Management: Blast from Simon

Los Angeles businessman Norton Simon is not an easy man to please, whether he is buying the paintings with which he surrounds himself or acquiring interests in a growing list of companies. The boss of the $400 million Hunt Foods & Industries, he is also a major stockholder in McCalls and several other companies, recently bought into American Broadcasting-Paramount Theatres and acquired a 23% interest in Canada Dry. Simon may crack a few executive heads behind the scenes once he takes over a company, but his takeovers have not been marked by public rancor. Last week, however, he let fly at the former boss of one of his newest companies, excoriating the man in terms rarely heard in the business world.

When he took over last month as chairman of West Virginia’s Wheeling Steel, said Simon, he found the nation’s twelfth largest steel producer in sorry shape. Wheeling’s profits have dropped by almost 50% since last year despite a slight rise in sales, and its stock has dropped from 41 to as low as 23¼. In fact, Simon frankly told a special meeting of stockholders in Manhattan, the company may lose up to $8,000,000 next year, dividends will have to be suspended for several years, and much time and new financing may be required to put the company back in shape. And who was to blame for the mess?

Simon laid the blame squarely on William A. Steele, 64, the former chairman of Wheeling Steel, who resigned a few weeks before Simon took over. Steele, said Simon, was “not even a good vice president,” and his salary of $140,000 a year was “preposterous.” Under Steele’s direction, said Simon, Wheeling had been “too steel-industry-minded”—it won the praise of the industry for its selected price increases in 1963—and had “wanted to be a good friend and good fellow instead of concentrating on doing a good job.”

Simon hinted at possible instances of mismanagement, ordered a three-man committee of review to look into the company’s past dealings. The committee’s first case: a $70 million Wheeling contract for a Blaw-Knox hot strip mill at a time when, says Simon, Blaw-Knox had little experience in such work—but did have a member on the Wheeling board. Giving Blaw-Knox the order, said Simon, was like “buying an Edsel with a Ford on the board.” What did William Steele think of Simon’s blast? “Without justification,” he said, taking off just enough time from his quail-shooting vacation in Florida to say it.