A Bath in Steel

As a collector and rebuilder of limp companies, California Industrialist Norton Simon owns an unrivaled record of success. From the tomato-paste base of his Hunt Foods, he has strung together an empire of two dozen corporations from publishing (McCall Corp.) to soft drinks (Canada Dry) to containers (Knox Glass). Almost every company that Simon has bought into has prospered and he has hung on to all of his major acquisitions.

Except for one. Last week Simon conceded a resounding defeat in his effort to master steelmaking. At a loss of some $654,000, Simon gave up 60% of his holdings in troubled Wheeling Steel Corp. and turned the job of reviving its fortunes over to Pittsburgh Steel Co.

For $21.50 a share, or $4.20 less than he paid, Simon sold 77,353 shares of Wheeling to Pittsburgh Steel, plus an equal amount to the family of the late Charles F. Kettering, the General Motors inventor and executive. Along with three other Simon-picked directors (Simon himself resigned as chairman and director last November), Wheeling Steel President Robert Morris announced his resignation. In as chairman and chief executive of Wheeling will go Allison R. Maxwell Jr., 52, a gregarious salesman who has held the same job at Pittsburgh Steel since 1956.

Two-and-a-half years ago, when Simon moved into Wheeling, now the nation's tenth largest steel producer, he shook up the company by forcing five directors off the board, tossing out the chairman-president and hiring Morris away from Monsanto Chemical Co. to take charge. Amid that upheaval, Wheeling was unable to attract new seasoned steel executives. Though the company had borrowed $145 million from banks and insurance companies for plant modernization, it needed still more renovation to run efficiently. Over the past two years, Wheeling piled up losses of $12.4 million.

"The Constructive Way." On top of criticism from the lenders when Wheeling failed to meet its repayment schedule last year, Simon came under pressure from his Hunt associates to devote his energies to more promising parts of his realm. To nurse Wheeling back to health, Simon agreed to let Pittsburgh Steel take charge because, said he, "it was the most constructive way out."

The two companies should make a good fit. Pittsburgh, the nation's 14th largest steelmaker, lacks modern galvanizing facilities that Wheeling has in quantity. Pittsburgh's finishing capacity should help Wheeling recapture lost customers. Best of all, the two plants are linked by cheap water transport, the Ohio and Monongahela rivers. Despite his selloff, Simon kept a 4% interest in Wheeling (100,000 shares). If the price climbs eleven points from last week's close of 21 3/8, Simon could yet escape from his bath in steel with a profit.

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