STEEL: Expanding Furnaces

No. 1 material of war is steel; and the U. S., with some 81,000,000 ingots a year, has about half the world’s steelmaking capacity. No foreseeable peacetime boom is likely to strain it. But for purposes of war, U. S. steel capacity is mostly of the wrong kind. Of its enormous furnace power, 90% is open-hearth, for run-of-the-mill steel. Only 2% is in electric furnaces, which are hotter, can be more precisely controlled, turn out steel ingots of the finest grade. Many an aircraft part, the guts of internal combustion engines, light armor plate for tanks, tools for Defense industry must (or should) be rolled from electric-furnace ingots. As defense orders pile up, steelmen have encountered a growing demand for high-grade, high-cost, electric-furnace steel.

Biggest electric-furnace operator in the industry* is Tom Girdler’s Republic Steel Corp. Last week its operating chief, Vice President Charles M. White, announced that Republic was going to maintain this lead. With one 50-ton-per-shift, two 25-ton, three 15-ton, two 6-ton electric furnaces all going full blast, White announced that his Canton works would soon add two mammoth new electric furnaces with a combined capacity of 100 tons per shift, roughly a 50% increase in Republic’s capacity.

Few days later the industry’s No. 2 unit, Bethlehem Steel, announced that it would triple its electric capacity, have two new 50-ton furnaces ready soon after Labor Day. Total additions to electric-ingot capacity now in prospect for the industry: 450,000 tons a year, an increase of 28%.

Bethlehem is expanding on other fronts too. Bethlehem is one of the four U. S. steelmakers capable of making heavy armor plate. The others: U. S. Steel, Baldwin Locomotive’s Midvale Co., the U. S. Government’s Naval Ordnance Plant at South Charleston, W. Va. All these plants, said Bethlehem’s boss, mackerel-jawed Eugene Grace, are adding or about to add to their capacity. Through its shipbuilding division, Bethlehem is also the U. S. Navy’s No. 1 private supplier. For the sake of a two-ocean fleet, the U. S. Government is building (and taking title to) additions to Bethlehem’s shipyards. Bethlehem engineers, said Steelmaker Grace last week, are expanding its San Francisco yards to build destroyers, converting its ship-repair facilities at Staten Island into ways for smaller ships.

The White and Grace reports made clear that Defense had become a serious matter to Steel. They also indicated that further additions to capacity lay ahead. Bethlehem was already working at 99% of capacity (up from 82.6% in the second quarter), and new orders in July were 30 to 40% above that. Exports, mainly to Britain, accounted for somewhat more than the normal 10 to 12%. Profits were at least keeping pace. Bethlehem’s second-quarter net of $10,807,318 was 161% ahead of the same quarter in 1939. And holders of Republic’s 6% convertible preferred began to hope that Defense might soon get them their $12 per share arrears.

*Timken Roller Bearing is now the No. 1 electric-furnace operator, but it uses a large part of its steel output in its own plants.