Northwestern Steel & Wire: 1936 - 2001

Published: May 26, 2026

Northwestern Steel & Wire was, as its name states, was once a major steel and wire manufacturer located in Sterling, Illinois. It was in production from 1936-2001 although its earliest history can be traced back to 1879. For railfans, the operation became famous for its own industrial railroad, which operated former Grand Trunk Western 0-8-0s until 1980. Operations slowly wound down after this time as the domestic steel market retrenched. The company finally ceased production entirely in the spring of 2001.

Northwestern Steel & Wire 0-8-0 #25 (ex-Grand Trunk Western #8325) works the mill in Sterling, Illinois on August 19, 1964. Marty Bernard photo.

Founding and Early Wire-Making Era (1879–1930s)

The company traces its roots to February 28, 1879, when Washington M. Dillon (a hardware merchant with iron-working family heritage from Ohio) and partners, including his stepbrother William C. Robinson and two others, incorporated the Northwestern Barb Wire Company in Rock Falls, Illinois (adjacent to Sterling). They started small in a three-story building along the Rock River, with about 10 employees producing barbed wire spools from purchased smooth wire, powered initially by water wheels.

Dillon expanded through partnerships (e.g., Dillon-Griswold Wire Company in 1892 in Sterling for barbed wire, bale ties, drawn wire, and nails). After various changes, including the 1912 acquisition of assets from a receivership and relocation of operations to Sterling, the company grew. A major fire in the late 1920s destroyed the wire mill (with some fatalities), but it was quickly rebuilt larger. Washington Dillon died in 1920; his son Paul W. Dillon took leadership, with later generations (Martin and Peter) involved.

By the early 1930s, dependency on external wire rod suppliers—who were also competitors—became a problem, especially during the Great Depression.

Entry into Steel Production (1936 Onward)

In 1936, amid the Depression and restrictions from the National Recovery Act (which limited traditional blast furnaces but allowed electric furnaces), Paul Dillon installed two 10-ton electric arc furnaces, a billet mill, and a rod mill. This made NWSW a fully integrated steel producer. The name officially changed to Northwestern Steel and Wire Company in 1938.

Production scaled rapidly:

WWII era: Added 50-ton furnaces to meet demand; attracted workers from across the U.S. (especially Southern states like Texas and Oklahoma).

Post-WWII: “Silver City” housing—100 converted railroad boxcars painted silver along the Rock River—housed many workers and families, with rent deducted from pay and a company store nearby.

1950s: 150-ton furnaces, new plant expansions (including a 46" blooming mill and merchant bar mill), and significant growth in facilities.

1960s–1970s: Massive upgrades, including a 250-ton furnace (1968, using ultra-high power tech), then world-largest 400-ton Electro-Melt furnaces (1971, mid-1970s, and a third converted in 1979). Added continuous casters, multiple rolling mills (12", 14", 20", 24-inch—the 24" one an early continuous structural mill), and more. Rod was produced at high speeds (up to ~230 mph at final stands) for internal wire use or sale.

By 1979 (its centennial), NWSW was one of Whiteside County's largest employers with peak employment of ~4,678 (or around 4,500 across six plants spanning ~600 acres along the Rock River). It ranked among the top 15–16 U.S. steel producers by tonnage/dollar volume, with ~2–2.3 million tons annual raw steel capacity. Products included barbed wire, fencing (farm/residential, welded wire, plastic-coated), nails (Sterling brand), reinforcing fabric, structural shapes (beams, channels, angles), and more. Scrap was sorted and melted in refractory-lined electric furnaces (up to ~3,000°F via electrodes).

Railroad Operations and Steam Locomotive Fleet

The mill had an extensive internal rail network for moving scrap metal to the furnaces and hot ingots/products between facilities and shipping points. This was a point of pride and a major operational feature.

Steam switchers were introduced in the late 1930s (Paul W. Dillon was a steam enthusiast who had operated engines as a young man on the Denver & Rio Grande). The company typically bought second-hand locomotives (e.g., from Illinois Central or others) for scrap but often repurposed serviceable ones instead. Early ones included 0-6-0 switchers (one notable ex-Chicago Burlington & Quincy, converted from a 2-6-2 and an early oil burner). Coal-fired engines were demanding (e.g., ~24 tons coal and 48,000 gallons water per day).

The iconic fleet came in 1960: NWSW acquired 15–16 ex-Grand Trunk Western (GTW) 0-8-0 switchers (Class P-5b or similar, many built by Lima or Baldwin in the 1920s, e.g., around 8327 series). These were oil-fired with auxiliary tenders for one-man operation and far more capable (could handle 25+ loads of steel). They replaced the older 0-6-0s, which were then scrapped. At peak, ~4 engines were kept serviceable at any time from the fleet (not all were steamed; e.g., 8310 and 8314 may not have been). An in-house shop maintained them, fabricating or scavenging parts from scrapped locos (they had scrapped over 100 steam engines by 1962 for steel feedstock).

These 0-8-0s operated around the clock into the early 1980s, with whistles, smoke, and sounds familiar to locals. They were among the very last steam locomotives in regular freight/industrial service in the United States. Examples include:

NS&W #73 (ex-GTW 8376, Baldwin 1929) — one of the final ones, with its last run on December 3, 1980 (coupled to a diesel); later moved as a memorial to the Paul W. Dillon home.

Others like #05 (ex-GTW 8305), #76, #80, and references to #25, #28, etc.

Steam operations largely ended after Paul Dillon’s death in 1980; the mill switched to diesels (e.g., EMD SW1001s). Some GTW 0-8-0s were donated to museums like the Illinois Railway Museum rather than scrapped. Railfans documented them extensively in the 1960s–1970s, and videos from 1979 still circulate online.

Decline, Closure, and Legacy (1980s–2000s)

The 1980s brought a global steel slump, intense competition, and losses (e.g., millions in late 1984/1985). Acquisitions and management changes followed (bought in 1987; later involvement by Kohlberg & Co. in 1993). Despite innovations like electric furnaces and continuous casting (pioneering for mini-mill style), the company struggled. It filed for Chapter 11 bankruptcy in late 2000 and ceased operations on May 18, 2001, laying off the remaining ~1,500 workers.

In 2002, Leggett & Platt acquired part of the site and reopened it as Sterling Steel (focused on wire rod), which continues today with ~400 employees after renovations.

NWSW left a legacy as a major local employer, innovator in electric steelmaking, and one of the last bastions of industrial steam railroading. Local historical societies and sites like nwsw.info preserve photos, memories, and documents. Your 0-8-0 photos would be a great addition to that record!

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Northwestern Steel & Wire: 1936 - 2001

Founding and Early Wire-Making Era (1879–1930s)

Subscribe To American Rails!

Entry into Steel Production (1936 Onward)

Railroad Operations and Steam Locomotive Fleet

Decline, Closure, and Legacy (1980s–2000s)