Pittsburgh Plus

"There's no room in the steel industry for a little company so, by God. we're gonna be big." says Pittsburgh Steel Co.'s President Avery C. Adams.

Last week Pittsburgh Steel opened a new seven-acre cold rolling mill at Allenport. Pa., hard by a big, hot rolling mill opened last year. The new plant completed a four-year. $65 million expansion program that moved Pittsburgh up to twelfth among U.S. steelmakers. By more than tripling its total plant investment, Pittsburgh transformed itself from a high-cost, marginal producer to a modern, well-balanced company. All this is in keeping with Adams' business philosophy: "Either a company makes progress, or it falls behind."

Yaleman Adams. 56. onetime vice president of U.S. Steel, took over as president of Pittsburgh Steel four years ago, when the steel industry was just coming out of a slight slump. Pittsburgh's earnings had been spotty. When demand was high, Pittsburgh could sell all the semifinished steel (mostly ingots) it produced; other companies needed it for fabricating. But when the industry was running at 70% of capacity, Pittsburgh dropped to about 50%, near the break-even point; other steelmakers had enough of their own steel for fabricating needs. Adams' solution was to "get into the finishing business fast."

At his first meeting with the board of directors. Adams outlined plans for more open-hearth capacity, for blast-furnace improvements and new sheet mills for the industry's fastest-growing markets (cars, home appliances, etc.). When Adams estimated that all this would cost $56 million, the directors were flabbergasted. This was more than double the $27.5 million valuation of all the company's plants. But Adams persuaded them to et him go ahead, found it actually cost another $9,000,000.

From banks, an insurance company and two customers (Chrysler and Packard), he borrowed $40 million. The rest he hoped to get out of higher earnings. His optimism was well founded. For the next four years, earnings averaged $5.800,000 a year, compared to an average of $1,800,000 in the ten previous years. Part of the added income came from the new facilities, part from the purchase of the Thomas Steel Co., manufacturers of strip steel specialties.

Though Pittsburgh Steel has raised its steelmaking capacity 48% to 1,560,000 tons and its finishing capacity 82%, Adams is not worried about the current slump in steel. He thinks he will need more capacity before long. For this reason, the company's $28 million hot rolling mill at Allenport was laid out so that its capacity can be doubled at the cost of only a few million dollars.

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