ROGER BLOUGH

THE man who has the biggest say over what wages the steel industry will--or will not--pay in its new steel contract is Roger Miles Blough (rhymes with now), 55, the tough-minded chairman of U.S. Steel. Blough, who sternly calls for "renewal of the present contract with no rise in wage rates for one year," has the sinewy build (6 ft., 175 Ibs.) and face of a steel puddler. But he is not cast in the steelmaker's bluff, up-from-the-mills mold. He is an "outside man," a lawyer who got to the top by applying his logician's mind to the problems of heavy industry. Reserved in manner, quiet in speech, he runs Big Steel's $3.7 billion empire and its 230,000 employees with an almost academic air. "Blough," says one steelman, "is a real, warm, likable IBM machine." Unlike former Chairman Benjamin Fairless, who thought one of the ways to labor peace was to tour plants with Union Boss David McDonald, Blough believes in separation of management and labor. Grouses one union leader: "Blough is a man you don't get to know much about. He stays in his ivory tower."

Roger Blough's upbringing was anything but ivory tower. The son of a poor Pennsylvania Dutch truck farmer, he got his schooling in one-room schoolhouses, spent his free time stoking stoves and cleaning blackboards for $5 a month to help the family get by. He went through high school and Susquehanna University, taught school and coached basketball for three years before he worked his way through Yale Law School, graduating with top marks in 1931.

In those Depression days, the young lawyer had to canvass ten firms before he got his first offer. When he applied for a job at the Manhattan law firm of White & Case, which numbered U.S. Steel among its clients, the official who interviewed Roger Blough noted: "First-class chap; good, clean-looking, talked intelligently. We would probably make no mistake." Irving Olds, former chairman of U.S. Steel, who moved into the company from White & Case himself, puts it another way: "Blough was one of those fellows who turn up no more than once in ten years."

Blough, hired by White & Case, got his first big chance when the New Deal's Temporary National Economic Committee launched a congressional study, which was a veiled attack on Big Business. Blough was put in charge of a task force of 20 lawyers to make Big Steel's case, did so well that, at 38, he was named general solicitor for U.S. Steel itself.

Blough streamlined the legal department, went on to important roles in labor negotiations, financing, a hundred other tasks. Within ten years he had scrambled through the corporate hierarchy so fast that when Ben Fairless shifted over from president to chairman in 1952, a special post of vice chairman was created for Blough and he became, in Fairless' words, "my right bower." Three years later, when Fairless retired, it was a foregone conclusion that Blough would be the new boss.

STEELMEN credit him with the major reorganization of Big Steel that eliminated the sprawling semi-autonomous subsidiaries, turned them into divisions of one central corporation that took responsibility for both policy and production. He pushed hard for a standard cost system throughout the company. He expanded its savings plan, whereby the company matches every dollar saved by its nonunion employees (the union turned down the plan) with 50-c- of its own, and he broadened the incentive program, which now covers 75% of all employees either through cash awards for production ideas or through stock options. Blough, who himself picked up most of his 19,302 shares of U.S. Steel stock (worth $1,800,000) through options, considers the incentive program "one of the great factors in the progress of the corporation." He points proudly to the fact that U.S. Steel's first-quarter profit of 9.9% on sales was the highest among the industry's major companies.

In Pittsburgh, where he spends a third of his working time at the operating headquarters, his home is a suite of rooms atop the Mellon-U.S. Steel Building; in Manhattan, his home is a Park Avenue apartment minutes away from the corporate policymaking headquarters. He often starts his day at 4 a.m. or 5 a.m. sitting quietly in his den or kitchen working out corporate problems on a yellow pad of legal paper, and his workday rarely ends before 7 or 8. His free time is generally spent with his wife in a sprawling Victorian house in Hawley, Pa.; it is her family home and they were married there, have never given it up. He likes trout fishing, golf (with luck, under 90), and singing hymns (he is a Presbyterian) and folk songs. He is an enthusiastic cook. Special ties: doughnuts, Pennsylvania Dutch coffeecake, and fluffy pancakes--for which his secret is a pinch of salt in the pan.

Blough found time to lay out his business philosophy in three lengthy lectures delivered recently at Columbia University. He feels that it is time to "raise the question as to whether the original purpose so many sincere people had in fostering the cause of unions has somehow gotten out of hand. The glacierlike forces of a powerful labor movement, including unions representing workers in hundreds of competitive groups, adopt objectives that largely contradict the competitive principle itself." They also imperil profits, the chief means to improve production. "All consumers benefit from improved tools of production, which profits must pay for, and competition is what provides the environment in which profits are created." Yet today, says Blough, wages and costs have spiraled so far out of line that enough profits cannot be accumulated to buy the needed new tools.

BLOUGH argues that the dollars corporations earn as profits have remained virtually stable for ten years, while wages have more than doubled throughout U.S. industry. In steel alone, employment costs have jumped at the compound rate of 7.9% each year since 1940. The industry still made a profit of 6.3% on its sales last year (an even better 8.7% for U.S. Steel), but Blough argues that profits still fall far short of the cash needed for expansion. U.S. Steel alone had to borrow $600 million in the last five years. As for inflation, Blough considers congressional suggestions of wage and price controls "sheer nonsense." Nor does he agree with McDonald's argument that the best way to fight inflation is to cut prices, starting with steel. He cites the fact that U.S. Steel cut prices $1.25 a ton in 1948 when inflation had pushed living costs up 14.5% the year before. Costs kept climbing so fast that the price cut had to be canceled within three months. Says Blough: "The problem isn't prices; it's costs."

To Blough, the issue is vital in view of the global challenge facing U.S. industry. Says he: "We are only in the first skirmishes of a battle of production that is destined to rage for many decades. Whether or not America emerges triumphant depends in large measure on the virility of American industry. And industry's strength depends directly on our ability to win the understanding of Government, of labor leaders, of investors in a national effort to encourage the investment of capital necessary to develop and acquire the finest tools of production on earth."

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