STEEL: Pride of Pueblo

In Denver, early one morning this week, some 900 people climbed aboard a special train for Pueblo, Colo., 120 miles away; another special train pulled into Pueblo from Chicago. The visitors joined a crowd of 4,000 to watch the official opening of a $30 million steel pipe mill, first of its kind west of the Mississippi. With a capacity of 150,000 net tons a year, the new mill will turn out seamless pipe for a ready-made market: the oil industry of western U.S. and Canada.

Pueblo’s new pipe mill is the latest step in a program of expansion and modernization that in eight short years has converted Colorado Fuel & Iron Corp. from a doddering septuagenarian to one of the most vigorous companies in the U.S. steel industry. With $80 million already spent on expansion and modernization, C.F. & I. sales have soared from $56 million to an annual rate of $300 million (fiscal 1953 net: $8,000,000), and employment has more than doubled, to 22,200. The company has added so many new products—ranging from manhole covers to springs for cigarette lighters—that its rail and fastening business, which once accounted for 70% of its tonnage, now represents only 20% of production. Since 1945, C.F. & I. has risen from twelfth place to ninth among U.S. steelmakers, doubled its ingot capacity (2,466,570 tons).

Pumps & Hunches. C.F. & I. owes much of its phenomenal growth not to an oldtime steelman but to Wall Streeter Charles Allen Jr., 50-year-old head of the Manhattan investment firm, Allen & Co. (TIME, Aug. 2, 1948). A shrewd operator who credits his success to playing hunches backed by common sense, Charlie Allen set up his own brokerage house when he was 19, went broke and lost $1,000,000 in the 1929 crash, made a fast comeback buying blocks of stock at bargain prices. Currently, he controls 13 companies, worth some $450 million, including Arma Corp. (electronics, navigational equipment), American Bosch (automotive electric equipment), a gold mine in the Philippines, and real estate interests from North Kansas City to Riverside, Calif.

When Allen picked up Colorado Fuel & Iron control for about $20 million in 1944, he got something nobody else wanted. Founded in 1872 by Confederate Brigadier General William J. Palmer, the company prospered in steel and coal as the railroads snaked westward, was bought by the Rockefellers at the turn of the century. But under absentee ownership, C.F. & I. began to falter. Its mines and mills ran down, its labor relations deteriorated. The company became notorious for the famed Ludlow Massacre of 1914, in which 33 men, women and children were shot down by the state militia, most of them C.F. & I.-employed guards. Time and again the Rockefellers tried to sell their old property, but not till Charles Allen came along could they make a deal.

Eastward Ho! Allen’s first move was to merge C.F. & I. with another of his interests. Wickwire Spencer Steel Co. of Buffalo. That gave the company two blast furnaces in the East plus fabricating equipment in New England. More important, C.F. & I. also got Wickwire’s Plant Superintendent Alwin Franz, a crack operating man who started in the steel business as an open-hearth pitman and is now C.F. & I.’s president.

Financial Man Allen and Production Expert Franz found C.F. & I.’s operations as outdated as its plant. Says Franz: “The company had been serving some customers at a loss for 40 years.” The new management canceled the losing business, dumped unprofitable products and added new ones. Only three of its four Pueblo blast furnaces were in operation; Franz started up the standby, a move which has since netted the company some $11 million. C.F. & I.’s rail output was inefficient, and a high percentage of C.F. & I.’s rails had to be rejected because the holes at each end were improperly drilled. Franz flew the drillers to Gary, Ind. to see how U.S. Steel did the job. C.F. & I.’s different plants didn’t always know what new production tricks the others might have developed; Franz set up a company-wide information exchange.

In every operation, costs were slashed. Says Franz: “I’d go in to a foreman and say ‘How’s everything?’ and he’d say ‘Fine.’ Then I’d say ‘Fine? What the hell does that mean? How’re your costs?’ ” (C.F. & I. was its own prime contractor on its new pipe plant, saved an estimated $1,500,000 in fees by doing so.)

Promising Situation. While Franz was straightening out production, Allen built up C.F. & I.’s corporate structure. He bought a plate and pipe plant in the burgeoning Delaware Valley (TIME, June 8), a pig iron and iron ore company in Pennsylvania. Last year he bought Newark’s 112-year-old John A. Roebling’s Sons Co., primarily a maker of wire rope, and an engineering firm. These acquisitions not only gave C.F. & I. diversification, but also made it a well-integrated organization.

No in and outer, Wall Streeter Allen has built a reputation for buying into promising situations and developing them. Allen thinks that Colorado Fuel & Iron is still so promising that he plans to stay with it for some years to come.