not been stolen from us so soon. What careers might they have pursued? Would they have chosen to work with me, side-by-side? What might we have accomplished, together? I'll never have an answer, I know.

But I have learned what it's like to have both a daughter and son-in-law in whom I take great pride, and who will some day take over the leadership of my companies, as a team.

I've also had the friendship, support, and encouragement from men like Jess Cartlidge, Dick Walker, Tom Pippitt, Bob Hotchkin, Roy Ruble, Paul Cervellero, and John Mortimer, plus a dozen other colleagues and friends who have shared the exasperation, the frustrations, the anxiety--and the thrills of building a great company.

And through it all, I've had the understanding and support of my wife, Betty. And even after I've met my commitments to Rowan College, I'm sure Betty will understand if I look around for some new challenge to tackle. As we both learned a long time ago, no matter what more we might achieve, I'll never quench that fire within.