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Volume 28, Number 1January/February 1977

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Partners in Growth

The United States 2

Written by Philip Harsham
Photographed by Katrina Thomas

Out in tiny Minden, Nevada (pop. 500), where the snowcapped Sierra Nevadas reach down into lushly green Carson Valley, lathe-operator Ralph Jepsen helps produce something called a proximitor. It's an electronic device designed to sense and measure potentially dangerous vibrations in rotating mechanical equipment.

And across the United States, in Foxboro, Massachusetts, David Alger helps produce pneumatic and electronic controllers instruments whose job it is to measure and control the pressures, temperatures, and flows in giant turbines, pumps, processing plants and other facilities.

Chances are that neither Jepsen nor Alger has ever given much thought to Jeannette, Pennsylvania, or to Anton Kush, who lives there. Nor is it likely that Kush, who helps assemble big propane compressors, will ever run across Jepsen or Alger. More unlikely still is the possibility that any one of the three will ever find himself in far-off Saudi Arabia.

Yet Minden, Foxboro, and Jeannette—as well as Jepsen, Alger and Kush—are important to Saudi Arabia right now. And while they may be unaware of it, Saudi Arabia is important to them.

Here's why: the multi-billion gas-gathering project that lies at the heart of Saudi Arabia's ambitious $143-billion industrialization plan calls for the use of more than 100 compressors to condense and refine the gas and force it out to processing stations. Some will be produced in New Jersey, some in New York, and some in California. But 52 of the big ones—21,000 horsepower and weighing almost 200,000 pounds—are being machined and assembled by the Elliott Company in Jeanette, Pennsylvania, a company whose operations typify the impact of Saudi Arabia on many companies—and communities—in the United States.

The Elliott Company, to begin with, gathers in the components it needs from roughly 125 primary suppliers, many of whom supply the other compressor makers as well. Those 125, in turn, rely on hundreds of their suppliers to keep the Elliott-bound pipeline filled. And among those primary suppliers are Minden's Bently Nevada Corporation—whose sensitive vibration-monitoring probes have made the 21-year-old company Nevada's leading manufacturer of export goods—and Foxboro's Foxboro Company, unchallenged as the largest United States supplier of instruments and control systems for the oil and gas industry.

Which brings us back to Jepsen, Alger and Kush. Jepsen works for Bently Nevada, Alger for Foxboro and Kush for Elliott. All of them, as well as thousands of other wage earners, contribute to the Elliott compressors and—whether or not they know it—will share in the $60 million or so that Saudi Arabia will spend for those Elliott compressors. In a very real way they—and the companies they work for—capsule the impact of Saudi Arabia's development program on America and Americans. The program, in sum, affects countless individuals, numerous companies, most states any many cities and towns. All will be touched—or perhaps have been touched already—by the economics of it. For the Saudi Arabian expenditures will create a ripple effect in the economy. The ripple effect is created as Elliott pays that money out to its suppliers, they pay it out to their suppliers, all of them pay it out to Jepsens, Algers, and Kushs across the country, and those individual workers spend it with the grocer, the landlord, the TV repairman, the dentist or, perhaps, put some of it into an interest-paying savings account.

Even that is not the end. For the interest-paying institution may then lend the savings to a company that wants to expand, add more employees and, possibly, pay greater dividends—creating via its shareholders another avenue of economic growth. Or the financial institution may lend the money to a builder who would then be able to buy materials—on which his suppliers would profit—to construct a house on which he would profit.

And so it goes, the Saudi petrodollars—some ultimately earned through the sale of gasoline to those same workers—filtering through the economy: from employer to employee, employee to retailer, retailer to wholesaler, wholesaler to distributor and on to producer and the suppliers of raw-materials, benefiting in countless ways the many who handle it.

Jeanette, where Elliott puts its compressors together, provides a good example. A typical small factory town—pop. 15,200—lying about 40 miles southeast of Pittsburgh, Jeannette leans heavily on Elliott. For jobs primarily—Elliott provides 2,400 of the town's approximately 6,000 industrial jobs—but for other things too. Elliott, for example, once spearheaded a fund drive to build Jeannette's 100-bed District Memorial Hospital, helped build the city's Salvation Army Citadel—which operates a day-care center, adult recreational programs and a summer camp for children—and makes the company auditorium available for Boy Scout and civic club functions.

Elliott wasn't always that important to Jeannette; when it moved there in 1914 its total work force was 32. But over the years it grew, and with the compressor orders from Saudi Arabia stands to sustain its growth.

Those orders, as Elliott Comptroller John Weagraff makes clear, are important. In 1977 alone, for example, Saudi Arabia placed orders for compressors worth, roughly, S50 million in Elliott sales. That in turn requires 554 Jeannette-based workers and a payroll of $9.2 million. Most of that money represents a direct contribution to the local economy and should generate $2.3 million in federal and state taxes, including Social Security withholding. Furthermore, Weagraff figures, those 554 jobs should also generate $6.4 million in personal income, $2.8 million in bank deposits and $3.2 million in retail sales.

Something similar is happening over in Donora, Pennsylvania, about 25 miles away. Little Donora, embedded deeply in the Monongahela River Valley, made tragic news a while back as a company town that "died". That was in the 1960's when a U.S. Steel subsidiary phased out its 3,700 to 4,500 workers—practically Donora's total work force—and, in 1966, let the last six men go.

Actually, Donora did not die. By 1970 it had torn down the old steel mill, cleared the site and begun to build an industrial park. And by 1976 Donora was ready to go back to work when the Elliott Company moved its Lubrication Systems Division to it, partly, says an Elliott fact sheet, because Donora could satisfy the shipping requirements for Saudi Arabia's compressors.

Today in Donora, some 125 workers are kept busy on compressor work, 67 of them on Saudi Arabia-bound compressor "trains." Working in a newly constructed high-bay unit fitted with a newly acquired 100-ton crane, they produce the compressors' lubrication consoles, assemble the major components into base plate-mounted "trains", and crate the completed units for shipment. Each train, lubrication console, compressor, gear unit and motor—mounted in that order—makes up a package weighing 200,000 pounds.

As in Jeannette, the impact of Saudi Arabia's development program is substantial. The Lubrication Systems Division expects to ante up $1.3 million for workers' paychecks this year, with perhaps 85 percent of that being charged against orders going out to Saudi Arabia. Much of the pay will go to previously unemployed workers whom Elliott has trained as welders and machine operators in a manpower-upgrading program for which the state and Elliott share costs. More Elliott money will go to Donora-based suppliers of the company's needs—such as Gutman Supply, which provides welding equipment and industrial gases and the local Sherwin-Williams outlet which stocks the turquoise and gray paints that cover the compressor exteriors. And some will go to such businesses as Eugene Muia's Green Grill, just a few blocks from the plant, which sells bagged lunches to workers.

"Donorans are living better now than they ever lived before," says John A. "Jap" Gorscak; a storeroom foreman in the lube division and a perfect example of how distant Saudi Arabia affects individuals throughout the United States. Gorscak, a bachelor, has bought himself a new car since joining Elliott last August, and is already talking of trading it for a more expensive one. "I like to make money, and I like to spend it," he says.

Another example is Betty Ferguson, a welder trained under the manpower program. A young divorcee, Betty is planning to buy the house in which she now lives with her two sons and her widowed mother—all of whom she supports. She probably will make a $1,000 down payment, she says, and pay the remainder of the 83,000 price in monthly installments over a three-year period. Knowing that she can work with the big compressors has given her the confidence needed to take on a sizeable debt.

In Erie, Pennsylvania, where something over $1 million of Elliott money is going to little Custom Engineering Company, the pattern is similar. Highly industrial Erie, a victim of layoffs in the locomotive and aerospace-parts industries, went into the exceedingly cold winter of 1976 with Pennsylvania's highest unemployment rate. And although Elliott's order—for the 66,000-pound steel base plates on which its compressors are built—could hardly offset unemployment completely, it did enable Custom to take on at least 20 men who were without jobs. It also enabled Custom Engineering—only a machine shop a year earlier—to expand into a fabricating facility. As a result, Custom is now fully assembling nine of the base plates—each 10 to 12 feet wide and 50 to 60 feet long— and machining 31 others. With a loan from Erie's Union Bank—another direct result of the base plate order—Custom invested $150,000 toward expansion. The resulting added capacity has doubled sales and Treasurer Ron Huff expects the 1977 gross to double as well.

"That one order gave us the confidence to go out and get others—orders we wouldn't even have tried for before," says Huff. "We're not going back to half production again. And those 20 men working on the Elliott order won't be going back to the unemployment lines."

That one order also gave Custom workers something more: $33,000 in overtime in the three month period ending just before Christmas, an average of $1,650 for each worker's efforts and a welcome addition that hourly employees count on for life's little extras. At Elliott, for example—where Sunday work means double-pay—overtime can run to $100 for the day. Which, says a 37-year-old Elliott veteran, adds up. This man, who now works with impellers and diaframs going into the Saudi Arabia-bound compressors, says proudly that overtime has given him a mortgage-free house. "Paid it off by doubling up on the monthly payments." he says. "And I've raised six kids here, too."

Overtime, in fact, is relatively common at plants working on the compressors and Elliott expects to pay at least 10 percent more during 1977, according to Vice-President for Manufacturing Paul Smiy, and most employees are delighted. To one 22-year employee, for example, overtime pay from the Aramco order has meant an investment in a four-acre lot on which he hopes some day to build and—something a bit more frivolous—a motorcycle.

Another compressor-components supplier that pays overtime is the Kraissl Company in Hackensack, New Jersey. "It's been a way of life for us for some time," says Robert C. Michel, the firm's President. Kraissl—which makes critically machined valves—holds an order for 160 three-way transfer valves to be used with the Elliott compressors for Saudi Arabia. That order, totalling $168,000, is roughly eight percent of Kraissl's 1976 sales. "It came at a peak for us, and we have no way of knowing just how much of our overtime can be attributed to it," says Michel; "but that doesn't mean our 65 employees are any less appreciative of it."

Kraissl's valve orders mean orders as well to the company's 25 or 30 primary suppliers—particularly to the three steel-casting foundries making the Elliott valve housings. Those three are Arrow Foundry in Holyoke, Massachusetts, Empire Steel Castings in Laureldale, Pennsylvania and Walworth Company in Greensburg, Pennsylvania.

The Elliott order, obviously, has been important to suppliers in Pennsylvania, particularly to manufacturers of steel and steel-related heavy machinery, traditionally centered in the steel-producing Pittsburgh area.

One is Lukens Steel Company in Coatesville, which traces its history to 1793 and claims to be the oldest privately owned iron and steel-plate producer in America. The nation's fourth largest steel maker, Lukens is working to complete an Elliott order that could run to $3 million.

Lukens' job is to turn out the steel plate and the barrel sections for the 17-foot-long compressor casings, including the barrel heads and the 6 to 12-inch thick horizontal flanges that hold the casings together. It was not a particularly large order for a company with annual sales of $252 million, but it was a significant one. The sale of steel plate was "not too brisk" when the order came in, said one company official. "And here was a job that called for use of our steel-making, head-making, and flame-cutting people.'' And also, he might have added, contributed wages to some of the 5,000 workers, and to the income of some 200 suppliers—such as scrap-steel broker Luria Brothers.

Another steel company, McInnes Steel, provides Elliott compressor impellers with hubs and caps from Corry, Pennsylvania, a town of about 7,500 lying 35 miles southeast of Erie. Elliott's order for the impeller hubs and caps comes to about $400,000, but McInnes can count on an additional $300,000 from the Saudi Arabia gas-gathering program; it's providing parts, in addition to Elliott's, for the even larger Dresser-Clark compressors being made in Olean, New York and for Koppers Corporation which, in effect, puts the final touch on Elliott compressors. Koppers' plant, in Baltimore, Maryland, fabricates the huge customized couplings needed to tie major units of the compressor train together. All in all, the McInnes Saudi Arabian orders come to about 3.5 percent of its total output for 1976.

Pennsylvania also produces the big high-speed gears needed to drive the Elliott compressors; they're made in King of Prussia, Pennsylvania by Philadelphia Gear Corporation. Philadelphia Gear employs some 1,200 workers—most of them commuters from nearby Philadelphia. The compressors' gaskets and shims, those essential tidbits, come from Industrial Gasket and Shim Company in Meadow Lands, Pennsylvania—which now calls Elliott its third largest customer—and the impeller forgings are done by Cann & Saul Steel in Royersford, Pennsylvania, in the Delaware River Valley area known for its forges even before the American Revolution. Compressor diaframs and some specialty machine screws have been cast by the Engineered Products Division of Abex Corporation at Mahwah in neighboring New Jersey. The Elliott order, for 900 diaframs in varying sizes, amounted to perhaps four percent of the division's 1976 total, enough to keep the 350 employees hopping at a time when foundry work nationwide was slow.

But Elliott suppliers are by no means limited to Pennsylvania—or even to the East Coast. The far west, for example, is more typically the origin of electronics devices and so far as Elliott compressors are concerned, that usually means Minden, Nevada, Bently and, in effect, Ralph Jepsen.

With 13 or 14 of its vibration-sensing probes needed for each Elliott compressor, and similar proximitors being produced for other gas-gathering machinery, Bently Nevada can count on roughly 10 percent of its $20-million 1976 output going into the Saudi Arabia program.

Given that level of technology, customers who visit Bently Nevada—whether from Jeannette, Pennsylvania, or Saudi Arabia—are surprised to find the company headquartered in what once was a creamery and flour mill. They don't realize, apparently, that Bently is a new firm and that approximately half of its 600 employees—up from the four Bently had when he moved to the valley 16 years ago—have joined the company within the last year. If new, however, Bently is important: its 600 workers funnel a $6-million payroll into western Nevada and—like all of the companies involved with Elliott, with compressors or with Saudi Arabia's development program—into many parts of the U.S. economy.

Some Planners

Although construction accounts for a large proportion of the contracts awarded to American firms, design supervision and other services are also important. Some examples:

  • The kingdom's Saline Water Conversion Corporation has awarded a $90-million contract to an American firm to supply engineering services and supervise construction of a desalination plant at Jubail.
  • An American architectural firm has the planning and design contract for the Faculty of Medicine and Health Sciences at King 'Abd al-'Aziz University at Jiddah—a $500-million project.
  • A Dallas firm has won a three-year, "multimillion-dollar" computer service consulting contract with King 'Abd al-'Aziz University.
  • A San Francisco geotechnical and environmental consulting firm has a subcontract with Skidmore, Owings and Merrill to do studies of the site of a new campus in Mecca.
  • Edward Durell Stone Associates of New York is doing preliminary work for a master plan for Abha, capital city of 'Asir province.
  • A $200-million project to be built at Tabuk was designed by a St.Louis firm, and will incorporate a $1.5 million central solar heating system, the world's largest.
  • Another St. Louis firm of architects had designed a new campus for the University of Riyadh—a $3-billion project.
  • Waste Management, Inc., an Illinois form, has signed a five-year contract to provide city sanitation services for Riyadh, calling it "the largest contract for sanitation services ever entered into anywhere." The company expects revenues of $243 million from the contract, and the Saudi Arab Government is supplying the capital necessary for the project.

This article appeared on pages 40-48 of the January/February 1977 print edition of Saudi Aramco World.


Check the Public Affairs Digital Image Archive for January/February 1977 images.