Bethlehem Steel
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 bankruptcy and liquidation in the late 20th century is similarly cited as an example of America's diminished manufacturing leadership during the late 20th century. From its founding in 1857 through its 2003 dissolution, Bethlehem Steel's headquarters were based in Bethlehem, Pennsylvania, in the Lehigh Valley region of eastern Pennsylvania. Its primary steel 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 in Sparrows Point, Maryland; Johnstown, Pennsylvania; Lackawanna, New York; and Burns 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 for 28 Liberty Street, 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's 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 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.
Bethlehem Steel's roots trace to an iron-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 for bankruptcy in 2001, and was dissolved in 2003 after its remaining assets were sold to International Steel Group.
History
19th century
In 1857, the first iron works in Bethlehem, Pennsylvania, was launched as the Saucona Iron Company by Augustus Wolle. That same year, the Panic of 1857, a national financial crisis, halted the company's further organization. Another organization subsequently started, its site moved elsewhere to South Bethlehem, and the company's name was changed to the Bethlehem Rolling Mill and Iron Company. On June 14, 1860, the board of directors of the fledgling company elected Alfred Hunt president.On May 1, 1861, the company's name was changed to the Bethlehem Iron Company. 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, 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 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 in Manchester, 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 directors Robert H. Sayre, Elisha Packer Wilbur, president of Lehigh Valley Railroad, William Thurston, and Joseph Wharton, founder of the Wharton School, 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 and the, 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 from 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.
During the 1893 Chicago World's Fair, Bethlehem Steel provided the iron used in the creation of a 45.5-foot steel axle to support the world's first Ferris wheel, a structure. The iron was manufactured in Bethlehem Steel's blast furnaces and represented the largest single steel forging ever constructed at the time.
In 1898, Frederick Winslow Taylor joined Bethlehem Steel as a management consultant charged with solving the company's expensive machine shop capacity challenge.
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.
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. 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.20th century
In 1901, Charles M. Schwab, purchased Bethlehem Steel Company, and named Samuel Broadbent as its vice president. 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.Schwab transferred his ownership of Bethlehem Steel Company to U.S. Steel Corporation, the company where he previously served as president. Schwab then repurchased Bethlehem Steel Company, and sold it to United 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.
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. From 1906 until it was delisted in 2002, Bethlehem Steel was traded on the New York Stock Exchange under the symbol BS.
Bethlehem Steel Corporation was formed by Schwab, who had recently resigned from U.S. Steel, and by Joseph Wharton, who founded Wharton School at the University of Pennsylvania in Philadelphia. 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. 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 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 diversified beyond steel, managing iron mines in Cuba and shipyards around the U.S. In 1913, under Broadbent, Bethlehem Steel acquired Fore River Shipbuilding Company, a Quincy, Massachusetts-based company, and became 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 Delaware, Lackawanna and Western Railroad and extensive coal holdings.
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 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 told The Washington Post in 2003.
In the 1930s, the company manufactured the steel sections and the parts of the Golden Gate Bridge and built for Yacimientos Petrolíferos Fiscales, 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, 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 from Latin America. The company established a presence in Latin America for roughly a century from the 1880s to 1980s. 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 their Venezuelan iron investment, and this profit equaled all the taxes paid to the Venezuelan state in the decade since 1950"
Bethlehem Steel also relied on Latin American mines for manganese, an additive for tensile strength. During President Eurico Dutra's presidency in Brazil from 1946 to 1951, Bethlehem Steel received 40 million ton of manganese “for 4 percent of the income of exporting it.”