HIGH PRODUCTION COSTS

Dominion, Volume 36, Issue 307, 22 September 1943, Page 6

HIGH PRODUCTION COSTS

How £16,032 Was Saved On

Munitions Contracts COMPANY RETURNS MONEY r l'O GOVERNMENT

Resulting from what were described, in a letter to the Minister of Supply and Munitions, as “a few simple ami practical tests” witli a Now Zealandmade hand grenade, as compared with the imported one, a 'Wellington engineering firm was, on December 2 last, able to forward to the Government a cheque for £16,032 (a facsimile of the cheque appears below). This represented a saving of 37 per cent, in direct and indirect production costs under a group of contracts held, by the firm. It was able to demonstrate convincingly’ to members of the War Cabinet and Supply Council, and officials of the Army, Q.M.G. department, Army Inspection department and Munition Controller's department, in a backyard demonstration, how a considerable amount of the taxpayers’ money which they were contentedly spending could be saved.

That it was saved was not due to any investigation on the part of the Government by their own initiative. Their supply authorities are stated at first to have refused to allow any alteration to the original 1914-18 English specifications, which both England ami Australia had allowed in both the last war and this till, by a simple piece of engineering logic the firm, in February, 1942, staged a practical demonstration. At this demonstration 24 imported grenades, supplied by Hie Ordnance Department were checked by the Army Department’s own gauges, and it was shown that these grenades did not comply with the degree of accuracy called for by the Munitions Department in New Zealand. In other words, the imported grenades greatly exceeded the tolerance permitted by the English specilieations. By tolerance is meant the difference allowed in dimensions to tolerate unavoidable imperfections in workmanship. Obviously the larger the tolerance allowed in a product the cheaper will be the cost of that product.

The principal of the contracting firm, when he addressed Cabinet Ministers and officials who were present at the demonstration, stated; — “My own experience as a manufacturer of* munitions and war materials nave forced me to the earnest belief that oui war effort is being seriously hampered by inefficient methods, which are obstruciing the production of urgently needed components, causing waste of manpower and material, and resulting in abnormally high production costs. . . . Simple and practical tests have been arranged which: “(1) Show the functions ot the component parts of a grenade, and_ thereby remove certain delusions conceruing it. “(2) Show where time and materials have been wasted. “(3) Show where toolroom accuracy has been demanded from locally produced grenades. . _ “(4) Show where commercial accuracy only is supplied in similar grenades purchased from abroad. “(5) Show that New Zealand has not teiven effect to the recommendations ot the British War Office as set out in Textbook for Small Arms, page 118, under manufacture: ‘They must be capable ot being manufactured in large quantities by indifferent workmen, in small cheaply and badly equipped works. No part should be difficult to make and the whole should be easy to lit together accurately.’ . , “(6) Show that the commercial accuracy, as supplied in grenades purchased from abroad, is more than sufficient to give the necessary safety. “(7) Show that the locally produced grenade, made to biS'h costing toolroom accuracy, cannot possibly give a better performance than the cheaply produced, commercial accuracy imported grenade. Subsequent to this demonstration lhe Munitions Department agreed to some of the variations recommended by lhe firm, with the result that the cost of production was reduced by 37 per cent. The efhcieney of private enterprise saved tlie taxpayers £16,032 on these contracts alone. The letter which accompanied the cheque to the Minister contained the following statement: “These tests were arranged to support our statement that all was not well with the war effort of the metal trade in New Zealand. . . . lu arriving at the amount of saving we took the total quantities delivered from November 1, 1941, multiplied by the contract price per unit and from that result deducted our full costs of production. . . . Our cheque herewith is the complete answer. IVith the earnest hope that the War Cabiuet will have a fuller appreciation of the latent capabilities of the metal trade in New Zealand. . This letter was formally. acknowledged by the office of the Minister of Supply and Munitions on behalf of Mr. Sullivan.

This reply, dated December 50, 1942, expressed no thanks or appreciation, the implication being that the department was almost resentful. It is to be particularly noted that the Government authorized modifications in one particular munition specification only, after the necessity for modifications had been demonstrated iu an elementary manner, but omitted to investigate all the others. Tliey received the money that had been saved through no enterprise of their own. However, they set a shinin"’ example in departmental efficiency when the chief ordnance «ffic er > 17 months later, sent an account for £l- -- for the 24 English grenades used in a demonstration to show Government officials how to save £16,032. The firm paid.