Slice open the growing U.S. economy at Maryland, slide it under a microscope, and you see this:
The University of Maryland Medical Center decides to build a nine-story, $90 million hospital tower in downtown Baltimore. A contractor hires Jarvis Steel & Lumber Co. in 1993 to make the building's metal skeleton.
Jarvis orders $500,000 of construction steel. Spurred by the hospital job and hundreds of other orders, Bethlehem Steel Corp.'s Sparrows Point mill runs its furnaces, casters and rollers at the highest rate since the late 1970s. Shareholders of the mill's parent company see something unfamiliar: profits.
Bethlehem Steel is making money again, and the main reason is a resurgent economy. Buildings are rising. Machinery is being forged. Auto factories are working overtime.
Last week the company reported that it made $12.9 million for the three months ended March 31, its third consecutive quarter of operating profits after a nearly four-year drought. Some Wall Street analysts think Bethlehem, the nation's second-largest steelmaker, could earn $200 million this year and $300 million next.
"Business couldn't be better," said Duane R. Dunham, president of the Sparrows Point operation, which sold roughly $1.5 billion worth of steel last year. "The order book is extremely strong. We're going full out right now."
But as ever in the steel trade, the question is: For how long?
Even critics credit Bethlehem and other big U.S. steelmakers with stunning improvements in plant investment, cost cutting and quality in the past decade. But the industry still faces intense competition from foreign producers and U.S. "minimills," which melt junk metal instead of making steel from scratch.
And the economy that gives today will eventually withhold its favors. No industry is more handcuffed to the business cycle than steelmaking.
Charles A. Bradford, a steel analyst with investment firm UBS Securities in New York, is blunt about Bethlehem's long-term prospects. For all the company's "spectacularly good" results now, he said, "the issue for them is survivability in the next recession."
Although less heralded, steelmaking's renaissance rivals that of the U.S. automakers. Ten years ago the industry was a rusty relic of what it was in the 1960s, run by a highly paid, overstaffed work force operating obsolete equipment.
