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| Company type | Private |
|---|---|
| Industry | Steel,shipbuilding,mining |
| Founded |
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| Founder | Augustus Wolle |
| Defunct | 2003; 22 years ago (2003) |
| Fate | Bankruptcy andliquidation |
| Successor |
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| Headquarters | , U.S. |
| Subsidiaries |
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| Website | Archived 31 March 2002 at theWayback Machine |
TheBethlehem Steel Corporation was an Americansteelmaking company headquartered inBethlehem, Pennsylvania. Until its closure in 2003, it was one of the world's largeststeel-producing andshipbuilding companies. At the height of its success and productivity, the company was a symbol of American manufacturing leadership in the world, and its decline and ultimate liquidation in the late 20th century is similarly cited as an example of America's diminished manufacturing leadership during the late 20th century.[1] From its founding in 1857 through its 2003 dissolution, Bethlehem Steel's headquarters were based in Bethlehem, Pennsylvania, in theLehigh Valley region of easternPennsylvania. Its primarysteel mill manufacturing facilities were located in Bethlehem, Pennsylvania, and were later expanded to include a major research laboratory in Bethlehem, and various additional manufacturing plants inSparrows Point, Maryland;Johnstown, Pennsylvania;Lackawanna, New York; andBurns Harbor, Indiana.
The company's steel was used in the construction of many of the nation's largest and most famed structures. Among major buildings, Bethlehem produced steel for28 Liberty Street, theEmpire State Building,Madison Square Garden,Rockefeller Center, and theWaldorf Astoria hotel inNew York City andMerchandise Mart inChicago. Among major bridges, Bethlehem's steel was used in constructing theGeorge Washington Bridge andVerrazzano-Narrows Bridge in New York City, theGolden Gate Bridge inSan Francisco, and thePeace Bridge betweenBuffalo andFort Erie, Ontario.
Bethlehem Steel played an instrumental role in manufacturing the U.S.warships and other military weapons used inWorld War I and later byAllied forces in ultimately winningWorld War II. Over 1,100 Bethlehem Steel-manufactured warships were built for use in defeatingNazi Germany and theAxis powers in World War II. Historians cite Bethlehem Steel's ability to quickly manufacture warships and other military equipment as decisive factors in American victories in both world wars.[2]
Bethlehem Steel's roots trace to aniron-making company organized in 1857 in Bethlehem, later named the Bethlehem Iron Company. In 1899, the owners of the iron company founded Bethlehem Steel Company and, five years later, Bethlehem Steel Corporation was created to be the steelmaking company's corporate parent.
Bethlehem Steel survived the earliest declines in the American steel industry beginning in the 1970s. In 1982, however, the company suspended most of its steelmaking operations after posting a loss of $1.5 billion, attributable to increased foreign competition, rising labor and pensions costs, and other factors. The company filed forbankruptcy in 2001, and was dissolved in 2003 after its remaining assets were sold toInternational Steel Group.
In 1857, the first iron works inBethlehem, Pennsylvania was launched as the Saucona Iron Company by Augustus Wolle.[3] That same year, thePanic of 1857, a national financial crisis, halted the company's further organization. Another organization subsequently started, its site moved elsewhere toSouth Bethlehem, and the company's name was changed to the Bethlehem Rolling Mill and Iron Company.[3] On June 14, 1860, the board of directors of the fledgling company electedAlfred Hunt president.[3]
On May 1, 1861, the company's name was changed to the Bethlehem Iron Company.[3] Construction of the firstblast furnace began on July 1, 1861, and was operationalized on January 4, 1863. The firstrolling mill was built between the spring of 1861 and the summer of 1863 with the first railroad rails being rolled on September 26, 1863. 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 andarmor plating used by theU.S. Navy.
The company continued to prosper during the early 1880s, but its share of the rail market began to decline in the face of competition from growingPittsburgh andScranton-based firms, such as theCarnegie Steel Company andLackawanna Steel. The nation's decision to rebuild the Navy with steam-driven, steel-hulled warships reshaped Bethlehem Iron Company's destiny.
Following theAmerican Civil War, the U.S. Navy quickly downsized after the end of hostilities, and national focus was 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. military capabilities, trade, and prestige.
In 1883,U.S. Secretary of the NavyWilliam E. Chandler andU.S. Secretary of WarRobert Todd Lincoln appointed Lt. William Jaques to the Gun Foundry Board, and Jaques was sent on several fact-finding tours of European armament makers. On one of these trips, he formed business ties with the firm ofJoseph Whitworth inManchester, England. He returned to the U.S. 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, and he contacted the Bethlehem Iron Company with a proposal to serve as an intermediary between it and the Whitworth Company, so Bethlehem Iron could erect a heavy forging plant to produce ordnance.
In 1885,John F. Fritz, sometimes referred to as the father of the U.S. steel industry, accompanied Bethlehem Iron directorsRobert H. Sayre, Elisha Packer Wilbur, president ofLehigh Valley Railroad, William Thurston, andJoseph Wharton, founder of theWharton School, to meet with Jaques inPhiladelphia. In early 1886, Bethlehem Iron and the Whitworth Company executed a contract.
In the spring 1886,Congress passed a naval appropriations bill that authorized the construction of two armored second-class battleships, one protected cruiser, one first-class torpedo boat, and the complete rebuilding and modernization of two Civil War-era monitors. The two second-class battleships, theUSS Texas and theUSS Maine, both had large-caliber guns with 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, which was designed by John Fritz with assistance fromRussell Davenport, who joined Bethlehem Iron in 1888. By fall 1890, Bethlehem Iron was delivering gun forging to the U.S. Navy and was completing facilities to provide armor plating.[4]
During the1893 Chicago World's Fair, Bethlehem Steel provided the iron used in the creation of a 45.5[5]-foot steel axle to support the world's firstFerris wheel, a 264-foot (80 m) structure. The iron was manufactured in Bethlehem Steel'sblast furnaces and represented the largest single steel forging ever constructed at the time.[6]
In 1898,Frederick Winslow Taylor joined Bethlehem Steel as a management consultant charged with solving the company's expensive machine shop capacity challenge. Taylor and Maunsel White and a team of assistants applied a series of management principles established by Taylor, later known asscientific management, which were used in increasing mass production.
The Bethlehem Iron Company was very successful and profitable, and the company's corporate management believed that it could be even more profitable. To accomplish this, the corporate ownership of the Bethlehem Iron Company switched to steel production, and the company's name was formally changed to Bethlehem Steel Company.
In 1899, Bethlehem Steel Company was established. Bethlehem Steel Company, also then known as Bethlehem Steel Works, was incorporated to take over all liabilities of the Bethlehem Iron Company.[7][8][9] Bethlehem Iron Company and the Bethlehem Steel Company operated as separate companies under the same ownership. Bethlehem Steel Company leased the properties, which were owned by the Bethlehem Iron Company.
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In 1901,Charles M. Schwab (no relation to the stockbrokerCharles R. Schwab), purchased Bethlehem Steel Company, and named Samuel Broadbent as its vice president.[10][9] During this time, the company's lease with the Bethlehem Iron Company came to an end as the Bethlehem Steel Company gained control of all properties from the Bethlehem Iron Company and Bethlehem Iron Company ceased operations.[9]
Schwab transferred his ownership of Bethlehem Steel Company toU.S. Steel Corporation, the company where he previously served as president. Schwab then repurchased Bethlehem Steel Company, and sold it toUnited States Shipbuilding Company, which owned Bethlehem Steel Company only briefly. The United States Shipbuilding Company was in turmoil; its subsidiaries, including Bethlehem Steel Company, contributed to United States Shipbuilding Company's problems. Schwab again became involved with Bethlehem Steel Company through the parent company, United States Shipbuilding Company.[10][9]
In 1903, United States Shipbuilding Company planned to reorganize as Bethlehem Steel and Shipbuilding Company, which was the second company to use the name Bethlehem Steel. However, United States Shipbuilding Company was not reorganized as Bethlehem Steel and Shipbuilding Company; instead, a plan was drawn up for a new company to be formed to replace United States Shipbuilding Company. The new company was initially to be named Bethlehem Steel and Shipbuilding Company. In 1904, it instead assumed the name Bethlehem Steel Corporation.[10] From 1906 until it was delisted in 2002, Bethlehem Steel was traded on theNew York Stock Exchange under the symbol BS.[11]
Bethlehem Steel Corporation was formed by Schwab, who had recently resigned fromU.S. Steel, and byJoseph Wharton, who foundedWharton School at theUniversity of Pennsylvania inPhiladelphia. Schwab became the company's first president and first chairman of its board of directors.
After its formation, Bethlehem Steel Corporation purchased Bethlehem Steel Company and its remaining subsidiaries from United States Shipbuilding Company.[10][9] Bethlehem Steel Company became a subsidiary of Bethlehem Steel Corporation, though the Bethlehem Steel Company also had subsidiaries of its own. Bethlehem Steel Corporation became the second-largest steel provider in the nation. Both Bethlehem Steel Company and Bethlehem Steel Corporation existed simultaneously after 1904 until the 1960s, when the two companies merged into Bethlehem Steel Corporation.
Bethlehem Steel Corporation installed the Gray rolling mill and produced the nation's first wide-flange structural shapes, which proved partly responsible for ushering in the age of theskyscraper and establishing Bethlehem Steel as the leading supplier of steel to the construction industry.
In the early 1900s, Samuel Broadbent led an initiative to diversify the company. The corporation diversified beyond steel, managing iron mines inCuba and shipyards around the U.S. In 1913, under Broadbent, Bethlehem Steel acquired [[Fort River Shipyard}Fort River Shipbuilding Company]], aQuincy, Massachusetts-based company, and became one of the world's major shipbuilders. In 1917, it incorporated its shipbuilding division asBethlehem Shipbuilding Corporation Ltd. In 1922, Bethlehem Steel purchased theLackawanna Steel Company, which includedDelaware, Lackawanna and Western Railroad and extensivecoal holdings.[12]
DuringWorld War I andWorld War II, Bethlehem Steel was a major supplier of armor plate and ordinance to theU.S. armed forces, including armor plate and large-caliber guns used by the U.S. Navy, which proved influential to U.S. victories in both wars. Bethlehem Steel "was the most important to America's national defense of any company in the past century. We wouldn't have won World War I and World War II without it", historian Lance Metz toldThe Washington Post in 2003.[2]
In the 1930s, the company manufactured the steel sections and the parts of theGolden Gate Bridge and built forYacimientos Petrolíferos Fiscales, a new oil refinery inLa Plata, Argentina, which was the tenth-largest in the world. DuringWorld War II, as much as 70 percent of airplane cylinder forgings, a quarter of the armor plate for warships, and a third of the big cannon forgings for the U.S armed forces were manufactured by Bethlehem Steel.
Steel is an alloy made up of iron and carbon, and additional minerals are sometimes added to it depending on its intended use. In the 20th century, however, sourcing necessary minerals in the U.S. began proving significantly more expensive than obtaining from other nations. Bethlehem Steel is one of several U.S. companies that chose to source iron fromLatin America. The company established a presence in Latin America for roughly a century from the 1880s to 1980s.[13] The company profited greatly from U.S. economic control over the region. "In a single year, 1960, U.S. Steel and Bethlehem Steel realized a greater than 30 percent profit on theirVenezuelan iron investment, and this profit equaled all the taxes paid to the Venezuelan state in the decade since 1950"[14]
Bethlehem Steel also relied on Latin American mines formanganese, an additive for tensile strength. During PresidentEurico Dutra's presidency inBrazil from 1946 to 1951, Bethlehem Steel received 40 million ton of manganese “for 4 percent of the income of exporting it.”[14]
Bethlehem Steel ranked seventh among all U.S. corporations in the value of its wartime production contracts duringWorld War II.[15]Bethlehem Shipbuilding Corporation's 15shipyards produced a total of 1,121 ships, more than any other builder during World War II, and nearly one-fifth of the U.S. Navy's two-ocean fleet. Its shipbuilding operations employed as many as 180,000 persons, representing the lion's share of the company's total employment of 300,000 at the time.
From 1916 to 1945,Eugene Grace served as president of Bethlehem Steel, and chairman of the board from 1945 until his retirement in 1957. Grace orchestrated Bethlehem Steel's World War II wartime efforts. In 1943, Grace promised U.S. PresidentFranklin D. Roosevelt that Bethlehem Steel would manufacture one ship per day, and he ultimately exceeded that commitment by 15 ships.[16]
World War II, however, drained Bethlehem Steel of much of its male workforce. With many of its male employees deployed to the war front, the company hired female employees to guard and work on the company's factory floor and in its company offices. After World War II, female workers were promptly fired in favor of male counterparts.[17]
OnLiberty Fleet Day, September 27, 1941, then U.S. PresidentFranklin D. Roosevelt was present at the launching of the firstLiberty shipSSPatrick Henry at Bethlehem Steel'sBethlehem Fairfield Shipyard inBaltimore. Also launched the same day were the Liberty SSJames McKay atBethlehem Sparrows Point Shipyard inSparrows Point, Maryland, and the emergency vessel SSSinclair Superflame at theFore River Shipyard inQuincy, Massachusetts.
In 1946, Bethlehem Steel signed a contract with mining companyLKAB, committing the company to contribute to the recovery of the post-World War II recovery of the iron ore industry inNorrbotten County in northernSweden.[18] Following the end of World War II, Bethlehem Steel's plant continued to supply a wide variety of structural shapes for construction trades.Galvanized sheet steel under the name BETHCON was widely produced for use asduct work or spiral conduit.[19] The company also produced forged products for defense, power generation, and steel-producing companies.[20]
From 1949 to 1952, Bethlehem Steel had a contract with theU.S. federal government to rolluraniumfuel rods fornuclear reactors in Bethlehem Steel'sLackawanna, New York plant. Workers were not aware of the dangers of the hazardous substance and were not given protective equipment. Some workers later sought compensation under a radiation exposure law, which was enacted in 2000 and required theU.S. Labor Department to compensate workers up to $150,000 if they developed cancer later in life, provided their work history involved enough radiation exposure to significantly increase their cancer risk. Bethlehem Steel workers, however, have not been awarded this compensation because radiation doses involved in processing fresh uranium fuel is low and produces a small risk relative to baseline risks.[21][22] The larger danger in processing uranium is chemical poisoning from the heavy metal, which does not produce cancer.[23]
The steel industry in the U.S. prospered during and after World War II, while the steel industries inGermany andJapan were in ruins, devastated by allied bombardments. Bethlehem Steel's success reached its peak in the late 1950s and early 1960s. The company began manufacturing 23 million tons of steel annually. In 1958, the company's president, Arthur B. Homer, was the nation's highest-paid business executive, and the firm built the first phase of what became its largest plant, Burns Harbor, between 1962 and 1964 inBurns Harbor, Indiana.
In 1967, the company lost its bid to provide steel for the originalWorld 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.[24]
U.S. global leadership in steel manufacturing lasted about two decades, during which U.S. steel industry operated with little foreign competition. Eventually, however, foreign firms were rebuilt with modern techniques, includingcontinuous casting, while profitable U.S. companies resisted modernization. Bethlehem Steel experimented with continuous casting but never fully adopted the practice.
As the age of Bethlehem Steel workers was increasing, however, 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 failed to adequately invest in the company's pension plans during the 1950s. At its peak, the company's pension contributions that should have been made were not. As a result, the company encountered difficulty when it faced rising pension costs associated with its retiring workers, which were amplified by the company's diminishing profits and increased global competition.[25]
By the 1970s, imported foreign steel was proving cheaper than domestically produced steel,[26] and Bethlehem Steel faced growing competition from mini-mills and smaller-scale operations that could sell steel at lower prices.
In 1982, Bethlehem Steel reported an unexpected loss of US$1.5 billion, and responded by promptly shutting down much of its operations. The company returned to profitability briefly six years later, in 1988, but restructuring and shutdowns continued through the 1990s.[17] In the mid-1980s, demand for the plant's structural products began diminishing, and new competition entered the marketplace. Lighter construction styles, featuring lower-height construction styles, such as low-rise buildings, did not require the heavy structural grades of steel that were being produced at theBethlehem plant.
In 1991, Bethlehem Steel Corporation discontinuedcoal mining, which the company had been conducting under the name BethEnergy. In 1992, theJohnstown plants of the Bethlehem Steel, which were founded in 1852 by The Cambria Iron Company of Johnstown and were purchased by Bethlehem Steel in 1923, were forced into closure. In 1993, the company also exited therailroad car business.
By the end of 1995, Bethlehem Steel ceased manufacturing steel at its main Bethlehem plant, bringing an end to 140 years of such production in Bethlehem, and the company ceased operations in Bethlehem. Two years later, in 1997, Bethlehem Steel Corporation ceased shipbuilding activities in an attempt to preserve its steel manufacturing operations.
In 1998, after denying pension benefits, a lawsuit was filed in theThird Circuit Court of Appeals inPhiladelphia. The case, Lawrence Hollyfield, Fiduciary to the Estate of Collins Hollyfield v. Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies, was settled in favor of Hollyfield three years later, in 2001. The settlement led to a class action lawsuit filed by Bethlehem Steel's workers union, which led toPBGC assuming all Bethlehem Steel pension obligations, representing the largest pension such liability assumption in U.S. history.[27]
In 2001, Bethlehem Steel filed forbankruptcy, becoming the 25th American steelmaking company in the span of four years between 1998 and 2001 to file for bankruptcy protection.[28] In 2003, the company was dissolved with its remaining assets, including six plants, acquired by theInternational Steel Group. International Steel Group, in turn, was acquired byMittal Steel in 2005, which then merged withArcelor to becomeArcelorMittal in 2006.
Despite closing its local operations, Bethlehem Steel tried to reduce the significant economic and social impact onBethlehem and theLehigh Valley area, announcing plans to revitalize the south side of Bethlehem where its headquarters and primary plant had existed since the mid-19th century. The company hired consultants to develop conceptual plans on the reuse of the massive property, and a consensus emerged to rename the 163 acres (66 ha) siteBethlehem Works and to use the land for cultural, recreational, educational, entertainment, and retail development. TheNational Museum of Industrial History, in association with theSmithsonian Institution and the Bethlehem Commerce Center, consisting of 1,600 acres (650 ha) of prime industrial property in Bethlehem would be erected on the site along with acasino and a large retail and entertainment complex.
In 2007, the Bethlehem Steel property was sold toSands BethWorks, which planned to build a casino where the plant once stood. Construction began in fall 2007, and the casino was completed in 2009. Due to a global steel shortage at the time, the casino had difficulty finding the 16,000 tons of structural steel needed for construction of the $600 million casino complex.[29]
The site of the company's original plant in Bethlehem, Pennsylvania is home to SteelStacks, an arts and entertainment district. The plant's rusted 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, theWind Creek Bethlehem casino resort, formerly Sands Casino Resort Bethlehem, a gambling emporium, and new studios forWLVT-TV, the Lehigh Valley'sPBS affiliate.[30] The area includes three outdoor music venues: Levitt Pavilion is a free music venue featuring lawn seating for up to 2,500 people, Air Products Town Square at Steelstacks, and PNC Plaza, which hosts outdoor concerts.[31] Levitt Pavilion and the casino resort are connected via theHoover-Mason Trestle linear park.
On November 9, 2016, a warehouse being used as a recycling facility that was part of the Bethlehem Steel complex inLackawanna, New York caught fire and burned down.[32]
On May 19, 2019,Martin Tower, Bethlehem Steel's former corporate headquarters building in West Bethlehem, was demolished.[33]
Bethlehem Steel's corporate records are housed at theHagley Museum and Library inWilmington, Delaware, and at theNational Museum of Industrial History in Bethlehem.[34]
Bethlehem Shipbuilding Corporation was created in 1905, when Bethlehem Steel acquired theSan Francisco-based shipyardUnion Iron Works.[35][36] In 1917, it was incorporated as 'Bethlehem Shipbuilding Corporation, Limited.
In 1931 and 1932, Bethlehem Steel manufactured 38electric multiple unit carriages for thePhiladelphia-basedReading Company, then one of the nation's largest and most profitable commercial railroads.[37]
From 1923 to 1991, Bethlehem Steel was one of the world's leading producers of railroadfreight cars following their purchase ofMidvale Steel, whose railcar division was located inJohnstown, Pennsylvania. 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.
Bethlehem Steel manufactured steel used in many of the nation's most prominent landmarks, including:
Bethlehem Steel fabricated the largestelectric generator shaft in the world, produced forGeneral Electric in the 1950s, and the steel used for theWonder Wheel inConey Island.
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