While big U.S steel producers are padlocking old plants and choosing up merger partners, the minimills continue to grow. In late winter, as the U.S. Department of Justice pondered the proposed U.S Steel-National Steel and LTV Corp.-Republic Steel mergers, tiny Continental Steel Corp. (see INC., June 1983, page 82) was floating a new stock offering to bolster its mill expansion.
By cutting costs and boosting its marketing efforts, the Kokomo, Ind.-based company last year halved its 1982 losses of $18 million. For 1984, despite the recession and soft prices that continue to hound the steel industry, Continental Steel projects losses of less than $5 million.
The recent $8.7-million stock offering through Drexel Burnham Lambert Inc. was an important sign of Continental Steel's brightening prospects. According to company financial adviser Pierre Stanis, the stock issue is providing Continental with vital operating capital while the company implements its modernization program. When a new, Italian-made continuous caster is added to the company's recently completed rod mill, the cost savings shouId be sufficient to allow Continental to break into the black even if there is no turnaround in the basic steel market.
Explains Continental chief executive officer Tom Sigler: "Drexel Burnham doesn't go with losers. We're a hell of lot closer to profitability now than the people in big steel. At least there's lot of sunshine coming in here."