Bethlehem Steel: Builder and Arsenal of America

by Kenneth Warren

In the late 19th century, rails from Bethlehem Steel helped build the United States into the world's foremost economy. During the 1890s, Bethlehem became America's leading supplier of heavy armaments, and by 1914, it had pioneered new methods of structural steel manufacture that transformed urban skylines. Demand for its war materials during World War I provided the finance for Bethlehem to become the world's second-largest steel maker. As late as 1974, the company achieved record earnings of $342 million. But in the 1980s and 1990s, through wildly fluctuating times, losses outweighed gains, and Bethlehem struggled to downsize and reinvest in newer technologies. By 2001, in financial collapse, it reluctantly filed for Chapter 11 bankruptcy protection. Two years later, International Steel Group acquired the company for $1.5 billion.

In Bethlehem Steel, Kenneth Warren presents an original and compelling history of a leading American company, examining the numerous factors contributing to the growth of this titan and those that eventually felled it—along with many of its competitors in the U.S. steel industry.
Warren considers the investment failures, indecision and slowness to abandon or restructure outdated “integrated” plants plaguing what had become an insular, inward-looking management group. Meanwhile competition increased from more economical “mini mills” at home and from new, technologically superior plants overseas, which drove world prices down, causing huge flows of imported steel into the United States.

Bethlehem Steel provides a fascinating case study in the transformation of a major industry from one of American dominance to one where America struggled to survive.

Genres: Nonfiction

344 pages, Paperback

First published January 1, 2008

Reviews

[Gregory · Rating 3 out of 5]

One of the my favorite ways to relax is to wonder the stacks in the library glancing at the books for something that catches my fancy. When I stumbled on Kenneth Warren's Bethlehem Steel I couldn't resist. I earned my PhD at Lehigh University in the shadow of the hulking, defunct Bethlehem Steel mill. It was enormous. The complex stretched for miles. At that point in the 1990s, it operated under very limited capacity. Now, twenty years later I was finally going to read about the company that built this enormous plant with its rust, broken windows, and abandon equipment laying in the yards.

The title really captures the essence of Bethlehem Steel. It started as a small scale iron producer in a region with many. It was among the first to jump to steel an adopt the Bessemer. While lauded for its quality, Bethlehem Steel lagged behind competitors in the midwest that had access to more markets and cheaper ore. The company took off around 1900 when if moved into naval construction, was purchased by Charles Schwab, and secured several large contracts. In the 192os it profited from the building boom stretching across the United States. Like most firms, it suffered immensely during the Great Depression. It did well in World War II and grew significantly in the 1950s through sales and acquisitions. Production peaked in the 1970s and then started the thirty year decline that culminated with Bethlehem Steel's absorption by the International Steel Group in 2003.

Two things really caught my attention. First, the long term effects of recessions. Something that seems minor in historical hindsight, such as the 1982 recession, which is dwarfed by the economic boom of the 1980s, hit Bethlehem Steel really hard and had long term impacts. Second, was the devolution of the 1970s-1990s. A century before, it was all about consolidation of integration, which meant controlling all the lines of production from raw materials to sales of finished product. Yet, one hundred years later, Bethlehem Steel was following the model of Chrysler executive Lee Iacocca and selling off its subsidiaries, sources of raw materials, etc. The circle was coming around.

[Jared · Rating 4 out of 5]

Very interesting book about an industry that fascinates me.

[Brian · Rating 4 out of 5]

Kenneth warren provides a great account of the rise and decline of Bethlehem Steel in his work on what happened to the second largest producer of steel in the country. Professor John Smith in one of his articles titled "The improbable success of Bethlehem Steel" looked at all the factors that went against Bethlehem Steel and Warren confirms many of those as he assesses what happened to the company. Bethlehem's rise was driven by being one of the first to modernize and develop natural resources for the production of steel. What started out as a small company to make rails for the Lehigh Valley Railroad quickly developed into the premier supplier of battleship grade steel for the US Navy. Although growing pains would ensue at Bethlehem Steel, it would remain the supplier of steel to the United States Navy throughout the decades including World War II.
The downfall of Bethlehem Steel is attributable to any number of factors including unions, bad management, poor location, increased competition, and soaring pension costs coupled with falling steel costs. Bethlehem's management team was severely anti Union leading to further strife and causing the unions to be even greedier in their demands leading to widespread dysfunction within the company. Bethlehem was always further away from natural resources on the great lakes than its competitors in Pittsburgh and further away from the primary steel markets in Detroit. All of these factors together combined to make the perfect storm to take down an industrial giant
Warren does an excellent job of clearly explaining what happened to Bethlehem Steel and its outlying plants be they Youngstown, Johnstown or Lackawana and looking at the fall of the main corporation in Bethlehem PA. For those who want to understand how a huge corporation can collapse quickly this is a great book for understanding it.

[Christa · Rating 3 out of 5]

I read the last half to learn more about the decline of Bethlehem Steel. The book was fairly interesting, I didn't read it in depth. It seemed to be partial and contain a lot of information about Bethlehem Steel, most of which I didn't really care about (production numbers, dollars earned in various years, etc). If you are interested in the steel industry or the very business side of things then I would recommend reading it, but if you want more of a story, more of the lives of steel workers, etc then I would recommend another (albeit more biased) book by John Strohmeyer, Crisis in Bethlehem.