MANUFACTURING: Ladies Paid Off

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At 12:45 p.m. on the last day of last year an agent of Manhattan underwriters Blyth & Co. strode into Chicago's First National Bank, nipped a check for $4,555,909 at the wide-eyed receiving teller. Thus did Milwaukee's widowed, 75-year-old Ella M. Kearney and her two daughters get hard cash for their 50% stock interest in Kearney & Trecker Corp., maker of 30-35% of all U.S. milling machines.

No fear for the company's future prodded the Kearney family into selling their half of K. & T. Instead it was the fear of much stiffer capital-gains taxes this year. By getting out nf hours before 1941's end, the Kearneys pay only 1941 tax rates on the huge sale. To help the ladies under the wire, Blyth & Co. (with co-underwriters The Wisconsin Co.) handed over the cash before they had sold a single share of stock. Their gallant risk panned out. This week investors were anteing $5,249,200 for the 198,083 K. & T. shares sold by the Kearneys.

K. & T. was started in 1898 by Edward Kearney and Theodore Trecker, two smart machinists who were tired of sweating for other people. Their first job: repairing a baby carriage. Later they specialized on that most versatile of machine tools, the milling machine. The milling machine, holding a chunk of metal in a movable bed, works on three sides of it at once with as many as eight multi-toothed rotating cutters. First big break for K. & T. was the auto industry's need for highly finished flat or grooved surfaces—the kind of work millers do best.

Even so, K. & T. remained small (1938 sales $4,257,000) until the fall of 1939, when the French Purchasing Commission handed K. & T. the biggest single machine-tool order in U.S. history up to then: $13,000,000 for 1,415 millers. K. & T. rushed floor-space additions, hired workers right & left, started a 168-hour work week. Since then K. & T. has hummed night & day on orders from aircraft, tank, truck and gun makers. Its 1941 sales were about $36,000,000, its profits about $5,000,000, equal to $12.60 a share.

For this swift expansion, K. & T. credits a manufacturing technique it helped develop: subcontracting. Since the French order, it has subcontracted more & more of its zooming backlog, now figures 40% of its work is done by others. A saucy baby, it even approached giant Westinghouse Electric & Manufacturing, got it to take subcontracts. The Treckers (Father Theodore and four sons) are so hepped on subcontracting that Sons Joseph and Francis went to Washington a year ago to preach the gospel (TIME, May 26).

Even the Treckers know it will take more than subcontracting to keep their company where it is. A saucy baby, K. & T. is also a war baby. So the Treckers—who have held on to their 50% stock interest—are preparing for peace. Their best preparation: a milling machine to make dies at one-half of their present hand-tailored cost. A U.S. at peace could use die-cast plastics, compositions and light metals in fabulous amounts.