Scrambled Steel

When Sir John Morison, 60, a canny Scottish accountant, took over Britain's steel denationalization program four weeks ago, he made it clear that he intended to drive a Scottish bargain. Said he: "Some people seem to think we're going to give the things away . . . We're after a good price, and we're going to get it." In his first sale last week, Bargainer Morison lived up to his word. In a $3,000,000 deal, he sold two-thirds of the stock of Templeborough Rolling Mills to British Ropes, Ltd. and William Cooke & Co., Ltd., at a higher price ($20.30 a share) than the government had paid for it originally ($19.60, in 3 1/2% government bonds).

But Sir John knows that denationalizing a socialized industry is almost as tough a job as unscrambling an egg. Even after selling two-thirds of Templeborough, for instance, the government still owns half of it. Reason: it still owns United Steel Companies, Ltd., owner of the remaining third of Templeborough; since United also owns half of William Cooke, its own third plus its half interest in Cooke's third totals 50%.

Profits & Risks. This was just a preview of bigger complications yet to come as Sir John tries to unwind a nationalized, $840 million network of 80 steel companies. What, for example, was to be done about the Steel Co. of Wales, owner of the Margam Works, Britain's most modern, comprehensive steel plant? Started in 1947, the plant was not completed until almost a year and a half after Steel Co. of Wales was nationalized. It has $47.6 million in issued capital, but is worth more than $196 million. The difference is borrowed money, which went into finishing the plant. Sir John plans first to retire the debt, revamp the capital structure. Even after that is done, investors will look twice before buying into the company. Its streamlined plant requires a steady high rate of production in order to show a profit. It would be hit first and hardest by even a small business slump, while older plants might cut back operations and still earn money. Thus, investors are apt to be chary of risking money on Margam.

If anybody can find sensible answers for these puzzles, Sir John seems to be the man. Born in Greenock, on Scotland's Firth of Clyde, he "drifted into accountancy," probably because his father was in it. Sir William McLintock, head of Britain's famous Thomson, McLintock firm, soon drafted the "drifter" as his protege, moved him rapidly up to a partner. During World War II, Morison ran the Ministry of Supply's financial affairs and served on the vital War Damage Commission, which decided how much should be paid to thousands of blitzed British property owners. He was knighted for his work.

The "City's" Duty. In a sense, Sir John is now doing the same job for Britain's ex-steel shareholders, bombed out by the Labor Party's nationalization blitz. He is seeing to it that the former owners of the steel-company properties get the first chance at rebuying them, and, where the bids are fair, sees that they get them.

Sir John's first major challenge will be disposal of what he calls the "Big Seven," some of the biggest British steel firms.* So much capital will be required to buy their shares that only London's professional traders in the "City" (London's Wall Street) could swing it. Yet he must also guard against the shares falling into so few hands that cries of "monopoly" might arise. But Sir John is confident that the traders will buy the stock and meet their responsibilities in carrying off the return to free enterprise successfully. Says he: "The City knows it's got to take them. It's on the spot."

*Colvilles, Dorman Long, Lancashire Steel, Stewarts and Lloyds, United Steel, Whitehead Iron and Steel, and John Summers & Sons.

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