Mr. Olds Regrets

Big Steel's suave, diplomatic Irving S. Olds sat down with reporters last week in one of his infrequent press conferences. Up popped the question which is a red-hot issue in the West: will U.S. Steel buy the $200,000,000 DPC plant at Geneva, Utah --which it now runs for the U.S.--and operate it postwar? Big Steel's chairman answered: DPC and the company have not discussed postwar operation. He had another dampener for Westerners, who passionately believe that operation of Geneva is an absolute "must" if the West's industrial growth is not to be retarded. He pointed out that Geneva's current production of 600,000 tons a year is mainly in ship plates, and said: Geneva cannot turn out the types of steel needed postwar until another $30,000,000 to $90,000,000 is spent on new finishing plants. He opposed such Government investment now, because: 1) construction costs are high, 2) it would not help the war. Furthermore, these additions could not be made economically until postwar markets are known. In the face of this, would Geneva be operated after the war?

Make It Run. The most optimistic answer to this question came, not from politicos or steelmen, but from the University of Utah's steel expert, Professor J. R. Mahoney. In a comprehensive 73-page study, he said: the cost of production of pig iron is lower at Geneva than in any other U.S. steel center. As the Geneva Works are the finest in the world, private operators should also be able to turn out steel far cheaper, if a reasonable capital value is placed on the plant. With new-facilities, he saw no reason why Geneva should not undersell the East, and help supply the 2,000,000 tons which the West bought from the East prewar. Most of this steel came by rail and water at costs that "exceed reasonable rates from the Utah plant." The two prime obstacles to private operation: 1) Geneva may not get the benefit of the low rail-water rates of Eastern steel mills, 2) the Government may ask a whopping price for Geneva. Professor Mahoney optimistically expects that favorable postwar Western rates can be worked out. As bait for buyers, he proposed: base the purchase price for Geneva on the size of its usable postwar capacity. Make the buyer pay more as the market expands and production rises. This would mean, at first, a drastic write-down in the price for Geneva. But the West would get cheaper steel than it did before the war. As this expanded the market, the Government would get more of its cash out of Geneva. Many Westerners feel that Big Steel might dicker on such a proposition.

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