Bethlehem Steel, nation's No. 3 steelmaker, files for Chapter 11 bankruptcy
Monday, October 15th 2001, 12:00 am
By: News On 6
PHILADELPHIA (AP) _ 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 Monday.
The nation's third-largest steel company was suffering from five straight quarters of losses blamed on competition from low-cost foreign steel and high labor and retiree-benefit costs.
``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, headquartered 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.
Chapter 11 enables a company to hold off its creditors and continue operating while it tries to work out its 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 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.
On Monday, the steelmaker reported a quarterly loss of $152 million, or $1.25 a share. 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 company 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, dropped even further after the Sept. 11 terrorist attacks, he said.
Miller said the company will continue to press for government action to limit low-priced steel imports.
Leo Gerard, president of the United Steelworkers of America in Pittsburgh, said Congress should assist the industry and curb imports, ``if they want a steel industry in this country.''
Bethlehem Steel has laid off union and salaried employees and sold off some of its assets in an attempt to stay out of bankruptcy. Miller said the company was talking with the union and planning further job cuts by January, but did not disclose how many jobs would be cut or where.
Bethlehem now produces galvanized products and sheet metal for the auto industry and other customers at its Burns Harbor division near Chicago and operates plants in Sparrows Point, Md., and in Steelton, Pa.
Bethlehem stock was at $1.20 a share, unchanged, in midday trading on the New York Stock Exchange.