“Going through the [steel] plant [in 1947], we actually had to step over workers who were falling asleep there. I decided right then that I didn’t ever want to work for a big steel company.”
He created the largest steel corporation in the U.S.–during a time when Big Steel in America was fast becoming a failed industry and a fading legend. U.S. Steel, ascended from the raging furnaces of Carnegie and forged by the financial genius of J. P. Morgan, would soon become a burned out falling star. Bethlehem Steel, erector of the Golden Gate Bridge and the Empire State Building, originator of “High Speed Tool Steel,” which had swept the world at the start of the 20th Century, would be shortly relegated to the slagheap of ignominious bankruptcy.
Throughout the ‘70’s & 80’s, as one-by-one the old steel mills closed and the sacred fires blinked out, panicking CEO’s and boards of directors of America’s steel industry stampeded to Washington, howling about Japan and Germany “dumping” lower priced (but comparable) steel onto the U.S. market. The Union of United Steel Workers, in rare agreement with their bosses, aired their xenophobic rage against the upstart Japanese (and to a lesser degree, against the Germans). Politicians solemnly temporized about threats to American security. News commentators chimed in by observing that the American steel industry had failed to modernize over the years.
Amidst all that hysteria, the CEO’s & boards of directors—the Taggarts and the Orren Boyles—the union shop rats, the Capitol Hill rats and the just-plain-rats of the press made a studious and concerted effort to forget.
They “forgot” that the capital for keeping the steel industry competitive had instead gone to pay for glitzy company PR campaigns, which mostly apologized for steel industry profits by trumpeting the contributions Big Steel made to local communities in the form of increased employment and a wider tax base.
They “forgot” about the capital wasted by complacent executives on ostentatious administrative offices, on unproductive show-off exhibitions and on an endless list of society ladies’ pet charities.
They “forgot” about the capital paid as protection to union thugs
They “forgot” about the capital stolen by government price quotas and extorted by taxes.
They “forgot” about the capital consumed by crippling government regulations and deep pocket lawsuits, the impetus for which having been spewed in fact free and logic challenged commentaries on self-sacrifice, brother love and robber barons, spun out by cocktail party editorialists, beatnik essayists and historians better suited to the stockyards than to academic research libraries—all of them with a Marxist ax to grind and none of them with one wit of knowledge about the making of steel. Indeed, not one wit, period.
They, in short, “forgot” about the rust. The rust that would over the coming decades continue to eat through the American steel industry—as it had the railroads before it—eventually extinguishing the furnaces of U.S. Steel, Bethlehem Steel and a host of other smaller steel companies, leaving them all wastelands of cold ash and rotting metal, amid the rubble of crashed stock prices. At the end of those decades—after the squeaks and the fits of the rats, which had signified nothing, had ceased—America’s steel companies quietly closed their doors. Over the ruins the mooching and looting rats had created, they scurried to erect a gravestone on which they scratched: The Rust Belt.
That was the course and destination of American steel in 1965 when an unknown took the helm of a tiny, near bankrupt company named Nuclear and—like the fictional hero, Hank Rearden, in the Ayn Rand novel Atlas Shrugged—devised a new way to make steel. In so doing, he saved the American steel industry.
His name was F. Kenneth Iverson. The Man of Steel.
Born on September 18, 1925, Ken Iverson lived his childhood in Chicago’s rural Downers Grove. In college, Ken studied engineering; then, in 1943, he joined the Navy, which sent him to Cornell to study aeronautical engineering. Later, he got his Masters at Purdue in metallurgy and wound up working for International Harvester in the research department. Over the next 13 or so years, Ken Iverson learned a great deal about steel and its production, winding up as the Executive VP of Coast Metals in 1960.
A year later, a small conglomerate named Nuclear Corporation of America—originally R.E.O. Motor Car Company, founded by R. E. Olds way back when—tried to buy Coast. They were unsuccessful in their buyout attempt, but during the process, Nuclear’s management became well acquainted with Ken, eventually hiring him as a part-time consultant. His assignment was to scout out potential acquisitions for the company. Ken came up with Vulcraft, a small company in South Carolina that made steel grates and joists. Nuclear followed Ken’s advice and bought the company. Not only that, they offered Ken the job of running it.
Nuclear had a history of mediocrity, almost from the beginning. By late 1965, the small conglomerate was on the ropes, with only one division out of its eight showing a profit. That one division was Vulcraft, run by Ken Iverson. Shortly thereafter, the owner—a New York City investment banker—offered Ken the presidency of Nuclear. There was just one condition: Make a profit.
Ken immediately reduced administrative staff from twelve to two. Then he packed up the company headquarters lock, stock & barrel into a couple of vans and moved it from Phoenix, Arizona, to Charlotte, North Carolina, near the profitable grate and joist operation at Vulcraft. There he fashioned a business plan that focused on Vulcraft while spinning off or closing the other seven unprofitable divisions. His focus on Vulcraft amounted to intense modernization. R&D became God at Nuclear. So much so, that Douglas Sease would later write in 1981 in the Wall Street Journal that “[M]odern technology is Nucor’s long suit.” That R&D laden suit was first dealt in 1965 by Ken Iverson.
Iverson’s idea of R&D, though, wasn’t the conventional one. Indeed, nothing about Ken Iverson’s ideas on steel production even remotely resembled convention. Iverson made the entire company of Vulcraft his R&D department. No lab hermetically sealed from the reality of singing belts and pounding presses. No cloistered lab researchers. Rather, innovators in metallurgy and production haunting the job line. No bovine, beer bellied shop rat mechanically performing his job functions by rote. Instead, thinking, imaginative, resourceful workers. No desk bound, pencil-pushing executives. Instead, hustling, eagle eyed managers, with their sleeves rolled up and their ties loosened, stalking the factory floor. Along with everyone in between, from the janitor to the president himself. Encouraged along the way by performance bonuses, they all became intimates of press and die and grate and joist.
Vulcraft—and Nuclear with it—caught fire. In 1966, Ken opened a new plant in Norfolk, Nebraska. In 1968, one in Jewitt, Texas. Ken looked at his company’s bottom line and smiled. Then he frowned. Vulcraft didn’t make steel. But they needed it, lots of it. What Ken saw in the financials was that steel was costing his company too much, 56 cents for every dollar earned. And that was the cheap, European steel, too, mind you; not the expensive American stuff.
Did Ken run to the government for a subsidy?
Did he hire a company PR agent?
Did he try to expand his factory’s capacity by acquiring land through eminent domain?
Did he just sit on his ass, happy with the level of profitability he had already achieved?
Of course not, silly, socialist educated rabbit. He did what any great producer in even a semi-free economy would do: After studying the field thoroughly, he led his company into the steel making business. And from the great furnaces that he would light, this latter day Vulcan would forge a new American steel corporation named Nucor.
Those sacred fires, gone out in the East, would burn once more.
- “Ken Iverson—Nucor.” American National Business Hall of Fame. 2001.
- McManus, George J., “Everybody Shares the Pie at Nucor,” Iron Age, October 15,1986.
- “Management Profiles: F. Kenneth Iverson.” The Anderson School at UCLA. 2003.
- Sease, Douglas R., “Mini-Mill Steelmakers, No Longer Very Small, Outperform Big Ones, ” Wall Street Journal, January 12, 1981, p. 10.