Kaiser Plans a Steel Plant

If the steel companies do not wish to expand their capacity, the fabulous Henry J. Kaiser of Boulder Dam fame would like to do the expanding for them.

Not content with cracking the West Coast cement market and invading the never-before-invaded magnesium industry (TIME, March 3), he applied to OPM last week for a certificate of necessity to build $150,000,000 worth of steel mills in the West. His plans include blast furnaces in Utah for Rocky Mountain coal and ore; electric furnaces near Bonneville Dam to use cheap Government power to convert the Utah pig and scrap iron into high-grade steel; a plant in Southern California to use electricity and natural gas (first time on a commercial scale) to smelt local ore; a plate mill near Los Angeles. He thinks he could complete this setup in twelve months, start producing 1,500,000 tons of steel a year, adding 2% to U.S. capacity.

More important, Kaiser's plan would more than double production west of the Rockies, where today there are seven plants (two owned by U.S. Steel, three owned by Bethlehem, two independents) with 1,029,670 tons capacity. Even before the defense boom, Coast consumption far exceeded its capacity; now, with a terrific expansion of shipbuilding, demand and supply are farther apart than ever. A big local steel industry to make the West independent of the East has long been a pet idea of the Army, was urged by President Roosevelt in 1939. Existing steel companies say it would cost more to make steel on the Coast than to ship it from Chicago. But Kaiser thinks his setup, with no obsolete equipment to carry and with cheap gas and power, could actually make a profit at reduced prices just as his cement plant has cleaned up on bargain rates.

Kaiser's immediate interest in steel was raised to white heat by delivery delays which are making it impossible for him to perform his favorite trick of finishing contracts ahead of schedule. At the Richmond yards of his Todd-California Shipbuilding Corp. tank-top steel promised the first of the month did not arrive; the best Kaiser could get after protesting loudly to the steel industry and 0PM was a promise that it would be only about 30 days late. When he tried to buy 5,000 tons of steel for barges to work on a $10,000,000 breakwater contract at San Pedro, the best delivery offer he could get was next December (OPM has now promised to get it for him in four to eight weeks). He figures that there are plenty of other West Coast buyers as eager as he for quickly available steel.

Whether Kaiser can go ahead with his plant program depends on 1) whether the Government will help his financing with a big chunk of RFC cash, 2) whether the Government will give him priorities on the steel he needs to build his plants. With the Army, the President and several busy New Dealers keen for more West Coast steel, he figures he has at least an even chance for both. If not, he hopes that the possibility of new competition will help convince established steelmakers of the need for expansion.

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