Grace Steps Down

To Eugene Gifford Grace, life means competition. And in any kind of competition--from the baseball diamond to the steel mill--he likes to lead the team. For 41 of his 81 years. Gene Grace not only captained giant Bethlehem Steel Corp., but was often the industry's most articulate spokesman in its bouts with Big Labor and Government. Last week, seven months after suffering a stroke, Chairman Grace stepped down as chief executive of the company that he had molded into the nation's second-biggest producer of steel, and its biggest shipbuilder.

In tribute, Bethlehem Steel made Grace honorary chairman, and abolished the post of chairman. Named chief executive was Grace's longtime (since 1945) second-in-command, President Arthur Bartlett Homer, 61, a precise and analytical Beth Steel veteran (since 1919) who bossed Bethlehem's World War II shipbuilding program. One of Homer's first pronouncements in his new job: Grace is recovering from his illness, is itching to return as an active adviser.

15-c- an Hour. Wiry, thin-lipped Gene Grace first showed his competitive drive while working for pennies in his father's Goshen, N.J. general store. He saved enough to attend Lehigh University in Bethlehem, Pa., where he was class valedictorian ('99) and captained the baseball team for two years. Just before graduating as an electrical engineer, he had two job offers--one from the Boston Braves, the other from small Beth Steel. Grace calculated that a career as shortstop would end at 35 at best; so he went to Beth as a 15-c--an-hour electric-crane operator, moved from one muscle-straining job to another. In 1906, Grace's drive struck the fancy of Beth's Boss Charles M. Schwab, who picked him to overhaul the company's important, but mismanaged, ore properties in Cuba. Grace did so well that he became the star of Bethlehem. By 1916, ten years after he traded overalls for a white collar, he was president.

Grace drove other men as hard as he drove himself. He sent out photos of himself to his plant managers, autographed: "Always More Production." He pushed Beth Steel's famous incentive plan by which workmen were carefully graded on their output, and the top producers were promoted to bonus-paying jobs.

$ 1,623,000 a Year. Yet Grace also had his troubles, with labor and stockholders. They complained when in depressed 1930 Grace got a bonus of $1,623,000 for 1929. In the mid '30s Grace, with U.S. Steel, led the industry's opposition to the unionization of workers and to the New Deal. He waged a loud battle against Social Security and the closed shop.

When World War II came, Grace went to work furiously as usual. Beth Steel became one of the top U.S. war contractors, turned out 73 million tons of steel, built 1,127 ships, repaired or overhauled 37,000 others. More than any other civilians, Grace and his lieutenant, Arthur Homer, got the credit for building a two-ocean navy.

There were other rewards. For the last 30 years, Grace has ranked among the ten highest-paid U.S. businessmen. Last year his $809,000 salary and bonus topped the nation's list. But stockholders felt that he had earned it. During his 41-year regime Grace boosted Bethlehem's capacity from 1,000,000 tons to 20 million tons a year, recently started a $300 million expansion that will add another 3,000,000 tons. As he stepped down, Beth Steel was in glowing health. While other makers operated at about 80% capacity, Bethlehem was pouring 91%. And for the first nine months, the company announced last week, Beth Steel's sales hit a record $2,002,000,000 while earnings also reached a new peak of $144 million.

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