A New Boss for Big Steel

During 13 years as the steel industry's chief spokesman, U.S. Steel Chairman Roger M. Blough has become one of the best known American business men--if not the most conspicuously successful one. When Blough steps down next month at the mandatory retirement age of 65, he will leave behind an industry with a stodgy image and a company with a spotty record. In his tenure, U.S. Steel's share of domestic steel sales has slipped from 30% to 25%. Last week, hoping to reverse that trend sharply, the world's largest steelmaker picked a new management group. To succeed Lawyer Blough as chairman and chief executive, Big Steel's directors chose Edwin H. Gott, 60, an operations man who has been president for the past 18 months.

The aggressive new chief is likely to depart from Blough's cautious, somewhat remote style of leadership. More than that, the elevation of Gott--who started his career wearing the greasy overalls and grimy face of an industrial engineer in a U.S. Steel plant--represents a victory of the production men over the financial experts and lawyers who have traditionally run the company.

Other executive changes further underscored the policy shift. To succeed Gott as president, the board picked his longtime ally and fellow production specialist, Executive Vice President Edgar B. Speer, 52. Another executive vice president, R. Heath Larry, a lawyer and Blough protege who has long been considered his heir apparent, had to settle for the post of vice chairman. At 54, Larry is still young enough to have a shot at the top job later.

Terse Releases. Like many huge corporations, U.S. Steel is far too complex to be run by a single man. Under the new setup, Gott will direct the master planning, while the gregarious Speer will execute and expedite policy decisions. Larry, a poised and articulate public relations specialist, will handle labor negotiations and probably share with Gott the role of the industry's unofficial ambassador to Washington.

That job goes with the U.S. Steel chairmanship, but Blough never seemed fully comfortable in the statesman's role. American steelmakers have been beset by many problems, notably the rising level of steel imports, which this year will capture about 16% of the U.S. market. Privately, steelmen have often faulted Blough for issuing terse press releases instead of fully articulating the industry's position on trade and other matters of public policy. Blough's effectiveness in Government relations was further impaired by his 1962 steel-price showdown with President Kennedy--after which J.F.K. complained: "My father always told me that all businessmen were sonsofbitches, but I never believed it till now."

U.S. Steel, which in past years often seemed more interested in conserving cash than investing in modernization, has lagged behind some of its competitors in adopting the industry's two major postwar innovations: the basic oxygen process and continuous casting. When Blough took over in 1955, the company had sales of $4.098 billion and earnings of $370 million. Profits reached a record high of $419 million in 1957, but then began dropping off fairly steadily. Last year sales were $4.067 billion and earnings were down to $172.5 million. So far in 1968, the company has increased both sales (by 20%) and profits (by 15%), but part of the improvement was due to stockpiling by customers, who were hedging against a threatened steel strike earlier in the year. The company's stock, which hit a high of 108 7/8 in 1959, is now about 45.

Proper Credit. Blough sought to improve U.S. Steel's fortunes largely by paring its work force, consolidating its sprawling divisions and ending a costly overlap of sales offices. More recently he has loosened the purse strings in a somewhat belated effort to renew the company's plants. As part of a threeyear, $1.8 billion spending program that began in 1966, U.S. Steel has installed ten oxygen furnaces, is now phasing in one of the world's biggest continuous casting lines at Gary, Ind. It has also abandoned its lofty refusal to cut prices to meet foreign competition, and has begun offering some discounts.

All these efforts have helped raise U.S. Steel's share of the market a bit--from a low of 23.5% last year to the current 25%. Meanwhile the company has diversified fairly rapidly by expanding its petrochemical operations and by venturing into such varied fields as aircraft leasing and lumber products.

Much of U.S. Steel's recent activity bears the imprint of Ed Gott, who helped launch the modernization drive and has pressed for diversification. In replacing Blough, who will become a partner in the Manhattan law firm of White & Case, where he worked before joining U.S. Steel in 1942, Gott is naturally careful to give his predecessor proper credit. "We're only trying to complete what Blough started," he says. One of Gott's goals is to lift the company's share of the steel market back up to 30% within the next several years.

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