Continental Steel Corporation
Continental Steel Corporation
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Continental Steel Corporation
April 24, 1946
National Bank Note Company
11" (w) by 7" (h)
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This 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.
Within a year of its founding, the various plants of Continental Steel employed 2,288 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 3,000 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.
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. 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.
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.
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. 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.
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. 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.
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. 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.
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