ALUMINUM: Move Over!

Poker-faced Leo M. Harvey, 63, an aluminum fabricator in Los Angeles, plays his cards close to his chest. No outsiders have ever found out much about the production, profits or prospects of his family-owned Harvey Machine Co. Last week shrewd-dealing Leo Harvey won a pot that made competitors gasp. The pot was a $46 million Government loan designed to make Harvey the fourth biggest U.S. aluminum producer.

Since Harvey was an unknown in the aluminum-producing business, aluminum’s Big Three—Alcoa, Reynolds and Kaiser—flinched a bit at the news that the Government was dealing him in as No. 4 at their table. But Leo Harvey pointed out that Reynolds and Kaiser also had very little experience in making aluminum until the Government put them in the business.

Stretching the String. Like Henry Kaiser himself, Leo Harvey has the knack of getting what he wants from the Government and working a shoestring into a golden cord. His shoestring was the one-man Los Angeles machine shop which he started in 1913. Born in Latvia, Harvey had learned the machinist’s trade in Germany before coming to the U.S. at 20. His shop prospered with World War I orders for parts for the Curtiss “Jenny,” afterward, did a tidy business machining brass and aluminum parts. World War II’s demand for aluminum plane parts spread his company over four small plants. At war’s end, when the $8,000,000 Bohn Aluminum & Brass war plant at Torrance, Calif, became surplus, he snatched it up at a bargain, has since become a key supplier for the aircraft industry. Harvey claims his company now has a net worth of $9,000,000, employs 1,000 people, processes 2,000,000 Ibs. of aluminum a month.

Golden Cord. He began his campaign to make his own aluminum because, he said, the Big Three withheld supplies to independent fabricators. First of all, he would need cheap electric power. It was scarce, but Harvey seemed to have no trouble finding it. He persuaded the Interior Department’s Bonneville Power Administration to assign him 111,500 kilowatts from the new Hungry Horse Dam being built near Kalispell, Mont. To use the power, Harvey needed electric rectifiers. From War Surplus Boss Jess Larson, Harvey bought enough for a complete “pot-line” (i.e., enough to make 35 million Ibs. of aluminum a year). After that, all Harvey needed to make aluminum was i) a plant, and 2) the money to build it. Last fall Harvey put in his bid for the $46 million Government loan.

Only two weeks ago (TIME, Aug. 27), the Defense Production Administration indicated that it would reject Harvey’s plan, for failure to agree on terms. The loan had been conditioned on his raising $7,000,000 capital of his own, and the most he could scrape up was half that amount. Last week DPA changed its mind, approved the loan to Harvey anyway. Under the terms, he has 18 months to raise the other $3,500,000, but he can draw from RFC on the loan as soon as he puts up $2,000,000 in working capital. (DPA will require him to set aside 50% of all profits for 20 years, to repay the loan.) Within two years, if his plans hit no snag, Harvey hopes to be turning out 108 million Ibs. of aluminum a year (7% of U.S. production) at Kalispell, have his own plant at Everett, Wash., to make alumina (aluminum oxide), and to have his own $3,000,000 fleet of ore boats to bring in bauxite from Dutch Guiana.