Continental Steel Corporation

The Continental Steel Corporation was United States steel producer from 1927 until 1986. The company was created on June 21, 1927 through the merger of the Kokomo Steel and Wire Company (founded in Kokomo, Indiana in 1901) with the Superior Sheet Steel Company of Canton, Ohio, and the Chapman Price Steel Company of Indianapolis. Among the original eleven directors was John E. Fredrick, who had been an organizer of the Kokomo Fence Machine Company in 1896 and had served on the board of directors of the Kokomo Steel and Wire Company. Fredrick served as first Chairman of the Board of Continental Steel, whose headquarters were established in Kokomo. The Kokomo operations of this corporation, however, continued to employ the Kokomo Steel and Wire name until 1944.[1] Continental Steel was dissolved in 1986, due to bankruptcy.

Early operations

Within a year of its founding, the various plants of Continental Steel employed 2288 individuals, a new bar mill was in operation, and the firm was preparing to produce its first steel. Continental Steel would become at one time the largest employer in Kokomo, with a workforce approximating 3000 at its peak. In 1929 the construction of a sheet rolling plant and sheet galvanizing units at Kokomo were authorized, with production in the sheet mill beginning that summer.[2] Continental was able to surmount the rigors of the great depression of the 1930s, and in 1936 its stocks, listed on the Chicago Stock Exchange since 1929, were admitted on the New York Stock Exchange. Its earnings for 1935 had reached over one million dollars, with total assets valued at more than $18,000,000.[3] During the Second World War Continental produced large tonnages of barbed wire, nails and sheet steel for military use, and it provided material for products manufactured by defense industries. These included aerial bombs, fuel containers and landing mats for air strips.[4]

Expansion and growth

In 1946 and 1947 Continental Steel sold off its Canton, Ohio and Indianapolis sheet mill facilities, having decided to focus on the manufacture of finished products at Kokomo. The 1950s witnessed considerable expansion: a new continuous rod mill started operations in 1953, in 1955 a welded fabric department was housed in a new facility; the mail mill was modernized and a new nail warehouse was built in 1957; 1959 saw the production of a new item, high carbon wire. By 1963 Continental Steel's open hearth capacity had grown to 420,000 net tons through the enlargement of existing furnaces. The prospering company was producing a wide range of products including fences, gates, posts, welded wire fabric, nails, a variety of wires, clothes lines rivets, and copper steel (Konik) sheets. [5]

Penn-Dixie Corporation take-over

An important turning point for the company took place in the late 1960s. In 1968 Jerome Castle, president of the Penn-Dixie Cement Corporation of New York, acknowledged that his company was in the process of purchasing hundreds of thousands of shares of Continental Steel; by 1969 a takeover was completed and the Kokomo operations formally took on the Penn-Dixie name five years later.[6] This takeover was part of a current trend within the American steel industry in which individual steel companies were merged with conglomerates. Ten such mergers took place in 1968 and 1969, including the absorption of Jones and Laughlin Steel by the Ling-Temco-Vought Corporation, and the merger of Youngstown Steel with the Lykes Corporation.[7]

Challenges and setbacks

The next decade and a half proved to be a period of tremendous challenges and setbacks for Continental Steel and for the American steel industry as a whole. Despite a worldwide steel boom in 1973–1974, American producers were confronted by labor disputes, the costs of modernizing an aging infrastructure, environmental issues and foreign competition from Europe and Japan.[8] In 1971 Continental Steel experienced a contentious strike involving the issue of pension funds. Critics accused Castle of mismanagement and of wresting maximum profits from operations without investing sufficient capital into expansion and modernization. In 1977 Castle was dismissed from his posts at Penn-Dixie for selling Florida swampland to the corporation far above its actual worth. Two years later he was convicted of defrauding Penn-Dixie in this conspiracy and sentenced to 15 months in prison.[9]

Bankruptcies and demise

Troubles continued to plague Penn-Dixie. In 1980 the firm filed for Chapter 11 reorganization bankruptcy. On January 29, 1982 the company was able to obtain concessions from its United Steelworkers local that reduced labor costs by $2 an hour, and it agreed to pass on the savings to its employees once the company attained profitability.[10] In March, 1982 it emerged from bankruptcy, having shed all its operations with the exception of the steel division. The company reorganized under the name Continental Steel Corporation, with its headquarters being relocated from New York to Kokomo. Expenditures were made in 1984–1985 on a new continuous rod mill and a continuous billet caster in hope that this would salvage the company, but the business continued to decline. In late 1985 Continental Steel again sought Chapter 11 bankruptcy, hoping for another opportunity to reorganize, but in February of the following year its creditors were successful in having the Chapter 11 reorganization converted to Chapter 7 liquidation. On February 17, 1986 Continental Steel shut down what remained of its operations in Kokomo, leaving over 700 workers jobless.[11]

Pension and environmental controversies

Even after its closing Continental Steel generated controversy. Embittered workers, who had earlier been led by management to believe that their pensions were secure, discovered that this was not the case. The dispute that ensued was only partially resolved through compensation provided by the Federal Pension Benefit Guaranty Corporation.[12]

In its last few years of operation Continental Steel had encountered problems with the Indiana Department of Environmental Management (IDEM) and the federal Environmental Protection Agency (EPA) due to alleged improper disposal of hazardous wastes and PCBs, and in March 1989, the 183-acre (0.74 km2) area that it had occupied was declared a Superfund site, with the EPA and IDEM sharing responsibilities for a massive, costly cleanup which would include the decontamination and demolition of its plant buildings in 1999–2000. While considerable progress has been made over the past two decades, decontamination efforts continue, accompanied by vigorous discussion and debate in Kokomo concerning what use might be made of this property in the future.[13] As of 2016, the plans for the site are to use it as a solar energy park, which should be in operation in 2017. [14]

References

  1. ↑ Continental Steel—Its Origin and History,rev. ed. (Kokomo, Indiana: Continental Steel Corporation, 1963), 3–13; "Continental Steel," Kokomo Tribune, February 23, 1996, D2.
  2. ↑ Continental Steel, 15–17; Kokomo Tribune, July 27, 1929, 9.
  3. ↑ Continental Steel, 17–20; New York Times, March 26, 1936, 37.
  4. ↑ Continental Steel, 20–21.
  5. ↑ Continental Steel,21-24-36.
  6. ↑ "Continental Steel," Kokomo Tribune, February 23, 1996, D2; New York Times, July 23, 1968, 47 and July 25, 1968, 47; Kokomo Tribune,January 7, 1969, 20.
  7. ↑ William T. Hogan, S.J., World Steel in the 1980s: A Case of Survival (Lexington, Massachusetts: Lexington Books, 1983), 113; William Scheuerman, The Steel Crisis: The Economics and Politics of a Declining Industry (New York: Praeger Publishers, 1986), 73–75.
  8. ↑ Hogan, 1–2, 97, 191–217.
  9. ↑ "Continental Steel," KokomoTribune, February 23, 1996, D4; "Penn-Dixie Industries may look like a slum, but to Jerry Castle, it's Fat City, U.S.A.," Forbes, June 15, 1976, 21–23; Joel Kotkin, "A Commitment Forged in Steel, Inc.,5 (June, 1983), 82–83; New York Times, May 27, 1977, 70 and August 30, 1979, D1; Dan Dornman, "An Invitation for Dining, Disco-Dancing...and the S.E.C." New York, May 9, 1977, 12–13.
  10. ↑ John P. Hoerr, And the wolf finally came: The Decline of the American Steel Industry (Pittsburgh: University of Pittsburgh Press, 1988), 65; New York Times, April 8, 1980, D5.
  11. ↑ Wall Street Journal, November 26, 1985, 1; "Continental Steel," Kokomo Tribune, February 23, 1996, D2-D3; Kokomo Tribune, October 12, 1986, 4.
  12. ↑ Kokomo Tribune, February 27, 1986, 1; "Continental Steel, Kokomo Tribune, February 23, 1996, D4.
  13. ↑ "Continental Steel," Kokomo Tribune, February 23, 1996, D3-D5; Kokomo Tribune, June 9, 2005, A1, A10; June 25, 2006, C1, C6; June 13, 2007, A10; New York Times, November 10, 2003, A12; Indiana Department of Environmental Management, "Second Five year Review Report for Continental Steel Superfund Site, City of Kokomo, Howard County, Indiana," ; Scott Smith, "Continental Steel Cleanup Moves to Quarry," June 8, 2008,
  14. ↑ "Plan Commission approves solar park at former Continental Steel site". Kokomo Tribune. 15 June 2016. Retrieved 21 June 2016.

Books

Continental Steel—Its Origin and History. Rev. ed. Kokomo, Indiana: Continental Steel Corporation, 1963.

Hoerr, John P. And the wolf finally came: The Decline of the American Steel Industry. Pittsburgh: University of Pittsburgh Press, 1988.

Hogan, William T., S. J. World Steel in the 1980s: A Case of Survival. Lexington, Massachusetts: Lexington Books, 1983.

Scheuerman, William. The Steel Crisis: The Economics and Politics of a Declining Industry. New York: Praeger Publishers, 1986.

Articles

Dornman, Dan. "An Invitation for Dinging, Disco-Dancing...and the SEC," New York, May 9, 1977, 12–13.

Kotkin, Joel. "A Commitment Forged in Steel," Inc., 5 (June, 1983), 82–83.

"Penn-Dixie Industries may look like a slum, but to Jerry Castle, it's Fat City," Forbes, June 15, 1976, 21–23.

Newspapers

Kokomo Tribune, 1929–2009.

New York Times, 1929–2003.

Wall Street Journal, 1985.

Government report

Indiana Department of Environmental Management, "Second Five Year Review Report for Continental Steel Superfund Site, City of Kokomo, Howard County, Indiana," September, 2007.

External links

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