56 STEEL SHIP CONSTRUCTION 



all over the country, but in the early stages of the game, each yard had scouts out trying to 

 get any workmen who showed a capability to make satisfactory production. 



As to the question of overhead, of course, that is a question which is very much thought 

 of, and is a very deep subject; but we found in looking over the cost of the ships — giving 

 the average time of construction, we will say, ten months — the average overhead, based on 

 direct labor employed in the yard, figured out so that it was approximately $1,000 per ship 

 per day. Under normal conditions you will find that is not far off. Of course, the more 

 efficient the yard is the smaller it will be, and the more inefficient the yard is the larger it will 

 be, but all the figures showed approximately, for the purpose of preliminary calculations and 

 comparisons, that $1,000 a ship per day under normal conditions will represent approxi- 

 mately the overhead. 



The President: — The difference in the size of ships would be a controlling factor? 



Mr. Churchill: — Yes, that would be a factor. 



The President: — What do you figure it as a percentage of direct labor? 



Mr. Churchill: — It would run anywhere from 60 to 80 per cent of direct labor. 

 There is an accepted rule of thumb that the cost of the ship is represented 'by a ratio of 2, 

 2 and 1, 2 for material, 2 for laibor and 1 for overhead, or 40 per cent of the cost for ma- 

 terial, 40 per cent for labor and 20 per cent overhead. This figures out that the overhead 

 is 50 per cent of the direct labor. As a matter of fact, there are very few yards that kept 

 their overheads down to 50 per cent of direct labor during the war. 



The President : — The explanations given by Mr. Churchill will add very much to the 

 value of his paper. The reason that the Chair was specially desirous of knowing something 

 more about the bases of the calculations was that the remark has been repeatedly made to him 

 in his official capacity that the very great labor turnover, or extreme dilution of skilled la- 

 bor, as well as various other causes which could not be controlled, and did not reflect par- 

 ticularly upon any one, seriously impaired the efficiency of work as compared with normal 

 peace-time conditions. Of course, as Mr. Churchill states, his premise is necessarily an ar- 

 bitrary one, and one with which perhaps many would disagree, but it gives a basis of comi- 

 parison. 



This paper is one which will bear a great deal of study and profitable study, and I am 

 sure that the members will desire that the Chair express the thanks of the Society to Mr. 

 Churchill for the time and trouible expended in the preparation of this admirable paper. 



Before announcing the next paper, the Chair would like to state that there will be a 

 meeting of the Council immediately after the morning session — which will terminate after 

 the reading of the next paper — and I also wish to announce that due to the courtesy of 

 the New* York members, the Entertainment Committee, of which Mr. C. M. Wales is chair- 

 man, has arranged that the steamer Chester W. Chapin will take the miembers of the So- 

 ciety and their guests (including ladies) to the works of the Submarine Boat Corporation on 

 Newark Bay to witness a launching. Limcheon will be served on board. The steamer leaves 

 Pier 40, North River, at 11 o'clock on Saturday morning. Tickets may be obtained from 

 Mr. Kain in the rear of the hall. 



