Bethlehem's troubles

Chapter 11: Cheap imports, slowing economy force nation's No. 2 steelmaker to bankruptcy.

October 16, 2001

BETHLEHEM STEEL has faced tough times before.

In 1977, it recorded what was then the biggest single-year loss in U.S. corporate history.

In 1982, its Sparrows Point plant in Baltimore County was forced to lay off more workers than at any time since the Great Depression.

The reasons were the same then as those that yesterday forced the No. 2 steelmaker to declare bankruptcy and seek Chapter 11 protection: Cheap foreign imports and a slowing economy.

Since the beginning of the Asian economic crisis in 1998, more than 20 U.S. steel companies have been driven to bankruptcy.

"The entire domestic steel industry is suffering from the onslaught of record steel imports," the company said in a statement. "The events of Sept. 11 have contributed to a further weakening in demand for consumer products that rely on steel, such as automobiles, appliances and new homes, and to a worsening outlook for our near-term performance."

Bethlehem's economic health has steadily deteriorated since 1999. It has lost money in four consecutive quarters, including $1.2 billion in the first half of this year. Meanwhile, the company, which employs 13,000, is burdened with heavy obligations to 74,000 retirees.

"Chapter 11 does not solve our problems," Bethlehem Steel chairman Robert S. Miller Jr. said yesterday as he pledged to return the company to solvency.

The coming weeks will be nerve-wracking for the 4,000 Bethlehem Steel workers at Sparrows Point, one of the company's three principal operations. They have to cope with uncertainty and rumors and the very real possibility of layoffs.

In the 1940s, journalist John Gunther asked an expert, "What is steel?" and got back the answer, "America!" Indeed, the imprint of Bethlehem Steel is nearly everywhere - from the Golden Gate Bridge to the skyscrapers of New York City.

If the domestic steel industry is to survive, consolidation and fundamental changes are necessary. The United States could easily end up with only three or four steel companies. This is the reality Bethlehem Steel and other producers have to confront.

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