WILMINGTON, Del. -- Bethlehem Steel Corp. was slow to fal prey to the nation's recessionary malaise, and is likely to be slow recovering from it, company Chairman Walter F. Williams said yesterday.
Mr. Williams said the nation's second-largest steelmaker not only lost $39 million, as expected, in the first three months of 1991, but will likely lose money in the second quarter as well.
Mr. Williams told about 100 shareholders gathered in the ornate ballroom of the Hotel Dupont for the company's annual meeting that the company is losing money because steel demand and prices have been sinking.
By the end of 1990, steel prices had fallen to 1981 levels, Mr. Williams said; accounting for inflation, today's steel prices would actually be 40 percent lower than they were a decade ago, he said. And steel prices have continued to drop in 1991, "deteriorating beyond any reasonable expectation," he said.
At the same time, he said, Bethlehem's costs have been rising because of a recent union settlement as well as costly improvements to the company's two flagship plants at Burns Harbor, Ind., and Sparrows Point in eastern Baltimore County.
Making matters worse, the financial squeeze comes as a strengthening dollar makes foreign steel more cost competitive, he said. Mr. Williams charged that foreign mills were selling their steel at illegally low prices in the United States.
Though he described the steel market's outlook as "troublesome" and "uncertain," Mr. Williams said that he anticipates a "slight upturn" sometime this quarter. But even if the rest of the economy pulls out of its downturn in the next few months, Bethlehem and other steelmakers will likely continue to suffer, he said.
"Steel markets usually lag the economy into both recession and recovery," he said.
Nevertheless, Mr. Williams said the Bethlehem, Pa.-based steelmaker still plans to spend about $500 million this year on improvements to its steelmaking plants.
Sometime this year, the company is expected to finish a $200 million upgrading of the Sparrows Point furnaces, shears and mills that turn out strips of steel used in construction, he said.
Last year, Bethlehem spent $100 million renovating one of the furnaces where coal and ores are superheated into steel. In addition, the company spent $20 million improving the Sparrows Point equipment that makes metal for Campbell's Soup cans.
Sparrows Point, which produces about a third of the company's steel, employs about 7,400 steelworkers.
Bethlehem is investing heavily in Sparrows Point and Burns Harbor, while selling off smaller divisions and trying to arrange for partners to share the risks of modernizing several of the company's Pennsylvania plants because "the viability of the two plants had to be assured if we were going to do things elsewhere," Mr. Williams said.
Three months ended 3/31/91
.. .. .. .. .. .. ..Revenue .. .. .. .. .. Net .. ..Share
'91.. .. .. ..1,055,600,000 .. .. (39,200,000) .. .(0.60)
'90.. .. .. ..1,215,300,000 .. .. ..21,300,000 .. .. 0.20
% change .. .. .. .. .-13.1 .. .. .. .. .. .-- .. .. ..--