| Economics| Principles of Economics| | INTRODUCTION The Bethlehem Steel Corporation (1857-2003), base 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. In2005, ISG merged with Mittal Steel, ending US 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 manufacturing leadership.
Bethlehem Steel’s demise often is cited as one of the most prominent examples of the US economy’s transition away from industrial manufacturing and its inability to compete with cheap foreign labor. FOUNDING The Company began on April 8, 1857 as the Saucona Iron Works in South Bethlehem, Pennsylvania. Then, on May 1, 1861, the company changed its name to Bethlehem Iron Works. Alfred Hunt was elected president by the board of directors on July 15, 1860. In its early years, it produced railroad rails and armor plating for the US Navy. In 1899, the company assumed the name, Bethlehem Steel Company. In 1904, Charles M.
Schwab (recently resigned from US Steel, and unrelated to the stockbroker Charles R. Schwab) and Joseph Wharton formed the Bethlehem Steel Corporation with Schwab becoming the 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. It 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. 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 steel workers during the two decades that the US steel industry operated without significant foreign competition, set the stage for a significant price differential in the 1980’s. In the mid-1980’s, the market for the plants 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 steel making 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. Cheaper foreign steel began being imported in the 1980s, negatively impacting Bethlehem Steel’s market share in the US steel industry. In 1982, the company reported a loss of 1. 5 billion US dollars 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.
MISMANAGEMENT OF MATERIALS AND LABOR 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 antidumping and countervailing duty measures which were in effect for the three decades preceding Bethlehem Steel’s collapse.
CONCLUSION Surcharges on imports of steel by the Bush administration decided in March 2002 to protect the U. S. steel industry, but lifted in December 2003 under pressure from Europe, Japan and the World Trade Organization, Allied the falling dollar had given back a little bit of oxygen to the industry. Of blast furnaces have been rekindled, the concentration has accelerated and some investments to modernize shy a production often has been made obsolete.