Bethlehem Steel files for bankruptcy
Associated Press
PHILADELPHIA — Bethlehem Steel Corp., which launched more than 1,000 ships during World War II and made girders for the Golden Gate Bridge and Empire State Building, filed for Chapter 11 bankruptcy yesterday.
Bloomberg News Service
The nation's third-largest steel company was reeling from five straight quarters of losses blamed on competition from cheaper foreign steel and high labor and retiree-benefit costs.
Grinders put the finishing touches on steel plates at a Bethlehem Steel Corp. plate mill in Chesterton, Ind. Bethlehem Steel Corp. filed for Chapter 11 bankruptcy protection yesterday after competition from inexpensive imported steel and slowing demand left the third-largest U.S steelmaker in debt.
"It is becoming increasingly clear that the economy is in a precipitous decline, and the market for steel has just gone on hold," said Robert S. Miller Jr., chief executive.
The company, whose headquarters are in Bethlehem, 50 miles from Philadelphia, was once a symbol of American industrial and military might. But it is now a shell of what it once was, with about 13,000 employees and 74,000 pensioners.
Under Chapter 11, a company is protected against creditors and can continue operating while it tries to work out its financial problems.
Miller said the company hopes to reduce debt, work with its unions to address money owed to retirees, and find buyers or merger partners. Bethlehem has lined up $450 million in financing in the meantime.
"I believe that consolidation of the American steel industry is absolutely required. There are far too many players, and they are all small and weak compared to their global competition," Miller said.
Bethlehem Steel Corp. was founded in 1904 by Charles M. Schwab, one of steel magnate Andrew Carnegie's top lieutenants. By the 1920s, it employed 60,000 and could turn out 8.5 million tons of steel a year. Its Fore River shipyard in Quincy, Mass., launched America's first aircraft carrier, the USS Lexington, in 1925.
The company made steel for the Golden Gate Bridge, George Washington Bridge, Empire State Building, Rockefeller Center and the Waldorf-Astoria.
During World War II, Bethlehem Steel churned out steel for ships, tanks, guns, shells and airplane engines. It employed nearly 300,000 people during the war, and operated 15 shipyards that launched 1,121 ships. More recently, the company supplied armor plate for the repair of the bomb-damaged destroyer USS Cole.
At its peak, the massive plant dominating Bethlehem employed 30,000. Now shuttered and rusting, its stacks serve only as a historical feature of a planned Bethlehem Works hotel and entertainment development.
Yesterday, the steelmaker reported a quarterly loss of $152 million, or $1.25 a share, for the July-September period. Bethlehem has lost $1.4 billion for the first nine months of the year.
The bankruptcy filing came just weeks after the company replaced its chairman and chief executive with Miller, a turnaround specialist who led negotiations leading to the government bailout of Chrysler Corp. in the 1980s.
Miller said the firm could not overcome the damage done by low-cost imports and the slowing economy. Demand for consumer products relying on steel, such as autos and appliances, have dropped.
Miller said the company will continue to press for government action to limit low-priced steel imports.
"What we really need is less steel capacity around the world," said Charles Bradford, a New York-based steel industry analyst. He said he doubted Bethlehem Steel would succeed in attracting consolidation partners.
Bradford said the problems of liabilities to retirees and low steel prices would not be helped by bankruptcy proceedings. "Unfortunately it doesn't appear to me that anything much is going to be accomplished by it except the buying of time," he said.
Bethlehem Steel has laid off union and salaried employees and sold assets in an attempt to stay out of bankruptcy, but said revenues still have dropped by about $1.3 billion a year since mid-1998, resulting in operating losses of about $500 million.
"If the government was waiting for another signal that this industry is in terrible crisis, this is it," said Leo Gerard, president of the United Steelworkers of America, in Pittsburgh.
Miller said Bethlehem Steel was having discussions with the union and developing plans for further job cuts by January.
