Steel's Surprise

The U.S. steel industry, whose low production in 1960 was one of the economy's unhappy surprises, last week had a surprise of a different sort. Though the industry as a whole operated at only 66.8% of capacity for the year, companies reporting 1960 earnings not only showed themselves generally well in the black but in some cases actually ran up gains over 1959, when the industry was hit by a 116-day strike. They did so despite two wage increases (the last in December) that for the first time since World War II were not balanced by a rise in steel prices.

The performance was a tribute to the effectiveness of the industry's $7 billion modernization program over the last five years, which has made steelmaking so efficient that companies can make a profit at lower operating rates than ever before.

Up Profits. Bethlehem Steel Corp., the second largest U.S. steel producer, reported that its 1960 earnings rose to $2.52 a share from 1959's $2.44, and fourth-quarter earnings rose 133% from the third quarter, to 56-c-. All this was despite a 13% drop in fourth-quarter production. Jones & Laughlin ran up a 12% earnings gain in 1960 to $4.04 a share despite the loss of a $3,000,000 loan on a Cuban nickel ore project; its fourth-quarter earnings dropped slightly from 1959's 43-c- to 40-c-. Wheeling Steel's 1960 earnings rose to $3.14 a share from 1959's $2.53, but the company went $437,000 into the red in the fourth quarter. Earnings of Inland Steel dropped to $2.68 from $2.77 in 1959, when a special credit added 19-c- a share to earnings; its fourth-quarter income slipped from 78-c- to 51-c-. Republic Steel reported earnings down from $3.43 to $3.36 in 1960, and Crucible Steel's net slumped from $1.50 to 19-c-. Kaiser Steel reported a net loss of $8,216,000 for the year.

Up Production? Where does the steel industry go from here? Just when the industry could have expected a substantial pickup from auto orders, heavy production cutbacks in the auto industry robbed it of that hope. As a result, most industry experts now expect that no real upturn in steel can be expected until March or April. Steel companies have noted a general pickup in nonauto steel orders. Bethlehem Chairman Arthur B. Homer predicted that the industry in 1961 will produce between 95 million and 100 million tons of steel v. 1960's 99,260,000 tons. With its ability to make profits at low capacity, that could mean a not-so-bad year for steel.

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