Once upon a time, Bethlehem Steel was the premier steelmaking company in the United States, producing steel used in buildings like the Rockefeller Center, the Empire State Building, and the Golden Gate Bridge. So what happened to this massive company?
Bethlehem Steel began operating at a loss and eventually became so unprofitable that it had to close down. Three main factors led to the demise of Bethlehem Steel: a poorly managed pension fund, union rules that made modernization difficult, and competition from cheap foreign steel.
How many plants did Bethlehem Steel have? Where did Bethlehem Steel get its ore? And when was the last shift at Bethlehem Steel? In the following sections, you will learn more about the history of this famous steel company.
The History of Bethlehem Steel
Bethlehem Steel Corporation was one of Pennsylvania’s most iconic steel companies. For almost 150 years, Bethlehem Steel produced iron, steel, steel products, and even naval vessels until it filed for bankruptcy in 2001. So what led Bethlehem Steel to collapse?
The story begins in 1857, when Augustus Wolle created the Saucona Iron Company in Bethlehem, Pennsylvania. Almost immediately, the company encountered a significant challenge when the Panic of 1857 caused many financiers to stop funding railroads, which adversely impacted the demand for iron.
The panic subsided by 1860, and the company was reorganized as the Bethlehem Rolling Mill and Iron Company, later simplified to Bethlehem Iron Company.
By 1867, Bethlehem Iron had two operational blast furnaces, a rolling mill, and a machine shop running. These facilities produced rails for railroad companies and armor plating for U.S. Navy vessels. In 1873, the Bethlehem Iron Company began using a new technique called the Bessemer Process to convert pig iron into steel, which eventually led them to change their name to the Bethlehem Steel Company.
The improved steel produced by the Bessemer Process allowed Bethlehem to manufacture higher-grade rails as well as armor plating and guns for the U.S. Navy. Steel plates manufactured at Bethlehem armored famous vessels such as the early battleships USS Texas and USS Maine.
In 1901, Charles M. Schwab – an executive at U.S. Steel, not the famous banker – purchased the Bethlehem Steel Company.
Schwab transferred ownership of Bethlehem Steel several times for business reasons, and at the end of it all, in 1903, the Bethlehem Steel Corporation emerged from the chaos. The new company included all of the assets of the Bethlehem Steel Company, plus several shipyards, mines, and other assets.
During World Wars I and II, Bethlehem Steel manufactured millions of tons of armor plates, vessels, aircraft components, artillery, and munitions. After the war years, Bethlehem Steel continued to boom, producing everything from ductwork to automotive steel to structural steel.
However, the 1950s also sowed the seeds of Bethlehem’s eventual destruction. Executives took money intended for worker pensions and used it elsewhere, leading to a lag in the growth of the pension fund. As Bethlehem’s workers got older, the ratio of retirees to workers rose, and maintaining the pension fund became progressively more challenging.
The 1970s saw cheap foreign steel hit the market, compounding the pension problem. At the same time, union policies prevented Bethlehem from investing in modernization that would have kept it competitive.
By 1982, the company was running massive losses. Between short-sighted management decisions in the 1950s, an inflexible union, and the introduction of cheap foreign steel manufactured with improved processes, Bethlehem Steel Corporation’s days were numbered.
The company limped along for years, but the writing was on the wall. Plant closures began in the early 1990s, and in November of 1995, Bethlehem Steel stopped producing steel.
By 2001, the company had filed for bankruptcy. Then, in 2003, the company was dissolved, and its remaining assets were acquired by International Steel Group, an ignominious end for a legendary American company.
How Many Plants did Bethlehem Steel Have?
A complete inventory of Bethlehem Steel’s plants could fill a book. However, the company existed for 146 years, and many facilities came and went during that time. There were steel plants, steel mills, machine shops, assembly lines, and mines.
Keystone Answers Fun Fact: During World War II, Bethlehem Shipbuilding Company (a division of Bethlehem Steel) produced 1,121 warships for the United States Navy.
Plus, Bethlehem Steel had subsidiaries, spinoffs, and other entities associated with it that, make it difficult to provide a precise count of Bethlehem Steel plants.
The most important plant for Bethlehem Steel was its flagship campus in Bethlehem, Pennsylvania. This 1,600-acre plant was the original site of the Saucona Iron Company, which was the precursor to the Bethlehem Steel Corporation. Today, the original steelworks still stands as the center of a huge public art space that has helped revitalize the city of Bethlehem.
Apart from the main plant, three of Bethlehem’s most significant plants were Burns Harbor, Sparrows Point, and Pennsylvania Steel Technologies.
Burns Harbor, located near Chicago, manufactured rolled-steel products for use in cars, container vessels, office furniture, construction equipment, and other applications. Burns Harbor could produce more than five million tons of steel a year!
Sparrows Point was a 2,000-acre facility on the Chesapeake Bay in Maryland. Sparrows Point focused chiefly on producing sheet steel, tin, and galvanized sheet steel, producing about 7 million tons of steel products every year.
Finally, Bethlehem Steel operated a plant in Steelton, Pennsylvania, known as Pennsylvania Steel Technologies (PST). PST manufactured rails for railroads, large-diameter pipes for oil and gas, and steel bars for various industrial uses.
What Was Made at Bethlehem Steel?
As the name would imply, Bethlehem Steel manufactured steel and steel products. Production included raw steel, rolled steel, and railroad tracks. Bethlehem also manufactured military hardware such as artillery, munitions, armor plating, and warships.
While Bethlehem initially started fabricating steel for the military during peacetime, the World Wars caused the company to kick into overdrive. The steelworkers at Bethlehem, many of them women pulled to work while their men fought abroad, forged the metal that became American airplanes, ships, bombs, tanks, and armor. As a result, millions of tons of steel poured out of Bethlehem during the wars.
After the wars, Bethlehem Steel mainly focused on industrial and architectural steel. They manufactured ducting, other building supplies, as well as large steel beams and other structural elements. Steel manufactured at Bethlehem lives on in famous landmarks like the Golden Gate Bridge, the Hoover Dam, Rockefeller Center, and Madison Square Garden!
Where Did Bethlehem Steel Get its Iron Ore From?
Bethlehem Steel mostly got its ore from sources in the United States. The company extracted massive amounts of iron ore in Pennsylvania from the Cornwall Mine in Cornwall, PA, and the Grace Mine near Reading.
The company mined iron ore in Canada, Europe, and Africa and eventually opened mines in Chile and Cuba as well. In the post-WWII era, Bethlehem Steel imported iron ore from Sweden in an effort to help revitalize the Nordic nation’s economy.
While the iron ore used by Bethlehem came from around the world, the coal used in the plant was almost entirely domestic.
In addition to its steelmaking plants, Bethlehem owned several coal-mining companies and coal mines, which is a common practice in the steel industry as it ensures a steady supply of low-cost coal. Bethlehem’s steel plant in Johnstown sat directly on top of massive coking coal deposits. The company also owned coal mines in West Virginia and Kentucky.
When was the Last Shift at Bethlehem Steel?
The last shift at Bethlehem Steel was November 18, 1995. The workers had been notified by Bethlehem Steel earlier that year that the plant would be closing. Yet, despite it being their last day, the steelworkers at the plant gave it their all, fired up the blast furnaces, and pumped out one last run of steel.
According to the famous Pennsylvania newspaper The Morning Call, the plant went silent as steelworkers opened the blast furnaces for the final time, only for the silence to be broken as one worker whistled a rendition of “Amazing Grace” over the plant’s loudspeakers.
More than 500 local people were now unemployed, and the closure of Bethlehem Steel marked the end of an era for the Lehigh Valley.
To their credit, the leadership of Bethlehem Steel tried their best to mitigate the impact of the plant closure. They hired consultants and drew up plans for a revitalization of the area around the steel plant. These efforts led to the creation of the National Museum of Industrial History and the SteelStacks arts and culture campus.
If you are interested in learning more about the steel industry in Pennsylvania, we also have a post about Pittsburgh steel that we encourage you to read.
Last One Out, Turn Off The Lights
The root cause of Bethlehem Steel’s collapse can be traced to the 1950s, when management failed to fund the company’s pension adequately. The underfunded pension problem was compounded when the number of retirees outgrew the number of employees. Then, as if that wasn’t enough, when cheaper foreign steel became available in the 1970s, complex union rules made it impossible to modernize the company’s operations.
Hamstrung, unprofitable, and immutable, Bethlehem Steel limped along until the mid-1990s, when the losses became unsustainable, and the company collapsed. The company itself may be gone, but the steel forged at Bethlehem will still be standing centuries from now, a testament to the hard work and grit of the people of the Lehigh Valley.
