Embarrassment of Riches

The chief executives of the three largest U.S. steel companies faced a task that was a mixture of. pride and embarrassment. With the steel union in its third week of a strike for higher wages, they went before reporters and microphones last week to announce the biggest sales and earnings in their history. The figures for the top eleven steel firms that have reported for the half year were so extraordinary that they immediately set off a new duel between management and labor, brought widespread suggestions that the industry consider a cut in steel prices to share its profit performance with the consumer. The companies reported total net income up 140% over the first half of recession 1958, while average earnings per share of the eleven rose 420%.

Broken Records. U.S. Steel Chairman Roger M. Blough, who has led the industry's fight against higher wages for steelworkers, reported that Big Steel's profits reached record levels of $2.64 per share in the second quarter v. $1.25 in the same quarter last year, raising half-year earnings 96% to yet another record: $4.50 per share for the half-year v. $2.29 last year. Steel sales for the quarter rose to a record $1.4 billion, hiking first-half sales $1.1 billion above last year to a record $2.5 billion.

Bethlehem Steel set new records with second-quarter profits of $1.59 v. 61/ last year, first-half profits of $2.64 v. $1.13 last year. President Arthur B. Homer reported that Bethlehem's billings of $1.4 billion for the first half also touched new highs; so did production, which was running at 97% of capacity just before the steel strike. From Republic Steel Chairman Charles M. White came another record report to round out the picture: the nation's third largest steel firm ran up quarterly earnings of $2.57 a share v. 98-c- last year, half-year earnings of $4.28 a share v. $1.53 last year. Republic's half-year production (5.6 million ingot tons) and sales ($785 million) also broke all previous records.

Apples & Pears. Rarely has good news been presented with more furrowed brows. Big Steel's Blough astutely cautioned that high second-quarter earnings reflected "an unusually high demand artificially stimulated by our customers' fear of a steel strike." Comparing current earnings with profits in recession 1958, said Bethlehem's Homer, was comparing "apples and pears." Republic's White called his company's second-quarter record "to a major degree a result of robbing business from the third quarter." Such profits, he said, must be "the regular order of business" if the industry is to modernize and grow, compete against foreign firms and other materials at home. But the industry's argument did not stem the union's expected attack. Cried Steelworkers Boss David J. McDonald: "The astronomical profit figures completely demolish the excuse the companies have used to force this shutdown. How can they possibly justify a heartless denial of needed benefits to their workers, who have produced this mammoth pile of profits?"

Veiled Warnings. McDonald's words failed to soften industry's determination to hold the line on wages. To head off any background maneuvering by McDonald to win Government intervention--and serve new notice that the industry is prepared to hold out during a long strike--Big Steel's Blough joined a pledge to hold prices with a veiled warning to the Government not to interfere in negotiations. Said he: "Whatever the length of the strike, and whatever the eventual outcome of the negotiations--so long as they are voluntary--we in U.S. Steel do not intend to raise the general level of our steel prices in the foreseeable future."

Blough got quick backing from Bethlehem's Homer, who said that his company would like to cut steel prices "eventually" if it can win the contract changes in local working practices demanded by the industry. Homer called the industry's experience with Government fact-finding boards "not a very happy one," obliquely warned Labor Secretary James Mitchell, who stepped into the fray fortnight ago as a one-man fact-finding board, to stick to assembling the facts. Even a "token" wage hike, said Homer, would be inflationary because it would cause increases in such industries as aluminum, which last week extended its contract with the steelworkers' union until 30 days after a steel-strike settlement (with any wage increases retroactive to Aug. 1).

By week's end, Labor Secretary Mitchell had heard enough. In a sizzling statement, he accused both sides of doing "very little to measure up to their own responsibilities to the American people and to the thousands of workers who are affected by the strike. They have made no serious, conscientious, continuous efforts to reach an agreement. They have resisted efforts of the Federal Mediation and Conciliation Service to hold more face-to-face meetings. This is no way to bargain. I know that the American people join me in urging them to get down to serious collective bargaining and to meet together daily to reach an early, just and equitable settlement."

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