Northwestern Steel and Wire Company


Pioneer manufacturer of high-tonnage EAF (Electric Arc Furnace) carbon steel products,
and the "prototype Mini Mill" that once operated in Sterling, Illinois



Northwestern Steel & Wire Company (formerly NSW, or NWSW on the NYSE), at one time the eleventh largest steelmaker in the country, was developing innovations in electric arc furnace carbon steelmaking from 1936 to its closure in 2001. Even before 1969, when the first mini-mill was just beginning to operate, NSW had already sold more than 8,500,000 tons of high-volume EAF carbon steel ("electric steel") products. This is the story of how P.W. Dillon and the thousands of NSW employees forever changed the face of the American steel industry.

This website, commissioned by a senior Dillon Family member, is a tribute to P.W. Dillon, Northwestern Steel and Wire Company, and NSW's many loyal, hardworking employees. The information has been written by several NSW employees based on extensively researched historical events and facts drawn or paraphrased from published and unpublished NSW legal, financial, and historical records and from several of the other references listed below.

Early Electric Arc Furnace (EAF) Development

European Roots

    In the 19th century, a number of men had employed an electric arc to melt iron. Sir Humphry Davy conducted an experimental demonstration in 1810; welding was investigated by Pepys in 1815; Pinchon attempted to create an electro­thermic furnace in 1853; and, in 1878-79, Sir William Siemens used an electric current to melt iron and took out patents for “direct arc” electric furnaces. [1]

   The first successful and operational furnace was invented by James Burgess Readman in Edinburgh, Scotland in 1888, and was patented in 1889. However, it was specifically built for producing phosphorus. The first successful direct-arc steelmaking furnace was placed in operation by Paul Heroult of France in 1899. [2]

The Beginnings of Electric Arc Steelmaking in the U.S. [3]

   In 1906 the first Heroult furnace in the United States was installed at the Holcomb Steel Company in Syracuse, New York. In 1907 the Sanderson Brothers Steel Co. in Syracuse used Heroult’s design to install the first electric arc furnace in a U.S. commercial plant. The Holcomb furnace had a four-ton capacity, but a fifteen-ton, three-phase furnace was installed by the Chicago-based Illinois Steel Company in 1909.

   Initially "electric steel" was a specialty product for such uses as machine tools and spring steel. However, while EAFs were widely used in World War II for producing alloy steels, it was only later that electric steelmaking began to expand. The low capital cost for a mini-mill—around US$140–200 per ton of annual installed capacity, compared with US$1,000 per ton of annual installed capacity for an integrated steel mill—allowed mills to be quickly established in war-ravaged Europe, and also allowed them to successfully compete with the big, integrated U.S. steelmakers (such as U.S. Steel and Bethlehem Steel) for low-cost, carbon steel "long products" (structural steel, rod and bar, wire, and fasteners) in the U.S. market.


NSW Pioneers the First High-Volume Carbon Steel EAFs  [4, 5, 6, 7, 8]

Early History:  Necessity is the Mother of Invention

   In the early 1930s, when Northwestern was buying its rods from “The Corporation” (U.S. Steel), Paul Washington Dillon (“PW”) was always pressing for lower material (rod) prices. He believed that the only safe course was to become independent of any other steel company for raw materials. But achieving that goal meant the installation of melting facilities for making steel—not just putting up a rod mill for making NSW’s wire products (barbed wire, fencing, nails, etc.).

   Open hearth furnaces, which were then in general use by the major, integrated steel companies, were extremely costly to build, and Northwestern did not have the millions of dollars required. Furthermore, the Great Depression came along early in this decade and made the installation of traditional furnaces even more impossible.

   Then, on June 16, 1933, Congress approved the National Industrial Recovery Act, which was commonly known as the NRA. It allowed—even urged—each U. S. industry to draw up a “Code of Fair Competition” for that industry. The general objective was to eliminate much of the cutthroat competition in pricing and selling practices that were being used by companies in all types of businesses in order to survive.

   On August 19, 1933, a “Code of Fair Competition for the Iron and Steel Industry” was approved by President Franklin D. Roosevelt. The new code immediately produced complications in pricing and in “unit of sale” definitions that adversely affected non-integrated manufacturers (like Northwestern), who did not at that time produce their own rods. Paul Dillon’s protests were heard sympathetically, but he was denied any relief. While making known his intention to do whatever he could to protect his position, he began constructing a large steel building that could potentially be used for a warehouse or for a steel­making facility.

   But the code also had a provision that seemingly thwarted Dillon’s ambition to produce steel in his own plant. The provision, which was in the “Production and New Capacity” section, read as follows:

“Section 2.  ....Accordingly, unless and until the Code shall have been amended as hereinafter provided so as to permit it, none of the members of the Code shall initiate the construction of any new blast furnace or open hearth or Bessemer steel capacity. The President may, however, suspend the operation of the provisions of this Section.”

   In l935, Northwestern Barb Wire Co. (as it was called then) applied for exemption from this clause and for permission to erect open hearth capacity to produce 100,000 tons of steel annually. The company stated that it was seeking to become an integrated unit in order to be able to compete with integrated manufacturers, who produced steel ingots as well as barbed wire.

   Even though The National Industrial Recovery Act was due to expire in June of l935, on June 3rd, the U.S. Supreme Court declared the NRA unconstitutional. That set Northwestern free to erect whatever steelmaking facilities it wished. As Paul Dillon read and reread the code, it dawned on him that the code prohibited only “the construction of any new blast furnace or open hearth or Bessemer steel capacity.” It did not prohibit the construction of an electric furnace. Noting this omission, he began investigating the use of electric furnaces in steelmaking.

   W. E. Moore was among those who became involved in the American development of electric furnaces. He designed and marketed a Moore Rapid Lectro­melt furnace, the forerunner of the modern Lectromelt Arc Furnace. The first Lectromelt furnace was operated by the Stowell Manufacturing Company in 1916. But even in the 1930s, the electric process was still considered suitable for making only very small quantities of high quality specialty steels, such as tool steels and stainless steels. It was not considered practical for making plain carbon steel in any volume.

   So those who drafted the NRA Code for the iron and steel industry did not bother to prohibit the expansion of electric furnace capacity. In fact, they probably did not expect anyone to try to use electric furnaces to make plain carbon steel.

   The expansion into electric furnaces was slow. Capacity grew from 805,240 tons at the end of 1931 to only 869,364 tons at the end of 1934.

The Search for Electric Furnaces

   PW’s investigation went in several directions. In addition to listening to Moore, he talked to Fryn Engineering Company, Chicago consultants. They indicated that, with a limited expenditure, he could put in a small electric furnace that would be adequate for his immediate requirements.

   NSW accepted the Fryn and Moore recommendations. Moore’s Lectromelt Corporation in Pittsburgh was authorized to build two 10-ton, top-charge furnaces, which were believed to be the very first of their kind. Westinghouse Corporation, also of Pittsburgh, manufactured the necessary electrical equipment and controls. Both companies extended generous credit and cooperated fully in what at that time was considered a bold experiment. In fact, traditional, integrated steelmakers scoffed at the plan and openly predicted that Dillon would go bankrupt before he got started. Without the strong backing of both Lectromelt and Westinghouse, these predictions might well have come true. But Moore envisioned the electric furnace as the coming thing. It was clean and did not require the enormous expenditures that were necessary to purchase and install a blast furnace.

   However, there was a problem with power. The 7,500 kilowatts per hour (later upgraded to 10,000 or more) required by each furnace were more than all of Northern Illinois needed. Furthermore, an electric arc furnace abruptly draws a huge surge of power from the system. But Illinois Northern Utilities was willing to bring in a special line just to supply Northwestern.

An Innovative Steel Mill ("Proto-type Mini Mill") Is Built

   So, during the winter of 1935 and on into the spring of 1936, Northwestern built a steel mill. Obtaining the skilled labor for this job was no small matter. It was necessary to draw ironworkers, millwrights, electricians, pipefitters, and other trades­­men from a wide area--to meet the requirements.

   Earlier electric furnaces were side-charged units, which were satisfactory for making alloys and special steels. But in order to get any tonnage out of a furnace, it was necessary to get a lot of scrap into it as quickly as possible. So the top-charge design was developed. In fact, the idea of top-charging an electric furnace is believed to have originated during the development of Northwestern’s furnaces.

   Construction of all of the necessary equipment—the furnace, blooming mill and rod mill—was synchronized to be completed in early April, at which time Northwestern could begin producing the basic materials for its wire mill.

   By March 1936, Northwestern’s first electric furnace was installed, equipped, and made ready for operation. It began operating on Easter Sunday in early April 1936. It is notable that this was 33 years before Nucor operated its first EAF, followed by the growing number of mini mills with their EAFs.

   With the opening of Commonwealth Edison’s nuclear power plant at Cordova, Illinois, Northwestern had uninterrupted service. It was the first customer to use the 345,000-volt power system that ComEd extended to the Chicago area in 1971. In fact, NSW would normally utilize more Commonwealth Edison power in a day than the city of Chicago.


 Major Dates and Facts Regarding NSW Facilities and Operations

 A.  1879:  Northwestern Barbed Wire Company was founded by Washington M. Dillon and W.C. Robinson.
 1938:  Company name was changed to Northwestern Steel and Wire Company.
 1960:  Northwestern Steel and Wire became traded on the New York Stock Exchange.
 2001:  After 123 years in the wire and steel business, Northwestern ceased operations.

       In the meantime....

 B.  1936:  As an “independent producer” (rather than an integrated steel mill), Northwestern began operating
       its first two 10-ton carbon steel electric arc furnaces (EAFs) for making carbon steel in the United States,
       essentially becoming the very first (non-integrated) “mini-mill.”

       NSW’s Total production of ingots in 1936 was 10,076 tons. It jumped to 103,827 tons in 1937.
       By 1973 it had reached 1,444,156 tons.

C.  1950:  NSW split into two divisions:

Merchant Wire Products Division: produced, for example, rod, barbed wire, Sterling brand nails (sold nationally), and fencing.
In those days, nail machines stamped and cut one nail at a time, so the division became noted for internally
developing nail machines that could crank out
two nails at once.


      Steel (Hot Rolled Products) Division (the new division): produced merchant bars, flats, channels,
       angles, and wide-flange beams.

D.    NSW’s additional and larger furnaces
    1936:    original two 10-ton furnaces
began operating two 150-ton furnaces



       1969:    began operating one 250-ton furnace
    began operating one 400-ton furnace, then the largest EAF in the world
1976:    began operating a second 400-ton furnace
    converted one 250-ton furnace to a  third 400-ton furnace

 E.   NSW’s additional and updated rolling mills
 1950 – 12” merchant bar mill
 1956 – 25” billet mill
 1957 – 16” mill
 1959 – 20” structural and plate mill
 1963 – 24” structural and plate mill
1975 – 14” merchant bar mill
 1975 – 46” blooming mill
 1984 -- Morgan Stelmore/No-Twist rod mill

F.    Just from 1957 to 1969, the year when Nucor was just beginning to operate its first electric furnace,
       NSW had already produced more than 8,580,000 tons of “electric steel.”

G.   At a high point in 1979, NSW employed 4,678 people—mostly unionized workers.

H.   Continuous caster operations initiated
1982 --  6-strand bloom caster
1982 --  8-strand billet caster
1991 --  jumbo 3-strand beam blank caster

I.    In 1993, Northwestern had....
  16% market share in structural steel; and
  27.3% market share in wide flange beams.

J.   In its heyday, NSW was the eleventh largest steel producer in the U.S., successfully competing with the larger
      integrated companies....as the very first (independent) “mini-mill” to produce carbon steel products in high-capacity EAFs.


NSW’s Competitiveness Declines
Due to Increasing Competition from the “New Mini-Mills

   Northwestern once had the highest total wage/fringe package in the industry. In 1982 it was $23.75 per hour. But, as outlined below, non-unionized southern, southeastern, and southwestern wire products and steel competitors (such as the “new” mini mills, most constructed in “right-to-work” states) had total wage/fringe packages of only around $9.00/hour. With far lower costs that enabled aggressive pricing, those competitors relentlessly ate away at NSW's traditional, wide-ranging geographic market area.

   Paul W. Dillon’s son, Martin, and Martin's son, Peter, took a number of temporarily successful steps to turn a ship the size of NSW onto a more sustainably competitive course. But after an ESOP (Employee Stock Ownership Plan), several new CEOs at the helm, and some very costly mistakes, the pioneering NSW finally met its demise, leaving Nucor and an increasing number of other mini-mills to reap the benefits of so many years of NSW innovations in EAF steelmaking.

   From about 1969, approximately forty mini mills sprang up around the country.[9]  These included, for example: Steel Dynamics Inc., Fort Wayne, Ind., built mills in Indiana; traditional integrated steelmakers such as U.S. Steel built EAF capacity in Pennsylvania and Ohio; in 1985 North Star Steel, a division of Cargill, built mini-mills in Minnesota and Ohio; and Co-Steel built EAF mills in New Jersey. Several others were Chaparral in Texas, Florida Steel Corp., Georgetown Steel Corp. in South Carolina, and Oregon Steel Mills.

   But it was Nucor that initiated this mini mill boom. [10, 11, 12]

   Nucor’s F. Kenneth Iverson and Samuel Siegel reorganized the company around its only profitable business, the steel fabricator Vulcraft. All other businesses were either sold or liquidated. In 1966, the company moved its headquarters to Charlotte, North Carolina to be closer to its main Vulcraft plant.

   In 1968, unable to get favorable steel prices from American manufacturers and unhappy with the imported steel available at the time, Iverson, a metallurgist by training, decided to extend Nucor vertically into steelmaking by building its first steel bar mill in Darlington, South Carolina.

   For many of the same reasons as NSW, the company chose to purchase an electric arc furnace, which was far cheaper than the traditional steel blast furnace. The company’s first mini-mill, located in Darlington, went into production in 1969. At first intended as a way to provide a reliable and economical supply of steel to the company’s Vulcraft divisions, the mini-mill soon expanded into other products.


Northwestern's Steam Locomotives

When younger, P.W. Dillon became fascinated with steam locomotives--a fascination that later led to his adopting them for moving materials around in NSW facilities.





              One of NSW's steam locomotives, #73, now rests on the grounds
             of The Dillon Home in Sterling, Illinois.




1.   Electric Arc Furnace – Wikipedia
[https://en.wikipedia.org/wiki/Electric Arc Furnace]

2.   “Journey’s End,”
Recycling Today: Brian Tay­lor, 2013.

   Electric Arc Furnace – Wikipedia
[https://en.wikipedia.org/wiki/Electric Arc Furnace]
   Northwestern Steel & Wire – Wikipedia
[https://en.wikipedia.org/wiki/Northwestern_Steel_and _Wire]
   NSW Annual Reports as a private company up to 1959.
6.   NSW Annual Reports as a publicly traded company on the NYSE from 1960 to 2001.

7.  100 Years of Progress: 1879-1979, Northwestern Steel & Wire Company, 1979. This was an illustrated, 14-page, 100th Anniversary commemorative publication made available to NSW customers and suppliers, NSW employees, citizens of Sterling and Rock Falls, Illinois, area newspapers and libraries, and many other friends of the company.

8.   History of the Dillon Family in America and Northwestern Steel & Wire Company: 30-chapter, 231-page/2-column book, researched and written by J. Harold Torres, Gunnar A. Benson, Peter W. Dillon, and Robert D. Cecil, and based on (a) Dillon family recorded history; (b) 1974 extensive employee interviews; (c) NSW’s unpublished, privately distributed Annual Reports up to 1959; (d) more recent interviews of fifteen NSW executives and key supervisors; (e) NSW’s published Annual Reports (as a publicly traded company on the NYSE) from 1960 to 2001; and 100 Years of Progress (above). Because P.W. Dillon did not want competitors to know what NSW was doing, it was his express, firm stipulation that such a detailed history never be published for consumption by the general public and NSW’s competitors. Dillon family members still honor that wish.

  9.   “No more mini mills?”: Industry Week, November 8, 1971.
   Nucor Corporation, History
   Nucor Corporation – Wikipedia
   7 Fascinating Things You Probably Didn’t Know About NucorCorp.:  R.G. Brewere, August 20, 2017.

         Also published in The Motley Fool and other sources.

Northwestern Steel & Wire Company

NSW Rod and Wire Products Factbook: a 46-page informational publication that was provided confidentially to all NSW managers and salaried supervisors. The Factbook’s maps, graphs, and other exhibits were presented in informational meetings conducted for leaders of NSW’s two unions and those unions’ members. The purpose of those meetings was to explain NSW’s competitive problems in an attempt to procure wage and benefit concessions from the unions. The booklet was researched and written by Peter W. Dillon and consultant R.D. Cecil. Information was based entirely on (a) audited NSW revenue and cost figures; (b) cost figures provided by (undisclosed) NSW customers; and (c) publicly available industry data. Later in 1982, steelworker union auditors confirmed the company’s financial figures.

Northwestern Steel & Wire Co – Company Profile and News
[https://www.bloomberg.com/profile/company/NWSW: US]

Northwestern Steel and Wire, New York Times, Aug 30, 1985.

History of Northwestern Steel & Wire Co.

Northwestern Steel & Wire
nwsw case study.pdf]

History Timeline | Unofficial – Northwestern Steel & Wire Co.
[https://www.nwsw.info/?page_id=159]; also

Northwestern Steel and Wire Company's Lightning Bolt Newsletters

Northwestern Steel & Wire Co. | Home  | Facebook

Northwestern Steel and Wire

Northwestern Steel and Wire Photos on Flickr | Flickr

Additional References

Crucible Industries: Our History

United States Patent Office:  US Patent # 417943

Last revised:  8/22/2023

RDCecil.com Home Page