That completes the checklist. Let's turn now to considerations of return on investment, for a few points.

Return on investment is a fundamental and important measure of the use of capital. It is the job of management to maximize return on investment to the share owners. A parallel in a govern

ment situation is to provide necessary function at the least possible cost.

Keeping it simple, if you deposit $1,000 in a savings bank and the bank pays you 4 percent interest, your return on investment for a one-year period is 4 percent, or $40.00. In a business situation, capital requirements are provided for from the depreciation provision and from earnings. Testing equipment needs must be appraised along with other capital equipment needs of the business, and must meet the test of offering satisfactory return. The facts count.

The measure to be applied then, when considering a new acquisition, is a comparison of before-andafter cost, equating the cost benefits to the cost of investment. Consider the purchase of service possibilities. This test must be a significant part of the decision-making process. The wisdom of your actions is going to be reflected on the profit and loss statement. Remember the basic point - as

managers you're interested in improving your company's performance. Look at all the alternatives.

The last thing I want to cover with you is a challenge for the future. The formation of this organization is a step in the right direction, as are meetings of the type you are having here this week.

It occurs to me that there is a need to work out sharing arrangements at the local level, not only among plants within the same company, but among several different companies. I believe that several companies exploring this idea might gain very real competitive advantages in the market place.

One angle to consider is for each of several companies to specialize in one field of measurement, and then exchange services with the others.

Devise a means of getting data on the costs of calibration to your operating organization. This may be the real answer to insuring that only needed equipment will be found in the operating areas.

To summarize, gentlemen, we've talked over some points which I think bear in an important way on proper management of the standards and cali bration function. I hope you have found this useful. We've examined in a fundamental way the matter of return on investment. Now, managers - go manage!

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Now we all pride ourselves on the quality of the measurements that we think we know how to make. In fact, however, if we are honest, we really know absolutely a lot of things that aren't true at all. Each of us would like our management to appreciate the value of our operations in our respective organizations, but do any of us really know what a given kind of measurement is worth? Not what it costs to make, but what is it worth to the organization for which we are making it.

To date we have been very ready to talk about management problems where higher levels of management always seem to be the problem. But is it THEIR responsibility to understand what we would like them to know? I submit that one of the differences between managers and the people who do the work, is that the people who do the work know how, and the manager-if he is any goodknows why.

WE as an organization, if we are going to talk about management problems associated with standards laboratories, must face OUR responsibility to find better means of evaluating not only the technological competence of our measurements, but also the value of them.

Jerry Hayes had a Navy film here today called "Why Calibrate?" In the case of the defense applications of metrology, all of us feel intuitively that we understand. When we see it so clearly as was presented in the film, there is no question in our minds. However, most of the funds supporting the Bureau of Standards, other than those that are allocated from DOD, come via the Department of Commerce's budget. What's it worth to the economy of this country to be able to make a given kind of measurement with a given limit of error? If the measurements are worth while, if we as individuals can provide a composite set of data that will help the Department of Commerce and our Congress to recognize the need and the justification for better measurements in support of our economy, then I feel that budgetary problems will take care of themselves. But I find it very hard to be critical of anybody who says "I'm not going to give you the money until you tell me what it is worth". I ask the same thing of my son; my boss asks me. Accordingly, I would like to encourage NCSL to consider setting up some kind of a committee structure that would ponder this question: How do we evaluate the value of the measurements that we already know how to make? This is important because Charlie Johnson has a session later this week in which he is going to report some of the measurement needs that have been cited to him.

These are needs that will be called to the attention of the Bureau of Standards as gaps that desirably should be filled. Some of them are readily justified by the defense effort. Justification of others may not be so obvious and will require our best management judgment. Let's try to produce the evidence.

Of course there is one thing we'll have to face. You know what happens to the turtle when he sticks out his neck-sometimes he makes progress and sometimes he gets it lopped off. If we are going to be professional in our attitude, we have to be prepared to be honest in facing the possibility that some of the measurements we are making really aren't worth making.

And now, one more matter. I don't believe that NCSL can totally duck the question of ethics in the making and reporting of measurements, in the advertising of instrument performance, etc. These are questions that have been raised by other people, but I think they are justified questions in many instances.

How do we provide an answer? We can't, easily. Part of it is related to the work that C-100 is doing. We can't really consider ethics until we first consider the question of having standards against which to make judgments. To illustrate my point, if George Vincent will give me permission. I will steal from him a story that he says originated with Marion Eppley. I enjoyed it, and I hope you will. It seems there were two partners who ran a small retail business. One afternoon the son of one of the partners came in from high school and said, "Dad, the teacher told us he is going to talk tomor row about ethics. What are ethics?" The father thought for a moment and replied, "Well, let's see if I can think of an example. Oh, yes, a man comes into the store and buys a carton of cigarettes. I give him the cigarettes, he gives me $5.00, and I give him change. He takes the cigarettes and the change, and starts to walk out. Just as he is about to leave, I notice that the $5.00 bill seems a bit thicker than usual, and as I examine it more carefully, I notice that it is two $5.00 bills stuck together. Here son, arises the question of ethics. Should Ior should I not-tell my partner?"

All that I am trying to say here, gentlemen, is that your Board of Directors should not overlook the question of ethical considerations. They also should recognize, however, that inadvertent damage to people, organizations, and reputations can be avoided only by working towards standards of nomenclature, standards of practice, standards of common understanding among all.

I am honored to be with you tonight, particularly since this is the occasion of a meeting of the National Conference of Standards Laboratories at the new facilities of the National Bureau of Standards. I had the pleasure of seeing those facilities today, and they are indeed impressive. Learning something about this business of measurement is one of the rewards of being here. I have learned, for example, that metrologists can measure to 1/10 of a microgram, and I'm told that this is approximately 1/10 of one-millionth of 1/32 of an ounce. In the face of an achievement like that, I have no business to talk about measurement, so I've discarded that notion and decided to talk about management: the management of measurement and standards laboratories. Section II-A of your Bylaws says: "The National Conference of Standards Laboratories is an organization to promote cooperative action on common problems of management and operation of measurement standards and calibration laboratories".

I note that your agenda for this meeting is strongly oriented to management activities. As managers, your primary interest is not measurement per se. Your primary interest is assisting in delivery of satisfactorily high quality products out the door at the least possible cost, so that in combination with all other activities necessary to success, our companies' reputations and profitability are maximized. I think we in this room can agree that measurement to the appropriate degree is necessary, and I know from personal association that a professional engineer with good business acumen can make this possible.

I'd like to approach the subject on the basis of a checklist of the points which make for successful management of the measurement function, other than technical competence. These points are equally applicable to commercial, government contracting, or government operations. Further, they apply to any size or type of business. This is not a complete list, and I'm sure you could add to it. After I've given you my checklist, I'll talk a bit about return on investment, then pose an additional challenge to you, and we'll call it a night.

These are the points I consider to be a major responsibility of the management of a standards and calibration laboratory:

1. Organization

Definition: The responsibility of the standards and calibration laboratory is to provide inspection, test, and measuring equipment in compliance with company and customer specifications to all departments, as required to support current and future

contracts.

The total responsibility for the management of this function of the business should be assigned to one group in your plant. If it is splintered, consolidation is the first step to full effectiveness, in my personal opinion.

The concept must be one of service with responsibility- and allow me to emphasize-with particular attention to cost. You have found from experience that this gets tricky, because most technical folks like to have everything they need or may need at their fingertips. It is the job-the responsibilityof the standards and calibration laboratory to insure that necessary functions are provided at the least possible cost. We have not yet found a completely satisfactory solution to this problem, have we? There are still some operators who believe that the equipment is theirs, not the company's, and others who don't appreciate the economic facts.