Ready, Get Set, Scramble

For months the tightening steel shortage has posed an increasingly tough problem for the U.S. Government. Should it allocate steel or let industry scramble for supplies under the normal peacetime rules of a free economy? Last week the Administration made its decision. In Washington Defense Mobilizer Arthur S. Flemming flatly refused to set up a priority system to ease steel shortages in the booming U.S. shipbuilding industry on the ground that it would amount to Government interference in a civilian-market shortage. That meant that shipbuilders, who are getting only 40% of the steel they need, will have to fight for a place in line, and few suppliers are likely to favor the feast-or-famine shipyards over such big, steady customers as automakers and the heavy-construction industry.

Goals Filled. ODM's Flemming also refused to issue fast tax write-off certificates to help expand production of steel and five other goods (commercial aircraft, aviation fuel, titanium melting, titanium processing and taconite iron ore). The defense expansion goals have been filled, said Flemming. Actually, more plant expansion now would make steel even scarcer by diverting it to new plants that would not be in production until 1960.

Though ODM's decision sorely disappointed steelmakers, there were few cries of real alarm. Bethlehem Steel Corp. and Youngstown Sheet and Tube Co. announced that they would review expansion plans; Jones & Laughlin Steel Corp. said that it would be forced to reappraise plans for a new $250 million mill planned for Houston. But most steelmen had already decided that they have to expand one way or another to meet their growing markets. Republic Steel Corp. will still continue with its $187 million expansion program; so will Pittsburgh Steel Co., National Steel Corp., Armco Steel Corp. and Inland Steel Co., which have expansion plans totaling almost $500 million. U.S. Steel also is expected to keep right on with expansion of the huge Fairless Works in Bucks County, Pa., though it may postpone other expansion plans.

Cash Needed. Where the steelmen will get the funds in the tight money market was another question. Last week Lukens Steel Co. produced an idea: it plans to finance its $40 million expansion program through 20-year loans from General Electric Co. and other big customers. Most other steelmen will probably depend on earnings to finance the new plants, are expected to boost prices to get the extra cash they need. At week's end U.S. Steel, Bethlehem and Inland Steel hiked prices 1% to 4% on specialty items for the second price rise in six months.

This file is automatically generated by a robot program, so reader's discretion is required.