Corporations: Thunder in Pittsburgh

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Pittsburgh is a city with a head of steam, a heart of steel and one subject on its tongue. The steel chieftains ponder it in their exclusive Duquesne Club; the middle managers anxiously debate it in the Bar D'Or at the Penn-Sheraton Hotel; the mill hands chew it along with pretzels and pistachios in beery saloons from Ambridge to Donora. The subject: the change that is coming over the United States Steel Corp. Behind the closed doors of its executive suites, the world's largest steelmaker is shaking through the greatest reorganization in modern U.S. business. On July 1 the giant that steelmen everywhere know as "The Corporation" plans to announce that Phase One is over, that its thorough shifting of executives and sorting of divisional boundaries have been successfully completed.

"It Was So Obvious." The thunder has been rolling in almost every corner of a company that pours more steel (27 million tons a year) than all of Great Britain. Since 1960, U.S. Steel has cut its work force from 225,000 to 183,400. Some 3,000 executives—more than 10% of the company's management—have been released or sent to early retirement. Another 2,500 executives, who have what one U.S. Steel official calls "good records and good attitudes," have been rooted up from such outposts as Birmingham, Cleveland and Provo, Utah, leaving behind a surfeit of $35,000 to $50,000 homes. Transferred to Pittsburgh, they now overflow the 41-story headquarters into four other downtown buildings. They have been brought together as part of the corporation's effort to slice through its layer cake of supervisors, consolidate its sprawling divisions and end the costly overlapping of its sales offices. The company has united many of its independent accounting and engineering offices in central headquarters, reduced the number of its regional sales offices from 53 to 28, and ordered all salesmen to sell its full range of 10,000 kinds of steel instead of only a limited number. Says President Leslie B. Worthington: "It was so obvious that we could improve our effort by bringing together these divisions."

The obvious need is to increase sales and earnings. The company that controlled 65% of the nation's steel sales 60 years ago has slipped almost steadily to a low of 24.2% of the present booming market; each percentage-point drop now means a loss of $150 million in annual sales. Though U.S. Steel last year reached a three-year peak in sales ($3.6 billion) and earnings ($203.5 million), its profit as a percentage of invested capital (4.9%) was the lowest among the majors, and as a percentage of sales (5.6%) was just average. In comparison, National Steel, which is one-quarter the size, led by both measures with returns of 8.4% and 7.5%. In 1962 U.S. Steel was forced to cut its quarterly dividend from 750 to 500, and its stock closed last week at 53 ¾—less than half of what the price was five years ago.