Technology to the Rescue

Among U.S. industries, none has paid a higher price for hazy vision than steel. Lulled by the surprising strength of the market after World War II, American steelmen for years merely expanded in stead of modernizing their costly plants and processes. As labor costs climbed, they raised prices, in the comfortable conviction that anything as basic as steel would inevitably prosper with the U.S. economy. Instead, when world steel capacity finally overtook demand, the U.S. industry ran into a triple squeeze from severe foreign competition, Washington pressure to hold down prices and labor-cost increases. Result: since 1957, steel's profit margin has fallen from 17th to 37th among 40 leading manufacturing industries.

Last week the cost of complacency was still troubling the industry. While first-quarter profits spurted to new peaks for most other U.S. manufacturers, the eight largest steel companies reported a combined 22% drop from a year earlier in their first-quarter profits. U.S. Steel's $50,090,000 in earnings trailed the same period in 1965 by 32%, and Youngstown Sheet & Tube's $10 million was 35% behind.

Despite their problems, and partly because of them, U.S. steelmen are full of plans for the future. They have come to realize that hope lies less in insisting stubbornly on traditional price-cost formulas than in a new steel technology. Today, the industry is embracing new methods more rapidly than at any time since the turn of the century when the open-hearth furnace replaced Sir Henry Bessemer's converter as the principal method of steelmaking.

Steelmen are not only employing new technology to dig ore out of the ground more efficiently, they are also coming closer to realizing their old dream of melting, casting and shaping steel into useful forms in one continuous operation instead of in clumsy, start-and-stop batches. "Technological improvement," says Works Executive Richard Holtz of Wisconsin Steel, "is now a matter of life and death." Much of the $2.2. billion that the industry plans to pour into new plant and equipment this year (14% more than last) will go into four promising processes:

P: PELLETIZED ORE. When the industry was threatened by shortages of top-grade iron ore eight years ago, engineers perfected techniques that made it possible to tap a 300-year supply of low-grade taconite deposits in Minnesota's Mesabi Range. As a result, the industry has now built 14 concentrating plants in the U.S. and seven in Canada, is building ten more. The taconite is drilled out of its beds by 4,300DEG jet flames, crushed to powder, and magnetized to separate the iron from silica and other impurities. It is then washed and rolled into pea-sized pellets and baked to provide an ore 15% richer in iron than the ordinary stuff.

P: BASIC OXYGEN FURNACES. Developed in Europe, the oxygen process is now catching on so fast that it should oust open-hearth production as the U.S. norm by the end of next year. As a spectacle, the oxygen furnaces of such firms as Bethlehem, National, Republic and Kaiser out-inferno Dante. When a pipelike lance stabs the molten iron with a Mach 2 jet of high-pressure oxygen, the cauldrons burst into a maelstrom of 3,000DEG metal, boiling noxious smoke and spewing fireworks. The process not only enables steelmen to cook a batch of steel in 40 minutes instead of six to ten hours in an open-hearth furnace but produces metal with fewer strength-sapping impurities as well.

P: CONTINUOUS CASTING. The idea is so obvious that Bessemer filed a patent on it 101 years ago, but complex production bugs stymied its use until recently. The ordinary method of casting is to pour the metal into ingot molds to harden, strip away the mold, reheat the ingot and roll it into semifinished shapes. Continuous casting eliminates these cumbersome steps. A ladle atop a tower pours white-hot steel into a 2-to-4-ft-deep oscillatfhg copper-lined mold. As the mold bottom is withdrawn, an unbroken billet of barely crusted steel creeps down through cooling water sprays and over rollers to burners, which slice it, still red-hot, into handy lengths. The technique has cut production costs by more than $10 a ton for companies such as Roblin Steel of Dunkirk, N.Y., which helped pioneer the process in the U.S. Continuous casting mills are so much cheaper to build than old-fashioned facilities that tiny (80,000 tons a year) Roblin earned a 47% return on its net worth last year. Though continuous casting accounts for only 1% of the nation's 131 million-ton-a-year steel output now, some analysts predict that the system will grab 60% of U.S. production by 1975.

P: AUTOMATED ROLLING MILLS. In the most widely used of steel's new bag of tricks, everything in a half mile of machinery is computer-controlled. At hotstrip mills, such as Inland Steel's at Indiana Harbor near Chicago, a serpent-like tongue of red-hot steel is shot at up to 44 m.p.h. through rollers that squeeze it out from 32 to 3,560 ft. and thin it from ten inches to less than one inch in four minutes. At the end of the line, a coiling machine rolls the steel spaghetti into a compact bundle. This automated process not only saves manpower, but speeds up output and controls its quality with a precision well beyond that of human operators.

Battling back against market inroads by aluminum, plastics and concrete, steelmen are also pushing thinner but stronger wire cable, lighter structural girders, even tinless cans coated with resins. Having upped its research staff from 274 to 700 persons, Bethlehem Steel in the last year has brought out a corrosion-resistant sheet steel cheaper than some alloys, devised a plastic coating to protect suspension-bridge cables from the weather. U.S. Steel has just introduced a spiral nail which not only fastens lumber more securely but provides up to 29% more nails per pound than the smooth-shank variety. And Crucible Steel last week announced that it will build the world's first plant, at Midland, Pa., to make stainless steel in a continuous liquid process from chrome ore in a blast furnace to a slab-casting machine.

Thus, despite its problems with cheap foreign imports and its heavy dependence for sales on one market--autos take 20% of steel shipments--the steel industry is increasingly confident that technology can rescue its fortunes.

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