Includes all stainless steels containing 10% or more of Chromium, with or without other alloys, or a minimum (x) Includes Type 314 2/8/72 EXHIBIT 17 UNIVERSAL-CYCLOPS SPECIALTY STEEL DIVISION, Mr. GEORGE WILE, DEAR SIR: Mr. Frank M. Richmond discussed with you by phone Mr. Roger S. Ahlbrandt's teletype of March 24, 1972. Since Mr. Richmond will be out of the office for several days, he requested the writer to develop information particularly related to items 1 and 3 of the teletype and pass it on to you in the hope that it will be of some help in your endeavor. The following represent some of the items we would classify as "piggyback": (1) In the early 1950's it became apparent that a concentrated R & D effort was needed to develop the high performance materials both in regards to composition and processing. Land and buildings were purchased; a staff of engineers and technicians experienced in such products was recruited; and equipment for developing and testing particularly high temperature metals was secured and the laboratory established. This was all done from funds resulting from the sales of the more common high-volume specialties. Approximately 90% of the R&D work during the several years following the establishment of the R & D Laboratory was applied to the development of the high performance materials. In more recent years, the proportion of effort has dropped to below 50% due to the need to concentrate on the development of the high-volume specialities in order to remain competitive. In the past several years over $250,000 has been spent for such sophisticated testing equipment as an electron microscope, x-ray diffraction equipment, electron probe microanalyzer, and scanning electron microscope. Without such equipment it would be impossible to develop and study the complex structure and composition of current high performance materials, although only about 25% of the time available on these instruments is used for such materials. Therefore, to obtain them it was necessary to justify the other 75% of the time available by using them on the more common highvolume specialties. (2) Vacuum induction melting furnace Originally a 1000# unit was installed for the production of high temperature metals. The need for such equipment was occasioned by the complex composition of the materials used in the high temperature operating parts of aircraft such as jet planes. The costs of installation and continued operation were dependent upon funds derived from the highvolume specialties. (3) Vacuum arc remelting furnaces-Increased demand for materials capable of use at high temperature, such as in jet engines, as well as for improved quality required production in this type of unit. Requirements for high temperature materials alone did not make use of their full capacity and their installation could only be justified by producing upgraded high-volume specialties. The costs were principally supported by funds resulting from the sales of highvolume specialities. (4) 30-Ton vacuum induction melting furnace-Demands for larger melt quantities to reduce the amount of testing and obtain more uniform properties required larger furnaces, thus resulting in larger quantities made in a shorter time. The remaining time could be used only for making the higher-volume specialties. Therefore, a large percentage of the capacity of this unit was devoted to making the high-volume specialties and the installation could be justified only on this basis. (5) Electroslag remelting furnace-Reasoning similar to the vacuum are remelting and the 30-ton vacuum induction melting furnace. (6) Sheet product of high performance materials-The requirements for size and surface condition could not be met on mills previously used. A mill was purchased which would produce material to meet these requirements. This purchase could be justified only on the basis that the major part of the capacity of the mill could be used for the high-volume specialties. Much of the old mill was abandoned. It should also be pointed out that certain high performance materials in flat product form can only be produced on "hand" sheet mills. The fact that only two of these so-called hand sheet mills are still in existence in this country makes it extremely important that they continue operation. However, the depressed market for large-volume specialty items also produced on such mills makes it uneconomically feasible to operate these mills and seriously jeopardizes their future existence. (7) Specialty strip For certain aircraft and missile applications the aerospace industry required cold rolled strip with special surfaces and of various gauges. A specialty strip mill was constructed and equipment such as special rolling mills, annealing and pickling lines, slitters, and accessories were installed. Only a portion of the capacity of this mill could be used for high performance specialties; the balance had to be dependent upon the high-volume specialties. (8) Presses-Two high-capacity, fast acting presses were purchased for the reduction of ingots of high performance materials. Because of the limited amount of such materials required, the operating time was only partially filled. It was necessary to use the equipment for the high-volume materials to justify installation. (9) Blooming mill-Now being installed. A part of the capacity of this mill will be used for producing billets and plates for the aircraft industry. The larger part of the capacity will be used for the high-volume specialties. The following represents some of the items we would classify as "miscellaneous specialties." The list can be prefaced by general comments which would apply to all materials and products. While the product forms may be common to other materials, the making of high performance materials requires heavy-duty equipment, special processing steps, and personnel trained in the handling of special products. The materials and processes are essentially American developments and unobtainable from sources outside of the United States. All of the products and materials listed are used to some extent in military aircraft, missiles, and space vehicles, including the space shuttle. Included among these aircraft are the F-4J, F-104, C-5A, F-14A, F-15, F-105, A6A, C-130, and the helicopters. While the quantity used in each aircraft may be small, it is essential to the performance of the craft. (1) Precision rolled shapes-Vanes, blades, and other intricate shaped components for aircraft use were originally shaped by machining or forming from bars, sheet, or strip, resulting either in the loss of a high percentage of the material or difficulty in obtaining the shape and dimensions required. A department for producing such shapes was established and is one of only two (one later developed as a second source of material) such production units in the United States. These precision rolled shapes are made to the exact finished dimensions and have a surface condition suitable for the end application. This method of production conserves material, reduces machining, forming, and finishing to a minimum, and gives a product having the specified dimensions. These precision rolled shapes are used in the A37A attack plane, F5A fighter, F3A antisubmarine, B-1 bomber, P3C patrol plane, E2A early warning, F-111A, FB-111A, C-141, U-2, KC-135, C140A, as well as the planes listed in the preface. Ten to fifteen percent of the annual production of the precision rolled shapes department is used for high performance materials. The remaining 85 to 90% of the production is used for the high-volume specialties. (2) Wire-Fasteners of the high performance materials were required to withstand the stresses and heat conditions at high temperatures. Special processes were developed to enable the production of this product form. These processes consume more production facility time and are considerably more complicated than the processes used for the high-volume specialties. They also require equipment capable of withstanding the higher strength of such materials. Only about 1 to 1.5% of the wire produced annually is of the high performance specialty type. The remaining production capacity is used for high-volume specialties. (3) Strip-Special surfaces, not obtainable by other processing means, were required for certain applications. This necessitated the development of processes to produce material in this form. The high strength of the high performance materials required mills of high rolling force and similar accessory equipment such as for annealing and pickling. The processes required involve more production steps and more time than for those of the high-volume specialty materials. Only about 0.5 to 1% of the total annual production of strip is in the high performance specialties. The remaining production is of the high-volume specialties. (4) Sheet-Product in this form is used in many aircraft and aerospace applications and requires special production processes. Alloys such as Rene 41, Waspaloy, 718, and HX are high strength materials and can only be produced on the so-called "hand" mills. The product finds use in parts such as burner cases, burner liners, flap traps on wings, partitions for controlling air or gas flow. seals, rings, rotating parts, etc. About % of the annual production of sheet product is of the high performance materials. The other 2% is of the high-volume specialties. (5) Plate-Need for uniform properties in all directions required the development of a special processing procedure. This could only be done on the type of mill in a specialty steel plant. The amount of material produced is minimal, practically immeasurable, in comparison to the high-volume specialties but does represent a need for the aircraft industry. The use of such material along with new technological developments has significantly reduced material input in engine parts with associated reduction in costs. This development has brought forth information which will permit the making of plate product of a size which can only be produced by this method, which will be required in planned future aircraft. (6) Maraging steels-These are high performance specialty alloys for missile cases and similar applications. The quantities required are so small in amountabout 35 tons annually-that they must be produced in a specialty steel mill. We trust that the above comments will be of some assistance. Should you wish to discuss any of these items further, please feel free to call either Mr. Richmond or the writer. Very truly yours, PHILIP W. RUSH, Manager, Administration and Patents, EXHIBIT 18 [From Center Lines, published by Steel Service Center Institute, vol. VI, July 1971] CRITICAL TIMES FOR SPECIALTY STEELS (By Rev. William T. Hogan, S.J.)1 Steel's last line of defense against foreign competition, the specialty steel business, has been outflanked by low-priced imports. Armed with prices that have severely undercut those of domestic producers, foreign mills have zeroed in on the elite steels that contain expensive alloys, that are labor intensive, difficult and costly to produce, and suited to special or critical applications. Overall, imports have captured more than 21 percent of the market for these specialty steels, but in specific product lines the toll has been much higher. In 1970, for example, 68 per cent of the stainless wire rod market went foreign, as did 54 percent of the market for stainless wire and 34 percent of that for stainless cold rolled sheets. Even the more sophisticated among the specialty products have been affected, witness a 17 percent loss of the market for tool steel. The fact is that important pressure on the specialty steel business has been intensified under the Japanese-European voluntary restraint programs, adopted at the close of 1968 to head off legislated quotas. Since that time, a shift in product mix toward the more expensive steels, including the specialty grades, accompanied by a general increase in prices, has permitted foreign steelmakers to maintain the dollar volume of their business here, despite the voluntary limitation of that business on a tonnage basis. Although total steel imports in 1970 were 25.6 percent below the level of pre-quota 1968, virtually the same revenues were generated by these imports, $1,967,000,000 in 1970 vs. $1,976,000,000 in 1967, a difference of less than 2 of 1 per cent. Over the same period, imports of specialty steel were up 3.2 percent, and their dollar value, reflecting stepped up competition for the higher-priced specialty products, increased 24.8 percent. 1 Reverend William T. Hogan, S.J., is a Professor of Economics at Fordham University, where he is also Director of the Industrial Economics Research Institute. Father Hogan did his undergraduate work at Fordham College, and received his M.A. and Ph. D. degrees in Economics from Fordham Graduate School. He has been engaged in economic studies of the iron and steel industry, as well as other basic heavy industries, for the past 20 years. During this time, Father Hogan has authored umerous articles. His books include "The Development of American Heavy Industry in the Twentieth Century," "Depreciation Policies and Resultant Problems," and "The Economic History of the Iron and Steel Industry" (to be published shortly). He has lectured widely throughout the United States and abroad. He is a member of President Nixon's Task Force on Business Taxation. Father Hogan has been a participant n many conferences on steel industry problems, and has taken part in Steel Service Center Institute continuing education programs, as well as annual, regional, and chapter meetings. |