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and also for some of the unemployed who attend classes. They obtain experience on large machine tools, much larger than a normal high school complex would contain.

Senator KENNEDY of Massachusetts. Your application was rather speedily acted upon; is

Mr. SHEVCHIK. The first one dragged on for about 2 months, and perhaps a little over 2 months, but I think that part of the responsibility was in the lap of our people, because of a lack of understanding. There is one point I would like to make, Senator, if I may.

Since this application was prepared, I have discussed the subject of job training with other representatives of industry. I happen to be vice president of our local chamber of commerce and I have discovered that there are a number of members who are not aware that such a job training program exists. If there would be some way of condensing the description of the program, and I recognize this is probably a little difficult to do, some language that an ordinary layman can understand, it can be disseminated via the chamber of commerce or some other similar manner. This might open up the door to a larger number of other areas of employers that could use this job training program.

I think this is a good incentive for industry, but I am afraid there are many industries who are not aware that the program exists.

Senator KENNEDY of Massachusetts. Have you yourself made a presentation, just for my own information, to your chamber of commerce about your experience?

Mr. SHEVCHIK. No; but I propose to now. After today I propose to get the story across at one of our board meetings, and have a decision made by them to see how far we are going to convey this information. Senator KENNEDY of Massachusetts. Is your principal reservation about the program one of lack of communication, or do you have reservations about the administrative procedures which are set up under this program that are necessary to be fulfilled before the application is finally approved?

Mr. SHEVCHIK. The point that I was trying to get across was not so much reservation with respect to the procedures as much as it is to the dissemination of the information that exists.

The procedure itself is relatively simple, after you prepare the application after you study it for a spell, so we have no problemi from that point.

Senator KENNEDY of Massachusetts. Do you have any specific recommendations concerning increasing allowances that you would like to make?

Mr. SHEVCHIK. In our own application I know that we are limited, and this is all subject to audit. We have not as yet received any remuneration, but according to the application we are limited to reimbursement for the time of the instructors and only extra material cost that is a result of the training program.

We, for instance, as a result of this training program experience a substantial amount of scrap loss. Under the interpretation of the application as it has been submitted, we can recover only that portion of scrap loss that would occur beyond so-called normal losses.

This is good, but there is a substantial amount of scrap loss during the first 3 or 4 weeks and in reality, there is another angle, too. We

pay the wages of all of our employees and this represents almost twothirds of the total cost of a training program.

We hope to recover approximately 10 percent of the first project and we expect to recover about 22 to 23 percent on the second project.

It would help if there could be some recognition for the element of wage cost that is incurred in those first 2 or 3 weeks. Our program was initially an 8-week program, which has been expanded to 12. If more liberalization to costs could be given in the first 2 or 3 weeks, I think that would be helpful.

Senator KENNEDY of Massachusetts. If you had the increase for additional allowances for scrap, that would be welcome! ?

Mr. SHEVCHIK. Yes, it would be.

Senator KENNEDY of Massachusetts. Besides, say, additional allowances for materials, what other incentives would be helpful?

Mr. SHEVCHIK. This may be a little bit selfish. Wages is the only other significant item, and wages for the first 2 or 3 or 4 weeks are an investment. We are interpreting this as an investment, and classifying it as an investment. There is no immediate cash recovery.

After the fourth week there is a certain element of recovery. These men in some instances have had sufficient training and are able to indicate that they are good prospects as material operators. We can then give them some material to work on and obtain some recovery with acceptable materials.

Senator KENNEDY of Massachusetts. Could you give us an opinion about the suggestion which has been made to provide a tax credit to industries as an additional incentive for on-the-job training?

Mr. SHEVCHIK. Well, I do not know that a tax credit as such is a real incentive to generate interest by industry on the part of job training programs. My own feeling is that if the redtape can be reduced somewhat so that these programs can be expedited a little more rapidly and perhaps a little more consideration be given to the first few weeks of the training program then there is an added element of cost that might be recovered.

I think if those two factors could be taken care of, the tax credit angle as such is not necessarily the most desirable incentive.

I am expressing my own viewpoint, but I feel that way.

Senator KENNEDY of Massachusetts. There has, under Senator Javits, been an amendment introduced to the program to provide for the approval of local applications up to $75,000.

I was wondering, first of all, whether you were aware of this; secondly, if you were aware of it, whether you think it has been helpful in expediting the smaller application ?

Mr. SHEVCHIK. No, Senator, I know nothing about it, so I am afraid I am not qualified to comment.

Senator KENNEDY of Massachusetts. Your application for the 8week program was for $20,569, Project PA-J-139. Was that approved at the local level ?

Mr. SHEVCHIK. Yes, at the local level. Everything in our instance was done at the local level.

Senator KENNEDY of Massachusetts. I believe your other application, too—what was that for?

Mr. SHEVCHIK. That was for a second program for $29,000, and that was approved at the local level. That program, by the way, started with 25 trainees yesterday.

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Senator KENNEDY of Massachusetts. How did you select your trainees?

Mr. SHEVCHIK. For our trainees, the first requirement is that they must all be high school graduates. We are convinced that they have to have at least a high school education as a background.

We have, as indicated in the written testimony that I presented earlier, tried to generate interest on the part of our present employees to upgrade themselves. We provided this training program and as a result, we have been most successful in that approximately half of the people who completed the course were employees who desired to upgrade themselves.

The other half were employees who were hired from the outside. In the meantime, however, those present employees who took advanage of this training program obviously created openings and these openings, in turn, were filled by employees who were hired.

We at Elliott have increased our employment rather substantially, particularly in the last 12 months. Approximately a year ago we had 850 employees; we now have 1,078, or an increase of 228, which is a little more than 25 percent. Much of this is due to replacements that were necessary as a result of this training program that we have underway. But we are-how do I describe it--we do try to get a quality type of person to undertake this training program.

We have, as I said, a large machine shop. We pay a very good rate of wages, and as a result of that we feel that we can be justified in our position that we want only the best to undertake this training program.

Senator KENNEDY of Massachusetts. Do you contemplate additional on-the-job training programs?

Mr. SHEVCHIK. We now have this next program for 1964 underway. As a matter of fact, we have another application underway and it is going to be interesting to observe what happens. We are going to try an on-the-job training program for about 12 heavy equipment

We do plan to get the program into motion sometime in April. Ilhether or not the application will be completed before then, we will

Senator KENNEDY of Massachusetts. I want to thank you very much, Mr. Shevchik, for appearing here before the subcommittee and giving it the benefit of your experience as well as the experience of the

I want to thank you very much for coming to Washington and appearing before the subcommittee. We will include your statement in the record at this point. Mr. SHEVCHIK. Thank you, Senator, is was a pleasure.

(The prepared statement of Mr. Shevchik follows:) PREPARED STATEMENT OF MICHAEL G. SHEVCHIK, ADMINISTRATIVE ASSISTANT TO THE PRESIDENT, ELLIOTT COMPANY, A DIVISION OF CARRIER CORP., JEANNETTE,

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Jeannette, Pa.

Mr. Chairman: My name is Michael G. Shevchik. I am Administrative Assistant to the President of Elliott Company, a division of Carrier Corporation,

The following information is submitted, as the experience of Elliott Company, for an evaluation of the on-the-job training program under the Manpower Development and Training Act.

56-057-66

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The Elliott Company is a manufacturer of power equipment. This includes steam turbines, centrifugal air and gas compressors, turbochargers for diesel engines, steam ejectors, strainers, and certain high speed rotating equipment for the Navy.

This apparatus is manufactured at our plant in Jeannette, Pennsylvania.

Elliott presently has a total of 1078 hourly employees at the Jeannette plant as compared to 850 hourly employees one year ago for an increase of 228 persons. Total employees have increased from 1722 one year ago to 2081 as of the end of January this year.

More than a year ago, Elliott recognized its need for additional manpower but experienced extreme difficulty in obtaining the necessary skilled personnel. This subject of manpower was discussed at length during contract negotiations with the United Steelworkers of America-our bargaining agent. The final outcome and arrangements for a training program were acceptable to both union and management. The union continues to strongly support this training program and this has aided union-management relations.

A search in the area disclosed that the local technical schools established under the Manpower Development and Training Act were not providing people skilled in the operation of machines of the sizes and types used at Elliott Company.

Accordingly, the approach was (1) to encourage present employees to accept the training and to learn a higher skill and qualify for a more responsible job assuming they successfully completed their training, and (2) to hire new people for training. Each present employee who was upgraded as a result of training thus in turn created a vacancy for another employee which ultimately led to the hire of new employees.

The first training class was started May 10, 1965 with 15 persons. This included five new employees plus ten men from the shop.

A training facility was established and equipped with 17 machines ranging from radial drills and engine lathes to the more complicated horizontal and vertical boring mills. Some of these tools were transferred from present facilities to the training location while others were leased from machine dealers.

The program started on the basis of giving trainees six hours instruction on these machines followed by two hours of classroom work, each day.

In the classroom the trainees were taught shop mathematics, blueprint reading, the use of measuring instruments, the application of cutting tools, and many other things. In the shop, they were taught the right way to use machine tools, how to set up the machines, how to run them, the proper feeds and speeds, safety and company policies deemed necessary to make good machine operators.

A second class of 19 was started on May 31, 1965 and included nine new employees. The training was to last for eight weeks. However, at the end of eight weeks, it was obvious that satisfactory skills were not produced and accordingly, the program was extended for another four weeks. All subsequent training classes were based on a 12 week training period.

Knowledge that Federal help might be available was not discovered in sufficient time to process an application for financial assistance for the first two classes of 34 students. While these classes were in progress, an application for an eight week program was approved for $20,569.33 as project PA-J-139. Later this was amended to provide for a 12 week program and resulted in an additional $2,905,47 allowance subject to audit. This project applied to four classes totaling 64 students with 60 persons qualifying for training.

Due to urgent requirements, another group of 18 received "on-the-floor" training. However, this program was undertaken without Federal Aid because of insufficient time to process application for approval.

Elliott Company's total expenditure for these training programs to date is approximately $312,000. This amount includes about $94,000 for wages paid to 110 trainees and $60,000 for wages and salaries paid to the instructors. The average wage paid to the trainees is $2.50 per hour.

The company credited this expenditure with $69,000 to cover value of usable finished material produced. This acceptable skill applied to usable material was achieved during the latter weeks of training.

The total of $23,474.80 ($20,569.33 plus $2,905.47) to be obtained in Federal Funds represents about 10% net recovery.

We are pleased to report the following results:

110 Started Training (43 new employees).
101 Compieted Course.
Of the 9 who did not complete training-

1 went to military service.
4 returned to former jobs.
2 quit to work elsewhere.

2 were released.
Of the 101 who completed the course

91 are working on machines.
1 is a tool crib attendant (injured finger).
1 is a material handler.
3 went to military service.
2 quit to work elsewhere.

3 returned to former jobs. Because of experience, coupled with Federal financial aid and the need for more skilled manpower, a second application was filed. It has just been approved for the sum of $29,698 as project PA-J-211 and covers training 64 machine operators,

This second project is to start Monday, February 28, 1966 and if 64 persons undertake the program, an overall net cost of $130,000 has been estimated. We also have underway a program to train eight very much needed welders. Federal Aid is being solicited for this program which normally requires six weeks for approval. We have had some difficulty in getting the program content to comply with regulations of the Manpower Development and Training Act because of the 15% maximum classroom instruction limitations. This necessitates performing some phases of the program in the shop which could be performed better in a classroom. The opportunity to present this report is very much appreciated.

Senator KENNEDY of Massachusetts. The subcommittee will now adjourn.

(Whereupon, at 12:15 p.m., the subcommittee adjourned subject to call of the Chair.)

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