By KEVIN NEVERS
Had it ever been
Don Draper’s to pitch an ad campaign to Bethlehem Steel, the Madmen writers
might have spun subplot gold out of these young lovelies: the scores of
girls with stars in their eyes hired by Bethlehem for the sole purpose of
escorting visitors through the company’s 13-story headquarters building.
And looking sweet
and chic while they did it.
Coached in poise
and manner by New York fashion models, no less--yet out of a job, deemed
spoiled goods, just as soon as they became pregnant--the girls were, for the
most part, the daughters of steelworkers, whose average hourly wage in 1956
Meanwhile, to the
gray-flannel denizens of the corner offices overlooking Lehigh Valley,
running a stable of corporate stewardesses must have seemed like a pretty
swell idea, a swanky move, as much a symbol of their status in the business
world as their lobster-tail lunches and 18-karat gold nameplates, as much as
President Arthur B. Homer’s salary in 1958, $511,249, the highest that year
of any executive officer in the country.
And why not?
Since the Roaring
Twenties Bethlehem’s Grey I-beam had been the spine of the modern American
city, iconized in New York’s Rockefeller Center and Waldorf Astoria Hotel,
Chicago’s Merchandise Mart, San Francisco’s Golden Gate Bridge. During World
War II the company’s plate floated whole fleets of naval and merchant
vessels, making it the world’s largest shipbuilder and arguably the Allies’
most vital armorer. And now, just past the midpoint of the 20th century, its
flat-rolled was satisfying the rising middle class’ clamor for cars and
appliances, the fruits of a post-war prosperity which the company was going
to take to the bank forever. Bethlehem Steel had become a byword more than a
brand, and for its executives that may well have been enough to justify the
keeping of a black Angus herd at their private retreat, the Saucon Valley
Yet only 20 years
after President Homer scored his cool half-million, the company was
foundering, a victim of its own complacency and insularity.
riches-to-rags story and perhaps one not well known to Dunelanders, whose
earliest memory of Bethlehem Steel is likely to be that of a company already
beginning its long slow slide into extinction well before the shiny new mill
in Burns Harbor was even completed.
So it’s a good
thing Jim Diffenbach is here to tell the tale.
into Bethlehem Steel in 1954, fresh out of college. He would work for the
company for 43 years, not quite long enough to be on the payroll when it
declared bankruptcy, in 2001. Diffenbach’s institutional memory is superb,
though, and at the Duneland Historical Society’s
last meeting of 2014 he spoke with authority--in a presentation entitled
“The Local Steel Industry”--on
a company which in the end rested itself to death on its laurels.
his story at the beginning, with steel’s
precursor, iron, which thousands of years before Christ was being extracted
from hematite or meteorites and cold-hammered by Egyptian or Sumerian
smithies into tools and weapons. Around 1100 B.C. the technology to smelt
iron from ore was developed and then steel--an alloy of iron and carbon--was
only a few accidental smelts away from being discovered.
Steel has always
been prized for its strength and hardness and the ease with which it can be
fabricated. Bladesmiths appreciated the edge it can take, craftsmen its
formability. But it was an artisan’s job making steel, in small batches and
haphazardly, and not until less expensive, more reliable techniques were
developed could steel be mass-produced. The Bessemer process, then the
Siemens-Martin process, both introduced in the mid-19th century, were just
the ticket, Diffenbach said, and the heaviest heavy industry was born.
1860, the Bethlehem Rolling Mill & Iron Company made its bones supplying
rail- and shipyards. Re-organized as the Bethlehem Steel Corporation in
1904, it made its name producing a revolutionary kind of I-beam, a
“wide-flanged” beam developed by Henry Grey and rolled in a purpose-built
mill whose construction the company’s first president and chair, Charles
Schwab, pretty much bet the farm on. Schwab’s
move proved hugely successful, as the new I-beam--also known as the
Bethlehem beam--made the erection of buildings taller than 20 stories both
structurally and economically feasible. The construction industry was
transformed very nearly overnight and no metropolis’
skyline would ever be the same. Yet Schwab’s
risk--he had to persuade friends to personally loan the company the
necessary money to install the new Grey mill--may have been the last gutsy
one every taken by a Bethlehem Steel executive.
his firsthand knowledge of the company, came in time to see it as stunted by
an “inbred culture,” one in which executive officers automatically also had
seats on the Board of Directors and whose salaries, if not as grand as
Homer’s, were nonetheless grander than
the pay of nearly every other suit in any domestic industry you could name.
They were uninterested in innovation, dismissive of foreign competition,
and--in the face of increased costs of production--content to wring profits
from price hikes, rather than from rationalizing or synergizing.
When, in 1958, the
U.S. Justice Department quashed Bethlehem Steel’s
pending acquisition of Youngstown Sheet & Tube Company--whose facilities in
East Chicago would have given Bethlehem a ready-made foothold in the Midwest
market--the decision was made just to start from scratch. Four years later,
in 1962, Bethlehem broke ground on the Burns Harbor facility, the last
integrated mill ever built in this country, the last one, that is, to stream
the entire steelmaking process under one roof, so to speak, from iron ore to
finished plate or roll.
Yet by 1966, when
Phase I of the Burns Harbor mill was completed, it was already too late for
the company, the market was changing in ways management had never troubled
itself to imagine, and so was the technology. By then the U.S. was importing
more foreign steel--and of very high quality, Diffenbach offered--than it
was exporting. Meanwhile, Nucur Corporation, under what Diffenbach called
its “visionary leadership,” was only two years away
from building its first minimill, which begins not with iron ore but less
expensive recycled steel scrap and melts it not in a blast furnace but the
less expensive electric arc furnace. Nucor is now the second largest
domestic steelmaker, a title once owned by Bethlehem.
Perhaps the most
disturbing sign of the times, though, was its loss, in 1970, of the contract
to provide and fabricate the steel for the World Trade Center, Diffenbach
added. Bethlehem Steel actually undercut the only other bidder, U.S. Steel,
by $5 million, but the Port Authority of New York and New Jersey rejected
the bid anyway. In the end, the contract went to a consortium of companies
which, by using cheaper foreign steel, were able to undercut Bethlehem in
turn by fully $34 million.
stodginess, competition both foreign and domestic, and a crippling recession
all combined in the Seventies to put the company into a slow-motion
death-spiral, and the desperate measures in the Eighties and Nineties to
dump and scrimp could not see it through the tectonic shakeout of the steel
industry at the end of the 20th and opening of the 21st century.
In 1945, 300,000
employees were on Bethlehem Steel’s payroll. In 2003, no one was.