Steel for the Future

by BENJAMIN F. FAIRLESS

1

OUR problems in the steel industry at the moment boil down to one undeniable fact: there is a shortage of steel. In spite of everything we have done and can do, we are not able today to turn out all the steel that our customers want as fast as all of them want it. Seldom in my lifetime, however, have I known any fact to be twisted, distorted, and lied about as that one has by some of our socialist-minded critics.

These critics base their attack on the logical but deceptive premise that it is the obligation of the industry to supply all the steel that the American people may ever want at any time under any circumstances. From there they jump happily to the conclusion that the present steel shortage proves beyond any shadow of a doubt that the industry has not lived up to its national responsibilities, and that its management can no longer be left safely in private hands.

Their premise is correct, of course, in theory; but their conclusion is ridiculous, Certainly it is the responsibility and the desire of any wellmanaged industry to take care of its customers. And it is the obligat ion of any bank to pay all its depositors whenever they want their money. But if all the customers come in at once, and demand all their money at once, they simply can’t get it. No matter how sound the bank may be. it will have to delay payment until the necessary supply of cash can be assembled. Does that prove the bank isn’t well managed? Has it failed to live up to its public responsibilities:

Well, that’s how it is with steel today. Let the government announce that it is planning to ration meat or butter or sugar, and almost within the twinkling of an eye, meat and but ter and sugar disappear from the shelves and showcases at your corner grocery. Similarly, when the government finds it necessary to allocate or ration steel — as it has announced that it will —a run on steel develops overnighl.

People who think they may need a new car, a new icebox, or a new stove within the coming year or two decide to buy it now for fear the government will not permit them to get it later. For the same reason, people who had planned to build, at some future time, a new building or a new factory, or to buy new machinery and equipment, decide to get these things now, while the getting is good. Thus the orders that would normally be spread out over several years are crowded into the space of a few months. But the fact that these buyers face delay in getting all the steel they want is certainly no proof that the industry has failed to live up to its public responsibilities, or that it has misjudged the real needs of the American people.

Government records show that American industries as a whole the manufacturers of everything from hairpins to locomotives turned out more goods in 1043 than in any year before or since. Not even today is our nation’s total industrial production as high as it was then. Yet the steel industry is pouring nearly 12 million more tons of ingots than it did then.

That means that our nation today is using 100 million tons of steel to produce a smaller quantity of goods than it manufactured out of only 88 million tons seven years ago. What’s happened to the other 12 million tons ?

Well, it is probable, for one thing, that manufacturers are not using steel as efficiently and as sparingly now as they did in 1943; but there could, of course, be another explanation. It is just barely possible, for instance, that some of the customers who are buying steel from us today are following the example of the woman who went into a liquor store, ordered ten cases of Scotch, and explained to the clerk that she wanted to build up her inventories before a lot of greedy people started hoarding.

Yes, that might explain a lot, for certainly the telescoping of consumer demand and the replenishment of inventories are two primary reasons for our present difficulties; but there is a third and equally important — reason, which cannot be ignored in any honest and complete discussion of the current shortage.

And that is the simple, undeniable fact that strikes have cost the American people 29 million tons of steel production since V-J day. Now understand I state that merely as a fact, and not as an accusation. I point the finger of blame at no one; for with all my heart and soul I believe one thing: I believe that any man who, in this critical hour, impugns the motives, the patriotism, and the high purpose of any group of loyal Americans is playing the Kremlin’s dirty game, and that is not for me!

Some men will say those strikes occurred because management was stubborn and unyielding. Others may say that labor was willful and headstrong. Conceivably both could be right. As an interested party, I’m not qualified to judge. But of this I am sure: that if the patriotic men of steel — the men who make it and the men who manage it — are fully determined to put America’s security above all else, there is no problem they will ever face that cannot, and will not, be peaceably settled with patience, with forbearance, and with reason.

2

LET’S get down to the simple, dispassionate facts about our steel supply and see if we can’t bring this picture into some kind of realistic perspective by asking ourselves three questions: What has the steel industry actually done, over the years, to fulfill its responsibilities to the American people? How serious is the present shortage in terms of military and civilian needs? And what is the steel industry doing to overcome that shortage;

Now, in answer to the first question: Americans don’t like to take second place in any league, so they expect their steel industry to be bigger and more productive than the steel industry of any other nation on earth. Well, it is; but what many Americans do not know, I suspect, is that their own steel industry is bigger than those of all the other nations on earth put together. The American steel industry today can match the output of every foreign steel plant in the world, ton for ton, and still have 14 million tons left over. It turns out nearly twice as much steel as all the other countries outside the Iron Curtain; and I should like to point out that United States Steel alone is pouring more steel today than all the Communist nations together are believed to be producing.

So I think it is clear that the American steel industry has more than fulfilled what is probably its first responsibility to the nation—the obligation to outproduce any possible combination of aggressors. But what of our domestic needs? How have those been met ?

All during this twentieth century, the steel industry has maintained, year in and year out, an average productive capacity nearly 50 per cent greater than the demands our nation has made upon it. That means that, over these years on the average, nearly one third of all the steelmaking facilities in America have stood idle.

Yet, in spite of this, it has continued to expand steadily, in every decade — even in the depths of the depression when only half our steel capacity was being used and when we couldn’t have sold another pound of the stuff if we’d taken cigar-store coupons in trade!

In fifty years, the population of the United States has only doubled, but America’s steel production has increased nearly sevenfold. And the most dramatic part of that increase has come in the past eleven years.

Since 1939, when Hitler’s armies invaded Poland and World War II began, America has expanded its steel production by more than 47 million tons. That is an increase of 90 per cent in eleven years — an increase six times as big as the growth of our populat ion.

Never once, of course, not even in the darkest days of World War II, did any military project ever suffer for lack of steel. On t he contrary, in the peak year of arms production, after every direct military need had been fully met, more than 50 per cent of our total steel production was still left for essential civilian requirements and for Lend-Lease export to foreign nations—including Russia. No other nation in the world could have matched that record.

Next we come to the question of our present-day steel supply and the probable demands that will be made upon it. The first fact we have to recognize here is that practically all the steel we can make today is being shipped to civilian customers as fast as we can make it. Military orders are beginning to flow, and will increase rapidly in the coming months. Naturally they have first claim on our entire steel supply.

So it is obvious that whatever the military and the other steel demands may be, new steelmaking facilities are going to have to be built to take care of them. It is equally obvious that, until those new facilities are built, the government’s needs will have to be met out of existing civilian supplies.

How much civilian steel will be left depends, therefore, on how much military steel our government must take. And on that question, I regret to say, there simply are no firm, established facts to guide us. I don’t see how anyone can be expected to know what the government needs will be, moreover, until we find out what Moscow is planning next. But when it pomes to reading the Russian mind. I’m strictly a second-guesser myself; so if the experts are a little hazy about their estimates, what right have I to complain?

The only official information we have on the subject is now outdated and comes from the House Appropriations subcommittee where ex-Secretary .Johnson and other military experts testified early last August. At that time, they thought that our direct defense needs, up to next July 1, would run to only 4 million tons.

But since then many things have happened, and my own inquiries lead me to believe that this estimate is low. Certainly, in the light of our experience at the outset of World War II, I think we must assume, for safety’s sake, that military demands might go as high as three times that figure by next July 1; so let’s be practical about it and put the government down for 12 million tons. That would mean that we would have to cut back our civilian consumption by about one eighth as an over-all proposition, but unfortunately it isn’t as simple as that. And it isn’t an over-all proposition.

Our greatest difficulty today lies in the field of light, flat-rolled products, and it is right here in this field, where we were already struggling to keep our heads above water, that much of the military demand is going to fall. The armed forces will need landing craft, tanks, more trucks and jeeps, blitz cans, field ranges, aircraft landing mats, lockers, tin cans for food, and a lot of other things that will take large quantities of flat-rolled steel. Beyond that we are going to have to build more oil pipe lines, more freight cars and more grain-storage bins.

So there is t he crux of our problem. While similar pressures are beginning to develop in other product lines, it is here, especially, that the first impact of our national defense program is going to cut a large segment from our civilian supply of sheets, plates, and tin plate. Just how large a, segment that will be, nobody knows. I have been very much impressed, however, by a statement which President Truman recently sent to the Congress. In that statement he said this:

We must continue to recognize that our strength is not to be measured in military terms alone. Our power to join in a common defense of peace rests fundamentally on the productive capacity and encrgies of our people. In all that we do. therefore, we must make sure that the economic strength which is at the base of our security—is not impaired but continues to grow.

That statement by the President makes a whole lot of sense. If our economy is to remain strong, and if it is to continue to grow, it must not be starved at home to provide the steel we shall need abroad. So, it is up to the industry to build as rapidly as it can the capacity required to meet our defense needs with the least possible disturbance to our necessary civilian demands.

3

ALL of which brings us to our third and final question: What is the steel industry doing about it, and what can it do?

We are suddenly confronted by civilian demands that normally would have been spaced out over several years. At the same time we are facing a flood of defense and military orders that might never have been forthcoming under other, and happier, circumstances. And just as all these demands have been compressed suddenly into one tremendous package, so the steel industry is now compressing into the space of a few months a construction program that ordinarily would have been spread out over many years to come.

Fortunately the steel industry has never stopped planning for the future-for its future and for America’s future. Plans that only a short time ago were hardly more than the blueprint of a distant dream are already beginning to spring to life in the form of steel buildings, flaming furnaces, and roaring mills — ready to provide our armed forces with whatever is necessaryfor our national survival.

I am happy to report that we do not seem to be facing any insurmountable problems so far as raw materials and the other essential ingredients of steel are concerned.

We have plenty of coal and limestone in the ground, although the opening of new mines and quarries may be necessary. Scrap is always a problem, of course, but we think we can obtain enough to meet foreseeable needs, and to help things out we have bought 200,000 tons abroad. Iron ore stocks at our plants are lower now than they should be, and will be still lower by next spring, chiefly because of the late opening of the shipping lanes on the Great Lakes this year. But to meet this transportation problem, we are building three new ore boats, which will be the largest and fastest in our Great Lakes fleet, and one self-unloading vessel to carry limestone. Beyond that we have initiated direct shipment of ore by rail from the mines to our plants.

Of the alloys, nickel alone is really scarce, and our inability to get adequate quantities from Canada may require a change in steel specifications later on. Government stockpiles of zinc, tin. chrome, copper, and manganese will insure the steel industry against any critical shortage of these metals in the immediate future, but the long-range outlook on manganese is still uncomfortably thin. That is why the steel industry today is scouring every likely corner of the earth lor new and reliable sources of supply, and is negotiating, with patient determination, the development of the foreign deposits it has recently discovered.

Within a matter of days after the Korean invasion began, the American steel industry announced the commencement of a truly enormous program of expansion. In the next twenty-seven months the industry as a whole will have added a total of nearly 10 million tons to our present, ingot capacity; and almost one quarter of that entire increase will be completed within the next fifteen months by United States Steel alone.

The sudden telescoping of all this construction into an incredibly short space of time naturally imposes a tremendous burden, not only upon the energies but upon the finances of the entire industry; yet, despite that fact, more plans are being rushed, in order that more plants can be built as our defense requires them.

Among those plants, of course, will be the new East Coast mill which we expect to build on the banks of the Delaware River near Morrisville, Pennsylvania. As soon as it became apparent that our national defense would require the building of new steel capacity, we decided to erect an integrated steel mill here on the Eastern seaboard, with a minimum capacity large enough to permit high efficiency of operation. How large that plant will be, and what kinds and quantities of finished product will be made there, depend to a large extent upon the military needs of our government, but I think it would be safe to assume that ultimately this plant will be large enough to produce whatever steel our government may want us to produce in this area.

This Eastern plant of ours will be only a part of the tremendous job we face in building this new, wholly integrated capacity. The other part lies down at Cerro Bolivar, near the equator, in the deep interior of Venezuela.

There we face the tremendous task of moving a whole mountain of iron-some of the richest iron ore this world has ever seen — through hundreds of miles of wilderness. To do this we must hack out roads and cart in enormous earth-moving equipment. We must install heavy machinery, huge conveyers, processing plants, and laboratories. We must have a railroad, sorting yards, ore docks, and two new towns for our workers — complete with water supply, power plants, streets, sewers, and all the other costly improvements of modern municipalities. Beyond that, we shall need a whole fleet of seagoing ore carriers to move our iron mountain across thousands of miles of water to our plants here in the United States.

That’s a mighty big job, and I should like to express my appreciation of the friendly and understanding help which the Venezuelan government has accorded us in arranging for the development of this Venezuelan ore. Knowing that the survival of democracy on this earth may depend tomorrow on the steel that we produce today, these Venezuelan officials are playing a full, conscientious, and patriotic part in the defense of the civilized world.

Many years ago — and long before there was any great public concern about it — the American steel industry began to worry about a possible shortage of iron ore. It was clear that the highgrade, open-pit ores of the famed Mesabi Range were running low and might not last much more than twenty years longer if they were n©t conserved. It was probable, of course, that the rich, hard-to-get metal in the underground mines would add enough to these resources to carry us well beyond the anticipated lifetime of most of the men who were then doing the worrying, but not beyond the expected needs of a nation that is only now in the first vigor of its youth.

So the search for foreign ores began in earnest, and while the geologists of U.S. Steel were combing the globe for the strike they finally made at Cerro Bolivar, our competitors — with equal perseverance and courage — were finding other deposits in Canada, Labrador, Liberia, and South America.

Hundreds of millions of tons of the world’s richest ores were thus added to America’s reserves, but still the industry was not content, because these sources might be cut off in time of war, and because the biggest iron treasure of them all lay right here at home in the taconite deposits of our own Lake Superior region.

Now taconite is just about the hardest, toughest rock you ever saw. It is estimated that there are some 72 billion tons of it in this country, and about one third of that is iron. The trouble is that this iron is scattered through the rock in tiny particles, some of them so fine that they could be hidden under a single grain of face powder. And the problem has been to separate those particles of iron from the rock and to bundle them together by the millions into solid pellets that can be charged into a blast furnace. It is a problem upon which the laboratories of the entire industry have spent many, many years and many more millions of dollars, but today we think we’ve got it licked. We are building our pilot plants now, and after that will come a host of great ore factories to separate and concentrate, agglomerate and nodulize, this iron.

It seems to me that if we have really found the answer to taconite, as we think we have, and if we are permitted to develop our foreign deposits, as we think we can, then this indeed is one of the greatest contributions any private industry has ever made to any nation. Whatever else the history of this great country of ours may hold, I think it must then be recorded that the American steel industry, in these years of patient exploration and research, has given the people of America all the iron they will need for a long, long time to come.