General Steel Industries - Discontinued Operations

Discontinued Operations

In 1964, declining demand for large steel castings and excess capacity from operating two foundries led the company to consolidate the Castings Division's operations at its Granite City plant at 1417 State Street in Granite City, Illinois. By 1971, the Granite City plant had grown to be 127 acres (0.51 km2) with 42 acres (170,000 m2) under roof and was bordered by the Madison city boundaries on the south, 16th Street on the north, State Street on the east, and the railroad tracks that run along Route 3 on the west.

Fortunes for both the St. Louis Car Division and the Castings Division began to fade in the mid-1960s. "The smooth, comfortable ride of the modern railroad passenger car is the direct result of General Steel's historic development of new designs of trucks with cast steel frames and bolsters" but the development of new designs would at least partially result in the end of St. Louis Car. In 1970, St. Louis Car won two large fixed-price contracts for rapid transit and commuter cars but "the complexity of new engineering and manufacturing techniques for cars of such advanced design was underestimated" leading to recording a charge of $6,400,000 in 1971 for the expected loss on fulfilling the orders. As the company's largest division at the time, losses at St. Louis Car sank the entire enterprise's net income into the red. At the Castings Division, the Granite City plant improved production efficiency and lowered its breakeven point but a strike from November 20, 1971 to January 17, 1972 completely halted production.

On December 14, 1972, management announced the company's Castings Division and its St. Louis Car Division were to be closed and, after the delivery of pending orders, the divisions' assets were to be liquidated (expected to occur in 1973). The reasons stated to discontinue operations at the two divisions included significant losses and competitive pressure. St. Louis Car incurred losses for seven of the previous eight years and "GSI lacks the financial resources needed to compete with several much larger companies which recently entered the transit car building industry." The Castings Division had not produced satisfactory earnings for five years, lost approximately $3 million in 1972, and "was not competitive in most of its major markets and there were no prospects for future improvement of its position." The company recorded a charge of $31,173,000 for the anticipated cost of discontinuing the unprofitable divisions. The closing of the Castings Division ended the company's manufacture of steel castings, products the company had been producing since its founding. The five remaining operating units were: National Roll, Flex-O-Lite, Ludlow-Saylor Wire Cloth Division, Standard Pipeprotection, and Simplicity Engineering Company (a subsidiary).

General Steel continued operations at the Granite City plant until orders, pending at the time of the December 1972 announcement of the Castings Division's closing, were completed. The property at 1417 State Street, Granite City, Illinois was purchased by Granite City Steel, a subsidiary of National Steel Corporation, in 1974 and the property became known as the South Plant. Granite City Steel likely occupied the facility until the parent company's bankruptcy liquidation in 2003.

In 1971, General Steel's corporate offices were at One Memorial Drive, St. Louis, Missouri. In 1973 the company's offices had moved to 8474 Delport Drive (8400 Midland Blvd.), also in St. Louis, and the concern launched a new consulting services division, GSI Engineering, to design railcar and locomotive trucks and suspension systems and to manage the licensing of company products that were in service in 50 countries.

Less than a decade later, when General Steel was acquired by Lukens Steel in 1981 for $66 million, it was a producer of steel, crushing and conveying equipment, reflective highway signs, and protective coatings for oil and gas pipelines.