Monday, Apr. 27, 1953
New Boost?
Steelmen last week started making noises about a new price boost. In Pittsburgh, National Steel Corp.'s Chairman Ernest T. Weir called in reporters and told them: "The [steel] industry basically does not make enough money. Its prices are too low." Armco's President Weber W. Sebald said that his company is studying its price lists, and expects to make some upward adjustments soon. At a Miami convention of steel distributors, U.S. Steel's Chairman Ben Fairless referred to the "sub-competitive price" of steel, and said: "There's no fat left on our financial bones . . . Since 1940, U.S. Steel's employment costs have risen 155%. The cost of the goods and services we bought has increased by 138%. But the price of steel has gone up only 87%."
Mindful of the possible repercussions on their approaching wage negotiations, steelmen were not thinking in terms of a flat, across-the-board boost; they had in mind individual adjustments on different kinds of steel. They would probably have little trouble getting higher prices from their customers. Even though steel output hit a new record of 28,900,000 tons in 1953's first quarter, supplies were still tight. Such big users as the automakers were still resorting to high-cost "conversion" deals (i.e., buying steel ingots from one company and having them rolled, for a fee, by another).
Many a steel user had hoped steel would be plentiful in the third quarter, but even those hopes now seemed dim. In an effort to overcome the ammunition shortage (TIME, March 16 et seq.), the
Government told steelmen to earmark 488,000 tons of steel for shells in the third quarter-- 1/3 more than in the second.
Government economists figured that a boost of $3 or $4 a ton in steel would cost the U.S. economy, directly and indirectly, about $500 million. The cost of living, however, would be little affected. One reason is that steel products comprise only a small part of consumer purchases; another is that such a price boost would add little to the cost of most consumer items. But the biggest reason is that makers of appliances, cars and other civilian goods, although still scrambling for steel, are in such hot competition that few would dare pass on any added cost to their customers. Said a top executive of Cleveland's Perfection Stove Co.: "If steel prices advance and we don't increase our prices, we'll be faced with the job of trying to increase our volume in a difficult market. If we do raise prices, our volume will drop. Sales are not coming easy. Some day this whole thing could blow up in our faces."
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