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Jones & Laughlin Industries, Inc. - Lehman Brothers Collection

Jones & Laughlin Industries, Inc.

List of Deals

The history of Jones & Laughlin Steel Industries dates to 1853 when a partnership, Jones & Laughlin’s, Ltd., was established by James Laughlin and Benjamin Franklin Jones. Jones & Laughlin Steel Company was organized to acquire the partnership in 1902. In December 1922 the company was reorganized from being a privately owned family company to a public corporation. In the process, the Jones & Laughlin Steel Corporation was incorporated in Pennsylvania to acquire the business and assets of Jones & Laughlin Steel Company. The capitalization of the new company was also substantially increased from $30 million to $120 million.

After World War I, Jones & Laughlin was for a time the second-largest steel manufacturer in the United States. It fell to third place in 1924, when Bethlehem Steel supplanted it in second place.

The Great Depression hit Jones & Laughlin quite hard, as it did most of American industry. The company averaged an annual loss of approximately $3.9 million per year from 1931 to 1935, and a concomitant reduction in the labor force. The last half of the decade, exclusive of 1938, which registered a $5.9 million deficit, saw improvement in earnings with net income averaging $5.6 million per year.

Although the United States didn’t enter the war in Europe until December 1941, Jones & Laughlin’s improvement in earnings was partly due to the war’s impact on the demand for steel products. The company’s sales of major steel products rose from just over one million tons in 1938 to just over 2.3 million tons in 1940, while its production as a percentage of capacity went from 37 percent in 1938 to 60 percent in 1939 and to 85 percent in 1940. Its net income rose as well, from a deficit of $5.9 million in 1938 to surpluses of $3.2 million in 1939 and $10.3 million in 1940. Once the United States entered the war, demand increased even more, and by 1945 sales of most Jones & Laughlin products had risen to just under 3.2 million tons. This capacity was increased with the 1942 acquisition of the Otis Steel Company of Cleveland, Ohio.

After World War II, Jones & Laughlin embarked on a major program to improve and rehabilitate the plant and equipment that had been run down by excessive use during the war years. The company also announced a major plant improvement program in December 1950 in response to the burgeoning military needs brought on by the Cold War and the crisis in Korea. The company opened an eleven-furnace, open-hearth shop at Pittsburgh and increased capacity for existing plant and new power sources at all three works. As a result, capacity was increased from 4.85 million to 6.4 million net tons.

During the 1960s, the fate of Jones & Laughlin followed the gradual decline of the American basic steel industry. There are various reasons given for this decline, among them excessive union demands, government policies, and imports of foreign steel from countries with lower operating costs.

In June 1968 the Dallas-based LTV conglomerate acquired a controlling interest of 63 percent in Jones & Laughlin through a cash tender offer. Jones & Laughlin earned $20.5 million from sales of $1.07 billion in 1971.

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