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Thayer was in Pittsburgh recently studying Jones & Laughlin Steel Corp., the sixth largest U.S. steelmaker and LTV's biggest and sickest subsidiary. It is the key to LTV's chances for survival. A combination of high-cost old plants, start-up expenses at a new mill and labor problems produced nearly a $1,000,000 loss and a dividend omission at J. & L. in the first quarter; the second quarter is expected to show similar results. Early last month, Jim Ling personally promised the United Steelworkers local in Pittsburgh that there would be no major plant closings, layoffs or cutbacks as long as he was in control. Ling also made a deal with the Justice Department trustbusters that in order to hold onto J. & L., he would sell off Braniff Airways and Okonite Co. within three years. Thayer is not bound by Ling's pledges or plans. There are rumors in Dallas—which company officers do not explicitly deny—that the new management may sell J. & L. rather than Braniff and Okonite.
Wrong Foot Forward
Bustling young Charles F. McDevitt became president of the staid old A.S. Beck Shoe Corp. in 1968, and Wall Street reacted euphorically. When McDevitt renamed the company Beck Industries and unfolded his plans to diversify, the stock soared. But Beck, which now has well over 500 stores, swallowed more than it could digest. From the 1968 high to early this month, the shares plunged 90% (after adjusting for stock dividends). Then, to avoid further falls, Beck managers asked the American Stock Exchange to suspend trading in the stock while they talked with bankers alarmed by swelling debts and shrinking profits.
Last week, after days of acrimonious meetings at Manhattan headquarters, the 38-year-old McDevitt resigned under fire. The man who brought him down—and replaced him—was the man who had brought him into Beck, Newton Glekel, 55, Beck's chairman.
In 1967 Glekel sold Divco-Wayne, a manufacturer of mobile homes, to Boise Cascade Corp. Among the Boise Cascade officers whom he met was "Chuck" McDevitt, the secretary and general counsel. Glekel lured him to Beck with a five-year contract at $80,000 a year, plus bonuses and stock options. With boundless verve, McDevitt started to buy companies, aiming to turn Beck into a diversified concern. Last year he acquired 19 companies in furniture, men's and women's wear and discount retailing. Beck's sales rose 59% in 1969, to $198.5 million; profits went up 24%, to $5.6 million. In his haste to diversify, however, McDevitt had paid too much for some companies and examined others too cursorily. Glekel is now trying to sell Disco Fair, a group of discount stories which are a heavy drain on cash. Some other divisions may soon go on the block.
The crunch started this spring. Beck was forced by lack of buyers to withdraw a convertible-debenture issue that would have brought it $15 million in badly needed long-term money. As of last week Beck still owed the banks $29 million, and notes are coming due every month. Glekel is trying to keep the company afloat, largely by persuading creditors to be patient. Beck's sorry experience should at least warn other aggressive managers that uncontrolled growth can lead to financial anemia.
Kerkorian's Cold Streak