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American steel company, 1857–2009 From Wikipedia, the free encyclopedia
The Bethlehem Steel Corporation was an American steelmaking company headquartered in Bethlehem, Pennsylvania. Until its closure in 2003, it was one of the world's largest steel-producing and shipbuilding 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.[citation needed] From its founding in 1857 through its 2003 dissolution, Bethlehem Steel's headquarters were based in Bethlehem, Pennsylvania, in the Lehigh Valley region of the United States. Its primary steel mill manufacturing facilities were first located in Bethlehem, Pennsylvania and later expanded to include a major research laboratory in Bethlehem, Pennsylvania, and plants in Sparrows Point, Maryland, Johnstown, Pennsylvania, Lackawanna, New York, and its final and largest site in Burns Harbor, Indiana.
| |
| Company type | Private |
|---|---|
| Industry | Steel, shipbuilding, mining |
| Founded |
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| Founder | Augustus Wolle |
| Defunct | 2003 |
| Fate | Bankruptcy and Liquidation |
| Successor |
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| Headquarters | , U.S. |
| Subsidiaries |
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The company's steel was used in the construction of many of America's largest and most famed structures. Among major buildings, Bethlehem produced steel for 28 Liberty Street, the Chrysler Building, the Empire State Building, Madison Square Garden, Rockefeller Center, and the Waldorf Astoria hotel in New York City and Merchandise Mart in Chicago. Among major bridges, Bethlehem steel was used in constructing the George Washington Bridge and Verrazzano-Narrows Bridge in New York City, the Golden Gate Bridge in San Francisco, and the Peace Bridge between Buffalo and Fort Erie, Ontario.
Bethlehem Steel played an instrumental role in manufacturing the U.S. warships and other military weapons used in World War I and later by the Allied forces in ultimately winning World War II. Over 1,100 Bethlehem Steel-manufactured warships were built for use in defeating Nazi Germany and the Axis 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.[1]
Bethlehem Steel's roots trace to an iron-making company organized in 1857 in Bethlehem, which was 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 for bankruptcy in 2001 and final dissolution in 2003 when its remaining assets were sold to International Steel Group.
In 1857, what ultimately became Bethlehem Steel was launched as the Saucona Iron Company in Bethlehem, Pennsylvania by Augustus Wolle.[2] That same year, the Panic of 1857, a national financial crisis, halted the company's further organization. But the organization subsequently restarted, its site was moved elsewhere to South Bethlehem, and the company's name was changed to the Bethlehem Rolling Mill and Iron Company.[2] On June 14, 1860, the board of directors of the fledgling company elected Alfred Hunt president.[2]
On May 1, 1861, the company's title was changed again, this time to the Bethlehem Iron Company.[2] Construction of the first blast furnace began on July 1, 1861, and was operationalized 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, 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 and armor plating used by the U.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 growing Pittsburgh and Scranton-based firms, such as the Carnegie Steel Company and Lackawanna Steel. The nation's decision to rebuild the Navy with steam-driven, steel-hulled warships reshaped Bethlehem Iron Company's destiny.
Following the American Civil War, the U.S. 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. military capabilities, trade, and prestige.
In 1883, U.S. Secretary of the Navy William E. Chandler and U.S. Secretary of War Robert 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 of Joseph Whitworth of Manchester, England. He returned to the United States 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 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 directors Robert H. Sayre, Elisha Packer Wilbur, president of Lehigh Valley Railroad, William Thurston, and Joseph Wharton, founder of the Wharton School of the University of Pennsylvania, to meet with Jaques in Philadelphia. 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, the USS Texas and the USS 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. It was designed by John Fritz with the assistance of Russell 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.[3]
During the 1893 Chicago World's Fair, Bethlehem Steel provided the iron used in the creation of a 45.5[4]-foot steel axle to support the world's first Ferris wheel, a 264-foot (80 m) structure. The iron was manufactured in Bethlehem Steel's blast furnaces and represented the largest single steel forging ever constructed at the time.[5]
In 1898, Frederick Winslow 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, which would later come to be known as scientific management and was used in increasing mass production.
The Bethlehem Iron Company was very successful and profitable, and the corporate management of the Bethlehem Iron Company believed that it could be even more profitable. To accomplish that goal, 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. This was the first company to carry the name Bethlehem Steel. Bethlehem Steel Company, also then known as Bethlehem Steel Works, was incorporated to take over all liabilities of the Bethlehem Iron Company.[6][7][8] The Bethlehem Iron Company and the Bethlehem Steel Company were separate companies under the same ownership. The Bethlehem Steel Company leased the properties that were owned by the Bethlehem Iron Company.
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In 1901, Charles M. Schwab (no relation to the stockbroker Charles R. Schwab), purchased the Bethlehem Steel Company and made Samuel Broadbent its vice president.[9][8] 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 the Bethlehem Iron Company ceased operations.[8]
Schwab transferred his ownership of the Bethlehem Steel Company to the U.S. Steel Corporation, the company of which he was president. This period was brief; Schwab repurchased Bethlehem Steel Company, then sold it to the United States Shipbuilding Company. The United States Shipbuilding Company owned Bethlehem Steel Company only a brief time. The United States Shipbuilding Company was in turmoil; its subsidiaries, including the Bethlehem Steel Company, contributed to the United States Shipbuilding Company's problems. Schwab again became involved with Bethlehem Steel Company through the parent company, the United States Shipbuilding Company.[9][8]
The United States Shipbuilding Company planned in 1903 to reorganize as the Bethlehem Steel and Shipbuilding Company, which would be the second company to use the name Bethlehem Steel. However, the United States Shipbuilding Company was not reorganized as the Bethlehem Steel and Shipbuilding Company; instead, a plan was drawn up for a new company to be formed to replace the 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.[9]
The Bethlehem Steel Corporation was formed by Schwab, who had recently resigned from U.S. Steel, and by Joseph Wharton, who founded the Wharton School at the University of Pennsylvania in Philadelphia. Schwab became the first president and first chairman of the board of directors.
After its formation, the Bethlehem Steel Corporation purchased the Bethlehem Steel Company and its remaining subsidiaries from the United States Shipbuilding Company.[9][8] The Bethlehem Steel Company became a subsidiary of the 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 United States. Both the Bethlehem Steel Company and the Bethlehem Steel Corporation existed simultaneously after 1904 until the 1960s, when the two companies were merged into the Bethlehem Steel Corporation.
From 1906 until it was de-listed in 2002, Bethlehem Steel was traded on the NYSE under the two letter symbol BS.[10]
Bethlehem Steel Corporation installed the Gray rolling mill and produced the first wide-flange structural shapes to be made in the United States. These shapes were partly 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, Samuel Broadbent led an initiative to diversify the company. The corporation branched out from steel, with iron mines in Cuba and shipyards around the country. In 1913, under Broadbent, Bethlehem Steel acquired the Fore River Shipbuilding Company of Quincy, Massachusetts, assuming the role of one of the world's major shipbuilders. In 1917, it incorporated its shipbuilding division as Bethlehem Shipbuilding Corporation Ltd. In 1922, Bethlehem Steel purchased the Lackawanna Steel Company, which included the Delaware, Lackawanna and Western Railroad and extensive coal holdings.[11]
During World War I and World War II, Bethlehem Steel was a major supplier of armor plate and ordinance to the U.S. armed forces, including armor plate and large-caliber guns for the U.S. Navy, and was 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 told The Washington Post in 2003.[1]
In the 1930s, the company also manufactured the steel sections and parts for the Golden Gate Bridge and built for Yacimientos Petrolíferos Fiscales (YPF), a new oil refinery in La Plata, 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.
Steel is an alloy made up of iron and carbon, with additional minerals added depending on its use. In the 20th century, sourcing the necessary minerals in the United States was significantly more expensive than supplying them from elsewhere.
Bethlehem Steel is just one of several U.S. companies to have sourced iron from Latin America. Bethlehem Steel held a presence in Latin America for roughly a century (1880s - 1980s).[12] As such, the company profited greatly from the United States’ economic control over the region. “In a single year, 1960, U.S. Steel and Bethlehem Steel realized a greater than 30 percent profit on their Venezuelan iron investment, and this profit equaled all the taxes paid to the Venezuelan state in the decade since 1950” [13]
Bethlehem Steel also relied on Latin American mines for manganese, an additive for tensile strength. During President Eurico Dutra’s presidency in Brazil (1946 - 1951), Bethlehem Steel received 40 million ton of manganese “for 4 percent of the income of exporting it.” [14]
Bethlehem Steel ranked seventh among U.S. corporations in the value of wartime production contracts during World War II.[15] 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. Its shipbuilding operations employed as many as 180,000 persons, the lion's share 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. Grace orchestrated Bethlehem Steel's World War II wartime efforts. In 1943, Grace promised U.S. President Franklin 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. The company hired female employees to guard and work on the factory floor and in the company offices. After the war, female workers were promptly fired in favor of male counterparts.[17]
On Liberty Fleet Day, September 27, 1941, then U.S. President Franklin D. Roosevelt was present at the launching of the first Liberty ship SS Patrick Henry at Bethlehem Steel's Bethlehem Fairfield Shipyard in Baltimore. Also launched the same day were the Liberty SS James McKay at Bethlehem Sparrows Point Shipyard in Sparrows Point, Maryland, and the emergency vessel SS Sinclair Superflame at the Fore River Shipyard in Quincy, Massachusetts.
In 1946, Bethlehem Steel signed a contract with mining company LKAB to contribute to the recovery of the post-World War II recovery of the iron ore industry in northern Sweden.[18]
Following end of World War II, the Bethlehem Steel plant continued to supply a wide variety of structural shapes for the construction trades. Galvanized sheet steel under the name BETHCON was widely produced for use as duct 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 the U.S. federal government 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 hazardous substance and were not given protective equipment. Some workers have since attempted to receive compensation under a year 2000 radiation-exposure law. The law required the U.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 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.[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 in Germany and Japan lay devastated by allied bombardments. Bethlehem Steel's success reached its peak in the late 1950s and early 1960s as the company began manufacturing 23 million tons of steel annually. In 1958, the company's president, Arthur B. Homer, was the highest-paid U.S. business executive, and the firm built the first phase of what would become its largest plant, Burns Harbor between 1962 and 1964 in Burns Harbor, Indiana.
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.[24]
U.S. global leadership in steel manufacturing lasted about two decades during which the U.S. steel industry operated with little foreign competition. Eventually however, 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 age of Bethlehem Steel workers 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, pension contributions that should have been made were not. As a result, the company encountered difficulty when it faced rising pension costs combined with 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 a loss of US$1.5 billion and shut down much of its operations. The company's profitability returned briefly in 1988, but restructuring and shutdowns continued through the 1990s.[17] In the mid-1980s, demand for the plant's structural products began to diminish and new competition entered the marketplace. Lighter construction styles, due in part to lower-height construction styles, such as low-rise buildings, did not require the heavy structural grades produced at the Bethlehem plant.
In 1991, Bethlehem Steel Corporation discontinued coal mining it had been conducting under the name BethEnergy and the company exited the railroad car business two years later, in 1993. In 1992, the Johnstown plants of the Bethlehem Steel, which had been founded in 1852 by The Cambria Iron Company of Johnstown and were purchased by Bethlehem Steel in 1923, were forced into closure.
By the end of 1995, Bethlehem Steel closed steel-making at its main Bethlehem plant. After roughly 140 years of metal production in Bethlehem, Bethlehem Steel ceased its Bethlehem operations. Two years later, in 1997, Bethlehem Steel Corporation ceased shipbuilding activities in an attempt to preserve its steel-making operations. In 2001, however, Bethlehem Steel filed for bankruptcy and, in 2003, the company dissolved.
In 1998, after denied pension benefits, a lawsuit was filed in the Third Circuit Court of Appeals in Philadelphia. 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 in 2001. It led to a class action lawsuit filed by Bethlehem Steel's workers union soon thereafter. This settlement led to PBGC assuming all Bethlehem Steel pension obligations, representing the largest such pension liability assumption in U.S. history.[27]
In 2001, Bethlehem Steel filed for bankruptcy, 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 the International Steel Group. International Steel Group, in turn, was acquired by Mittal Steel in 2005, which then merged with Arcelor to become ArcelorMittal in 2006.
Despite closing its local operations, Bethlehem Steel tried to reduce the significant economic and social impact on Bethlehem and the Lehigh 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) 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 (650 ha) of prime industrial property in Bethlehem would be erected on the site along with a casino and a large retail and entertainment complex.
In 2007, the Bethlehem Steel property was sold to Sands 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, the Wind Creek Bethlehem casino resort, formerly Sands Casino Resort Bethlehem, a gambling emporium, and new studios for WLVT-TV, the Lehigh Valley's PBS 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 the Hoover-Mason Trestle linear park.
On November 9, 2016, a warehouse being used as a recycling facility that was part of the Bethlehem Steel complex in Lackawanna, 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 the Hagley Museum and Library in Wilmington, Delaware, and at the National Museum of Industrial History in Bethlehem.[34]
In 1931 and 1932, Bethlehem Steel manufactured 38 electric multiple unit carriages for the Reading Company.[35]
From 1923 to 1991, Bethlehem Steel was one of the world's leading producers of railroad freight cars following their purchase of Midvale Steel, whose railcar division was located in Johnstown, 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 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, and the steel used for the Wonder Wheel in Coney Island.
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