Tom Eagar's steel company experience

"By 1975, when Tom Eagar was working for a steel company" — used as a temporal anchor for sulfur-content benchmarks. Self-referential in third person, characteristic.

An ASM spec originally written in the 1920s or 1930s will say the sulfur must be less than 0.05%. By the 1940s they were saying less than 0.04%. By 1975, when Tom Eagar was working for a steel company, the sulfur was typically less than 0.01%. And the Japanese were making it at 0.005%. They had modern equipment and they were beating our socks off in quality of steel. 0.005%, 50 parts per million, was about the best they could do in the 1920s with any regularity. They didn't know how to control it until John Chipman told them what types of slags to use. I can go to an ASM spec today and they'll still say the sulfur has to be less than 0.05%. Are you kidding me? No one makes 0.05 steel anymore. They haven't made it since before 1950. Sulfur does a lot of bad things for toughness in steel, but we've learned how to make it better and better. We can regularly get down to 0.002 or 0.001 sulfur today if we want, but we don't usually need to.

First-person biographical anchor for the Bethlehem Steel case: Tom as one of 500 college hires in summer 1975, raising the contrarian hand at the financial VP's depreciation argument. ## Figures referenced (recurring numeric anchors)

I went to a training for the 500 new college employees of Bethlehem Steel in the summer of '75. We went to this two-week training in an auditorium, and we had countless vice presidents come in and give us talks. This one financial vice president comes in — they had just had their most profitable year ever a year and a half before — and he says, we are one of the most efficient steel companies in the world, because our blast furnaces were built in 1912 and our coke ovens were built in 1911. Out of 500 idiot newbies, I raised my hand and said, I don't understand why having old equipment makes you more efficient. He said, because it's fully depreciated. I said, oh. And he made some comment about how I didn't understand finance. So a year later I took a finance course and I learned I didn't understand finance — but neither did he.

Tom hired into Homer Research Labs in 1974 at Bethlehem. The loop course story — 500 new college grads, the VP of finance's claim that depreciated 1911 equipment made steel free, Tom asking the wrong question, the accounting course at Lehigh that taught him the VP was wrong. Thirteen months in, Tom decides to return to MIT.

Part of the best part of Bethlehem Steel, the Burns Harbor plant, was the last large-scale steel plant built by a company in the world. Bethlehem decided to build a brand-new greenfield steel plant in 1965, and it almost bankrupted them. At the same time they decided to build the Homer Research Labs for $600 million, which is where I was hired in 1974. A $600 million research lab in 1966 — it was a Taj Mahal of research labs.