Big Steel Bids

To the steel-hungry West Coast, the question of the year has been: Who will buy and operate the Government-owned $190,000,000 Geneva steel plant? Last week, in a room in one of Washington’s dismal buildings, the West got a partial answer. Seven bids for the plant were opened by the War Assets Administration.

One surprise was the spread between the bids; they ranged from $38,750,000 to $302,000,000 (but the latter bid, put in by Blue Star Enterprises, Inc., was later called a mistake). Another surprise was the fact that Henry J. Kaiser, who has said early & often that he was planning to buy Geneva, put in no bid. Best guess was that H.J. thinks the $115,000,000 he still owes RFC is about all he can handle now.

The best bid, dollarwise, came from U.S. Steel Corp.’s wholly owned Western subsidiary, Columbia Steel. U.S. Steel offered $47 million for Geneva, including inventory, said it would spend another $43,500,000 to give Geneva facilities for peacetime steel products, put Geneva in the front rank of steel producers. But U.S. Steel added a slight “if” to its bid: there would have to be reductions in Western rail rates on steel. Said Big Steel: “Any bidder on Geneva Steel sees a need for reduction in freight rates from Geneva to the Coast. The economic future of the plant rests on these reductions. . . .”

Colorado Fuel & Iron Corp., second best bidder, proposed to lease the plant with an option to buy, pay the Government rent of $2 for every ton of steel manufactured. Colorado Fuel also proposed to spend up to $47 million for added facilities, pay not less than $80,000,000 if the purchase option is exercised.

The other bids* called for RFC loans to help finance the purchase. The War Assets Administration expects to make up its mind about a buyer in a month. If many West Coast businessmen have their way, the plant would be sold to U.S. Steel. Privately they have favored this for months, because they think that Big Steel, which operated the plant during the war, is the best one to do it in peace. Moreover, they think Big Steel has a better chance of getting rail rates cut, bringing cheaper steel to the West Coast.

The Department of Justice, which must approve the sale, has opposed selling Geneva to Big Steel in the past, lest it mean less competition in the industry. But pressure from Western steel users, plus the fact that Big Steel’s offer is regarded as a reasonable one for the plant, may cause it to Change its mind.

* Riley Steel Co.; J. S. Warshaw, an “industrial consultant”; Assets Reconstruction Corp., Ltd.; Pacific American Steel Iron Corp.