Historic Structures

Complete History Part 3 Pittsburgh Steel Company Monessen Works, Monessen Pennsylvania

The cooperative spirit of labor and management barely outlasted the war. Even before many of the veterans returned—in November, 1945—750,000 steelworkers, combined in the largest union in the country, the United Steel Workers of America, voted to authorize a strike when their contract ended in January, 1946. With the cessation of wartime price and wage controls imminent, steelworkers demanded a twenty-five cent an hour raise. The steel companies, still locked into low, wartime prices set by the Truman administration, balked. On January 20, 1946 steelworkers walked off their jobs in the largest single strike in American history. The strike forced Truman to abandon his attempt to control steel prices and inflation. In February, 1946, the president authorized a $5.00 increase in steel prices, after which the union and the industry agreed to a wage increase of eighteen and one-half cents an hour. The strike ended in February, and workers were back on the job by the eighteenth. The strike heralded a new era in labor-management relations. Although the days of outright repression and violence were over, a spirit of conflict and struggle between labor and management remained. Unable to establish a mechanism to settle differences over wages, benefits, and work rules, the strike became the only means of resolution. Strikes occurred with alarming frequency: there were significant work stoppages in 1949, 1952, 1956, and 1959. Although they resulted in economic gains for steelworkers, the settlements raised labor costs and weakened the industry financially. With federal policy makers from Truman to Kennedy exercising price control (often through "jawboning"), steel companies were unable to finance the capital improvements necessary to expand and modernize their mills, which in turn led to deterioration of the industry's global competitiveness.

As it reminded its employees in Keystone, Pittsburgh Steel was hurt financially by the strikes and increased labor costs of the 1940s and 1950s. In the strike year of 1946 the company ended the year with a net profit of less than $50,000. Even the boom years of 1947 and 1948 failed to generate profits large enough to finance the extensive modernization of facilities long desired by company planners. With the exception of its entry into the materials handling business, where the company introduced the steel wire "cargotainer," the company's product line remained virtually the same. It was able to purchase the Johnson Steel & Wire Company of Worchester, Massachusetts, a small specialty wire producer, in 1947. In 1948 the company explained to its employees how the record income of that year was spent. With sales of nearly $103 million, profits amounted to $5,484,090. After payments for its mortgage, dividends, and a contingency fund, the company had only $4,239,138 available for expenditures on improvements. Moreover, despite payments of dividends to preferred stockholders, the company was unable to meet its obligation to common stockholders, who had not received a dividend since 1930.

In 1950 the management of Pittsburgh Steel decided to take radical steps to expand and modernize its facilities in order to become more competitive. Its first move in rebuilding the corporation was to reach outside to hire a new president, Avery C. Adams. Adams had wide experience in the steel industry, serving in various managerial positions with Republic Steel, Inland Steel, and U.S. Steel. He was also familiar with the burgeoning sheet steel business, working as manager of sheet sales for U.S. Steel. After taking the job in the spring of 1950, Adams worked out a plan of action to correct four major problems. First, the company's production costs were too high, mainly because of outdated facilities. Second, there was a deficiency of finishing facilities. The company produced wire - a product that was declining in the percentage of sales - and tubes, which were gaining in the market, but very slowly. Third, the company had an unprofitable product mix, with nearly one-third of its steel sales, ingots, a product that could be sold profitably only in a booming market. Fourth, as a result of poor performance in the past, the company had not expanded its production facilities.

To deal with these interrelated problems, Adams announced Pittsburgh Steel's "Program of Progress." The goal of the program was to increase finished product capacity by eighty-two percent and ingot capacity by forty-eight percent. But, before the plan could be put into place, there was a need to put the company's financial house in order. Adams simplified the company's financial structure. One class of preferred stock was eliminated, and the debt on another class was retired, thereby freeing more of the profits for common stock dividends. The goal was to make common stock more attractive to investors. Cash from increased stock sales was hardly sufficient to make the type of investments the company needed, however. To finance the improvements, the company borrowed: a total of two million dollars from the Metropolitan Life Insurance Company, five million from five different banks, eight million from Chrysler Corporation, and two million from Packard Automobile Company. The company also obtained capital through the federal government's accelerated depreciation program, which was initiated to promote expansion during the Korean War. Altogether, the company invested sixty-five million dollars - a sum equal to its total assets - on capital improvements in the period from 1950 to 1955.

The cornerstone of the "Program of Progress" was entry into the sheet steel business. Since 1920 flat-rolled steel products had increased from thirteen to thirty-one percent of the total domestic steel market and the trend was expected to continue. Rather than building its own facilities, the company at first attempted to merge with or purchase other companies which possessed flat-rolling capacity. In 1951 Pittsburgh Steel acquired the Thomas Steel Company of Warren, Ohio, which made thin, plated sheet steel for the specialty market. It also initiated merger negotiations with the Allegheny-Ludlum Steel Corporation, a semi-integrated company which produced flat-rolled products and had no iron or steel making capacity. After negotiations failed, the company announced that it would build a twenty-five million dollar hot- and cold-rolled strip mill at Allenport. Completed in 1954, the mills covered an area of fifteen acres, and were the largest rolling installation to be built in the Pittsburgh district in over a decade. The continuous, 66-inch, state of the art mill produced coils of sheet steel used for automobiles and appliances. The main market for this sheet was Chrysler Corporation, which had provided the eight million dollar loan for this purpose.

To increase its ingot capacity, the company also modernized its Monessen plant. All three blast furnaces were relined and No. 1 received a new control system. Two new turboblowers were purchased and installed. The bottleneck in rolling was broken with the installation of a eight million dollar, 66-inch blooming-slabbing mill. In addition, five new soaking pits were added. The twelve open hearth furnaces were rebuilt and enlarged from 120-ton to 250-ton capacity. New 250-ton cranes, ladle stands, slag pots, as well as a new ingot stripper building and stripping crane, were added to the open hearth department. In addition, the open hearth gas producers were abandoned and the furnaces equipped to be fired with coke oven gas, fuel oil, and pitch. Another major change in the open-hearth plant was the installation of oxygen lances at four of the furnaces. Positioned in the roofs of the furnaces, the lances delivered gaseous oxygen which combined with the fuel gas to increase temperatures in the furnace, speeding the completion of a heat by about one hour. Less dramatic changes in the open-hearth plant in the 1950s were the result of the utilization of a special pneumatic patching gun that sprayed dolomite into place during the process of making bottom, and the use of "torpedoes," an explosive charge, to open the tap hole prior to tapping. The expansion program was largely completed by 1954. With the new facilities, the historical weaknesses of the company, a lack of finishing facilities to match its steel making capacity, had been corrected. Adams proclaimed that Pittsburgh Steel had become a "new steel company."

With the new facilities and the revival of the market, the period of Adams's presidency was one of the most dynamic in Pittsburgh Steel's history. Profits rose and peaked at a record $7.5 million in 1955. Just before he retired from Pittsburgh Steel, Adams appeared before the New York Society of Security Analysts to herald the success of the "Program of Progress." He boasted that sales had increased by 122 percent since 1949. Moreover, the new diversified product line, with flat rolled products making up 56.4 percent of sales, provided the company with an opportunity to further expand its sales volume. Adams concluded with a note of caution, however. Noting that the return on investment for Pittsburgh Steel and other steel companies was well below that of other industries, he warned that the steel industry would soon be in deep trouble if prices were not increased.

Adams left Pittsburgh Steel and accepted the position of president of Jones & Laughlin Steel Corporation on October 1, 1956. He was succeeded by a man of egual ability if somewhat different temper of mind. Allison R. Maxwell, Jr. brought to the presidency of the company a sales background and a broad understanding of labor and governmental issues. Educated at Princeton University, Maxwell had worked as a salesman for Pittsburgh Steel since 1935. He was named the director of sales programs in 1952 and was responsible for the "unrelenting sales campaign" that had generated the record profits of the mid-1950s. Maxwell's understanding of political issues came from serving on five different steel industry advisory committees to the federal government in the late 1940s and early 1950s.

Maxwell sought to continue the modernization program initiated in 1950 by Adams, but he faced a more difficult series of challenges than his predecessor. The root of the company's difficulties was that the steel industry's lush post-war decade came to a crashing halt in 1957. Sales, profits, and operating capacity plummeted. Operating at only a sixty percent capacity between 1958 and 1962, Pittsburgh Steel lost over two million dollars. The performance of U.S. Steel and the other large companies was somewhat better, but well below the earning levels of the early 1950s. Although the substitution of plastic, aluminum and other materials for steel and the over expansion of the industry during the 1950s were important reasons for the decline, steel company spokesman most often cited high labor costs and foreign imports as principal causes. As Maxwell pointed out in a speech before the Pennsylvania Economic League, wages had increased 222 percent from 1940 to 1957 without commensurate increases in worker productivity. Moreover, strikes and illegal work stoppages—424 in the industry and 30 at Pittsburgh Steel since 1956—had cut productivity also so that his firm found it nearly impossible to remain competitive. Although foreign competition did not erode Pittsburgh Steel's markets, situated largely in the Pittsburgh area, the Midwest, and Southwest until after the opening of the St. Laurence Seaway in 1959, it had begun adversely to affect the steel industry by the mid-1950s. With large infusions of American aid, European, Japanese and Third World nations had rebuilt their steel industries in the postwar period. With more modern plants and lower labor costs, these off-shore producers began to export to the United States in the 1950s in large volumes. By 1959 foreign imports surpassed American exports for the first time in the twentieth century.

Working in the context of this overall decline, Maxwell made cutting costs and building a more competitive company his first objective. He completed the modernization program initiated by Adams. At Monessen a new battery of nineteen Koppers-Becker coke ovens were installed in 1955-1956. Nos. 1 and 2 blast furnaces were relined and modernized in 1958-1959; this renovation included a changeover in the stoves from a three- to a two-pass design. Six of the open hearth furnaces were provided with new instrumentation, and a new charging machine was purchased. Finally, a 30-inch billet mill was built to provide rounds for the tube mills.

New and more efficient production facilities were only a part of Maxwell's overall cost-containment plan. Another important focus was on increasing employee productivity - developing the company's "human resources." With his background in sales, Maxwell knew the importance of planning, education and public relations. His first step as president was to hire a professional consultant to do a opinion survey of management personnel to discern what they thought of the company. Maxwell found out that front-line supervisors regarded themselves as poorly-informed, and that not all of its management people knew or understood the company's goals. Pittsburgh Steel was seen as a "goal-less company." In response to the survey, Maxwell ordered a restructuring of management and the initiation of a company-wide education program. An overall planning agency, the planning and administration department, was set up, along with a market research and product development department. The functions of the production planning department, which Maxwell had established in 1955 as sales director, were expanded. This department was responsible for coordinating sales and operations so that the company operated at its most efficient level.

The new planning agencies were only a part of Maxwell's management initiative. Plans and objectives were of little value unless the company's salaried and hourly employees understood and internalized them. As Maxwell put it "somehow, we must communicate with our people - persuade them that the company's problems really are theirs, too." For the purpose of employee education, the management institute, composed of selected upper management personnel, was set up in 1958. After a period of research and preparation, which included the compilation of a history of the company by chairman of the board H.B. Collamore, the program got underway. In small and large group sessions, members of the institute explained the history, operation, current problems, and "comeback" strategy of the company to its seven hundred middle and lower management employees.

The basic message of the management institute was that significant progress had been made in the 1950s in correcting the company's historical problems - a deficiency of finishing facilities and antiquated equipment - but it still faced a crisis because of high production costs and stiff competition. The company ranked fifteenth in size in the steel industry with an ingot capacity of 1.1 percent of total industry capacity, making it part of a group of companies known as "Little Steel." Yet, the company did not compete with small companies such as Allegheny Ludlum, Crucible, Sharon, and Wheeling because they were mainly producers of specialty products. Instead, it faced competition from the large integrated firms, especially U.S. Steel. The problem was that Pittsburgh Steel operated at a distinct disadvantage in this market. It had higher production costs as well as a lower average selling price for its products. Why? Pittsburgh Steel executives were not sure why its average selling price was lower, but they reasoned that its production cost disadvantage arose from 1) higher raw material costs, a result of buying ore, coal, and coke on the open market; 2) higher inbound and outbound transportation costs, an inevitable consequence of the Monessen location; 3) insufficient blast furnace capacity during periods of peak operation, leading to dependence on the purchase of high-priced scrap in steel making; and 4) higher labor costs, a result of the uneven impact of incentive pay bonuses negotiated in the 1956 contract.

Later formulated by Maxwell as the "Program for Profits," the comeback strategy was a four-phased program which included 1) reduction of labor costs; 2) reduction of raw materials costs; 3) strengthening the company's market position; and 4) reduction of steelmaking costs.

The containment of labor costs, particularly equalization of incentive pay, was the top priority. The company decided to use the management institute to educate its hourly employees on the need to correct the labor cost problem. The educational program was barely underway when the industry was hit by the 116-day strike of 1959. Pittsburgh Steel told USWA negotiators that it had to have a contract which equalized incentive pay. This demand got them nowhere, so they initiated a public relations campaign. The company placed advertisements in Monessen area newspapers describing its financial situation and arguing for equalization. It used its newly-trained executives to argue its case in public addresses and other publicity campaigns, including a radio forum. After the invocation of the Taft-Hartley Act forced a vote on the contract, the company sent two-man teams to the homes of its hourly workers in order to "sell" its program. Over 6,000 of the 7,700 employees were interviewed. The campaign was not enough, however, to convince steelworkers to accept the company's offer. They rejected it by a sixty-six to thirty-four percent margin. The company responded by shutting down its plants. The lockout brought results; a deal was worked out whereby high-incentive pay workers agreed to forfeit two raises called for in the 1960 contract. Thus, Pittsburgh Steel equalized its labor costs by wringing concessions from its employees.

While it was persuading its hourly people to take concessions, Pittsburgh Steel embarked on negotiations with several banks and its stock holders to raise money for its Program for Profits capital expenditures campaign. Despite its record of losses since 1957 and the fact that its stock was selling for $10 to $12 when its book value was $40, the company convinced financiers and stockholders to provide it with $44 million for capital expenditures. The company's success in the negotiating concessions from its employees was cited by Business Week as one of the reasons it was able to obtain the new financing. An additional sum of six million dollars was later added to provide a total of fifty million for the Program for Profits.

The company's first investments from this capital improvements fund were used to cut raw material costs. The company controlled only twenty-two percent of its raw materials in 1959, purchasing the remainder at premium prices on the open market. In that year, the company purchased an option on part ownership in the Wabush Iron Company, Ltd, which was developing ore lands in Labrador, Canada. The company also began negotiations to secure a source of metallurgical coking coal, something it had lacked since it divested itself of the Monessen Coal St Coke Company in the 1930s. In 1962 it acquired a 22.5 percent interest in the Gateway Coal Company as part of a joint venture with Jones & Laughlin Steel Company and Pittsburgh Coke and Chemical Company. With these two acquisitions, the company controlled close to seventy percent of the raw materials used in production. Another step toward lower raw material costs was taken in 1964 with the completion of a $4.8 million sintering plant at the Monessen site. The plant processed blast furnace fines, obtained from the blast furnace gas cleaning operations, into an iron-rich sinter which was re-used in the furnaces.

To strengthen the company's market position, Pittsburgh Steel earmarked twelve million dollars for investments in finishing facilities. Because of the growth potential of sheet, the company decided to spend two-thirds on improvements at the Allenport sheet mill. Construction of new annealing equipment and the addition of two new rolling stands to the four-stand finishing train of the hot rolled mill were completed by 1966.

Investments to reduce ingot costs took the lion's share of fifty million dollar capital fund. The most important expenditure was the construction of a basic oxygen furnace (BOF) plant at Monessen in 1964. The eighteen million dollar plant consisted of a fourteen-story building housing two 150-ton steelmaking vessels equipped with lances that could deliver 18,000 cubic feet per minute of oxygen. It was equipped with a two million dollar electrostatic precipitator to clean furnace gas. The BOF was much more efficient than the old open hearths, which were mothballed and placed on standby. Not only did the BOF produce steel much faster—a 150-ton heat of steel in less than 50 minutes—but it also used far less scrap, which was more costly than hot metal.

The "Program for Profits" was completed in 1966 with the renovation of blast furnace No. 1, including the installation of a twelve-ton ore bridge, and the rebuilding of No. 3 blast furnace. After being relit by Jane Maxwell, wife of the president of the company, it was renamed "Jane." The first results of the six-year capital improvements program were realized during the second half of 1966. In comparing the company's performance to the same period in 1965, President Maxwell noted that net income was up, despite a smaller sales volume. This improvement, he asserted, was a result of savings gained from the "integration of raw materials sources, from new iron and steelmaking facilities, and from finishing mill improvements, "

The good news about the company's improved performance in 19 66 was tempered with the announcement on June 21 that the rod, wire and wire products divisions at Monessen would be phased-out. The step, which resulted in the complete closure of the division in 1972, was taken because foreign imports of rods and wire products had disrupted the domestic market. Since 1955 sales of imported rods and wire products—mainly nails, barbed wire, wire rods, and reinforcing bars—had increased by over 750 percent in the United States. Off-shore producers had literally invaded the U.S. market, selling their wares at prices twenty to thirty percent below those of American firms. Since rod and wire products were the first to make a large impact on the U.S. market, Pittsburgh Steel, with its traditional reliance on this product line, was one of the first companies in the nation to feel the pressure of foreign competition. Hit harder and earlier than other U.S. companies, Pittsburgh Steel became one of the leaders in the political battle against imports in the 1960s.

The campaign against foreign imports began in 1960, when Pittsburgh Steel joined with other members of the American Iron and Steel Institute (AISI) in a campaign to promote the use of American steel. The companies developed a trademark, the "Steelmark," to be placed on all American-made consumer products to identify them as such. The "Steelmark" logo, a circle enclosing three stars and the word "Steel," was imprinted on a tag which provided consumers with information on the quality and durability of the article, advising them to "look for products made of steel when you shop." Its primary purpose, according to an article in Keystone. was to "help preserve steel's markets."

In the following year, Pittsburgh Steel sent two metallurgists to visit steel plants in eight European nations to gather information on production processes and costs. The two returned with nothing but praise for the competition, particularly the Germans and Austrians. The Europeans had "good, up-to-date" facilities, their operations were well synchronized and efficient, and they employed the most advanced technologies, including BOF steelmaking and direct-rolling for tube rounds. According to the metallurgists, they produced a product equal to or superior to American steelmakers. Their biggest edge, however, was in labor costs. Not only did they produce their products with fewer manhours than American mills, but their hourly wage rate was far less than in America. For example, the top rate in Germany - assistant roller - was about one dollar an hour. The Spanish rate was only about forty cents per hour. Overall, European labor costs were about one-third of those in the United States.

In 1962 Pittsburgh Steel joined with seven other domestic producers to charge European and Japanese steelmakers with dumping hot-rolled carbon steel rods. A Treasury Department Customs Bureau investigation established that rods from Belgium, Luxembourg, West Germany, and France were being dumped (sold for prices below those in their home markets), but cleared Japanese rod makers because of insufficient evidence. The case then advanced to the Tariff Commission, which had the responsibility of deciding whether the American steel industry had been harmed. To the surprise of U.S. steelmakers, the Tariff Commission ruled against them. Although individual companies, such as Pittsburgh Steel, had been injured, according to the commission, the industry as a whole had not. An infuriated Pittsburgh Steel executive, Robert E. Lauterbach, vice president of sales, called the ruling the "greatest injustice that's ever been rendered by the Commission." Company officials vowed to continue their battle against the "foreign menace."

To obtain protection from imports, Pittsburgh Steel turned increasingly to the political arena. After 1964, when imports of flat-rolled products began to make a dent in the American market, the company, with nearly seventy percent of its total sales in this product line, stepped-up its lobbying and public relations campaign. The company participated in the lobbying effort of AISI. In 1966 AISI's Public Affairs Conference met in Washington, calling the attention of Congress to the import problem. At first AISI asked for a temporary tariff, but after hearings in Congress in 1967, the organization backed a quota. Pittsburgh Steel found a champion in Congressman John H. Dent, who represented Pennsylvania's twenty-first district. Dent, a native of Jeannette in Westmoreland County, visited the Monessen plant and sponsored hearings in Congress. He invited five companies, including Pittsburgh Steel, to participate in hearings before the House Subcommittee on Labor. In the 1967 hearings, Kenneth F. Maxcy, Jr, director of market development for Pittsburgh Steel, told the committee that unfair competition had been the principal reason for the company's phase-out of its rod and wire divisions and the layoffs of 1,500 men. After the hearings Congressman Dent sponsored a bill that would expand the president's power to raise tariffs or impose quotas on foreign imports that were produced at wage levels below the U.S. minimum wage.

Pittsburgh Steel actively supported the Congressional initiatives. After Congressman Dent's hearings, President Maxwell sent letters to all senators and congressman representing districts in which the company had plants, as well as to its employees and the USWA, calling for passage of federal legislation. Employees of the company initiated a petition drive calling for quotas. With this prodding from Pittsburgh Steel and other companies, the steelworkers union finally committed itself to quota restrictions in 1967. To obtain grassroots support, Pittsburgh Steel officials made repeated presentations to local community groups such as the Lions Club, which universally support the crusade.

The quota issue came to a head in 1968. The broad support for quota legislation became evident in June, when I.W. Abel, president of the USWA, testified in favor of a bill before the Senate Committee on Finance and the House Committee of Ways and Means. But, before Congress could act, both the Germans and Japanese made a dramatic move. Cognizant of the public support for Congressional action, the two nations told the Congressional committees that they would place voluntary restrictions on their steel exports to the United States. Moreover, they pledged to make an effort to induce other countries to join them. An agreement was reached and the hearings were brought to a close. Subsequently, the two countries obtained the assent of all of the nations of the European Coal and Steel Community (but not the United Kingdom) to the two-year agreement, known as the Voluntary Restraint Agreement (VRA). The nations agreed to limit the importation of steel products to fourteen million tons, four million less than in 1968. The nation's steelmakers now had some protection against imports.

Pittsburgh Steel's "Program for Profits" and its drive to stem imports were only part of the company's overall effort in the 1960s to remain competitive in an increasingly tough market. The most significant event of the decade was the merger with Wheeling Steel Corporation in 1968. In light of the eventual outcome of the move - the closure of the Monessen plant - it is ironic that the initiative for the merger came from Pittsburgh rather than Wheeling.

The Wheeling Steel Corporation was formed in 1920 from three companies: the Wheeling Steel and Iron Company, the Whitaker- Glessner Company, and the La Belle Iron Works. The company soon became a technological pioneer in the production of sheet steel for tinplate. Until the 1920s, tinplate was produced through hot rolling, the coils then being reheated and rolled to thinner gauge on hand mills. Several experiments with a continuous, cold-reduction process were undertaken in the 1920s. The most successful was that of Wheeling Steel. In 1929 the company put into operation a four-high tandem mill which produced a uniformly thin and ductile strip which was ideal for plating. By the 1960s Wheeling Steel had expanded its product line to include tinplate, galvanized plate, corrugated sheets, hot and cold rolled sheets and plate, and pipe at its plants near Wheeling and near Steubenville, Ohio.

Like Pittsburgh Steel and other small steel companies, Wheeling Steel came upon hard financial times in the 1960s. In 1963 the company initiated a modernization plan that included the installation of a basic oxygen furnace plant, a new 80-inch wide hot strip mill, and a new 60-inch wide galvanizing line. Completed in 1966, these improvements were undertaken with $140 million in loans from insurance companies and banks. The new facilities did not solve the company's financial problems. From $4.6 million in 1965, Wheeling Steel's net loss increased to $7.8 million in 1966. The 1966 losses came as a result of heavy start-up expenses of the 80-inch hot strip mill and an inadequate supply of semi-finished steel. To realize the full potential of these improvements, the company needed a new slabbing mill to provide a steady supply of slabs to feed its new hot strip mill, as well as a new 80-inch cold reduction mill. These facilities would cost an additional $150 million.

While Wheeling Steel was incurring heavy losses in 1965 and 19 66, Pittsburgh Steel's financial picture was improving. After a slight profit in 1966, the company reported a net profit of $2.2 million in 1967. When Wheeling Steel's lenders pressed for changes in its management in early 1967, Pittsburgh Steel was prepared to act. On April 18, 1967 Pittsburgh Steel purchased 77,350 shares of Wheeling Steel stock from Hunt Foods. Immediately after the sale, the president of Wheeling Steel and three of its five directors resigned. Allison R. Maxwell, president of Pittsburgh Steel, was named chairman of the board of Wheeling Steel, and Donald C. Duvall, executive vice president of Pittsburgh Steel, took over as president. On December 28, 1967 Pittsburgh Steel acquired an additional 100,000 shares of Wheeling Steel stock. In April, 1968 the board of directors of both companies set up merger committees to negotiate a union. On September 25, 1968 the board of directors approved the merger. After being approved by the stockholders, the merger became effective on December 5, 1968. The board of directors of the new company, which was elected the following day, consisted principally of officers from Pittsburgh Steel. Despite the fact that the merger was tantamount to a takeover by Pittsburgh Steel, the new company was named Wheeling-Pittsburgh Steel Corporation, ostensibly because Wheeling was the larger of the two parent firms.

As a consequence of the merger, Wheeling-Pittsburgh moved into ninth place among the steel companies of the nation. With modern BOF shops in both Steubenville and Monessen, the company had a raw steelmaking capacity of 4.3 million tons. The product lines of two parent companies complemented each other to a large degree. While Pittsburgh specialized in hot- and cold-rolled strip (mainly for the auto market), country seamless oil casing, drill pipe and tubing. Wheeling produced galvanized sheet, tin plate, and standard black and galvanized pipe.

It was clear from the beginning that the major beneficiary of the merger was Wheeling Steel. While Pittsburgh Steel had completed its modernization program. Wheeling had not. As Donald Duvall stated, Pittsburgh Steel had survived the dislocation caused by the breaking-in of new facilities. Now, the company's experience would be "useful in bringing Wheeling's [modernization] program to a successful conclusion." Wheeling's lack of an 80-inch cold reduction mill would be overcome through the use of Allenport's facilities. Just as important, Pittsburgh Steel's experience and technical expertise would be available to "help Wheeling during its inevitable period of dislocation." Moreover, Duvall noted that "Pittsburgh's facilities can be used to keep Wheeling's customers supplied in unavoidable periods of downtime during construction." The Keystone article heralding the merger expressed the hope that it would prove beneficial to each of the parent companies. But the new company was composed of two integrated steel plants. When hard times came and downsizing was needed, it was clear that one would have to be shut down. As events unfolded in the 1970s and early 1980s, it became apparent that Pittsburgh Steel had, in fact, taken in a Trojan Horse.