Paper Plans

The largest steel ingot expansion in world history was approved by SPAB last week. The 10,000,000 new tons SPAB called for, added to some 3,000,000 now under construction, will bring the steel capacity of the U.S. to 99,267,468 tons, twice the entire capacity of Axis-controlled Europe and Japan. It will cost the U.S. Government $1,250,000,000, take at least two years to complete.

Basis of SPAB’s action was a report by OPM’s white-haired steel expert, William A. Hauck. At his instigation, 30 steel companies had submitted specific plans for expanding their plants in 15 States. Their plans kept the regional distribution of the U.S. steel plant about where it was before. One noteworthy change: the Pacific Coast, with 1,865,300 tons of new pig iron and steel ingot capacity projected, was to be made virtually self-sufficient.*

Though the U.S. needs all this steel and then some, SPAB took no action on a further Hauck recommendation for 5,000,000 more tons if & when “practicable.” Reason: even 10,000,000 tons, however essential, looked less “practicable” every week. The 3,000,000 tons already under construction are the easy ones—opening up and reconditioning idle furnaces, adding new furnaces here & there to existing plants. From now on the going gets tough.

Not only must further expansion stretch back to the mine (requiring new mining and carrying equipment) but it must also soon include new rolling mills and other post-ingot equipment (requiring, among other things, thousands of motors). Experts believe that existing processing capacity can take care of perhaps 2,000,000 tons more of ingots—i.e., it probably could not even handle all the new ingot capacity now under way.

Furthermore, Mr. Hauck’s report flatly stated that, without “highest priorities,” no further expansion should be undertaken. He estimated that it would take 1.3% of current steel capacity (over 1,100,000 tons) in each of the next two years to build the new furnaces. With priorities as high as A-3 already a joke, that looks like a lot of steel—unless Don Nelson’s famed inventory study turns up some big hoards of the right kind of steel, and his new allocation program (TIME, Oct. 6) succeeds in prying it loose.

A more immediate hurdle for the expansion program is Jesse Jones, who must sign the contracts and advance the money. If it takes his Defense Plant Corp. as long to sign up for new steel as it has for new aluminum, the new tonnage may remain on paper indefinitely. In the two and a half months since OPM approved a 6,500,000-ton pig-iron expansion, Businessman Jesse Jones, tortured by post-war overcapacity nightmares, has signed up for barely half of that tonnage. With the scrap-iron shortage worse than ever,† he will have to finance a lot more pig iron, too, to support 99,000,000 tons of steel ingots.

Meanwhile, the giddy prospect of 99,000,000 tons made few steelmen happy. Even the 89,000,000 tons now assured to them is 22,000,000 tons more than they ever produced in a year. In thinking about new post-war markets, they see nothing but new post-war competition: from aluminum, with post-war capacity five times prewar; from enormously increased magnesium capacity; from substitutes (like plastics), encouraged by wartime shortages to entrench themselves in steel’s peacetime markets. Last week (see p. 50), U.S. Rubber began invading aluminum, whose laboratories are already busy planning a huge post-war steel invasion.

The New Dealers’ answer to these worries (outside of “first things first”): postwar planning will have to see to it that national income remains far above past levels; there will be an enormous dammed-up demand for cars, refrigerators, houses, highways in the U.S.; Europe will have to be rebuilt, China industrialized. If, despite all these potential markets, steel still runs into a depression, at least it will have new, lower-cost capacity with which to weather it.

*Potential West Coast ore sources—the big if of Coast self-sufficiency—are Southern California’s Eagle Mountain, or importation by rail from Utah, or by water from Latin America.

† Last week five open-hearth furnaces in Pennsylvania and Ohio shut down for lack of scrap.