The Bethlehem Steel Corporation (1857–2003), based in Bethlehem, Pennsylvania, once was the second largest steel producer in the United States (after Pittsburgh, Pennsylvania-based US Steel). But following its 2001 bankruptcy, the company was dissolved and the remaining assets sold to International Steel Group in 2003. In 2005, ISG merged with Mittal Steel, ending U.S. ownership of the assets of Bethlehem Steel.
During its life, Bethlehem Steel was also one of the largest shipbuilding companies in the world and was one of the most powerful symbols of American industrial manufacturing leadership.
Bethlehem Steel's demise often is cited as one of the most prominent examples of the U.S. economy's transition away from industrial manufacturing and its inability to compete with cheap foreign labor.
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Founding
The company's roots go back to 1857 when The Saucona Iron Company was first organized under the leadership of Augustus Wolle.[1] Due to the Panic of 1857, a national financial crisis, further organization of the company and construction of the works came to a halt. Eventually, organization of the company was completed, the original site for the works was changed to another in South Bethlehem, and the company's title was changed to The Bethlehem Rolling Mill and Iron Company.[1] On June 14, 1860 the board of directors of the fledgling company elected Alfred Hunt president.[1] On May 1, 1861 the company's title was changed again, this time to The Bethlehem Iron Company.[1] On July 1, 1861 construction of the first blast furnace began, going into operation on January 4, 1863. The first rolling mill was built between the spring of 1861 and the summer of 1863, with the first railroad rails being rolled on September 26. A machine shop, in 1865, and another blast furnace, in 1867, were completed. During its early years, the company produced rails for the rapidly expanding railroads and armor plating for the US Navy.
In 1899, the company assumed the name, Bethlehem Steel Company. In 1904, Charles M. Schwab (then recently resigned from US Steel, and unrelated to the stockbroker Charles R. Schwab) and Joseph Wharton (who founded the Wharton School of Business in Philadelphia) formed the Bethlehem Steel Corporation with Schwab becoming its first president and chairman of its board of directors.
The Bethlehem Steel Corporation ascended to great prominence in American industry, installing the revolutionary grey rolling mill and producing the first wide-flange structural shapes to be made in America. These shapes were largely responsible for ushering in the age of the skyscraper and establishing Bethlehem Steel as the leading supplier of steel to the construction industry.
In the early 1900s, the corporation branched out from steel, with iron mines in Cuba and shipyards around the country. In 1913, it acquired the Fore River Shipbuilding Company of Quincy, Massachusetts, thereby assuming the role of one of the world's major shipbuilders. In 1917 it incorporated its shipbuilding division as Bethlehem Shipbuilding Corporation, Limited., also known as BethShip.
Behind American landmarks
Eugene Grace was both president of Bethlehem Steel, from 1916 to 1945, and chairman of the board, from 1945 until his retirement in 1957. During Grace's tenure the company manufactured the steel for many of the country's most prominent landmarks: New York City's Rockefeller Center and Madison Square Garden; San Francisco's Golden Gate Bridge; Bonneville, Grand Coulee and Hoover dams; and the George Washington Bridge. Furthermore, Bethlehem Steel fabricated much of the 60,000 tons of steel used in Chicago's Merchandise Mart, once the world's largest building. [2]
The steel for American armed forces
During World War I and World War II, Bethlehem Steel was a major supplier of armor plate and ordnance products to the U.S. armed forces. Many of the nation's fighting ships used armor plate and large caliber guns supplied by Bethlehem Steel.
During World War II, Bethlehem Shipbuilding Corporation's 15 shipyards produced a total of 1,121 ships, more than any other builder during the war, employing as many as 180,000 persons in the process (company total employment was 300,000). When peacetime came, the plant continued to supply a wide variety of structural shapes for the construction trades and forged products for defence, power generation and steel-producing companies.
Bethlehem Steel's high point came in the 1950s, as the company began manufacturing some 23 million tons per year, and it built its largest plant, at Burns Harbor, Indiana, between 1962 and 1964. In 1958, the company's president, Arthur B. Homer, was the highest paid business executive in the US.
Shipyards
- Fore River Shipyard - Massachusetts
- Bethlehem Sparrows Point Shipyard in Sparrows Point, Maryland (now Barletta Industries Sparrows Point Shipyard and Industrial Complex)
- Alameda Shipyard - California
- San Francisco Shipyard - California (formerly U.S. Iron Works, now BAE Systems San Francisco Ship Repair)
Freight cars
From 1923 to 1991, Bethlehem Steel was one of the world's leading producers of railroad freight cars through their purchase of the former Midvale Steel and Ordinance Company, whose railcar division was at Johnstown, Pennsylvania. Despite its status as a major integrated steel maker, Bethlehem Steel Freight Car Division pioneered the use of aluminum in freight car construction. The Johnstown plant was purchased from Bethlehem Steel through a management buyout in 1991, creating Johnstown America Industries.
Facing foreign competition
While the US steel industry prospered during World War II, the steel industries in Germany and Japan were devastated by Allied bombardment. As a result, they had to be rebuilt after the war, but were rebuilt with more modern techniques such as continuous casting in their now newer plants. This efficiency, plus the high benefit concessions given to US steelworkers during the two decades that the US steel Industry operated without significant foreign competition, and unwillingness of the US steel industry to invest their profits into newer technology, set the stage for a significant price differential in the 1980s.
Cheaper foreign steel began being imported in the 1980s, negatively impacting Bethlehem Steel's market share in the U.S. steel industry. In 1982, the company reported a loss of US$1.5 billion and was forced to shut down many of its operations. Profitability returned briefly in 1988, but restructuring and shutdowns continued through the 1980s and 1990s.
In the mid-1980s, the market for the plant's structural products began to diminish, and new competition entered the marketplace. Lighter, lower construction styles, resulting in low-rise buildings not requiring the heavy structural grades produced at the Bethlehem plant, caused Bethlehem Steel to discontinue its coal mining operations (Under the name BethEnergy) in 1991, and its steelmaking activities at the main Bethlehem plant by the end of 1995. After roughly 140 years of metal production at its Bethlehem, Pennsylvania plant, Bethlehem Steel ceased operations in Bethlehem. Bethlehem Steel exited the railroad car business in 1993 and ceased shipbuilding activities in 1997 in an attempt to preserve its core steelmaking operations.
Management failings
James C. Collins, in the book Good to Great, compares the long term decline of Bethlehem with the meteoric rise of Nucor. Based upon the data gathered by the research team, Collins concludes that cheap imports were not the only reason for Bethlehem's decline. The failure of management to innovate, embrace technology and improve labor relations contributed to the company's demise.
Ironically, the subject of cheap imports has continued to be an issue for American steel producers. Recently, the Chairman and CEO of Nucor has testified to the US Senate concerning the problems caused by cheap imports.
Closing and bankruptcy
With the closing of its local operations and its extraordinary ensuing impact on the local Lehigh Valley area, Bethlehem Steel decided to help revitalize the South Side of Bethlehem, and hired outside consultants to develop conceptual plans on the reuse of the massive property. The consensus was to rename the 163-acre (660,000 m²) site Bethlehem Works and to use the land for cultural, recreational, educational, entertainment and retail development. The National Museum of Industrial History, in association with the Smithsonian Institution, and the Bethlehem Commerce Center, consisting of 1,600 acres (6.5 km²) of prime industrial property, plan to be erected on the site along with a casino and huge retail and entertainment complex.
In 2001, Bethlehem Steel formally filed for bankruptcy. Two years later, in 2003, the company's remnants, including its six massive plants, were acquired by the International Steel Group.
As of 2007, the property has been sold to Sands BethWorks, and plans for a casino to be built where the steel giant once stood are expected to be completed by 2009.
References
- Hall, P. J. (1915), "History of South Bethlehem, Pa.", Semi-centennial, the borough of South Bethlehem, Pennsylvania, 1865-1915, Quinlan Printing Co., p. 12-13
See also
External links
- "The Sinking of Bethlehem Steel", Fortune magazine, April 5, 2004.
- "Forging America: The History of Bethlehem Steel", The (Allentown) Morning Call.
- "Anthracite Railroading Blog", covers latest preservation news of the South Bethlehem Plant.
- .designedbreakdown. Short history and present-day photo galleries exploring the decayed plant.
- "South Bethlehem Plant Research and Modeling", Jules Heiliczer's website includes his research and HO scale models of The Steel.