Inland had its beginnings in the depression of 1893. It was in that year that
the Chicago Steel Works, a manufacturer of farm equipment, along with many other
companies, went out of business. A group that included a
foreman from the defunct company made an attempt to form a new company to
begin producing steel on a site that Chicago Steel Works had acquired, in the
village of Chicago Heights, Illinois. The necessary capital to finance the
venture, however, could not be found, until the group enlisted Joseph Block, a
Cincinnati, Ohio, iron merchant, who was in Chicago to visit the World's Fair.
He brought his son Phillip D. Block into the venture.
After incorporating as Inland Steel Company in October 1893 and purchasing
idle machinery of Chicago Steel Works, Inland was ready to begin production
in early 1894. By the end of the year, another of Joseph Block's sons, L.E.
Block, had joined the company. In the next few years, the business grew
steadily, with production centered on agricultural implements. Sales were
boosted by a new product, side rails for bed frames.
In 1897 sales topped $350,000, and the company, which had been sinking much
of its profits into improving machinery at the mill, purchased the East Chicago
Iron and Forge Company and renamed it Inland Iron and Forge. The new addition
was operated by L.E. Block and produced equipment for the railroad industry. The
plant was sold in 1901 for ten times its original purchase price of $50,000.
By the end of the 19th century Inland was doing well, and sales were growing
steadily. In 1901 it found itself in a position to accept an offer by a real
estate developer promising 50 acres of land to any firm that would spend at
least $1 million to build a steel plant on the site. The patch of land was
beside Lake Michigan, which could provide water needed for operating a mill and
waterway for transporting material. The land was also near several major
railroad lines. In 1902, when the first phase of construction of the new Indiana
Harbor, Indiana, plant was completed, Inland had a steel
ingot capacity of 60,000 tons. Due to a general
recession, Inland lost $127,000 in 1903-04. For the same reason, from 1901
until 1906 the company did not pay dividends. By 1905, however, the plant got
its first big order, for 30,000 tons of steel channels and plates.
In 1906, to meet the growing demand for steel, Inland added its fifth
open hearth furnace and constructed the first
blast furnace in northern Indiana. By purchasing the lease on an iron mine
in Minnesota, Inland ensured itself of a source of iron ore to feed its furnaces
that allowed it to reduce costs and significantly increase steel production.
Production was increased further as Inland added more open hearth furnaces and
sheet mills. In 1911 the Inland Steamship Company was formed to transport ore
from Inland's growing mining concerns in Minnesota to the Indiana Harbor mill. A
year later, Inland was manufacturing spikes and rivets for the railroad
By 1914, when Joseph Block died, Inland had a steel ingot capacity of 600,000
tons. Capacity reached one million tons by 1917, and to accommodate the world
market's growing demand for steel, Inland completed construction of a second
plant at Indiana Harbor that year. Demand for steel increased during World War
I, and following the war, between 1923 and 1926, all of the mills and machinery
at the new plant were completely electrified, which provided the most efficient
production. When the war ended, the railroad industry became Inland's top
customer, replacing agriculture. When Phillip D. Block became president of
Inland in 1919, Inland started to improve working conditions and to provide
benefits for its employees. It was one of the first companies in the steel
industry to introduce an eight-hour
workday. The measure was soon abandoned, however, when the rest of the
industry did not follow suit. In 1920 Inland was the first steel company to
adopt a pension plan for its employees.
In the early 1920s Inland began to make steel rails in its 32-inch roughing
and 28-inch finishing mills that previously had been used only for rolling
structural shapes. This was an innovation in the steel industry, and within a
short time rolling and finishing rails was Inland's most successful operation in
terms of both sales and earnings. At the same time, the company spent $1 million
to build a structural steel finishing mill. During this period, Inland continued
to modernize and expand. Millions of dollars were spent to improve quality and
efficiency as demand for steel rose and sales skyrocketed.
The early 1920s were not only a time of great prosperity for the steel
industry, they were also a period of
upheaval. The second great wave of mergers and attempted mergers in the
steel industry since the beginning of the century commenced in 1921. As it had
been in the early 1900s, Inland was again the object of schemes designed to
merge smaller independent companies into one huge corporation. A plan initiated
in 1921 envisioned the consolidation of seven large steel companies--Inland,
Republic Steel Corporation, Brier Hill, Lackawanna, Midvale Steel and Ordnance,
Youngstown, and Steel and Tube Company of America. Rumors of the proposed plan
circulated in the press in late 1921 and early 1922, but in May 1922 Lackawanna
withdrew from the plan. Negotiations continued between Republic, Inland, and
Midvale. After the Federal Trade Commission (FTC) issued a complaint in
August 1922, however, executives of the three companies announced that financing
would be difficult while the legal issues raised by the FTC complaint were being
resolved. The plan was dropped.
Sales at Inland increased, and while the company continued to spend on
expansion, it became the number one U.S. steel company in rate of return on
fixed assets in the period from 1926 to 1930. In 1928 Inland was able to acquire
a limestone quarry on the upper peninsula of Michigan, and formed Inland Lime
and Stone Company. Inland acquired another source of raw materials by purchasing
15 acres of land in Kentucky holding high-grade
Inland's expansion continued through the late 1920s and did not stop even
when the Great Depression hit in 1929. Between 1929 and 1932 Inland spent $30
million on expansion. In 1932, the only Depression year in which Inland was not
in the black, the company unveiled the widest continuous hot-strip mill in the
United States. At a cost of $15 million, the mill was 76 inches wide and would
later be used to roll sheet for the auto industry and for the U.S. Navy during
World War II. While 1932 was a financially
dismal year for Inland, which was operating at only 25 percent of capacity,
that figure was one-third higher than that for the balance of the industry.
During the period from 1931 to 1935, Inland's operating profit in terms of fixed
assets was 6.1 percent, the highest in the industry.
At the time that Inland built the new mill, competition in the steel industry
was intense, and Inland was forced to compete with companies like United States
Steel, among others, that had their own warehouse operations through which to
market their products. To remain competitive with its rivals, Inland chose to go
into the steel warehouse business and in 1935 acquired Joseph T.
Ryerson & Son Inc., a steel
warehousing and fabricating chain. Ryerson provided an outlet through which
Inland's customers could buy steel and have it custom processed. In 1936 Inland
acquired Milcor Steel Company of Milwaukee, Wisconsin, which made a wide variety
of steel products and had plants and warehouses in seven cities. Milcor provided
Inland with a market for the products of its sheet-rolling mills.
When World War II began, Inland, still under the direction of Chairman
Phillip D. Block, immediately began a program of expansion to provide added
capacity by building new blast furnaces and
coke ovens to provide steel for bombs, shells, tanks, ships, and planes. By
1944 Inland had become completely integrated. The company controlled its own
sources of raw materials including coal, ore, and limestone. With Inland's total
ingot capacity of 3.4 million tons by 1944, sales in the years between 1940 and
1950 ranged from $200 million to $400 million per year.
In the 1940s prosperity was tempered somewhat by a series of labor disputes
in which the United Steel Workers of America (USWA) sought higher wages and
certain benefits for its members. Although labor and industry had agreed to a
no-strike, no-lockout pledge during the early 1940s, steel workers across the
country went on strike to demand a $1 a day wage increase in March 1942. The
effects of the strike on war production were not significant, and Inland and the
USWA signed a contract covering working conditions for the company's 14,000
employees at both Indiana Harbor and Chicago Heights.
A much more serious strike, involving 750,000 steel workers, took place in
1946 and virtually crippled the steel industry as production fell to its lowest
level in half a century. The strike lasted 26 days and affected 11,000 employees
at Inland's Indiana Harbor and Chicago Heights plants. Only after Inland and the
other companies involved agreed to a wage raise of 18.5 cents per hour did the
strike end. Inland was then able to continue to produce the steel required by
the huge postwar demand for consumer products. The steel Inland produced then
went primarily to the automobile and home-appliance industries. After the war,
Inland continued to expand its facilities for sheet and strip and also acquired
more property from which to mine raw materials, in Minnesota, Michigan, and
Kentucky. In 1945 Phillip D. Block resigned as chairman after serving for more
than 22 years. He was replaced by his brother, L.E. Block, who served until
During the early 1950s expansion slowed at Inland. From 1952 to 1955 steel
production capacity increased by 700,000 tons. This was half the amount needed
to close the gap between Chicago area demand and capacity. In the years between
1947 and 1958 Inland's
capital expenditures of $121 million were the most modest among the major
steel companies. Expansion, however, picked up during the steel boom of 1956,
when Inland began a new program in which the company spent $360 million to
modernize its plants, to acquire new mining properties, and to build a steel
building to serve as its new headquarters in downtown Chicago. The stainless
steel for the curtain walls of the 19-story building had to be purchased from
another steel company because Inland was still producing carbon steel almost
Although the early 1950s were relatively
unremarkable for Inland in terms of production and growth, they marked the
beginning of a decade that was to include two bitter and costly disputes between
the steel workers and the industry. The first conflict began in November 1951
when the USWA notified the industry that it wanted to
bargain for a wage increase. In December, after no agreement was reached,
union president Phillip Murray called for a strike. Almost immediately,
President Harry S. Truman referred the case to the Wage Stabilization Board. The
board held hearings and made a recommendation accepted by the union but rejected
by the industry. In April 1952 the board tried unsuccessfully to
avert a strike. A few days later, on the eve of a strike, President Truman
issued an order for the nation's steel mills to be seized by the government to
keep them open and avert a strike. The industry was outraged by the president's
order and Inland's president, Clarence B. Randall, was chosen to give the
industry's viewpoint in an address that was broadcast on nationwide radio and
television. Randall called the president's order an 'evil deed' that he had no
legal right to issue. The U.S. Supreme Court agreed that the move was not legal
and in June 1952 ordered that the mills be returned to their owners. Within a
few hours, 600,000 workers walked off their jobs to begin a strike that would
affect 95 percent of the nation's steel mills and would last for 55 days.
Randall became chairman of Inland in 1953. After a few years of calm, the
industry and the USWA became involved in another dispute that was to prove the
longest and most costly in the industry's history. The dispute began in May 1959
when the industry called for a wage freeze. When negotiations stalled in July,
500,000 steel workers went on strike. In October, President Dwight D. Eisenhower
applied for an 80-day
injunction under the Taft-Hartley Act, ordering the workers back to the
plants while negotiations continued. The Supreme Court upheld the injunction,
and the plants reopened in November. In January 1960, the USWA won an agreement
that gave it a substantial wage increase. The agreement brought to an end the
116-day strike that had shut down the steel industry and forced the closing of
automobile plants because of a shortage of steel.
As the 1960s began, the steel industry planned record production to fill
consumer orders and
replenish inventories left depleted by the strike. Inland's steel shipments
in the years 1961 to 1965 averaged 4.1 million tons per year, compared to 3.6
million tons per year in the previous five years. To keep up with new production
demands, Inland embarked on a new expansion program in 1962. The plan included a
new 80-inch continuous hot strip mill as well as Inland's first
oxygen steelmaking shop. The new shop meant a shift away from the open
steelmaking process. It had a capacity to produce more than two million tons
per year and enabled Inland to close down its oldest open
hearth furnace plant, which had been operating for 60 years, since 1902.
The expansion plan was completed in 1966 and helped Inland to lower costs,
improve product quality, and increase capacity. An important
milestone for Inland was the completion in 1967 of its new research
facilities in East Chicago, Indiana, where company scientists could investigate
new processes in steel
metallurgy and production. The large amount of capital that Inland invested
in expansion in the mid-1960s, along with stronger competition, had the effect
of lowering earnings by 25 percent in the period from 1964 to 1967. Joseph L.
Block, who succeeded Randall as chairman in 1959, believed that the expansion
was important for the future, as Inland faced stiff competition for its
When Joseph L. Block retired in 1967, he had earned a reputation as a
maverick in the steel industry. In 1962, when the steel industry had clashed
with President John F. Kennedy over a proposed rise in steel prices, Block broke
with industry ranks and insisted that the time was not right for a steel price
hike. In 1966, however, Block took the lead in raising prices with the largest
increase since 1963. Block was well known, as reported in Time magazine,
for strengthening 'Inland's reputation as a civic-minded company' by among other
things supporting a fair-employment law in Illinois as well as a
redevelopment project for East Chicago.
Block was replaced as chairman by his cousin Phillip D. Block, Jr. Under the
new chairman, Inland maintained its share of the midwestern market and also
achieved the highest profit-to-sales ratio among the big-eight steel makers. In
the late 1960s, as competition increased from foreign imports and markets
eroded, Inland began a
diversification program. The first step was into the housing market with the
acquisition of Scholz Homes Inc. and later the formation of Inland Steel Urban
Development Corporation. By 1974 diversification had led Inland into areas such
as steel building products, powdered metals, and reinforced plastics.
The steel business started off slowly in the 1970s for the whole industry.
Profits were down, and Inland's net profit declined from $81.7 million in 1968
to $46.7 million in 1970. By 1974, however, things had turned around, and the
steel industry experienced one of the biggest booms in its history. After a
tight period in the previous two years, demand for steel increased dramatically
in 1974, and Inland's sales climbed to $2.5
billion. With demand showing no evidence of slowing, Inland, under Chairman
Frederick G. Jaicks, who had replaced Phillip D. Block, Jr., in 1971, made plans
for a $2 billion expansion, which it planned to finance from strong earnings and
outside financing. Inland, however, along with the rest of the industry was hurt
by the recession of 1975, and by 1977 the industry, plagued by
overcapacity, faced another
downturn, as imports flooded the market at prices domestic companies were
unable to match. Inland's earnings slumped as costs went up and demand dropped,
forcing the company to hold up the first phase of its expansion plan.
Business turned around for Inland in 1978, a record year for the company, in
which it was able to capture 6.5 percent of the domestic steel market. The
company produced 8.6 million tons of steel and generated profits of $158.3
million on $3.25 billion in sales. By the early 1980s, however, the steel
industry was in trouble again. A combination of factors, including the high
level of imports, decreased demand, and an oversupply of steel drove down prices
at the same time that costs such as labor and energy were on their way up. These
factors, combined with high investment expenses as well as depressed Midwestern
industries--autos, farming, construction, and appliances--caused Inland's
profits to drop 64 percent from their 1978 peak to $57.3 million in 1981.
Inland suffered four straight years of losses totaling $456 million in 1982
through 1985. The company was forced to shut down some of its steel mills and to
lay off some workers. Yet Inland continued to develop new products and improve
production efficiency. The company had success with lightweight, high-strength,
and corrosion-resistant steel for the auto, farm, and construction industries;
in 1981 it was able to push its market share to a record 6.7 percent.
In order to survive in a depressed industry, Inland--under Chairman Frank
Luerssen, who took over in 1983--cut costs by shutting down
unprofitable operations and divesting itself of certain assets. Inland began
to sell various subsidiaries, including companies that had supplied it with raw
materials. In addition, seven major operations at the Indiana Harbor works were
shut down. Steel making capacity was reduced by 30 percent. While producing less
steel, Inland began to shift its efforts into more profitable areas such as its
highly successful steel distribution operations which it sought to expand by
acquiring J.M. Tull Metals Company, a large metal-products maker, processor, and
distributor, in 1986.
In May 1986 Inland made a move to separate its waning steel manufacturing
operations from its profitable steel distribution sector by reorganizing as
Inland Steel Industries, Inc., a holding company for Inland Steel Company, and
Inland Steel Services, Inland's service center operations. Inland executives
hoped that the reorganization would facilitate diversification and joint
Shortly thereafter, Inland formed a partnership with a Japanese firm, Nippon
Steel Corporation. The partnership, known as I/N Tek, was created to construct a
continuous cold rolling facility near New Carlisle, Indiana. The I/N Tek
facility was the only U.S. continuous cold rolling mill. By combining five basic
operations that were usually done separately, the facility was able to complete
in less than an hour a process that had taken as many as 12 days. The cold
rolled steel produced by the plant was used for, among other applications, autos
and appliances. Another joint venture with Nippon Steel, I/N Kote, was started
in 1989 to construct and operate two steel-galvanizing lines adjacent to the I/N
Tek facility. The project was to be used in combination with I/N Tek to
galvanize the cold rolled steel.
With profits having declined 54 percent in 1989, and losses of $21 million
for 1990, Inland expected its continued expansion and modernization through
projects such an I/N Tek and I/N Kote to result eventually in profits nearly
double the then record $262 million earned in 1988. Such a
turnaround would ensure that Inland would remain an industry leader in
growth and technology, while once again becoming a top industry performer.
By 1994, the steel industry began to recover. The overall economy had picked
up and there was an increased demand for cars--good news for Inland, which was a
leading supplier of steel to such automakers as Honda, Toyota, Ford, General
Motors, and Chrysler. In addition, the dollar remained inexpensive so that
foreign competitors did not have the advantage of asking lower prices, and
difficulties with labor unions were resolved.
As a result of these combined factors, in 1994 Inland enjoyed its first
profit since 1989. Other moves by the company also ensured greater revenues and
profits. Inland closed some units that were unprofitable; sold off businesses
that were outside its core steel business; and began the search for emerging
markets overseas to compensate for slower growth in the domestic market. A
separate operating unit, the company's third, was created. Called Inland
International, the unit sold and distributed products to industrial customers
all over the world.
One market was Mexico, where the company formed a joint venture in 1994 with
Altos Hornos de Mexico S.A., to be called Ryerson de Mexico. In 1995, a joint
venture was created with China's Baoshan Iron and Steel, called Ryerson de
China; and another to deal with exports was formed in Hong Kong with two
partners: South African Macsteel and Canada's Federal Industries. In 1996, a
partnership was formed in India between Inland Steel Industries and Tata Iron
and Steel Co. of Numbai, called Tata-Ryerson, which provided industrial
materials management services to Indian customers.
Inland had focused on serving high-end customers with high quality steel bars
and other products. However, some quality problems resulted in the loss of some
customers and the company returned to the commodity steel markets.
New Steel noted that both Old Steel and New Steel paradigms existed
within Inland Steel. Yet the future seemed to belong to more progressive modes
of doing business. After a precedent-setting contract with the United
Steelworkers of America in 1993, ISI's workers took on more responsibility in
exchange for improved job security and working conditions.
The company had to buy coke since shutting down its coke batteries in the
early 1990s; this resulted in cost penalties of around $25 million a year.
Inland's empowered workers continued to look for ways to improve yields. At the
same time, automotive customers, led by the
transplants (factories established by such foreign makers as Toyota, Honda,
BMW, and Mercedes-Benz in the United States), were growing ever more demanding
in terms of quality.
Inland exited the unprofitable steel plate business in 1995. Ninety percent
of Inland's steel output ended up in consumer goods, a third of it in
automobiles. Unfortunately, Inland suffered disproportionately when auto sales
fell. At the same time, a weaker dollar was helping the American steel industry
increase its exports, and sales at Inland's Mexican unit doubled in 1995 to $150
million. All told, Inland had one of its most profitable years ever in 1995,
although the next year's results were much less impressive.
Inland Steel Industries CEO Robert Darnall told New Steel that the
company needed to help its customers exploit its technical expertise in order
for it to survive the next economic downturn. As late as the fall of 1995,
Darnall was dismissing the idea that the company spin off its profitable
Materials Distribution Group, which included Joseph T. Ryerson and J.M. Tull
Metals. 'Maybe it gives a little pop for current shareholders,' he told
Financial Times, 'but it ... really doesn't create long-term shareholder
Nevertheless, a fraction of Ryerson Tull was spun off in 1996, helping to
reduce Inland's considerable debt load. (An initial public offering sold 13
percent of Ryerson's shares, netting $60 million.) Frustrated by persistent
production problems, Darnall replaced several executives early in 1996.
In July 1998, Ispat International N.V. bought Inland Steel Company--the
steelmaking operations of Inland Steel Industries--for about $1 billion. Inland
Steel Industries, the holding company, then renamed itself after its prime
remaining subsidiary, Ryerson Tull, Inc. Inland Steel Company became known as
Ispat Inland, Inc.
Ispat was a $2 billion a year global player that had grown to an immense size
by buying troubled government-owned mills. Its acquisition of Inland Steel
Company gave Ispat a major presence in the competitive U.S. market. The deal
also suggested a new period of consolidation for an industry troubled by excess
capacity worldwide, according to Industry Week. As it had with its other
acquisitions, Ispat immediately went to work cutting costs at Inland. In its
first year and a half as an Ispat subsidiary, Inland realized $275 million in
annualized cost savings.
Information technology (IT) had become a key competitive tool by 2000.
Automotive customers in particular demanded just-in-time delivery of products;
Inland also used integrated databases to coordinate
At the turn of the millennium, Ispat Inland was the sixth largest integrated
steel producer in the United States, accounting for 5 percent of national steel
production. Its largest division, Flat Products, made carbon and high-strength,
low-alloy flat rolled steel, primarily for automakers and
appliance and furniture manufacturers. This division accounted for 85
percent of revenues. Bar Products supplied a variety of markets with special
alloy, and free machining bar products. The company operated a steelmaking
plant in East Chicago and two state-of-the-art finishing plants near New
Carlisle, Indiana (both joint ventures with Nippon Steel), as well as a
Minnesota iron mine.
Ispat Inland Flat Products; Ispat Inland Bar Products.
Commercial Metals Company; Earle M. Jorgensen; Worthington Industries, Inc.
Berry, Bryan, 'Inland Steel Redefines Itself,' Iron Age/New Steel,
August 1995, p. 18.
Byrne, Harlan S., 'Inland Steel: Plotting a Return to Consistent Top
Earnings,' Barron's, March 15, 1993, pp. 45-46.
------, 'Revival, Part II,' Barron's, July 22, 1996, p. 22.
Cimini, Michael H., and Susan L. Berhmann, 'Win-Win Contract at Inland
Steel,' Monthly Labor Review, October 1993, p. 74.
Colkin, Eileen, 'Traditional Values in a High-Tech World,' Informationweek,
September 27, 1999, pp. 233-38.
Evans, Richard, 'Man of Steel,' Barron's, March 23, 1998, p. 13.
Geer, John F., Jr., 'Steel Wallflower,' Financial World, November 21,
1995, p. 40.
Gilbert, R., and W. Korda, The Story of Inland Steel, Chicago: Inland
Steel Company, 1974.
'Help Thy Customer, Help Thyself,' Forbes, December 18, 1995, pp.
'Ispat Inland Settles Louisiana Fraud Case with U.S. for $30 Million,' IBJ
Daily, January 18, 2001.
Kafka, Peter, 'Steel Steal,' Forbes, April 20, 1998, p. 486.
Mehta, Manik, 'Steel's Still-Growing Giant,' Industry Week, January
18, 1999, pp. 120-23.
'Nelson Retires As President of Inland Steel Co.,' Metal Center News,
May 1996, p. 118.
'New Lease on Life,' Forbes, May 9, 1994, pp. 82-87.
'Picking Nickels Off the Floor,' Forbes, October 26, 1992, pp. 106-08.
Samuels, Gary, 'Help Thy Customer, Help Thyself,' Forbes, December 18,
1995, p. 196.
Sheridan, John H., 'A Global Future?,' Industry Week, January 18,
1999, pp. 124-28.
— Patricia Leichenko; Updates: Dorothy Kroll, Frederick C. Ingram