Proud history but sad recent timesIt has not been a good decade for Bethlehem Steel, the company whose products were used to build the Golden Gate Bridge, Rockefeller Center, and the U.S. Supreme Court building. Because of protracted industry-wide problems, Bethlehem has been forced to sell divisions, including its namesake plant in Bethlehem, Pennsylvania, and pursue massive downsizing efforts. America's second-largest integrated steel company (behind USX - U.S. Steel), Bethlehem has recently been facing a declining demand for steel and increased competition from upstart mini-mills.
In 1997, the company reversed its sell-off trend when it acquired Lukens, which made it the nation's largest maker of steel plate. As part of the $740 million deal, the company sold some of Lukens' businesses to Allegheny Teladyne for $175 million.
Foreign dumping
Former Bethlehem CEO Hank Barnette was the leading voice attributing the most recent woes of the U.S. steel industry to import dumping from foreign countries, primarily Asia and Russia. Barnette, who served on a presidentially-appointed trade committee, was not alone in accusing steel producers in those regions of selling steel in the U.S. at unfairly low prices (below production costs or home-market prices). The industry filed formal complaints in September 1998.
Bethlehem pointed to trade problems as the major reason for poor financial performance in 1998, which saw Bethlehem post decreases in both earnings and revenue. Throughout the year, Barnette warned that steel dumping was hurting Bethlehem. While most of the company's mills ran at 100 percent capacity in 1997 and at the beginning of 1998, Bethlehem's production dropped because of lack of sales. Mills that historically had been open for certain vacations were shut down for holidays. In October 1998, the firm closed down a plate mill in its Sparrows Point division (near Baltimore), laying off 500 employees. The company warned that further layoffs at that location are possible and that a $300 million construction project was in jeopardy. And in January 1999, Bethlehem announced the permanent closing of locations in Ohio and Pennsylvania that it planned to sell.
Trying to hold on...
Faced with slumping revenues and a negative net income in fiscal 1999, in addition to the threat of a hostile takeover by Wheeling Pittsburgh Steel Corp., Bethlehem employed additional survival techniques in 2000. That summer the company formed a business services division, whose purpose was to cut the company's costs. Approximately 500 workers will lose their jobs by January 2001. In July 2000, Bethlehem announced plans to sell its interest in Presque Isle Corporation. Indeed, a plethora of challenges face new CEO Duane R. Dunham, who replaced the retiring Barnette in the middle of the year.
