USX Corporation

views updated May 11 2018

USX Corporation

600 Grant Street
Pittsburgh, Pennsylvania 15219
U.S.A.
(412) 433-1121
Fax: (412) 433-6847

Public Company
Incorporated: 1901 as United States Steel Corporation
Employees: 46,000
Sales: $17.84 billion
Stock Exchanges: New York Midwest Pacific Montreal
SICs: 1311 Crude Petroleum & Natural Gas; 2911 Petroleum Refining; 3312 Blast Furnaces & Steel Mills

USX Corporation is an international diversified energy and steel-manufacturing company. About 70 percent of sales are derived from the oil and gas business through its Marathon Oil Group and Delhi Group. About 30 percent of sales are from its U.S. Steel Group, the largest integrated steel company in the United States, which produces and sells a wide range of semifinished and finished steel products, coke, and taconite pellets, as well as smaller operations in real estate, engineering, mining, and financial services. USX’s emphasis on energy dates from its acquisitions of Marathon Oil Company in 1982 and Texas Oil & Gas Corporation in 1986. Before these events, and its 1986 name change to USX Corporation, it was known as United States Steel Corporation, a company founded on February 25, 1901, as the nation’s largest steelmaker and the largest business enterprise launched Up to that time.

The origin of United States Steel Corporation (U.S. Steel) is virtually an early history of the steel industry in the United States, which in turn is closely linked to the name of Andrew Carnegie. The quintessential 19th-century self-made man, Carnegie began as bobbin boy in a cotton mill, made a stake in the railroad business and, in 1864, started to invest in the iron industry. In 1873 he began to establish steel plants using the Bessemer steelmaking process. A ruthless competitor, his Carnegie Steel Company grew to be the largest domestic steelmaker by the end of the century. In 1897 Carnegie appointed Charles M. Schwab, a brilliant, diplomatic veteran of the steel industry who had worked his way up through the Carnegie organization, as president of Carnegie Steel.

At about the same time, prominent financier John Pierpont Morgan became a major participant in the steel industry as a result of his organization of the Federal Steel Company in 1898. Morgan’s personal representative in the steel business was Elbert Henry Gary, a lawyer, former judge, and director of Illinois Steel Company, one of the several steel companies co-opted into Federal Steel, of which Gary was made president. Carnegie, Schwab, Morgan, and Gary were the key participants in the organization of U.S. Steel.

By 1900 the demand for steel was at peak levels, and Morgan’s ambition was to dominate this market by creating a centralized combine, or trust. He was encouraged in this by rumors of Carnegie’s intention to retire from business. U.S. President William McKinley was known to approve of business consolidations, and his support limited the risk of government antitrust claims in the face of a steel-industry combination. In December 1900 Morgan attended a now-legendary dinner at New York’s University Club. During the course of the evening Schwab gave a speech that set forth the outlines of a steel trust, the nucleus of which would be the Carnegie and Morgan steel enterprises, together with a number of other smaller steel, mining, and shipping concerns. With Schwab and Gary as intermediaries between Carnegie and Morgan, negotiations were concluded by early February 1901 for Carnegie to sell his steel interests for about $492 million in bonds and stock of the new company. The organization plan was largely executed by Gary, with Morgan arranging the financing. On February 25, 1901, United States Steel Corporation was incorporated with an authorized capitalization of $1.4 billion, the first billion-dollar corporation in history. The ten companies that were merged to form U.S. Steel were American Bridge Company, American Sheet Steel Company, American Steel Hoop Company, American Steel & Wire Company, American Tin Plate Company, Carnegie Steel Company, Federal Steel Company, Lake Superior Consolidated Iron Mines, National Steel Company, and National Tube Company.

At Morgan’s urging Schwab became president of U.S. Steel, with Gary as chairman of the board of directors and of the executive committee. Two such strong personalities, however, could not easily share power. In 1903 Schwab resigned and soon took control of Bethlehem Steel Corporation, which he eventually built into the second-largest steel producer in the country. Gary stayed on as, in effect, chief executive officer to lead U.S. Steel and to dominate its policies until his death in August of 1927. His stated goal for U.S. Steel was not to create a monopoly but to sustain trade and foster competition by competing on a basis of efficiency and price. Steel prices did drop significantly in the years after the company began, and, because of competition, U.S. Steel’s market share of U.S. steel production dropped steadily over the years from about 66 percent in 1901 to about 33 percent from the 1930s to the 1950s. U.S. Steel’s sales increased from $423 million in 1902 to $1 billion during the 1920s, dropped to a low of $288 million in 1933, reached $1 billion in 1940, and climbed to about $3 billion in 1950. Except for a few deficit years, U.S. Steel’s operations have been generally profitable, though earnings have been cyclical.

U.S. Steel’s history is notable for continual acquisitions, divestitures, consolidations, reorganizations, and labor disputes. In 1901 U.S. Steel acquired the Bessemer Steamship company, a shipping concern engaged in iron-ore traffic on the Great Lakes. Shelby Steel Tube Company was purchased in 1901, Union Steel Company in 1903, and Clairton Steel Company in 1904; a number of other, smaller acquisitions were made in those early years. In 1906 U.S. Steel began construction on a large new steel plant on Lake Michigan together with a model city designed primarily for its employees. The new town was named Gary, Indiana, and was substantially completed by 1911. A major acquisition in 1907 was that of Tennessee Coal, Iron and Railroad Company, the largest steel producer in the South. A presence in the West was established by the purchase of Columbia Steel Company in 1910. In addition to steel manufacture, U.S. Steel also maintained large coal-mining operations in western Pennsylvania. These operations were based on former properties of H. C. Frick Coke Company, which included some of Carnegie’s coal properties and which became a part of U.S. Steel when it was formed in 1901. The coal produced by these mines was used to fuel U.S. Steel’s operations.

The 12-hour work day, standard in industry during U.S. Steel’s early years, was a major labor issue. U.S. Steel’s workers originally were unorganized, and Gary was a staunch enemy of unionization, the closed shop, and collective bargaining. He took a leading role among businessmen, however, by calling in 1911 for the abolition of the 12-hour work day. Little was actually done, however, and a general strike was called against the steel industry in 1919. The strike failed and was abandoned in 1920. The 12-hour work day eventually was abolished, and in 1937 U.S. Steel signed a contract with the Steel Workers Organizing Committee, which in 1942 became the United Steelworkers of America. U.S. Steel’s labor relations have historically been adversarial, characterized by divisive negotiations, often bitter strikes, and settlements that were sometimes economically disastrous for the company and, in the long run, for its employees.

The U.S. government’s tolerant view of big corporations ended with the administration of President Theodore Roosevelt. On Roosevelt’s instructions, an antitrust investigation of U.S. Steel was begun in 1905. Gary cooperated with the investigation, but the final report to President William Howard Taft in 1911 led to a monopoly charge against U.S. Steel in the U.S. District Court of Appeals. This court’s 1915 decision unanimously absolved U.S. Steel from the monopoly charge and largely vindicated Gary’s claim that U.S. Steel was designed to be competitive rather than a monopolistic trust.

U.S. Steel’s business boomed during World War I with sales more than doubling between 1915 and 1918 and remaining strong at about $2 billion annually through the 1920s. Gary’s personal domination of U.S. Steel ended with his death in 1927. J. P. Morgan, Jr., became chairman of the board of directors from 1927 to 1932, but during this period U.S. Steel essentially was under the leadership of Myron C. Taylor, chairman of the finance committee from 1927 to 1934 and chairman of the board from 1932 until his resignation in 1938. Taylor brought about extensive changes in U.S. Steel’s make-up. Numerous obsolete plants were closed, others were modernized, and a new plant was added with total capital expenditures of more than $500 million. By the end of Taylor’s tenure about three-quarters of U.S. Steel’s products were different or were made differently and more efficiently than they had been in 1927, with the principal realignment being the change from heavy steel for capital goods to lighter steel for consumer goods.

After Taylor’s resignation in 1938, Edward R. Stettinius, Jr., served as chairman of the board until he left in 1940 to undertake government service and eventually to become secretary of state. Benjamin F. Fairless, an important figure in U.S. Steel history, became president in 1938, and Irving S. Olds succeeded Stettinius as chairman of the board in 1940. (Olds served as chairman until 1952, when he was succeeded in that office by Fairless.)

During this period U.S. Steel’s business recovered from its Depression slump, buoyed by the enormous demand for steel products generated by World War II and the postwar economic boom. Revenues more than quintupled from $611 million in 1938 to more than $3.5 billion in 1951. U.S. Steel was present in every geographical market in the United States except the East, so in 1949 it announced plans to build a large integrated steel plant in Pennsylvania on the Delaware River to be known as the Fairless Works. This plant, operational in 1952, was intended to compete with Bethlehem Steel for the eastern market and to take advantage of ocean shipment of iron ore from U.S. Steel’s large ore reserves in Venezuela.

In 1951 a change intended to simplify the structure of United States Steel Corporation took place when a single company was formed from its four major operational subsidiaries. This reorganization, completed in 1953, created a tightly knit, more efficient organizational structure in place of the former aggregate of semi-independent units. In 1953 Clifford F. Hood was appointed president and chief operating officer, sharing overall responsibility for the company with board chairman Fairless and Enders W. Voorhees, who continued as chairman of the finance committee.

Fairless’s tenure as chairman of the board included one of the longest strikes in U.S. Steel’s history in 1952, resulting from its refusal to allow substantial wage increases and tighter closed-shop rules. Just before the strike was to begin in April 1952, President Harry S. Truman seized the company’s properties in order to ensure steel production for the Korean War. This unusual action was declared unconstitutional by the U.S. Supreme Court in June 1952. An industry-wide strike ensued that was settled in August, ending a unique episode in U.S. Steel’s labor history. A more productive occurrence was the ground breaking in 1953 for the building of a new research center near Pittsburgh. Fairless retired in May 1955 and was succeeded by Roger M. Blough as chairman of the board and chief executive officer.

Due to improved administrative, operating, and plant efficiencies, U.S. Steel set a postwar record for profitability in 1955, although market share continued to decline to around 30 percent. In 1958 a further corporate simplification took place when wholly owned subsidiary Universal Atlas Cement Company was merged into U.S. Steel as an operating division, as were the Union Supply Company and Homewood Stores Company subsidiaries. Profits were being squeezed between rising operating costs and relatively stable prices, and in April 1962 U.S. Steel unexpectedly announced an across-the-board price increase that triggered a storm of criticism, including an angry protest to Blough from U.S. President John F. Kennedy. Within a week U.S. Steel was forced to rescind the price increase, using the face-saving excuse that other steel companies had not agreed to support the new price level. This situation resulted from U.S. Steel’s continued decline in market share to about 25 percent in 1961, together with deteriorating profitability, in part caused by excessive capital spending in relation to market volume.

In response to its difficulties U.S. Steel announced in 1963 a further reorganization and centralization of its steel divisions and sales operations in order to concentrate management resources to a greater extent on sales and consumer services. In 1964 U.S. Steel created a new chemicals division called Pittsburgh Chemical Company. Effective in 1966 United States Steel Corporation was reincorporated in Delaware to take advantage of that state’s more flexible corporation laws. In 1967 Edwin H. Gott became president and chief operating officer and in 1969 he succeeded Blough as chairman of the board and CEO. Edgar B. Speer, a veteran steel man, moved up to the presidency. In 1973 Gott retired and Speer assumed his duties as chairman and CEO. Significantly, Speer immediately announced plans to expand U.S. Steel’s diversification into nonsteel businesses. Prospects for long-term growth in steel were fading rapidly because of rising costs, competitive pricing, and foreign competition.

During Speer’s tenure, U.S. Steel closed or sold a variety of facilities and businesses in steel, cement, fabricating, home building, plastics, and mining. Capital expenditure, much of it for environmental purposes, remained high. There was little significant diversification, however. In 1979 U.S. Steel lost $293 million. Also that year, former president David M. Roderick became chairman and CEO. He announced a major liquidation of unprofitable steel operations and increased efforts to diversify. In 1979, 13 steel facilities were closed with an $809 million write-off. Universal Atlas Cement—once the United States’s largest cement company—was sold, and various real estate, timber, and mineral properties were leased or sold. The long-promised diversification move came in 1982 with United States Steel Corporation’s $6.2 billion acquisition of Marathon Oil Company, a major integrated energy company with vast reserves of oil and gas. Marathon’s revenues were about the same as those of U.S. Steel; thus the company’s size was doubled, with steel’s contribution to sales dropping to about 40 percent.

Marathon had been incorporated on August 1, 1887, as Ohio Oil Company by Ohio oil driller Henry Ernst and four of his fellow oil men, primarily in order to compete with Standard Oil Company. Ohio Oil quickly became the largest producer of crude oil in Ohio and was bought out by Standard Oil in 1889. When Standard was broken up on antitrust grounds by the U.S. government in 1911, Ohio Oil again became an independent company with veteran oil man James Donnell as president. Under Donnell and his successors Ohio Oil grew into an international integrated oil and gas company with large energy resources and extensive exploratory and retail sales operations. Its name was changed to Marathon Oil Company in 1962.

U.S. Steel continued to improve the efficiency and profitability of its steel operations with the 1983 closing of part or all of 20 obsolete plants. By 1985 Roderick had shut down more than 150 facilities and reduced steelmaking capacity by more than 30 percent. He cut 54 percent of white-collar jobs, laid off about 100,000 production workers, and sold $3 billion in assets. U.S. Steel continued its diversification program in February 1986 with the $3.6 billion acquisition of Texas Oil & Gas Corporation. Founded in 1955 as Tex-Star Oil & Gas Corporation, the company is engaged primarily in the domestic production, gathering, and transportation of natural gas. In July 1986 United States Steel Corporation changed its name to USX Corporation to reflect the company’s diversification.

In October 1986 corporate raider Carl Icahn threatened to make a $7.1 billion offer for USX—after purchasing about 29 million USX shares. Roderick fought off the takeover attempt by borrowing $3.4 billion to pay off company debts with the provision that the loan would be called in the event of a takeover. Icahn gave up his attempt in January 1987 but kept his USX shares and began a long program of urging USX management to spin off or sell its under-performing steel business. In 1987 Roderick shut down about one-quarter of USX’s raw steelmaking capacity, but by 1988 U.S. Steel, the steel division of USX, had become the most efficient producer of steel in the world.

In May 1989 Roderick retired and was succeeded as chairman and CEO by Charles A. Corry, a veteran of the USX restructuring. In October 1989 Corry announced a plan to sell some of Texas Oil & Gas’s energy reserves in order to pay off debt and implement a large stock buyback. In June 1990 the company stated that it would consolidate Texas Oil’s operations with Marathon Oil in order to cut costs. On January 31, 1991, Icahn won his long battle to have USX restructured when the company announced that it would recapitalize by issuing a separate class of stock for its U.S. Steel subsidiary although both businesses, energy and steel, would remain part of USX. In May 1991 USX shareholders approved the plan. Common shares of USX Corporation began trading as USX-Marathon Group, and new common shares of USX-U.S. Steel Group were issued. In May 1992 USX shareholders approved the creation of a third common share, USX-Delhi Group, which reflects the performance of the Delhi Gas Pipeline Corporation and related companies engaged in the gathering, processing, and transporting of natural gas.

In 1991 the two stocks rose 28 percent and the steel shares actually outperformed the oil. Several factors influenced the positive performance of the company and its stock. Marathon, unlike many of its competitors, has prepared for growth in the 1990s. The 1991 discovery of what may be a large oil field in Tunisia and two new Gulf of Mexico strikes had the early 1990s looking promising for USX-Marathon. The addition of its East Brae field in the North Sea in 1995 could also boost crude output by 25,000 barrels per day from about 200,000 barrels per day. In addition, while other oil companies reduced their exploration budgets, USX-Marathon increased its capital and exploration budget by almost one-third.

Although the outlook for steel has remained unfavorable, it has improved in the early 1990s. USX-U.S. Steel was able to reduce its fixed costs and boost productivity by cutting its raw steel capacity in half, closing four of its seven plants and reducing its total number of employees by 56 percent between 1983 and 1990. From 1991 to 1992 alone U.S. Steel reduced its operating capability by 3 million tons to 13.5 tons. The drastic cuts paid off for U.S. Steel—by 1993 the company was the lowest-cost fully integrated steel producer in the United States.

U.S. Steel has also worked to bring its quality up to par with foreign competitors, especially the Japanese, by forging joint ventures with such companies as Japan’s Kobe Steel. The company also spent $1.5 billion in the early 1990s to upgrade its facilities to industry benchmark standards.

USX-U.S. Steel diversified into information technology in the fall of 1992 in order to supplant dwindling revenue. This subsidiary unit started out with 100 employees working on four major projects, including information systems consultation for another (unnamed) steelmaker. The unit planned to provide systems integration, application development, consultation, and other services to other process industries, including manufacturers of metals and forest products.

Principal Subsidiaries

Marathon Oil U.K. Ltd.; Emro Marketing Company; Carnegie Natural Gas Co.; Delhi Gas Pipeline Corp.; FWA Drilling Co., Inc.; United States Steel International, Inc.; National-Oilwell; USS-POSCO Industries; UnSS/ Kobe Steel Co.; U.S. Steel Mining Co., Inc.; USX Engineers and Consultants, Inc.; USX Realty Development.

USX Corporation

views updated Jun 11 2018

USX Corporation

600 Grant Street
Pittsburgh, Pennsylvania 15219
U.S.A.
(412) 433-1121
Fax: (412) 433-6847

Public Company
Incorporated: 1901 as United States Steel Corporation
Employees: 51,500
Sales: $20.66 billion
Stock Exchanges: New York Midwest Pacific Montreal London

USX Corporation is an international diversified energy and steel-manufacturing company. About 65% of sales are derived from the oil and gas business, mainly from its Marathon Oil Group. About 30% of sales are from its USS subsidiary, the largest U.S. integrated steel company, which produces and sells a wide range of semifinished and finished steel products, coke, and taconite pellets. Remaining sales, about 5%, are from its U.S. Diversified Group division, made up of relatively smaller operations in real estate, transportation, engineering, chemicals, mining, and financial services. USX’s emphasis on energy dates from its acquisitions of Marathon Oil Company in 1982 and Texas Oil & Gas Corporation in 1986. Before these events, and its 1986 name change to USX Corporation, it was known as United States Steel Corporation, a company founded on February 25, 1901, as the nation’s largest steelmaker and the largest business enterprise launched up to that time.

The origin of United States Steel Corporation (USS) is virtually an early history of the steel industry in the United States, which in turn is closely linked to the name of Andrew Carnegie. The quintessential 19th-century self-made man, Carnegie began as bobbin boy in a cotton mill, made a stake in the railroad business, and in 1864 started to invest in the iron industry. In 1873 he began to establish steel plants using the Bessemer steelmaking process. A ruthless competitor, his Carnegie Steel Company grew to be the largest domestic steelmaker by the end of the century. In 1897 Carnegie appointed Charles M. Schwab as president of Carnegie Steel, a brilliant, diplomatic steel man who had worked his way up through the Carnegie organization. At about the same time, prominent financier John Pierpont Morgan became a major participant in the steel industry by organizing Federal Steel Company, in 1898. Morgan’s personal representative in the steel business was Elbert Henry Gary, a lawyer, former judge, and director of Illinois Steel Company, one of the several steel companies co-opted into Federal Steel, of which Gary was made president. Carnegie, Schwab, Morgan, and Gary where the key participants in the organization of USS.

By 1900 the demand for U.S. steel was at peak levels and Morgan’s ambition was to dominate this market by creating a centralized combine, or trust. He was encouraged in this by rumors of Carnegie’s intention to retire from business. U.S. President William McKinley was known to approve of business consolidations, and his support limited the risk of government antitrust claims in the face of a steel-industry combination. In December 1900 Morgan attended a now-legendary dinner at New York’s University Club during which Schwab gave a speech in which he outlined a steel trust, the nucleus of which would be the Carnegie and Morgan steel enterprises, together with a number of other smaller steel, mining, and shipping concerns. With Schwab and Gary as intermediaries between Carnegie and Morgan, negotiations were concluded by early February 1901 for Carnegie to sell his steel interests for about $492 million in bonds and stock of the new company. The organization plan was largely executed by Gary with Morgan arranging the financing and, on February 25, 1901, United States Steel Corporation was incorporated with an authorized capitalization of $1.4 billion, the first billion-dollar corporation in history. The ten companies that were merged to form USS where American Bridge Company, American Sheet Steel Company, American Steel Hoop Company, American Steel & Wire Company, American Tin Plate Company, Carnegie Steel Company, Federal Steel Company, Lake Superior Consolidated Iron Mines, National Steel Company, and National Tube Company.

At Morgan’s urging Schwab became president of USS with Gary as chairman of the board of directors and of the executive committee. Two such strong personalities, however, could not easily share power. In 1903 Schwab resigned and soon took control of Bethlehem Steel Corporation, which he eventually built into the second-largest steel producer in the country. Gary stayed on as, in effect, chief executive officer to lead USS and to dominate its policies until his death in August 1927. His stated goal for USS was not to create a monopoly but to sustain trade and foster competition by competing on a basis of efficiency and price. Steel prices, in fact, did drop significantly in the years after the company began, and, because of competition, USS’s market share of U.S. steel production dropped steadily over the years from about 66% in 1901 to about 33% in the 1930s to 1950s. USS’s sales increased from $423 million in 1902 to $1 billion during the 1920s, dropped to a low of $288 million in 1933, reached $1 billion in 1940, and climbed to about $3 billion in 1950. Except for a few deficit years, USS’s operations have been generally profitable, though earnings have been cyclical.

USS’s history is notable for continual acquisitions, divestitures, consolidations, reorganizations, and labor disputes. In 1901 USS acquired the Bessemer Steamship company, a shipping concern engaged in iron-ore traffic on the Great Lakes. Shelby Steel Tube Company was purchased in 1901, Union Steel Company in 1903, and Clairton Steel Company in 1904; and a number of smaller acquisitions were made in those early years. In 1906 USS began construction on a large new steel plant on Lake Michigan together with a model city designed primarily for USS employees. The new town was named Gary, Indiana, and was substantially completed by 1911. A major acquisition in 1907 was that of Tennessee Coal, Iron and Railroad Company, the largest steel producer in the South. A presence in the West was established by the purchase of Columbia Steel Company in 1910. In addition to steel manufacture, USS also had large coal-mining operations in western Pennsylvania. These operations were based on former properties of H.C. Frick Coke Company, which included some of Carnegie’s coal properties and which became a part of USS when it was formed in 1901. The coal produced by these mines was used to fuel USS operations.

The 12-hour day, standard in industry during USS’s early years, was a major labor issue. USS’s workers originally were unorganized; and Gary was a staunch enemy of unionization, the closed shop, and collective bargaining. He took a leading role among businessmen, however, by calling in 1911 for the abolition of the 12-hour day. Little was actually done, however, and a general strike was called against the steel industry in 1919. The strike failed and was abandoned in 1920. The 12-hour day eventually was abolished, and in 1937 USS signed a contract with Steel Workers Organizing Committee, which in 1942 became the United Steelworkers of America. USS’s labor relations have generally been adversarial, characterized by a long history of divisive negotiations, often-bitter strikes, and settlements that were sometimes economically disastrous for the company and, in the long run, for its employees.

The U.S. government’s tolerant view of big corporations ended with the administration of President Theodore Roosevelt and, on Roosevelt’s instructions, an antitrust investigation of USS was begun in 1905. Gary cooperated with the investigation, but the final report to President William Howard Taft in 1911 led to a monopoly charge against USS in the U.S. District Court of Appeals. This court’s 1915 decision unanimously absolved USS from the monopoly charge and largely vindicated Gary’s claim that USS was designed to be competitive rather than a monopolistic trust.

USS’s business boomed during World War I with sales more than doubling between 1915 and 1918 and remaining strong at about $2 billion annually through the 1920s. Gary’s personal domination of USS ended with his death in 1927. J.P. Morgan Jr. became chairman of the board of directors from 1927 to 1932, but during this period USS essentially was under the leadership of Myron C. Taylor, chairman of the finance committee from 1927 to 1934 and chairman of the board from 1932 until his resignation in 1938. Taylor brought about extensive changes in USS’s make-up. Numerous obsolete plants were closed, others were modernized, and a new plant was added with total capital expenditures of more than $500 million. By the end of Taylor’s tenure about three-quarters of USS’s products were different or were made differently and more efficiently than they had been in 1927, with the principal realignment being the change from heavy steel for capital goods to lighter steel for consumer goods.

After Taylor’s resignation in 1938, Edward R. Stettinius Jr. served as chairman of the board until he left in 1940 to undertake government service and eventually to become secretary of state. Benjamin F. Fairless, an important figure in USS history, became president in 1938, and Irving S. Olds succeeded Stettinius as chairman of the board in 1940. Olds served as chairman until 1952 when he was succeeded in that office by Fairless. During this period USS’s business recovered from its Depression slump, thanks to the enormous demand for steel products generated by World War II and the postwar economic boom. Revenues more than quintupled from $611 million in 1938 to more than $3.5 billion in 1951. USS was present in every geographical market in the United States except the East, so in 1949 it announced plans to build a large integrated steel plant in Pennsylvania on the Delaware River to be known as the Fairless works. This plant, operational in 1952, was intended to compete with Bethlehem Steel for the eastern market and to take advantage of ocean shipment of iron ore from USS’s large ore reserves in Venezuela.

In 1951 a change intended to simplify the structure of United States Steel Corporation took place when a single company was formed from USS’s four major operational subsidiaries. This reorganization, completed in 1953, created a tightly knit, more efficient organizational structure in place of the former aggregate of semi-independent units. In 1953 Clifford F. Hood was appointed president and chief operating officer, sharing overall responsibility for the company with Fairless as chairman of the board and Enders W. Voorhees who continued as chairman of the finance committee.

Fairless’s tenure as chairman of the board included one of the longest strikes in USS’s history in 1952, resulting from USS’s refusal to allow substantial wage increases and tighter closed-shop rules. Just before the strike was to begin in April 1952, President Harry S Truman seized the company’s properties in order to ensure steel production for the Korean War. This unusual action was declared unconstitutional by the U.S. Supreme Court in June 1952. An industry-wide strike ensued that was settled in August ending a unique episode in USS’s labor history. A more productive occurrence was the groundbreaking in 1953 for the building of a new research center near Pittsburgh. Fairless retired in May 1955 and was succeeded by Roger M. Blough as chairman of the board and chief executive officer.

Due to improved administrative, operating, and plant efficiencies, USS set a postwar record for profitability in 1955 although market share continued to decline to around 30%. In 1958 a further corporate simplification took place when wholly owned subsidiary Universal Atlas Cement Company was merged into USS as an operating division, as were the Union Supply Company and Homewood Stores Company subsidiaries. Profits were being squeezed between rising operating costs and relatively stable prices, and in April 1962 USS unexpectedly announced an across-the-board price increase, setting off a storm of criticism including an angry protest to Blough from U.S. President John F. Kennedy. Within a week USS was forced to rescind the price increase, using the face-saving excuse that other steel companies had not agreed to support the new price level. This situation resulted from USS’s continued decline in market share to about 25% in 1961, together with deteriorating profitability, in part caused by excessive capital spending in relation to market volume.

In response to its difficulties USS announced in 1963 a further reorganization and centralization of its steel divisions and sales operations in order to concentrate management resources to a greater extent on selling and consumer services. In 1964 USS created a new chemicals division called Pittsburgh Chemical Company. Effective in 1966 United States Steel Corporation was reincorporated in Delaware to take advantage of that state’s more flexible corporation laws. In 1967 Edwin H. Gott became president and chief operating officer and in 1969 he succeeded Blough as chairman of the board and CEO. Edgar B. Speer, a veteran steel man, moved up to the presidency. In 1973 Gott retired, and Speer assumed his duties as chairman and CEO. Significantly, Speer immediately announced plans to expand USS’s diversification into nonsteel businesses. Prospects for long-term growth in steel were fading rapidly because of rising costs, competitive pricing, and foreign competition.

During Speer’s tenure, USS closed or sold a variety of facilities and businesses in steel, cement, fabricating, home building, plastics, and mining. Capital expenditure, much of it for environmental purposes, remained high. There was little significant diversification, however. In 1979 USS lost $293 million. Also that year, former president David M. Roderick became chairman and CEO. He announced a major liquidation of unprofitable steel operations and increased efforts to diversify. In 1979 13 steel facilities were closed with an $809 million write-off. Universal Atlas Cement—once the United States’s largest cement company—was sold, and various real estate, timber, and mineral properties were leased or sold. The long-promised diversification move came in 1982 with United States Steel Corporation’s $6.4 billion acquisition of Marathon Oil Company, a major integrated energy company with vast reserves of oil and gas. Marathon’s revenues were about the same as USS’s; thus the company’s size was doubled, with steel’s contribution to sales dropping to about 40%.

Marathon had been incorporated on August 1, 1887, as Ohio Oil Company by Ohio oil driller Henry Ernst and four of his fellow oilmen, primarily in order to compete with Standard Oil Company. Ohio Oil quickly became the largest producer of crude oil in Ohio and in 1889 was bought out by Standard Oil. When Standard was broken up on antitrust grounds by the U.S. government in 1911, Ohio Oil again became an independent company with veteran oil man James Donnell as president. Under Donnell and his successors Ohio Oil grew into an international integrated oil and gas company with large energy resources and extensive exploratory and retail sales operations. Its name was changed to Marathon Oil Company in 1962.

USS continued to improve the efficiency and profitability of its steel operations with the 1983 closing of part or all of 20 obsolete plants and the 1984 purchase of the steel business of National Intergroup, Inc. By 1985 Roderick had shut down more than 150 facilities and reduced steelmaking capacity by more than 30%. He cut 54% of white-collar jobs, fired about 100,000 production workers, and sold $3 billion in assets. In 1986 United States Steel Corporation changed its name to USX Corporation, to reflect its diversification. USX continued its diversification program in 1986 with the $3.6 billion acquisition of Texas Oil & Gas Corporation. Founded in 1955 as Tex-Star Oil & Gas Corporation, the company is engaged primarily in the domestic production, gathering, and transportation of natural gas.

In October 1986 corporate raider Carl Icahn made a $7.1 billion offer for USX—after purchasing about 29 million USX shares. Roderick fought off the takeover attempt by borrowing $3.4 billion to pay off company debts with the provision that the loan would be called in the event of a takeover. Icahn gave up his attempt in January 1987 but kept his USX shares and began a long program of urging USX management to spin off or sell its underperforming steel business. In 1987 Roderick shut down about one-quarter of USX’s raw steelmaking capacity, but by 1988 USS, the steel division of USX, had become the most efficient producer of steel in the world.

In May 1989 Roderick retired and was succeeded as chairman and CEO by Charles A. Corry, a veteran of the USX restructuring. In October 1989 Corry announced a plan to sell some of Texas Oil & Gas’s energy reserves in order to pay down debt and implement a large stock buyback. In June 1990 the company stated that it would consolidate Texas Oil’s operations with Marathon Oil in order to cut costs. On January 31, 1991, Icahn won his long battle to have USX restructured when the company announced that it would recapitalize by issuing a separate class of stock for its U.S. Steel subsidiary although both businesses, energy and steel, would remain part of USX. In May 1991 USX shareholders approved the plan. Common shares of USX Corporation began trading as USX-Marathon Group, and new common shares of USX-U.S. Steel Group were issued.