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Saturday, September 22, 2012

Sylcor Western Office 5

It's time to get back to Jim V. and his efforts with Sylvania-Corning's attempt to open a Western office.  Be sure to check our previous installments for all the details until now.

We last noted that Sylcor had instituted a commission program for its sales managers in 1958, in installment 3 of this series.  Picking up that timeline of archived papers where we left it, we next find Jim launching what would become a brief, separate but yet not separate consulting job with Spanish concerns. In May, 1958, Jim traveled to Spain essentially on Sylcor's money but acting as a separately contracted consultant, for the purpose of conducting a survey to determine what of the general manufacturing industry in Spain was capable of entering nuclear plant manufacturing contracts.  Jim did this "farmed out" as a consultant to Internuclear Company, who paid him directly in part and paid Sylvania-Corning Nuclear directly in part.  Naturally, one must imagine that Jim was the right man for this job, having traveled to and evaluated many different vendors' plants during his time at Westinghouse, and writing detailed reports and recommendations on his findings. 

 On July 18, 1958, he sent a letter to Tecnatom in Madrid, Spain with the Sylcor publication "Bibliography on Solid Fuel Elements" and noted that Sylcor had recently been awarded a contract to produce the fuel for the Enrico Fermi Atomic Power Plant in Monroe, Michigan, which was a sodium cooled fast breeder and which had fuel quite unlike that produced in standard types by Sylcor.  This order was a major coup for Sylcor - and would be one of very few large power reactor contracts the company would get.

On July 23, 1958, Jim wrote to his friend Gerald Keen.  He mentions a general business upturn on the West Coast.  Of his new employer, Jim says:

"Sylcor is going great guns; I have certainly joined a progressive organization.  During the first six months of this year, we have been fortunate in obtaining 48 percent of the total available commercial business in this field.  Our backlog is well over three million dollars, and we anticipate that a little hard work is going to result in a substantial increase in this backlog within the next few months."


We now present a very intimate look inside the early nuclear fuel business through a very provocative letter written to Dr. Lee Davenport, President of Sylvania-Corning Nuclear by Jim V.  There is much sordid account in this letter, and at this present date (2012) I have absolutely no idea how much of this letter is true, false, founded or unfounded.  What is important here to us in our look at Sylcor is NOT the business-politics controversy at M&C (a direct Sylcor competitor) we're about to uncover, but rather what Jim tells Davenport about the implications it carries for Sylcor.  Also important are Jim's assessments of Sylcor's safety controls.  I hope no one alive today, or related to the principals mentioned in this letter, is offended - no harm is meant or wished by publication of this letter.

This letter is dated August 21, 1958 and is reproduced in entirety.

Dear Lee:

In the course of the past few weeks, the sordid story of what transpired at Metals and Controls has gradually been unfolded to me.  The manner in which the situation apparently developed is such that I felt you should be informed.

The following information is hearsay!

The major items of information were given me by an official of the Atomic Energy Commission.  The inside facts are purported to have come from an executive in a competing company.  We both know this man, and his integrity is unimpeachable.  Further, he is a close personal associate of the principals.

Rathbun Willard, Chairman of the Board of Metals and Controls, is in his late 70's; as a philanthropic gesture, he disposed of certain blocks of stock as outright gifts to various educational institutions.  His legal advisers apparently did not take adequate steps to insure retention of the proxy vote on these shares.  One of the colleges to whom such shares were given is purported to be Northeastern University.

The story has it that Jerry Ottmar, President of Metals and Controls Nuclear Company, was not on the best of terms with Carroll Wilson, President of the parent corporation, ex-Admiral, and close associate of Rickover.  Working through friendly interests at Northeastern, Wilson obtained the proxy votes held by that college, which together with other proxy and personally held stock, gave him a sizable vote for control of the Corporation.  Wilson also called a special meeting of the Board of Directors at a time when Mr. Willard was in Europe.  Mr. Willard's attorneys attempted to forestall the meeting to defer action on the proposed agenda until Willard could return.

The meeting was deliberately called at such a time because Mr. Willard has a known phobia against air travel.  Mr. Willard's attorneys were unsuccessful in their attempt to delay the meeting.  Despite his phobia, Mr. Willard made immediate arrangements to return by air.  The meeting was held on a Saturday; Mr. Willard was unable to return until Sunday.

The following action is reported to have taken place at the meeting:  Mr. Wilson presented to the assembled Board of Directors, minus Mr. Willard, documentary evidence charging Ottmar with mal-administration.  By a unanimous vote of the assembled Directors, Ottmar was removed from office, and Carroll Wilson assumed the Presidency of both companies.

Ottmar has not given up, and upon Willard's return, the entire mess resolved into a free-for-all in which both Wilson and Willard resigned.  Wilson has been named Chairman of an advisory committee, and George L. Williams, Treasurer, has become acting President of both firms until such time as the issues can be resolved. 

Up to this point, the situation would appear to be typical of the machinations frequently found in the internal politics of American Corporations.  The following facts, and I use the word advisedly, since they came to me from the person who is purported to have taken the action, seemed to be worthy of your careful consideration.  The documentary evidence presented to the Board by Wilson is claimed to have emanated from the Idaho Operations Office of the Atomic Energy Commission.  They were reported to be letters expressing dissatisfaction with criticality control, production control, and health physics administration at M&C.  The Commission deplored the lack of concern and attention by Jerry Ottmar on such matters which they maintained to be a major responsibility of his position.  It is claimed that these letters were intended to correct a situation rather than to cause personal discomfiture to Mr. Ottmar.  Wilson probably played the part of an opportunist in using them as he did.  The Commission's attitude is that they do not feel sorry for Mr. Ottmar since they held him responsible for what they considered to be extremely lax and ultimately dangerous handling of the uranium administrative problems, including as the officer expressed to me, one instance of subcriticality, in which criticality was averted only by alert action on the part of the AEC.

Another source has been quoted to me as saying that, "The Admiral (Rickover) is not displeased."

I am fairly familiar with the production setup at M&C, having administered the production phase in the Core Contract Group at Bettis.  The M&C system was not exemplary; but, I believe, and please forgive me for the remark, was superior to Sylcor's.  The AEC has the prerogative to issue a cease operation order on any organization which it feels is not operating in the best interests of safety.  Several such orders have already been issued.  I am concerned that, with the influx of more and more orders, we may find Sylcor operations have extended beyond the system of controls that have worked so well in the past.  The AEC's attitude, should Sylcor become involved in any unfortunate incident, would undoubtedly be conditioned by a reflection of the fact that the worst commercial accident to date happened at Bayside {a Sylcor facility}.  Certain of our contacts in the west have not let me forget this fact.  Perhaps my concern is groundless.  Certainly you have every right to tell me to stick to marketing and refrain from comments on operations many miles removed from my sphere of action.

However, the potential load of ETR {Engineering Test Reactor, which Sylcor was making elements for} combined with the Fermi elements presents a new production situation at Sylcor.  ETR is under Commission Administration by the same organization which spearheaded the internal situation at M&C, and I felt that it would be unwise if I did not immediately bring this story to your attention.

Because of the personalities involved, many of whom have been associates in the past, I would appreciate your confidence with respect to the disclosure of the contents of this letter.  I informed Stan Roboff  that I was writing you concerning the M&C situation, and he requested a copy promising not to reveal its contents and further agreeing to destroy the copy after reading.  I have a profound distaste for gossip and/or gossipers.  Since what I have said represents hearsay, I may have placed myself in a position of repeating gossip.  The potential significance of the hearsay appeared to me to be so important to you and to Sylcor that I can but trust you will receive its repetition as evidence of good judgment.  If not, I can but ask your indulgence in view of my good intentions."

The important points

Jim has made a large number of implications in this letter to the President of Sylcor, among which are the following:

-Should Rickover deem an operation unsafe, and likely to tarnish the reputation of nuclear energy in the US or the reputation of the AEC, he has many friends and many ways to shut the operation down or at least get it out of AEC direct contracting.

-Sylcor's operation is in part now, due to the ETR contract, directly under supervision of the same people whose information was (probably inappropriately) used in the corporate management coup at Metals & Controls.  One might say that "the spotlight is on."

-Sylcor presently has enough work in progress to tax its safety controls to the point that in Jim's view they may be inadequate.  With the spotlight on, the company may be in serious jeopardy should something happen like had happened at Bayside. (This was a thorium explosion incident in 1956.)

-Davenport is in essentially the most vulnerable position as President of Sylvania-Corning Nuclear as evidenced by the corporate actions that transpired at M&C.

What is also clear is that Jim, ever the salesman, was telling friends and customers only some of the story ("Going great guns," "taken 48 percent of the available business") while the reality of the situation was that Sylcor might actually have been overtaxed by contracts for specialty fuels that could risk its entire business outlook -- a business outlook that already included many contacts in his region who apparently continued to bring up the Bayside incident.  The development of the M&C situation with its complex business, AEC and apparently Rickover-affiliated actions was too much for Jim to sit on without warning the highest levels of Sylcor.  Jim also apparently had doubts about what safety infrastructure Sylcor did have, saying right out that Metals & Controls had a superior setup.  This certainly presents a sobering view of Sylcor's business, and a glimpse into how the AEC and Rickover were permeating every fissure of most of the early nuclear power era.

In our next installment, we'll see a letter to Jim from Lee Davenport, President of Sylvania-Corning Nuclear.  We'll also look further under the advertising and claims made to customers to see what really was going on with Sylcor's business.


Missed the earlier parts?  Here are links:

Part 1

Part 2

Part 3

Part 4

2:15 PM Eastern 9/22/2012

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