MANUFACTURING: Westward Ho!

For almost seven years Franklin Delano Roosevelt has been pretty much his own Secretary of the Navy. Last week Columnist Raymond Clapper chided him for being his own Secretary of State. And last week the President himself stepped out in front as his own Secretary of something like Military Economics. At press conference he laid down a new theory: the U. S. ought to have a Pacific coast steel industry. His arguments:

>The growing West Coast’s growing steel demands far exceed the limited capacity of the small West Coast steel plants. (U. S. Steel Corp. has three small plants in California with combined capacities of 441,500 tons, Bethlehem has three on the Coast, with a total capacity of 380,000 tons.)

>As the No. 1 U. S. aircraft-producing area, the West Coast provides a large market for high-grade steel alloys.

>Expanding West Coast shipyards are dependent upon steel plates coming through the Panama Canal and, in the event that the canal was rendered unusable by sabotage, it would hamper shipbuilding and repairs on the West Coast.

To steel company managements, which have nursed along their expanding, profitable West Coast market (where the asking price is generally the sales price), no proposal could be more harebrained. They object that such plants would duplicate existing facilities, that no large deposits of coking coal or iron ore exist on the West Coast to make such an industry logical. The cost of hauling raw materials would, they insist, make West Coast steel more expensive than East Coast steel plus delivery charges.

In spite of such objections, U. S. Army engineers have played with the idea for at least five years, have published a many-volumed report, Available Raw Materials for a Pacific Coast Iron Industry.

To the coal problem, the Army’s answer is the Columbia River’s Bonneville Dam. (But Administrator Paul Raver boasted last week at the White House that demand for Bonneville power is currently twice its output.) Instead of coal (used in blast furnaces for iron-making, in open hearth furnaces for steel), West Coast steel plants would depend on electric furnaces fueled by new Bonneville generators to process iron ore (or scrap) directly into steel. A January 1938 War Department publication noted that stainless and other special electrolitic steels for war purposes are “peculiarly adapted for production in the Pacific Coast low cost power areas.”

For the more difficult iron ore problem, Army engineers discuss several alternatives :

1) Use Chilean ore—at Sparrows Point, Md. Bethlehem Steel takes ores in from Cruz Grande, Chile (4,265 miles away) at a freight cost of $2.50 to $3.00 per ton, plus Panama Canal tolls of $7.20; since no toll need be paid on Chilean ore laid down in Portland (5,739 miles from Cruz Grande), it should be cheaper there.

2) Use low-grade ore from the mountain States—such deposits do exist not too far by rail from Portland. In fact, there are not only western deposits of iron ore but manganese, chromite, tungsten, and lesser metals. Trouble is that most of them are low-grade ores, which means that they are costly to develop.

3) Use Philippine iron ore. The Philippines now furnish about 1,000,000 tons a year to the Japanese steel industry (10-20% of its consumption), have easily mined resources of 50,000,000 tons, possibly as much as 500,000,000 tons all told. But the amount of military security that could be obtained by importing ore from islands 8,000 miles across a Japanese-infested ocean would be strictly limited.