Bethlehem Steel

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Bethlehem Steel Corporation
Former type Private
Industry Steel, shipbuilding, mining
Fate Bankruptcy
Successors ArcelorMittal
(2006–present)
Mittal Steel Company
(2005–2006)
International Steel Group
(2003–2005)
Founded 1857
Defunct 2003
Headquarters Bethlehem, Pennsylvania
Subsidiaries Bethlehem Shipbuilding Corporation

Bethlehem Steel Corporation was America's second-largest steel producer and largest shipbuilder.

Bethlehem Steel and a subsidiary company, Bethlehem Shipbuilding Corporation, were two of the most powerful symbols of American industrial manufacturing leadership. Their demise is often cited as one of the most prominent examples of the U.S. economy's shift away from industrial manufacturing, its failure to compete with cheap foreign labor, and management's penchant for short-term profits.

After a decline in the American steel industry and other problems leading to the company's bankruptcy in 2001, the company was dissolved and the remaining assets sold to International Steel Group in 2003. In 2005, ISG merged with Mittal Steel, ending American ownership of the assets of Bethlehem Steel.

History[edit]

Founding[edit]

Bethlehem Steel Works, a watercolor by Joseph Pennell, depicting Bethlehem Iron Company in May 1881

The company's roots go back to 1857 when the Saucona Iron Company was first organized by Augustus Wolle.[1] The Panic of 1857, a national financial crisis, halted further organization of the company and construction of the works. Eventually, the organization was completed, the site moved elsewhere in South Bethlehem, and the company's name 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] Construction of the first blast furnace began on July 1, 1861, and it went 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[2] and Joseph Wharton[3] formed the Bethlehem Steel Corporation with Schwab becoming its first president and chairman of its board of directors.[citation needed]

The Bethlehem Steel Corporation installed the gray 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.[citation needed]

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. In 1922, it purchased the Lackawanna Steel Company, which included the Delaware, Lackawanna and Western Railroad as well as extensive coal holdings.[4]

1890s[edit]

The Bethlehem Steel plant, photographed circa 1896 by William H. Rau

Although the company continued to prosper during the early 1880s, its share of the rail market began to decline in the face of competition from growing Pittsburgh-based firms such as the Carnegie Steel Company. The nation's decision to rebuild the United States Navy with steam-driven, steel-hulled warships reshaped Bethlehem Iron Company's destiny.

During the American Civil War, the Navy quickly downsized after the end of hostilities, as national energies were redirected toward settling the West and rebuilding the war-ravaged South. Almost no new ordnance was produced, and new technology was neglected. By 1881, international incidents highlighted the poor condition of the U.S. fleet and the need to rebuild it to protect U.S. trade and prestige.

In 1883, Secretary of the Navy William E. Chandler and Secretary of the Army Robert Todd Lincoln appointed Lt. William Jaques to the Gun Foundry Board. Jaques was sent on several fact-finding tours of European armament makers and on one of these trips he formed business ties with the firm of Joseph Whitworth of Manchester, England. He returned to America as Whitworth's agent and, in 1885, was granted an extended furlough to pursue this personal interest.

Jaques was aware that the U.S. Navy would soon solicit bids for the production of heavy guns and other products such as armor that would be needed to further expand the fleet. Jaques contacted the Bethlehem Iron Company with a proposal to serve as an intermediary between it and the Whitworth Company, so that Bethlehem could erect a heavy-forging plant to produce ordnance. In 1885, John Fritz, accompanied by Bethlehem Iron Company directors Robert H. Sayre, E.P. Wilbur, William Thurston, and Joseph Wharton, met with Jaques in Philadelphia. In early 1886, a contract between Bethlehem Iron and the Whitworth Company had been executed.

In spring 1886, Congress passed a naval appropriations bill that authorized the construction of two armored second-class battleships, one protected cruiser, and one first-class torpedo boat, and the complete rebuilding and modernization of two Civil War-era monitors. The two second-class battleships (the USS Texas and the USS Maine) would have both large-caliber guns (12-inch and 10-inch respectively) and heavy armor plating. Bethlehem secured both the forging and armor contracts on June 28, 1887.

Between 1888 and 1892, the Bethlehem Iron Company completed the first U.S. heavy-forging plant. It was designed by John Fritz with the assistance of Russell Wheeler Davenport, who had entered Bethlehem's employ in 1888. By autumn 1890, Bethlehem Iron was delivering gun forging to the U.S. Navy and was completing facilities to provide armor plating.[5]

During the 1893 Chicago World's Fair, a structure that was designed to make the world marvel received its giant axle from Bethlehem Steel. The world's first Ferris Wheel needed enough steel to assemble a 140-foot tower to support an all-steel wheel, altogether making a 264-foot (80 m) structure. The iron made in Bethlehem Steel's blast furnaces was responsible for the world's largest single piece of cast iron that had ever been made up to that time.[6]

In 1898, Frederick Taylor joined Bethlehem Steel as a management consultant in order to solve an expensive machine shop capacity problem. Taylor and Maunsel White, with a team of assistants, applied a series of management principles established by Taylor and that later would be known as scientific management to increase mass production.

1930s and 1940s[edit]

Construction of two warships: HMS Calder (K349) as USS Formoe (DE-58) and USS Foss (DE-59) on the right
6", 10", 12", and 14" naval guns being assembled at a Bethlehem Steel facility

During World War I and World War II, Bethlehem Steel was a major supplier of armor plate and ordnance to the U.S. armed forces, including armor plate and large-caliber guns for the Navy.

In the 1930s, the company made the steel sections and parts for the Golden Gate Bridge and built for Yacimientos Petrolíferos Fiscales (YPF), a new oil refinery in La Plata City, Argentina, which was the tenth-largest in the world. During World War II, as much as 70 percent of airplane cylinder forgings, one-quarter of the armor plate for warships, and one-third of the big cannon forgings for the U.S armed forces were turned out by Bethlehem Steel.[citation needed]

Bethlehem Steel ranked seventh among United States corporations in the value of wartime production contracts.[7] Bethlehem Shipbuilding Corporation's 15 shipyards produced a total of 1,121 ships, more than any other builder during the war and nearly one-fifth of the U.S. Navy's two-ocean fleet. It employed as many as 180,000 persons, the bulk of the company's total employment of 300,000.

Eugene Grace was president of Bethlehem Steel from 1916 to 1945, and chairman of the board from 1945 until his retirement in 1957. Eugene Grace orchestrated Bethlehem Steel's wartime efforts. In 1943, he promised President Roosevelt one ship per day, and exceeded the commitment by 15 ships.[8]

The war effort drained Bethlehem of much of its male workforce. The company hired female employees to guard and work on the factory floor or in the company offices. After the war, the female workers were promptly fired in favor of their male counterparts.[9]

On Liberty Fleet Day, September 27, 1941, President Franklin D. Roosevelt was present at the launching of the first Liberty ship SS Patrick Henry at Bethlehem’s Fairfield (Baltimore) yard. Also launched that same day was the Liberty SS James McKay at Sparrows Point and the Emergency vessel SS Sinclair Superflame at Fore River in Quincy, Massachusetts.

1950s and 1960s[edit]

When peacetime came, the plant continued to supply a wide variety of structural shapes for the construction trades[10] and forged products for defense, power generation and steel-producing companies.

From 1949 to 1952, Bethlehem Steel had a contract with the federal government of the United States to roll uranium fuel rods for nuclear reactors in Bethlehem Steel's Lackawanna, New York, plant. Workers were not aware of the dangers of the heavy metals they were rolling and were not given protective equipment. (Some workers have since attempted to receive compensation under a 2000 radiation-exposure law. The law required the Labor Department to compensate workers up to $150,000 if they developed cancer later in life, if their work history involved enough radiation exposure to significantly increase their cancer risk. The Bethlehem Steel workers have not been awarded this compensation because the radiation dose involved in processing fresh uranium fuel is low, and produces a small risk relative to the baseline risk.[11][12] The larger danger in processing uranium is chemical poisoning from the heavy metal, which does not produce cancer.[13])

The steel industry in the U.S. prospered during and after World War II, while the steel industries in Germany and Japan lay devastated by Allied bombardment. Bethlehem Steel's high point came in the 1950s, as the company began manufacturing some 23 million tons per year. In 1958, the company's president, Arthur B. Homer, was the highest-paid U.S. business executive. The firm built its largest plant, at Burns Harbor, Indiana, between 1962 and 1964.

The late 1960s offered a harbinger of the troubled times to come. In 1967, the company lost its bid to provide the steel for the original World Trade Center. The contracts, a single one of which was for 50,000 tons of steel, went to competitors in Seattle, St. Louis, New York and Illinois.[14]

1970s through 1990s[edit]

The U.S. advantage lasted about two decades, during which the U.S. steel industry operated with little foreign competition. But eventually, the foreign firms were rebuilt with modern techniques such as continuous casting, while profitable U.S. companies resisted modernization. Bethlehem experimented with continuous casting but never fully adopted the practice.

Meanwhile, the average age of the Bethlehem workforce was increasing, and the ratio of retirees to workers was rising, meaning that the value created by each worker had to cover a greater portion of pension costs than before. Former top manager Eugene Grace had failed to adequately invest in the company's pension plans during the 1950s. When the company was at its peak, the pension payments that should have been made were not. As a result, the company encountered difficulty when it faced rising pension costs and diminishing profits.[15]

By the 1970s, imported foreign steel was generally cheaper than domestically produced steel.[citation needed] The company faced growing competition from mini-mills, smaller-scale operations that could sell steel at lower prices.

In 1982, Bethlehem reported a loss of US$1.5 billion and shut down many of its operations. Profitability returned briefly in 1988, but restructuring and shutdowns continued through the 1990s.[9]

In the mid-1980s, demand for the plant's structural products began to diminish, and new competition entered the marketplace. Lighter construction styles, in part due to lower-height construction styles (i.e., low-rise buildings), did not require the heavy structural grades produced at the Bethlehem plant.

In 1991, Bethlehem Steel discontinued coal mining (under the name BethEnergy). At the end of 1995, it closed steel-making at the main Bethlehem plant. 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 steel-making operations.

Closing and bankruptcy[edit]

The site of the former Bethlehem Steel plant, which is now the Sands Casino

Despite the closing of its local operations, Bethlehem Steel tried to reduce the impact on the Lehigh Valley area with plans to revitalize the south side of Bethlehem. It hired 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, would be erected on the site along with a casino and large retail and entertainment complex.

Inexpensive steel imports and the failure of management to innovate, embrace technology, and improve labor conditions contributed to Bethlehem's demise. Critics of protectionist steel trade policies attribute the cause of this lack of competitiveness to American steel producers like Bethlehem having been shielded from foreign competition by quotas, voluntary export restraints, minimum price undertakings, and anti-dumping and countervailing duty measures which were in effect for the three decades preceding Bethlehem Steel's collapse.[16]

In 2001, Bethlehem Steel filed for bankruptcy. In 2003, the company's assets, including its six massive plants, were acquired by the International Steel Group.

In 2007, the Bethlehem property was sold to Sands BethWorks, and plans to build a casino where the plant once stood were drafted. Construction began in fall 2007; the casino was completed in 2009. The casino had difficulty finding structural steel for construction due to a global steel shortage and pressure to build Pennsylvania's tax-generating casinos. 16,000 tons of steel were needed to build the $600 million complex.[17]

The site of the company's original plant in Bethlehem, Pennsylvania, is home to SteelStacks, an arts and entertainment district. The plant's five blast furnaces were left standing and serve as a backdrop for the new campus. SteelStacks currently features the ArtsQuest Center, a contemporary performing arts center, the Sands Casino Resort Bethlehem, a gambling emporium, and PBS39, a community-owned public television station.[18] The area also includes three outdoor music venues – Levitt Pavilion, a free music venue featuring lawn seating for up to 2,500 people, Air Products Town Square at Steelstacks, and PNC Plaza, which hosts concerts featuring well-known artists.[19]

USS Massachusetts was built at Bethlehem Steel's Fore River Shipyard during World War II.

Shipyards[edit]

Freight cars[edit]

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 Ordnance 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.

Influence on American landmarks[edit]

The company manufactured the steel for many of the country's most prominent landmarks:

Bethlehem Steel fabricated the largest electric generator shaft in the world, produced for General Electric in the 1950s.

Gallery[edit]

See also[edit]

References[edit]

Notes[edit]

  1. ^ a b c d Davis (1877), "Bethlehem Iron Company", History of Northampton County, Pennsylvania, Philadelphia and Reading: Peter Fritts, Chapter XLV, p. 212–213
  2. ^ Schwab, who is unrelated to the stockbroker Charles R. Schwab, had recently resigned from U.S. Steel.
  3. ^ Wharton founded the Wharton School of Business in Philadelphia.
  4. ^ "Bethlehem Steel to Buy Lackawanna, in $60,000,000 Deal", New York Times, May 12, 1922.
  5. ^ Garn, Andrew (1999). Bethlehem Steel. Princeton Architectural Press. p. 14. ISBN 1-56898-197-X. 
  6. ^ Larson, Erik (2003), The Devil in the White City: Murder, Magic, and Madness at the Fair That Changed America, New York, NY, USA: Crown, ISBN 978-0-609-60844-9, p. 193. 
  7. ^ Peck, Merton J. & Scherer, Frederic M. The Weapons Acquisition Process: An Economic Analysis (1962) Harvard Business School p. 619
  8. ^ Loomis, Carol J.; Tkaczyk, Christopher (2004-04-05). "The Sinking Of Bethlehem Steel A hundred years ago one of the 500's legendary names was born. Its decline and ultimate death took nearly half that long. A FORTUNE autopsy.". CNN Money. Retrieved 2008-07-18. 
  9. ^ a b http://www.youtube.com/watch?v=2QTGiHOZZFU
  10. ^ The Morning Call (2003), "Forging America: The History of Bethlehem Steel", Morning Call Supplement (Allentown, PA, USA: The Morning Call). A detailed history of the company by journalists of the Morning Call staff. 
  11. ^ "Heroes Of The Cold War Out In The Cold". CBS (CBS News). 2006-06-19. Retrieved 2008-01-16. 
  12. ^ "Radiation Exposure for Uranium Industry Workers". Retrieved 2010-10-09. 
  13. ^ "Uranium - U". 
  14. ^ "Contracts Totaling $74,079,000 Awarded for the Trade Center". The New York Times. January 24, 1967.
  15. ^ Loomis, Carol J.; Tkaczyk, Christopher (2004-04-05). "The Sinking Of Bethlehem Steel A hundred years ago one of the 500's legendary names was born. Its decline and ultimate death took nearly half that long. A FORTUNE autopsy". CNN. 
  16. ^ "Steel Trap: How Subsidies and Protectionism Weaken the U.S. Steel Industry". Center for Trade Policy Studies. 2002. Retrieved 2009-03-01. 
  17. ^ Assad, Matt (2007-06-27). "BethWorks Says Beam Me Up: Project Officials Scurrying to Get Steel to Bethlehem Steel Site in Time". The Morning Call (Redorbit). Retrieved 2008-01-18. 
  18. ^ "PBS39". 
  19. ^ "Artsquest". 
  20. ^ Three Quarters Of A Century: The George W. Rogers Construction Company, George W. Rogers
  21. ^ Gay Talese: The Bridge: The Building of the Verrazano-Narrows Bridge,p.52. Bloomsbury Publishing USA, (2003) ISBN 0802776442 [1]
  22. ^ NYC Landmarks Preservation Commission[www.nyc.gov/html/lpc/downloads/pdf/reports/ChaseManhattanReport.pdf]

Bibliography[edit]

  • 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

Further reading[edit]

External links[edit]