Moving Metal

USING THE CUBE Large-scale developments compounded Gimbel’s worries. The steel industry was not only struggling from domestic competition and the residual effect of the strike, but it was also under pressure from an onslaught of foreign-pro- duced steel. In the mid-1950s, the United States had enjoyed a favorable trade balance, exporting between three and five tons of steel for every ton imported. In 1958, the trend began reversing. Steel imports accelerated during the 1959 strike, when American manufacturers discovered that foreign steel was a less costly alternative to domestic steel. Worse yet, the quality of the imported steel was often better, since the foreign mills were newer than their American counter- parts. This was particularly true of Japanese steel, which was produced in brand-new facilities erected after World War II. The world’s steelmaking capacity grew rapidly, with the European Common Market doubling its output, the Japanese quadruplingproduction, andmost of the surplus beingdumped in the United States. By the early 1960s, imports began to exceed exports by 3 million tons per year. Domestic produc- ers lowered their rates to compete, only to watch the foreign producers slash prices still further to undercut the American competition. As steel prices dropped, prices for processed steel plunged and profit margins evaporated. Confronted by this increasingly challenging market, Gimbel concluded that Reliance had to expand its operations and broaden its markets to ensure long-term survival, and he adopted the grim maxim that “in our business, you grow or go.” Gimbel accordingly challenged his management team to come up with plans for future expansion, additional product lines, and the establishment of warehouses in new locations— all the while pushing for a greater return on capital.

During the 1960s, Reliance offered roofing and siding in galvanized steel or aluminum. This machine processed corrugated metal from three feet to forty feet in length.

Now in his thirteenth year with the company and his third as its leader, he had learned much about the steel products industry—its idiosyncrasies as well as its fickleness. Local com- petition remained fierce and past experience indicated that the metal markets could turn on a dime. Therefore, despite Reliance’s recent surge, he still worried that things could go from boom to bust very quickly.

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