Lord of Steel

The British Steel Corporation, a nationalized giant, last week opened for business after a long and turbulent incubation period. Named to head it was a chap about whom his government boss, Minister of Power Richard Marsh, exulted: "He's first-rate. He's got enormous intelligence, breadth, which enables him to get on with unions and everybody else. He's very dynamic, and he works long hours."

For the Labor Government, which nationalized steel over the anguished outcry of industry and the Conservative minority, the new man is an astonishing--but shrewd--choice. He is an Etonian, a Tory and a peer--Julian Edward Alfred Mond, 42, third Baron Melchett, grandson of Alfred Mond, founder of Imperial Chemical Industries Ltd., and a successful merchant banker and gentleman farmer in his own right. Thus, in case of fiasco, Labor will always be able to blame a Tory. "It's quite a fascinating thing," he said softly, "to be asked to do something as large and as complicated for one's own country."

Learning about Steel. It took some asking--three months of what Minister Marsh described as "chasing and persuading"--to land him in the job. The quest began after it became obvious that nothing could stop Labor's comfortable parliamentary majority from acting at last on a basic commitment to nationalize steel. Convinced that the bill is broad enough to permit free action, Lord Melchett finally agreed to serve. A week later he quit his bank, Hill Samuel & Co., Ltd. and was hard at work learning about steel. Said he: "The job now is for capable people--Tory or anything else--to make sure it gets off on a proper footing and works well."

Flanked by his hand-picked directors in London's World Commonwealth Society Hall, Lord Melchett outlined his plans. The 14 steel companies that were officially taken over by the government account for over 90% of Britain's 32 million-ton steelmaking capacity, control 60% of its known iron-ore deposits. British Steel Corp. will be a single company, one-third larger than the next biggest steelmaker in Europe (August Thyssen-Hiitte), divided into four geographical groups. "We tried to build the thing logically, taking into account geography, product and raw-material supply," said Lord Melchett.

Formidable Challenge. The larger production units were created in the hope that British steel will become more competitive. For the time being, all 14 nationalized companies will continue to exist "supported and advised" by Lord Melchett's four boards of regional directors. They will then gradually take over the functions of individual company boards. Duplication will--hopefully--be eliminated from the start, and services and supply of raw materials streamlined to attain greater efficiency. The four units will not compete with each other in price, but in service, quality and productivity. "We will throw up real savings in a short time," Lord Melchett says, but he admits that within the present domestic and foreign economic context the new venture is "very much in the lap of the gods."

The challenge facing British steel is formidable. Worldwide unused steelmaking capacity is likely to persist and reach 60 to 70 million tons a year by 1970. Struggling to keep above water, both Germany and France are forming larger steel groups of their own. British steel plants, sorely in need of modernization, are working at only 70% of capacity this year. Lord Melchett, however, exudes optimism. He says: "So often people look at the railways, the post office, electricity and gas, and hold them up as examples of how bad it is for industry to be nationalized. Well, it's not going to be like that with steel."

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