It cannot be overstated: Bethlehem Steel was Bethlehem. And when the titan of the industry declared bankruptcy 20 years ago this week, that sounded the death knell. The steel industry here had already stopped and the company was selling goods to keep itself afloat. Some hoped that government intervention and negotiations with the unions could avoid the inevitable, but it was too late: Steel would shut down for good two years later.
Here’s how the Express-Times reported the bankruptcy of Bethlehem Steel on October 16, 2001.
Bethlehem Steel Corp., the giant that put this city on the map, to file bankruptcy online on Monday.
At 3 a.m., Steel’s board members voted unanimously to call for the reorganization of Chapter 11 after hours of meetings in New York City.
At 9 a.m., attorneys for Bethlehem Steel filed the documents with the U.S. Bankruptcy Court in Manhattan, listing $ 4.2 billion in assets and $ 4.5 billion in debt.
Robert “Steve” Miller, president and CEO of Steel, said the move came with enough loans to keep the company afloat while making significant cuts.
âWhen I got here I was reasonably confident we wouldn’t need to go,â Miller said of the bankruptcy filing. “But since September 11, the economy has gone into free fall – every day it was clear that the business outlook was bleaker than I thought.”
Miller has only been at the head of the company for 21 days.
The company, which has lost money five quarters in a row, has 13,000 employees and 74,000 retirees. On Monday, Steel reported a third-quarter loss of $ 152 million, or $ 1.25 per share.
â¦ In its heyday, Bethlehem metallurgists built landmarks like the Golden Gate Bridge and Rockefeller Plaza. During World War II, it employed 300,000 people as the country’s largest shipbuilder.
Today, more than 20 American steel companies have filed for bankruptcy protection since 1998, when financial crises in Asia and Russia prompted foreign producers to flood the United States with cheap steel.
Miller, a turnaround specialist who made his name with Chrysler’s bailout in the 1980s, joined the company on September 24, replacing Duane Dunham.
The company has announced plans to sell its South Buffalo Railway business in Lackawanna, NY, a 70 percent stake in an iron ore mine in Minnesota and a 5 percent stake in a mine in Brazil. It also plans to cut 340 jobs by closing a coal processing plant in New York City to cut spending.
This fall, Steel was struggling to get $ 750 million in loans. This weekend, the ailing company lined up $ 450 million in loans with GE Capital as “debtor in possession.”
âThe $ 750 million was like refinancing your mortgage, while the $ 450 million is more in the form of a second mortgage,â Miller said on a noon conference call. …
He said Steel’s takeover rests on âthree legsâ – work, government and merger or acquisition.
… [United Steelworkers of America] President Leo Gerard said 130,000 retired workers and dependents were “at risk” by the Bethlehem case.
âYou don’t have to be a rocket scientist to understand that if Washington [D.C.] don’t act now, an industry critical to America’s security will be bled to death, âGerard said in a statement.
Local union and pension officials said Monday they had not been informed of the changes facing the 11,000 retirees of Lehigh Valley metallurgy.
â¦ The fallout from Steel’s bankruptcy is not limited to Steel. Lehigh Heavy Forge laid off an undisclosed number of employees as of noon Monday, [Jerry Green, president of the tri-local union] noted.
â¦ Bethlehem Steel supplies raw materials for the South Bethlehem Company and is a major buyer for its products. …
People who heard the news from Bethlehem Steel used one word – sad.
Bruce Davis, attorney for the Bethlehem Steel Retired Employees Benefits Coalition, said: “It’s about as sad a day as I can remember for a very proud company.”
â¦ Author and former Globe-Times editor John Strohmeyer said he received a phone call from his daughter early in the morning.
It is now [at the time of original publication] author in residence at the University of Alaska at Anchorage.
âMy first reaction was to see it coming, but I never thought it would really happen,â Strohmeyer said.
Pulitzer Prize-winning Strohmeyer is the author of “Crisis in Bethlehem”, a book that traces Steel to the mid-20th century.
The theme? “Steel was relying too much on the government to bail it out,” said the author. âIt was time for management and workers to tango. If they wanted to save it, it had to be a joint rescue operation. I don’t think it ever happened.
Then he added, âIt’s sad. It’s very sad.”
MORE LEHIGH VALLEY HISTORICAL NOTES THIS WEEK
â¢ 10 YEARS AGO | October 10, 2011: The 110-year-old Blue Fox Hotel burns down in Whitehall Township, killing one and displacing nine others, some of whom are believed to have jumped from second and third floor windows.
â¢ 50 YEARS AGO | October 14, 1971: Early feedback from an Easton Express reader survey shows that 2: 1 readers vs. Tocks Island Dam project. The controversial project aims to dam the Delaware River just north of the Delaware Water Gap, and the Express is committed to sending the final results of its poll to a presidential council that is due to vote on the project by November 4.
This story is part of Lehigh Valley then, a weekly series that recalls the historical titles of lehighvalleylive.com affiliate The Express-Times and its predecessors 10, 20, 25, 50 and 100 years ago. The stories are taken from microfilm in the Easton and Bethlehem Public Libraries. Excerpts from the original text are edited for clarity and length.
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Steve Novak can be reached at [email protected].